Federal Reserve Bulletin, 1989-09

VOLUME 75 • NUMBER 9 • SEPTEMBER 1989 FEDERAL RESERVE 1 BULLETIN V 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 591 MUTUAL RECOGNITION: INTEGRATION to the House Committee on Banking, Hous- OF THE FINANCIAL SECTOR IN THE ing, and Urban Affairs, July 20, 1989.) EUROPEAN COMMUNITY 619 Griffith L. Garwood, Director, Division of In the financial sector, as in other areas, the Consumer and Community Affairs, ad- European Community is using the approach dresses issues regarding the Community of mutual recognition to achieve a single, Reinvestment Act (CRA) and its enforceunified market by year-end 1992. This ap- ment by the Federal Reserve and says that proach goes well beyond national treatment CRA enforcement poses a significant superand is of interest not only for its direct effect visory challenge because it requires looking within the Community but also in relation to beyond the bank itself and focusing on the issues regarding international trade in finan- role the bank plays in its community, before cial services. the Subcommittee on Consumer and Regulatory Affairs of the Senate Committee on Banking, Housing, and Urban Affairs, July 610 STAFF STUDIES 31, 1989. "The Adequacy and Consistency of Margin Requirements in the Markets for Stocks and 625 RECORD OF POLICY ACTIONS OF THE Derivative Products" is the first study to FEDERAL OPEN MARKET COMMITTEE combine a broad institutional description of At its meeting on May 16, 1989, the Commargin arrangements with an analysis of mittee adopted a directive that called inimargins and prices before and after the tially for no change in the degree of pres- October 1987 market crash to assess the sure on reserve positions. Some firming or adequacy and consistency of margin re- some easing of reserve conditions would be quirements in the cash, futures, and options acceptable during the intermeeting period segments of the equities market. depending on indications of inflationary pressures, the strength of the business ex- 612 INDUSTRIAL PRODUCTION pansion, the behavior of the monetary aggregates, and developments in foreign ex- Industrial production declined 0.2 percent change and domestic financial markets. The in June after a revised decrease of 0.1 reserve conditions contemplated by the percent in May. Committee were expected to be consistent with growth of M2 and M3 at annual rates of 614 STATEMENTS TO CONGRESS around IV2 and 4 percent respectively over Alan Greenspan, Chairman, Board of Gov- the three-month period from March to June. ernors, discusses monetary policy and the 631 ANNOUNCEMENTS state of the nation's economy and says that the fundamental objective of monetary pol- Nominations sought for appointees to Conicy remains to maximize sustainable eco- sumer Advisory Council. nomic growth, which requires the achieve- Amendments to Regulation CC. ment of price stability over time, before the Senate Committee on Banking, Housing, Proposed amendments to Regulation B to and Urban Affairs, August 1, 1989. (Chair- implement provisions of the Women's Busman Greenspan presented similar testimony iness Ownership Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Revised List of Marginable OTC Stocks A71 GUIDE TO TABULAR PRESENTATION, now available. STATISTICAL RELEASES, AND SPECIAL Settlement of enforcement proceedings. TABLES Admission of eight state banks to membership in the Federal Reserve System. A74 BOARD OF GOVERNORS AND STAFF 633 LEGAL DEVELOPMENTS Various bank holding company, bank ser- A76 FEDERAL OPEN MARKET COMMITTEE vice corporation, and bank merger orders; AND STAFF; ADVISORY COUNCILS and pending cases. 656 MEMBERSHIP OF THE BOARD OF A78 FEDERAL RESERVE BOARD GOVERNORS OF THE FEDERAL PUBLICATIONS RESERVE SYSTEM; 1913-1989 List of appointive and ex officio members. A80 INDEX TO STATISTICAL TABLES AI FINANCIAL AND BUSINESS STATISTICS These tables reflect data available as of A82 FEDERAL RESERVE BANKS, August 1, 1989. BRANCHES, AND OFFICES A3 Domestic Financial Statistics A46 Domestic Nonfinancial Statistics A55 International Statistics A83 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community Sydney J. Key, of the Board's Division of Inter- and regulation. This coordination has resulted in national Finance, prepared this article. some movement toward harmonization of rules among nations (in particular, the Basle Accord Since the beginning of 1988, momentum toward on international bank capital standards) and eascompletion of the internal market in the Euro- ing of restrictive rules and practices by individual pean Community has increased markedly. The countries. Although the EC program for financial target date for establishing this market, which services and markets can be viewed as a part of will allow the free movement of goods, persons, this process of international coordination, the services, and capital within the Community, is program is qualitatively different from what has December 31, 1992. The European Community been achieved beyond the Community. The EC has already taken legislative action in many approach to achieving internal financial integraimportant areas, including the liberalization of tion is therefore of interest not only for its effect capital movements and the establishment of a within the Community but also in relation to framework for a Communitywide market for issues regarding international trade in financial banking services. Currently, EC member states services that are being addressed in forums such are taking steps to encourage industries to pre- as the current Uruguay Round of the General pare for the more competitive post-1992 environ- Agreement on Tariffs and Trade (GATT), the ment, and some governments are using the dead- Organisation for Economic Co-operation and Deline to speed deregulation of their own financial velopment (OECD), and the Bank for Internamarkets. In the private sector, companies are tional Settlements. developing strategic plans based on the creation The first section of this article discusses the of a unified European market; one result has development of the internal market program been a wave of intra-European mergers and and the Community's use of the concept of acquisitions. mutual recognition. The second section pro- The EC program for the financial sector is vides an overview of the EC program for crebeing developed and implemented at a time of ation of a "European Financial Area," a term increasing internationalization of financial ser- used by the EC Commission, the Community's vices and markets. Technological change and executive body, to refer both to the removal of innovation in instruments and services have barriers to capital movements and to the estabplayed a major role in this process of internation- lishment of a framework for a Communitywide alization. At the same time, market forces have market for financial services. The third section both necessitated and facilitated greater interna- presents a conceptual analysis of the EC aptional coordination with regard to supervision proach of mutual recognition as a means of achieving integration of the Community's financial sector. The concluding section considers the relevance of the principle of mutual recog- NOTE. This article is based on Ms. Key's study "Financial Integration in the European Community," International Fi- nition in the broader international context of nance Discussion Papers 349 (Board of Governors of the approaches to domestic market access for for- Federal Reserve System, Division of International Finance, eign firms. April 1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

592 Federal Reserve Bulletin • September 1989 DEVELOPMENT OF THE INTERNAL The 1985 White Paper MARKET PROGRAM All of these political and economic developments In the early 1980s, concern was widespread created an environment in which the Commiswithin the European Community that the EC sion that took office at the beginning of 1985, with countries were recovering very slowly, com- Jacques Delors as its president, could move pared with the United States and Japan, from the forward with proposals for economic integration recessions of the late 1970s and were being (see the box "Institutions of the European Comoutstripped by the United States and Japan in munity"). By mid-1985, the Commission had new high-technology industries. The conven- prepared a white paper, Completing the Internal tional wisdom was that, even though tariff barri- Market, which the European Council subseers among the member states had been disman- quently adopted as the basis for the EC internal tled more than a decade earlier, nontariflf barriers market program.2 The white paper identified 300 and market fragmentation within the Community pieces of legislation (later revised to 279) that the were major impediments to EC economic Community would have to enact to remove regrowth. Partly because of this view, in the first strictions or to harmonize laws of member states. half of the 1980s new initiatives were proposed to It also set forth a timetable for the enactment of reactivate the process of European integration. each proposal that called for the entire program Perhaps the most far-reaching of these proposals to be in place by the end of 1992 (see the box was the draft treaty establishing a European "Forms of EC legislation"). Union that the European Parliament adopted in The white paper also announced a new stratearly 1984. This treaty had no chance of ratifica- egy regarding the harmonization of national laws tion by the member states; but it encouraged the and regulations. In place of the previous, unsucheads of the EC member states, who had previ- cessful attempt to achieve complete harmonizaously renewed their commitment in general tion of standards at the Community level, the terms to the goals set forth in the 1957 Treaty of Commission adopted an approach involving har- Rome, to take concrete action toward comple- monization of only essential laws and regulations tion of the internal market.1 (such as those affecting health and safety) for By the mid-1980s, steps toward further integra- both goods and services. Under the Commistion of the EC market had become easier to take sion's new approach, the harmonization of esbecause sustained economic growth had begun in sential standards provides the basis for mutual most of the EC countries after the recovery from recognition by the member states of the equivathe 1982 recession. Moreover, the political situ- lence and validity of each other's laws, regulaation had changed as governments that were tions, and administrative practices that have not more strongly committed to free markets than been harmonized at the EC level.3 An essential were their predecessors had come into power in element of such recognition is agreement not to the United Kingdom (in 1979) and in Germany (in 1982). 2. Commission of the European Communities, Completing the Internal Market: White Paper from the Commission to the European Council (Luxembourg: Office for Official Publications of the European Communities, 1985). 1. The treaty that established the European Economic 3. The term mutual recognition was used in the Treaty of Community (EEC), which is one of three European Commu- Rome only with regard to professional qualifications. Specifnities established under three separate treaties, is generally ically, the treaty called for the Council to issue directives for known as the Treaty of Rome. The European Coal and Steel "the mutual recognition of diplomas, certificates and other Community was established by a 1951 Paris treaty, and the evidence of formal qualifications." See Treaty Establishing European Atomic Energy Community was established by the European Economic Community as Amended by the another Rome treaty in 1957. The term European Community Single European Act (hereafter Treaty of Rome), art. 57. is commonly used to refer to all three European Communi- Treaties Establishing the European Communities, abridged ties; the EC institutions are common to all three Communi- ed. (Luxembourg: Office for Official Publications of the ties. European Communities, 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 593 invoke differences in national rules to restrict the plied equally to domestic and imported prodaccess of goods and services. ucts, a member state may create a barrier to the import of a product only when such a barrier is Cassis de Dijon necessary to satisfy "mandatory requirements" such as the prevention of tax evasion, the A 1979 decision by the European Court of Justice protection of public health, the ensuring of interpreting the Treaty of Rome provided, at fairness in commercial transactions, and the least with regard to products, the legal basis for protection of consumers. Moreover, any such the Commission's approach of mutual recogni- rule must be an "essential guarantee" of the tion. At issue was an article of the treaty that interest that is allowed to be protected. Without prohibits in trade between member countries not such a justification, a member state may not only quantitative restrictions on imports but also apply its own national rules to imported prod- "all measures having equivalent effect." In Cas- ucts that are lawfully produced and sold in sis de Dijon, the Court found that Germany could other member states. not prohibit the import of a liqueur that was In other words, although the Court did not use the lawfully produced and sold in France solely term, member states, by accepting each other's laws because its alcohol content, which was clearly regarding the production and sale of a product, are labeled, was too low for it to be deemed a liqueur to be governed by the principle of mutual recogniunder German law.4 The Court said that, even tion. In subsequent judgments overturning British though German national rules would have ap- standards for milk, German standards for beer, French standards for milk, and Italian standards for pasta, the Court has continued to apply the test set 4. Rewe-Zentral AG v. Bundesmonopolverwaltung fur forth in Cassis de Dijon. With these decisions, as Branntwein (Cassis de Dijon), Case 120/78, 1979 Eur. Ct. Rpts. 649, 1979 Common Mkt. L. Rpts. 494. well as with rulings in other areas, the Court has Institutions of the European Community The Commission is the executive branch of the sists of the heads of state or government and meets European Community and has responsibility for semiannually. proposing legislation and for ensuring implemen- The European Parliament, which is elected directly tation of EC law by the member states. Commis- by the citizens of the member states, has an extremely sioners are appointed by agreement among the limited legislative function. It does, however, have the governments of the member states for four-year final approval over the EC budget and over applicaterms. tions for membership in the Community and, with The Council of Ministers, which consists of rep- regard to other matters, a consultative role in Council resentatives of the governments of the member decisions. states, is the decisionmaking body and enacts leg- The European Court of Justice consists of thirteen islation proposed by the Commission. The presi- judges appointed by agreement among the governdency of the Council rotates among member states ments of the member states for six-year terms. In every six months. Participants at Council meetings general, the Court has original jurisdiction in cases in change on the basis of the subject being considered. which the Commission or another Community institu- For example, if banking legislation is being consid- tion is a party. Other actions are brought in national ered, the Council participants are the economic and courts but are referred to the European Court of finance ministers. The "European Council" con- Justice for preliminary rulings on matters of EC law; such rulings are binding on the national courts. (An EC Court of First Instance was created in 1988 to hear actions brought against Community institutions by EC NOTE. See generally Emile Noel, Working Together— The Institutions of the European Communities (Luxem- staff or by private parties in certain technical areas; the bourg: Office for Official Publications of the European European Court of Justice has appellate jurisdiction in Communities, 1988). such cases.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

594 Federal Reserve Bulletin • September 1989 Forms of EC legislation EC legislation can be in the form of regulations or fore, to complete the internal market by the end of of directives. A regulation is binding in its entirety 1992, directives would need to be enacted by the and is directly applicable throughout the Commu- Community by the end of 1990. nity without any implementing legislation by the If a member state does not conform its laws in member states. By contrast, a directive is ad- accordance with an EC directive, not only the dressed to the member states, which are obligated EC Commission but also in many cases an indito ensure that the result set forth in the directive is vidual or a company may take legal action achieved but have discretion as to the details of against the member state. An individual or a implementation. company may invoke rights under EC law in Most of the EC internal market legislation is in national courts under the principle of "direct the form of directives. Each directive specifies a effects," which was developed by the European date by which member states must conform their Court of Justice and has become an important national laws to the provisions of the directive; mechanism for ensuring implementation of EC typically the states have two years to do so. There- legislation. continued to play an important role in implementing To this end, the Single European Act replaced the internal market program. unanimous voting with "qualified majority voting" for the Council's adoption of most harmo- The Single European Act nization measures necessary to achieve the internal market. Under qualified majority voting, the Both the white paper's goal of implementing the number of votes that each member state exerinternal market by the end of 1992 and the principle cises in the Council is weighted roughly accordof mutual recognition were included in provisions of ing to its population. Fifty-four votes (out of a the Single European Act, a 1986 agreement among total of seventy-six) are required to adopt legisthe EC member states that amended the Treaty of lation. Fiscal measures, such as the harmoniza- Rome.5 Although the act, like Cassis de Dijon, does tion of taxes, however, still require unanimous not use the term mutual recognition, it provides that approval of the Council. the Council "may decide that the provisions in force Other institutional provisions of the Single in a Member State must be recognized as being European Act were designed to strengthen the equivalent to those applied by another Member role of the European Parliament in EC decision- State."6 making; however, the Parliament's role remains A major purpose of the Single European Act, primarily consultative rather than legislative. which became effective in July 1987, was to make Under the new "cooperation procedure," which EC decisionmaking more efficient and thereby to applies to most measures involving harmonizafacilitate the completion of the internal market. tion, the Commission and the Council must take into account amendments that the Parliament proposes. However, the Commission retains considerable power because a parliamentary 5. The member states of the European Community are Belgium, Denmark, France, Germany, Greece, Ireland, amendment that the Commission does not sup- Italy, Luxembourg, the Netherlands, Portugal, Spain, and port requires the Council's unanimous approval. the United Kingdom. If the Parliament rejects a measure in its en- 6. This authority is granted in the context of a provision requiring the Commission, together with each member state, tirety, the Council may enact it only by unanito draw up during 1992 an inventory of national laws, mous vote (see the box "The 'cooperation proregulations, and administrative provisions within the scope of cedure' "). the internal market program that have not been harmonized. See Treaty of Rome, art. 100b, added by article 19 of the In other areas, the Single European Act set forth Single European Act. See generally Jean De Ruyt, L'Acte goals that the Treaty of Rome either had stated Unique Europien: Commentaire (Brussels: University of Brussels, Institute of European Studies, 1987). much more generally or had not included. In the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 595 monetary area, the act encouraged further cooper- and acquisitions and of a Community trademark and ation among the member states to ensure the con- patent system, and development of a uniform policy vergence of economic and monetary policies and on government subsidies. made it clear that such cooperation might require 3. Removal of fiscal barriers, such as differinstitutional changes. The act also committed the ences in value-added tax rates. member states to encouraging improvements in so- The progress toward completion of the internal cial policy with regard to the health and safety of market has been impressive, particularly because workers, to strengthening the "economic and social what has already been achieved was only a few cohesion" of the Community (that is, reducing re- years ago generally viewed as unachievable. As gional disparities), to promoting research and tech- of mid-July 1989, the Commission had submitted nological development, and to preserving the envi- to the Council more than four-fifths of the 279 ronment. pieces of legislation identified in the white paper. The Council had acted on about half of the white The Legislative Program for Completing paper measures: It had taken final action on 130 the Internal Market pieces of legislation (5 more await enactment), and it had adopted a common position on another In its 1985 white paper, the Commission classi- 5 proposals. However, some of the remaining fied into three groups the measures that would be proposals—for example, harmonization of indinecessary to complete the internal market: rect taxes and removal of border controls—are 1. Removal of physical barriers, such as customs particularly complicated or controversial. checks at frontiers for goods and for individuals. 2. Removal of technical barriers, such as differences in essential national health and safety stan- CREATION OF A "EUROPEAN dards for individual products. Other goals include FINANCIAL AREA '' open access for bidding on public contracts, removal of restrictions on capital movements, re- An important part of the EC program to complete moval of restrictions and harmonization of essential the internal market is the creation of a "European standards for the provision of financial services, Financial Area," which involves eliminating restricrecognition of educational and professional qualifi- tions on the movement of capital among the member cations, abolishment of cartels in transportation, states and establishing a framework for a Commuestablishment of a Community policy for mergers nitywide market for financial services. The "cooperation procedure" The cooperation procedure, which is used only for position, the Council may adopt the proposal only by a measures that may be adopted by a qualified ma- unanimous vote. jority of the Council, involves two readings of the If the Parliament proposes amendments, within legislation by the European Parliament. When the one month the Commission must reexamine the EC Commission submits a proposal to the Council, proposal and submit to the Council a revised the proposal is also sent to the Parliament for a first proposal that either incorporates the Parliament's reading. After obtaining Parliament's opinion and amendments or justifies their omission. The Counreceiving any revisions proposed by the Commis- cil may adopt the Commission's revised proposal sion, the Council adopts a "common position." by a qualified majority. Unanimity is required for The Council must then submit its common position the Council to adopt Parliamentary amendments to Parliament for a second reading. that were not accepted by the Commission or If the Parliament accepts the proposal (or fails to act otherwise to amend the Commission's revised within three months), the Council must adopt the proposal. If the Council does not adopt the remeasure in accordance with its common position. vised proposal within three months, the proposal If the Parliament rejects the Council's common is deemed not to have been adopted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

596 Federal Reserve Bulletin • September 1989 Removal of Restrictions on Capital as capital is free to move in some way in re- Movements sponse to market forces, the opening of an additional channel for such movement would, by Without the free movement of capital, the inte- itself, be unlikely to precipitate a major outflow. gration of securities markets and the cross- Nevertheless, some countries, particularly border provision of financial services would be France and Italy, are concerned that the removal impossible. At present, four countries—the of their remaining exchange controls will create a United Kingdom, Germany, the Netherlands, serious potential for tax evasion because of exand Denmark—have fully liberalized capital isting differences in taxes on interest and divimovements vis-a-vis both other member states dend payments within the Community. In early and third countries (that is, countries outside the 1989, the Commission submitted proposals that Community). Four other countries—Belgium, would require member states to impose a mini- Luxembourg, France, and Italy—are already mum withholding tax of 15 percent on interest close to doing so. income paid to any EC resident on domestically Under a directive adopted in June 1988, eight issued bonds and bank deposits. However, the EC member states must eliminate any remaining proposal appears to have been dropped as it capital controls by July 1, 1990. (Spain and became clear that the unanimity required for Ireland have extensions until 1992; extensions Council action could not be achieved. until 1995 are possible for Portugal and Greece.) Beyond financial integration, the liberalization This directive was the final step in a lengthy of capital movements, together with other asprocess of liberalization that began in the early pects of the internal market program, raises the 1960s, was set back by restrictions imposed by issue of exchange rate relationships among the member states during the economic difficulties of member states. Within the Community there is the 1970s, and was reactivated in the early 1980s considerable debate as to whether the closer by a major Commission initiative. With regard to coordination of monetary policy and the third countries, the 1988 directive states that the strengthening of the European Monetary System EC countries "shall endeavor to attain the same will ensure sufficient stability of exchange rates degree of liberalization" of capital movements or whether establishing an economic and monethat applies within the Community to capital tary union will be necessary. In the context of the movements to and from non-EC countries. European Community, "economic union" refers In response to concerns of some member not only to the integration of markets but also to states, the Community included safeguards in the some form of coordinated or perhaps centralized plan for the removal of remaining capital con- decisionmaking regarding macroeconomic policy trols. One involves creation of a new medium- objectives. A true monetary union would require term loan facility for member states experiencing irrevocably fixed exchange rates, which could difficulties with their balance of payments. An- take the form of a common currency, and some other consists of a clause permitting a member mechanism for conducting a common monetary state to reimpose controls in the event of a policy, perhaps a European central bank. serious exchange crisis. Under this provision, a At their June 1989 summit meeting in Madrid, member state could reimpose controls, subject to the heads of the EC member states restated their subsequent approval by the Commission, for a determination "to progressively achieve Ecomaximum of six months. Because the Commu- nomic and Monetary Union." They agreed to nity is already close to achieving the free move- begin, as of July 1990, the first of three stages ment of capital, the concern about safeguards recommended in the report of the Delors comdoes not appear to stem from a belief that the mittee, which had been established at the Hanlifting of the remaining controls would trigger a over summit meeting a year earlier, and to carry crisis. Rather, it appears to stem from a concern out preparatory work regarding subsequent that a commitment not to impose restrictions on stages. However, the details of the plan and the capital movements could hamper response to a timetable remain unresolved. In any event, crisis generated by an exogenous shock. So long though economic and monetary union may be a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 597 longer-run consequence of completing the inter- home country permits a listed activity, the bank nal market, the achievement of such union is not may conduct that activity anywhere in the Compart of the internal market program. munity, regardless of host-country law. The European Community plans to implement Financial Services and Markets the Second Banking Directive no later than January 1, 1993, simultaneously with measures to The EC plan to complete the internal market in- harmonize bank capital standards similar to the cludes a comprehensive program for the financial framework developed by the Basle Committee sector. The program is designed to provide sufficient on Banking Regulations and Supervisory harmonization of essential rules to permit mutual Practices.9 These measures consist of the "own recognition of the equivalence and validity of na- funds" directive, which defines capital, and the tional rules and practices that have not been harmo- solvency-ratio directive, which specifies risknized and to permit the acceptance of home-country adjusted capital ratios. Additional harmonizing control. This section offers an overview of the EC measures—including limitations on bank ownerprogram for financial services and markets, includ- ship of nonfinancial institutions, initial capital ing the EC reciprocity proposals. requirements, and provisions relating to the identity, extent of holdings, and suitability of major Banking. The Second Banking Directive, on shareholders—are contained in the Second which the Council adopted a "common position" Banking Directive. Other measures, such as conin July 1989, is viewed as the centerpiece of EC solidated supervision and common accounting banking legislation because it is a comprehensive standards, are already in place. Measures relatproposal dealing with the powers and the geo- ing to deposit insurance and to the reporting of graphic expansion of banks within the Commu- large exposures are in the form of Commission nity. Under this directive, a credit institution recommendations (which are not binding), with could provide services throughout the Commu- legislation to be proposed in the future. nity—either through branches or across borders—under home-country control without ob- Investment Services. The EC program for the taining an authorization from the host country.7 securities sector encompasses two areas: first, rules The directive also sets forth a list of permissible applicable to firms offering investment services to activities for a credit institution (defined as an their customers; and second, rules applicable to the institution that receives deposits or other payable markets on which securities are traded. In general, funds from the public and grants credits for its the latter area involves more traditional objectives own account) that is based on a universal banking model and includes all forms of securities activities but not insurance activities.8 If a bank's means of payment (for example, credit cards, travelers checks, and bankers drafts); (6) issuing guarantees and commitments; (7) trading for own account or for account of customers in (a) money market instruments (checks, bills, 7. The term cross-border services refers to the provision of certificates of deposit, and so forth), (b) foreign exchange, services by a credit institution located in one member state to (c) financial futures and options, (d) exchange and interest consumers of these services in another member state without rate instruments, and (e) securities; (8) participating in the establishment of a branch in the host state. Within the share issues and providing services related to such issues; European Community, before the recent series of measures (9) providing management consulting services and advice to remove remaining exchange controls, such controls were a with respect to investments, mergers, and acquisitions; major barrier to the provision of banking services across (10) money brokering; (11) providing portfolio management borders. At present, some host-country restrictions on prod- and advice; (12) safekeeping and administration of securiucts or instruments, as well as national rules prohibiting the ties; (13) providing credit reference services; and (14) providing solicitation of business by foreign entities, also have the safe custody services. effect of limiting the provision of banking services across 9. The committee comprises the bank supervisory authorborders. ities from twelve major industrial countries: Belgium, Can- 8. The listed activities are as follows: (1) accepting deposits ada, France, Germany, Italy, Japan, Luxembourg, the Nethor other payable funds from the public; (2) lending, including erlands, Sweden, Switzerland, the United Kingdom, and the consumer credit, mortgage lending, factoring, and financing United States. The Basle guidelines provide for partial imof commercial transactions; (3) financiall easing; (4) providing plementation of minimum risk-adjusted capital ratios by money transmission services; (5) issuing and administering year-end 1990 and full implementation by year-end 1992. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

598 Federal Reserve Bulletin • September 1989 of investor protection and efficient market function- defined as a firm that engages in any of the activities ing whereas the former also involves systemic risks listed in the directive. These activities include brocomparable to those in banking.10 kering, dealing as principal, underwriting, market The area of investment services presents more making, providing portfolio management services difficulties for the Community than that of bank- and investment advice, and providing safekeeping ing because the process of international harmo- services (other than in conjunction with managenization in investment services is much less ment of a clearing system) with respect to any of the advanced and no equivalent of the Basle Accord instruments specified by the directive. The instruon bank capital standards exists for securities ments specified are transferable securities (including firms. Also, the regulatory structures for invest- unit trusts), money market instruments (including ment services vary much more among the mem- certificates of deposit and Eurocommercial paper), ber countries than do those for banking services, financial futures and options, and exchange rate and and there is no committee of regulators from interest rate instruments. different countries comparable to the Basle Com- Investment firms that engage in these activities mittee on Banking Regulations and Supervisory include firms that are also credit institutions that Practices. Moreover, in investment services, would be governed by the Second Banking Dieven more than in banking, the European Com- rective. The proposed Investment Services Dimunity confronts the problem of trying to harmo- rective takes account of this overlap by specifynize essential elements of national regulatory ing that only certain articles of the directive frameworks while those structures are them- would apply to investment firms that are also selves changing in response to globalization and credit institutions. innovation in the financial sector.11 The Commission is still trying to develop a In December 1988, the Commission proposed the directive on market risk for securities firms that Investment Services Directive, which is the coun- would be the equivalent of the directives on terpart of the Second Banking Directive. Under this capital adequacy for banking institutions. The directive, investment firms, like credit institutions, Commission hopes that such a directive will would be able to provide services across borders come into force simultaneously with the proand establish branches throughout the Community posed Investment Services Directive. The marwithout obtaining authorization from the host coun- ket risk directive is also likely to set forth retry. To ensure that investment firms are able to quirements for the securities activities of banks compete effectively in the host country, the direc- that would supplement the capital-adequacy retive also provides for the liberalization of rules quirements already in place. governing access to stock exchanges and to financial futures and options exchanges. Securities Markets. The EC program with regard In contrast to the Second Banking Directive, the to securities markets has been under way since the proposed Investment Services Directive adopts a early 1980s, and a number of directives have already functional rather than an institutional approach to been enacted. These directives are designed to defining an investment firm. Whereas a credit insti- break down barriers between national stock extution is defined separately from the activities in changes by increasing transparency and ensuring which it is allowed to engage, an investment firm is access for issuers to securities markets throughout the Community. One group of measures deals with listed securities and includes a 1987 directive providing for mutual recognition of the "listing partic- 10. See generally Organisation for Economic Co-operation and Development, "Arrangements for the Regulation and ulars" (that is, disclosure documents) of the com- Supervision of Securities Markets in OECD Countries," pany's home country. A directive dealing with Financial Market Trends, vol. 41 (Paris: OECD, November unlisted securities other than Eurosecurities, en- 1988), pp. 17-38. 11. For a discussion of regulatory approaches to financial acted in April 1989, provides for mutual recognition services, see Tommaso Padoa-Schioppa, "The Blurring of of prospectuses among the member states. Both Financial Frontiers: In Search of an Order" (paper presented directives provide that the Community may enter at Commission of the European Communities Conference on Financial Conglomerates, Brussels, March 14-15, 1988). into negotiations with third countries to achieve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 599 mutual recognition of home-country disclosure re- appears to be politically necessary for the Commuquirements that extends beyond the borders of the nity to proceed more slowly toward the harmoniza- Community. tion that is necessary to permit mutual recognition The EC program for securities markets in- and home-country control. Accordingly, the direccludes a directive regarding insider trading, on tives for insurance that were proposed or adopted in which the Council of Economic and Finance 1988 are much less far-reaching than those for Ministers adopted a common position in June banking and investment services. 1989. The Commission has also issued a recom- In contrast to the banking and investment mendation that relates to a European code of services directives, both the Second Nonlife Inconduct for securities transactions. Although the surance Directive (enacted in 1988) and the pro- 1985 white paper discussed creating an electron- posed Second Life Insurance Directive deal only ically linked, Communitywide trading system for with the cross-border provision of services and securities of international interest, no specific do not provide for Communitywide branching of proposals have been put forward. insurance companies under home-country con- An EC directive on cross-border sales of a trol. Unlike branches of EC banks and investparticular securities product—open-ended unit ment firms, branches of EC insurance companies trusts or "undertakings for collective investment will continue to be authorized and regulated by in transferable securities" (UCITS)—will become the host state in accordance with provisions of effective in October 1989. At that time, UCITS EC directives, although the home state has re- (which are similar but not identical in legal form to sponsibility for ensuring that the company meets mutual funds) that meet the minimum standards set overall solvency standards. forth in the directive may be sold throughout the Moreover, again in contrast to the directives Community under home-country control. However, on banking and investment services, the insurindividual member states may continue to impose ance directives adopted or proposed during 1988 their own rules with regard to marketing and adver- distinguish among customers on the basis of the tising, provided that such rules are applied on the degree of protection that is deemed to be rebasis of national treatment and can be justified by quired. The nonlife insurance directive provides the "public interest." To date, no proposals regard- liberalization only for wholesale customers; speing harmonization of tax treatment of unit trusts cifically, the cross-border provision of services within the Community have been put forward. As a under home-country control is permitted only for result, upon implementation of the directive, unit "large risks," defined primarily in terms of sales, trusts marketed by entities located in Luxembourg, assets, and the number of employees. Similarly, which will continue to benefit from tax treatment the proposed life insurance directive provides more liberal than that in other member states, may liberalization only for individuals who take the be be sold throughout the Community. initiative in seeking life insurance from a company in another state. Insurance. In contrast to the banking and securities sectors, the insurance industry in the European Reciprocity. The Second Banking Directive Community, other than in the United Kingdom, has and the proposed Investment Services Directive been relatively protected from outside competition contain reciprocity clauses, as does the proposed and has not been part of any globalization process. Second Life Insurance Directive. (The Second (Reinsurance, which has traditionally been an inter- Nonlife Insurance Directive, which was enacted national business, is the exception.) In general, the earlier, does not contain a reciprocity clause, but member states have imposed a multitude of restric- the Community reportedly plans to amend the tions on insurance services provided through directive to include one.) Under the EC reciprocbranches or agencies and on services provided ity provisions, a non-EC financial firm would not across borders. Because existing barriers to the be permitted to establish or acquire a subsidiary creation of a Communitywide regulatory framework in any member state unless the firm's home are much greater for insurance than they are for the country granted reciprocal treatment to similar rest of the financial sector, in the insurance sector it financial institutions from all member states. The Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

600 Federal Reserve Bulletin • September 1989 meaning of the reciprocity clauses and the cir- petitive opportunities as are available to domestic cumstances under which they might be applied credit institutions and that the conditions of effective have been the subject of considerable discussion market access are not fulfilled," the Commission both within the Community and abroad.12 may initiate negotiations with the third country to The reciprocity clauses apply only to entry to achieve such treatment. The Commission may also the EC market through the subsidiary form of require a host member state to "limit or suspend" organization. Direct branches of non-EC finan- decisions on applications by banks from the third cial institutions would not be subject to EC country for up to three months. The Commission reciprocity requirements. Such branches would may take the latter action only in accordance with a not benefit from the provisions of the directives complicated "comitology" procedure that provides permitting Communitywide expansion and would a role for the Banking Advisory Committee and for continue to be authorized and regulated sepa- the Council, with veto power granted to a simple rately by each host state. Existing subsidiaries of majority of the Council.13 An extension of the threenon-EC financial institutions would, in general, month period would require a qualified majority be grandfathered and would be treated like any vote of the Council. other financial institution in the member state in The second set of criteria involves treatment which they were chartered. comparable to that offered by the European The reciprocity provision in the Second Bank- Community. If the Commission finds that a third ing Directive is expected to serve as the model country does not grant EC banking institutions for the reciprocity provisions in the other finan- "effective market access comparable to that cial services directives. Under this provision, granted by the Community to credit institutions before the effective date of the directive and from that third country," it may submit proposperiodically thereafter, the Commission would als to the Council for an appropriate mandate to make a determination—analogous to the studies negotiate such access. The Council would act on on national treatment in the banking and securi- such proposals by a qualified majority. The Comties sectors conducted by the U.S. government— mission is not granted any authority to limit entry regarding the treatment of EC banks by third on the basis of this standard. countries. The reciprocity provision distin- The reciprocity provision in the Second Bankguishes between two sets of criteria under which ing Directive is generally viewed as an improvethe Commission could take action on the basis of ment over earlier versions because it no longer such studies or "on the basis of other informa- contains an automatic review procedure, it intion:" one that could be used to limit or bar entry cludes a grandfathering provision, and no sancto the EC market or to begin negotiations with tions appear to be contemplated against counthe threat of such action and another that could tries that provide EC banks with national be used as a goal in negotiations without any treatment. U.S. officials have, however, consisthreat of retaliatory action. tently expressed their concern about the unfor- The first set of criteria is being widely interpreted tunate precedent being set by the introduction of as reciprocal national treatment, although the concept of effective market access is also included. The EC Commission has stated that the standard will be "genuine national treatment," that is, de facto as 13. Under the comitology procedure used in this situation, well as de jure national treatment. If it determines the Commission must submit its proposed action to the Banking Advisory Committee, which consists of representathat EC credit institutions in a third country "do not tives of the central banks and finance ministries of the receive national treatment offering the same com- member states. If a qualified majority of the committee approves the Commission's proposed action, the Commission may proceed. If such approval is not obtained, the Commission must submit its proposal to the Council, which 12. For an analysis of the different concepts of reciprocity may either approve the measure by a qualified majority vote and their relation to the approach of mutual recognition being or amend the proposal by a unanimous vote. If the Council used as the basis for integration within the Community, see does not act within three months, the Commission may Sydney J. Key, "Financial Integration in the European proceed—but only if a simple majority of the Council does Community," section III.B.. not oppose the measure. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 601 any kind of reciprocity provision—even recipro- of Justice have been necessary to give practical cal national treatment—for financial services.14 effect to these rights. Nondiscrimination by an EC member state amounts to offering national treatment to individuals THE CONCEPT OF MUTUAL RECOGNITION and firms from other member states. Under a policy of national treatment, foreign firms have the same The goal of the internal market program for the opportunities for establishment and the same powfinancial sector is to create a single, unified ers with respect to their host-country operations market by removing barriers to the provision of that their domestic counterparts have; similarly, services across borders, to the establishment of foreign firms operating in a host country are subject branches or subsidiaries of EC financial institu- to the same obligations as their domestic countertions throughout the Community, and to transac- parts. The OECD's National Treatment Instrument tions in securities on Community stock ex- defines national treatment as treatment under hostchanges. In determining the best method of country "laws, regulations, and administrative pracachieving these goals, the Community must de- tices ... no less favorable than that accorded in like cide what principles should be used to establish a situations to domestic enterprises." The expression regulatory, supervisory, and tax structure that "no less favorable" appears to allow for the possiwould both facilitate the integration of Commu- bility that exact national treatment cannot always be nity financial markets and satisfy the public pol- achieved and that any adjustments should be reicy interests of the member states with regard to solved in favor of the foreign firm; the wording is not safety and soundness, monetary policy, market meant to endorse an overall policy of "better than stability, and consumer and investor protection. national treatment." The principal purpose of a The starting point for the Community was the policy of national treatment is to promote competiprinciple of nondiscrimination, a term that in this tive equality between domestic and foreign banking context refers to the prohibition of discrimination institutions by allowing them to compete on a "level between domestic and foreign residents based on playing field" within the host country. nationality. (By contrast, in the context of trade If the European Community had adopted naand capital movements, nondiscrimination usu- tional treatment as an approach to financial inteally refers to the prohibition of discrimination gration, the result would have been a level playamong foreign residents of different nationalities; ing field for foreign and domestic institutions the concept is similar to that of a most-favored- within each national market. But, even though nation clause, that is, benefits of any liberaliza- each country's rules would have been applied on tion must be extended to all foreign countries on a nondiscriminatory basis, twelve separate mara nondiscriminatory basis.) Although the right of kets with different rules in each would still have establishment and the right to provide services in existed. Moreover, although national treatment other member states without being subject to any removes barriers to the provision of services by restrictions based on nationality were set forth in ensuring fair treatment for entry and operation the Treaty of Rome, legislative action by the within a country, it does not by itself address two Community and decisions of the European Court important issues: the extent to which multinational cooperation or agreement is necessary to regulate and supervise financial activities conducted internationally and the de facto barriers 14. See, for example, Manuel Johnson, Vice Chairman, created by the lack of multinational harmoniza- Board of Governors of the Federal Reserve System, "Altering Incentives in an Evolving Depository System: Safe Bank- tion of regulatory structures. The Community's ing for the 1990s" (remarks before the Conference on Bank program attempts to deal with these issues. Structure and Competition, Federal Reserve Bank of Chi- One approach, which, as noted previously, the cago, Chicago, Illinois, May 4, 1989); and M. Peter McPherson, Deputy Secretary of the Treasury, "Global Competition Community originally used with regard to prodin Financial Services: A View from Washington" (speech ucts, is to require member states to modify their before the Fifth Annual San Francisco Institute of the Nadiffering national laws and regulations in order to tional Center on Financial Services, University of California, Berkeley, March 2, 1989). implement comprehensive, uniform standards Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

602 Federal Reserve Bulletin • September 1989 established by the Community. This approach of harmonized at the EC level are to be accorded complete harmonization was abandoned as in- mutual recognition, home-country rules and suvolving too much detailed legislation at the Com- pervisory practices must be accepted as controlmunity level and as totally impractical to achieve ling the operations of branches and the crosswithin any reasonable period. border provision of services by financial The Community's solution was to adopt the ap- institutions. However, the principle of homeproach of mutual recognition. This approach re- country control adopted by the Community is not quires each country to recognize the laws, regula- absolute. In accordance with judgments of the tions, and administrative practices of other member European Court of Justice and with EC direcstates as equivalent to its own and thereby precludes tives, the host country retains the right to reguthe use of differences in national rules to restrict late branches or the cross-border provision of access. The concept of mutual recognition goes well services to the extent that doing so is necessary beyond that of national treatment. Under a policy of to protect the public interest. mutual recognition, some member states in effect In practice, the division of responsibility beagree to offer treatment that is more favorable than tween home- and host-country regulators may be national treatment to firms from other member rather complicated. In general, the EC directives states. that have been proposed or adopted in the area of Mutual recognition cannot simply be decreed financial services provide for home-country conamong a group of countries with widely divergent trol for initial authorization and for ongoing prulegal systems, statutory provisions, and regula- dential supervision. However, various aspects of tory and supervisory practices. Mutual recogni- the day-to-day conduct of business could be tion of rules that differ as to what a country subject to host-country control on a national regards as essential elements and characteristics treatment basis under, for example, consumer would be politically unacceptable. As a result, a protection laws that are necessary to protect the crucial prerequisite for mutual recognition is the public interest but have not been harmonized by harmonization of essential rules. If member the Community. In some directives, such hoststates consider certain rules essential but cannot country control is strictly limited or is prohibited reach agreement on initial harmonization, they either because the extent of harmonization of may agree explicitly to exclude such rules from investor protection rules at the EC level is conmutual recognition and home-country control sidered sufficient (as in the cases of securities until agreement can be reached. prospectuses and unit trusts) or because the In the financial sector, the process of harmo- wholesale customers covered by the directive are nization involves identifying the rules that are deemed not to require host-country protection essential for ensuring the safety and soundness of (as in the case of cross-border nonlife insurance financial institutions and the rules that are essen- services). As a result, under the EC directives on tial for the protection of depositors, other con- securities markets, a company headquartered in sumers of financial services, and investors. It Greece and listed on the Greek stock exchange also involves determining how detailed the har- could, for example, be listed on the London monization of these rules must be. For example, stock exchange under Greek rules that satisfied one question is whether specifying that the major the EC minimum standards but provided proshareholders of a financial institution must be spective British investors with less information determined to be "suitable" by home-country than that required of a U.K. firm. authorities is sufficient or whether more specific The European Court of Justice has already criteria are needed. played a major role in establishing a public interest test for host-country regulation and in Home-Country Control determining whether that criterion has been met, and it will undoubtedly continue to do so. In the A corollary of mutual recognition is home- case of banking, the public interest of the host country control. If national laws, regulations, state appears to be particularly strong because of and supervisory practices that have not been the role of banks in the credit, monetary, and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 603 payments systems and because banks are within drawn a line between services provided through the so-called safety net of deposit insurance and subsidiaries and those provided through branches or of lending of last resort by the monetary author- across borders. ities. Rather than relying on the overall public Under the EC program for financial integrainterest exception to home-country control, the tion, subsidiaries of financial firms headquartered Second Banking Directive includes explicit ex- in other member states will continue to be govceptions for rules relating to the conduct of erned by the principle of national treatment. (The host-country monetary policy. In line with the right of a bank from one member state either to Revised Basle Concordat, an exception to the establish or to acquire a bank in another member principle of home-country control is also pro- state is, at least in theory, guaranteed by the vided for the supervision of liquidity. In practice, Treaty of Rome.) As a result, such subsidiaries of course, questions are likely to arise as to are treated in the same manner as other incorpowhether particular restrictions are truly neces- rated entities in the host state. For example, a sary for purposes of monetary policy and German banking subsidiary of a U.K. bank could whether particular regulations are addressed branch throughout the Community under Gertoward liquidity or solvency. man rules with respect to permissible activities. The EC approach to the provision of services Provision of Services through Subsidiaries, through branches and across borders is quite through Branches, and across Borders different. Mutual recognition and home-country control are made possible through the harmoni- Analyses of issues relating to international trade in zation of essential rules applicable to the parent financial services usually draw a distinction between banking or investment firm. Such harmonization providing services through the establishment of sub- includes, for example, general criteria for homesidiaries and branches and providing them directly country authorization and supervision; the estabacross borders. In general, more attention has been lishment of minimum capital requirements for devoted to issues of establishment, whereas the banks and investment firms; and, for banks, cross-border provision of services has been viewed agreement on a list of activities considered intewithin the context of removing exchange controls. gral to banking. Recently, however, particularly within the Organi- Under a regime of mutual recognition and sation for Economic Co-operation and Develop- home-country control, the powers of, for examment, where much of the multinational work on ple, a Greek branch of a U.K. bank would be trade in financial services has taken place, increased determined by U.K. rules in accordance with the attention has been given to cross-border services list specified by the Community, not by Greek that are not within the scope of the liberalization of rules. Similarly, Greek branches of banks from capital movements—for example, portfolio manage- other EC countries would be governed by their ment and investment advice. respective home-country rules. As a result, a The conceptual grouping of services into those branch of a bank from another member state provided through the establishment of subsidiaries could receive treatment that is better than naand branches and those provided across borders is tional treatment from Greece. Alternatively, if not of critical importance when both are being the bank's home country had rules with respect discussed in the context of a policy of national to bank powers that were more restrictive than treatment. However, within the European Commu- those of Greece, the bank's Greek branch could nity, where the overall approach to intra-Commu- receive treatment that is worse than national nity trade in services is mutual recognition, the treatment in Greece. conceptual grouping does matter. In the insurance In theory, a Greek bank (or a bank from any sector, the EC directives retain the conventional EC country) could establish a subsidiary bank in line between services provided through branches London, and the London subsidiary could and subsidiaries and those provided across borders. branch into Greece under home-country (that is, In directives concerning banking and investment U.K.) control. The Greek branch of the London services, however, the EC Commission has in effect subsidiary of a Greek bank might thus have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

604 Federal Reserve Bulletin • September 1989 broader powers to conduct activities in Greece than are specifically permitted to engage in such acwould its parent bank. Some EC officials assert that tivities anywhere in the Community through a in practice this situation would not arise because the branch or through cross-border provision of serprior consultation among the supervisory authorities vices. As a result, although the Community has regarding the establishment of subsidiaries that is not required governments to give their banks the required by the Second Banking Directive would powers on the list, it has created a situation in prevent such byzantine organizational structures. In which regulatory convergence toward the EC list any event, the potential for such structures could of activities as a result of market forces seems lead to increased pressure for regulatory conver- almost inevitable.15 Other areas, particularly if gence. the model for convergence has not been specified in advance, could be more complicated. Regulatory Convergence An example of the absence of agreement on a goal for regulatory convergence, namely, that The EC approach of mutual recognition could credit institutions should be permitted to become result, at least in the short run, in competitive members of stock exchanges, may explain a inequalities and fragmentation of markets. With notable exception to the principle of mutual regard to financial services, however, the Com- recognition in the EC proposals for the financial munity assumes that over the longer run market sector. Under the Commission's proposals, in forces will create pressure on governments that accordance with the principle of mutual recogniwill lead to a convergence of additional national tion, a host state must ensure that a branch of an rules and practices that have not been harmo- investment firm that is a stock exchange member nized at the EC level. Pressures for regulatory in its home state is permitted to become a memconvergence within the Community would arise ber of the host country's stock exchange. By both from the absence of restrictions on capi- contrast, a branch of a credit institution, even if tal movements and from the regulatory advan- the credit institution is a member of a stock tages enjoyed by branches of banks and of in- exchange in its home country, is governed by a vestment firms from other member states and policy of national treatment. As a result, if a host also by the head offices of such banks and member state does not allow its own credit investment firms in providing services across institutions to be members of its stock exchange, borders. it is not obligated to admit a branch of a credit In the financial sector, the Community is using institution chartered in another member state. the principle of mutual recognition as a pragmatic Such a credit institution could gain access to the tool that, together with market forces, is ex- host-country exchange only through a subsidiary pected to result in a more unified, less restrictive investment firm or through a branch of such a regulatory structure. The process is interactive: firm. Mutual recognition requires initial harmoniza- Competitive pressures associated with crosstion, and additional harmonization results from border provision of services, together with the mutual recognition. In adopting the approach of absence of restrictions on capital movements, mutual recognition in the financial area, the Com- might over time also contribute to some convermunity is in effect using trade in financial ser- gence of regulations that remain exclusively unvices as a lever to arbitrage the regulatory poli- der host-country control. One likely area of cies of the member states. convergence is the elimination of any remaining Regulatory convergence is particularly likely interest rate ceilings, although the primary factor to occur with regard to bank powers because the in removal of such limitations may be the ongo- Community has reached a theoretical consensus on what activities are permissible for banks. In effect, the member states have agreed upon a 15. Some member states may continue to require certain goal for regulatory convergence. Banks permit- securities activities to be conducted in subsidiaries; but, in contrast to the situation within the United States, such ted by their home country to engage in any of the subsidiaries may be held by the bank itself and may be funded activities listed in the Second Banking Directive by the bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 605 ing process of deregulation in this area, including might consider a strictly regulated bank or secuthe development of alternative financial instru- rities firm of one member state to be preferable to ments. Another possible development is some institutions authorized and supervised by authormove toward convergence of the effective tax ities of another member state even though the imposed by reserve requirements, that is, the latter institutions might offer a price advantage. level of such requirements and the extent, if any, The financial sector may be particularly suited to which interest is paid on reserve balances. to the interactive process of mutual recognition However, other factors, such as differences in and harmonization of regulatory frameworks. corporate taxation among the member states, One reason is the existence, apart from the EC also affect the relative tax treatment of banks. program, of an ongoing internationalization of Besides leading to a regulatory convergence financial services and markets. This process has that would liberalize rules such as those relating already led to cooperation among the major to bank powers, market pressures could lead to industrial countries with regard to bank supervicompetition in laxity among supervisory author- sion and to agreement on basic harmonization of ities. Such competition could occur either with national standards with regard to bank capital. regard to standards that have not been harmo- Thus, market pressures for regulatory convernized or that have been harmonized only in gence in the banking sector exist well beyond the general terms or with regard to the enforcement borders of the Community. of agreed-upon standards. Moreover, market Another reason the financial sector may be parpressures could prevent governments from im- ticularly suited to an interactive process of basic posing or maintaining standards stricter than the harmonization and mutual recognition is that the minimums set forth in the directives, even rules apply primarily to the providers of financial though governments are usually permitted to do services; by contrast, in the product sector, stanso. The EC view is that no major problems will dards apply principally to the products themselves. arise with regard to competition in laxity because Partly because of the intangible nature of the service the scope of harmonization is sufficiently broad being provided, the financial sector can adapt and because the minimum standards that the quickly to changes in the regulatory or market Community has adopted are sufficiently high. environment. Technological developments can be Problems would also be less likely to arise the rapidly assimilated, and innovation in instruments greater the theoretical agreement among the or practices can occur with considerable speed. This member states as to the line between liberaliza- situation contrasts sharply with that of the product tion and laxity—that is, the distinction between area, in which long periods of research and develnational rules that have primarily the effect of opment may be necessary or even a simple change imposing barriers to trade in services and na- in standards can require a lengthy period of impletional rules that are necessary for prudential mentation. purposes or for consumer protection. For exam- As a result, in the financial sector the approach ple, a consensus exists within the Community of harmonizing some basic standards and letting that permitting all forms of securities activities to market forces produce additional harmonization be conducted in a bank or its subsidiary is a appears easier. If market forces do not produce positive, liberalizing measure. further harmonization and if the member states A different possibility is that the market may agree that such harmonization is necessary, it place a value on national standards that are more can probably be accomplished at a later stage stringent than those required by EC directives. without major dislocations. However, because of Whereas governments are obligated to accord the substantial public policy interests involving mutual recognition to differing national standards macroeconomic policy, safety and soundness, that have not been harmonized, private firms and and stability of markets that are inherent in the individuals are under no such obligation. Indeed, financial sector, in addition to consumer protecin a more competitive marketplace, firms and tion, a greater degree of harmonization than is individuals may have even greater scope to ex- necessary in the nonfinancial sector may be ercise their preferences. For example, customers required to make mutual recognition and home- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

606 Federal Reserve Bulletin • September 1989 country control acceptable to the member states. "imperative reasons relating to the public inter- In any event, after the implementation of the EC est" exist that may justify restrictions on the program for basic harmonization of the frame- freedom to provide services. The Court emphawork for financial services, remaining differences sized that such restrictions must apply equally in national rules that create significant barriers to foreign and domestic firms (that is, on a could be removed not only as a result of market national treatment basis) and that the restricpressures or additional harmonization but also as tions could not be justified if the public interest a result of actions brought before the European were already protected by the rules of the home Court of Justice. state or if less restrictive rules could achieve the same result. Judgments of the European Court In examining the extent to which the public interof Justice est justified restrictions on the cross-border provision of insurance services, the Court distinguished In 1986, the European Court of Justice addressed among types of customers on the basis of the degree in four insurance cases some of the issues relat- of protection deemed to be needed. For small poliing to the use of mutual recognition for financial cyholders, the Court determined that existing Comintegration within the Community. In its judg- munity legislation did not provide sufficient harmoments, the Court provided guidance as to the nization to justify a claim that the public interest was degree of harmonization of essential elements it already protected by the home state. Moreover, the considered necessary for mutual recognition and Court found that the requirements the host state home-country control in the insurance sector and imposed were not excessive. However, with regard established a test for determining the legality of to authorization and other requirements for the host-country restrictions on the cross-border coinsurance of large, commercial risks that were at provision of services. issue in two of the cases, the Court found that such The Court dealt with the issue of the extent to restrictions could not be justified because such which a member state may impose authoriza- policyholders did not require the same degree of tion and other requirements on an insurance protection as that required by the smaller policycompany that is based in another member state holders. and wishes to offer cross-border services.16 The The insurance decisions confirmed that the Court found that "the insurance sector is a principle of mutual recognition and the obligation particularly sensitive area from the point of of member states not to erect barriers that had view of the protection of the consumer both as been established in Cassis de Dijon extended to a policy-holder and as an insured person." As a services as well as to goods. The judgments also result, the Court said, in the field of insurance established the public interest test and a method for applying it to determine the legality of any barriers to the provision of services across bor- 16. Re Insurance Services: EC Commission v. Germany, ders. In directives on banking and investment Case 205/84, 1987 Common Mkt. L. Rpts. 69; Re Coinsurance Services: EC Commission v. France, Case 220/83, services, the EC Commission has in effect ex- 1987 Common Mkt. L. Rpts. 113; Re Co-insurance Services: tended the Court's public interest test to apply EC Commission v. Ireland, Case 206/84, 1987 Common Mkt. also to host-country restrictions on services pro- L. Rpts. 150; Re Insurance Services: EC Commission v. Denmark, Case 252/83,1987 Common Mkt. L. Rpts. 169. The vided through branches, and the directives refer cases also presented the issue of whether a host country specifically to the public interest criterion for could in effect ban the provision of cross-border services in host-country rules in both cases. This extension insurance by requiring a company to have a permanent establishment in the host state. The Court held that "the is a logical consequence of the conceptual grouprequirement of a permanent establishment is the very nega- ing of these two forms of provision of services tion of [the freedom to provide services]" and would require discussed above. The Court's decisions have justification as an "indispensable requirement," a justification the Court found not to exist in this case. EC Commission been generally interpreted to mean that a memv. Germany, 1987 Common Mkt. L. Rpts. at 107-08. Simi- ber state may continue to apply its own rules on larly, in the coinsurance cases, the Court also struck down a national treatment basis only if the rules can be requirements that the leading insurer have an establishment in the host state. justified by the public interest test and if Com- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 607 munity legislation has not already provided har- These institutional and political characteristics of monization of basic rules in the relevant areas. the European Community are extremely important in considering whether the approach the Commu- Supranational Structure of the Community nity is using for internal financial integration is applicable to removing barriers and achieving a In considering mutual recognition as the ap- more integrated regulatory structure for financial proach to financial integration within the Com- services and markets beyond the Community. A munity and its relevance in contexts beyond the basic question is how much multinational harmoni- Community, one must remember that the mem- zation would be required and the extent to which ber states have agreed to use it as a tool to sovereignty might need to be surrendered to use the achieve an integrated market in the context of a principle of mutual recognition more broadly among structure that, though not a federation, is a rather nations. powerful supranational structure to which the The radical difference between what the Commember states have already transferred a signif- munity is trying to achieve and other types of icant degree of sovereignty. The customs union economic arrangements between nations is illuswith its common external commercial policy is trated by a comparison with the U.S.-Canada the basis of the internal market, but the internal Free Trade Agreement. Unlike a customs union, market is much more than a customs union. It the Free Trade Agreement has no common exinvolves a supranational legislative process un- ternal tariff or commercial policy, and its goals der which supranational rules ensuring the free are limited to eliminating bilateral tariffs, reducmovement of goods, persons, services, and cap- ing many nontariff barriers, liberalizing investital are adopted and the harmonization of basic ment practices, and providing ground rules for laws, regulations, and practices at a suprana- trade in services, which in the financial sector are tional level can be achieved. Moreover, a mem- based on the principle of national treatment. The ber state is obligated to implement or enforce all agreement has no commitment to a single, unified EC rules, including those it opposed in the Com- market. It entails a limited dispute-settling mechmunity legislative process. Community law is anism (from which financial services are exaccepted as prevailing over national law, and cluded) that does not involve a sacrifice of naboth judgments and preliminary rulings of the tional sovereignty, and it does not provide for European Court of Justice based on Community supranational legislative or judicial functions. law are binding and enforceable in the member states. (The principle of supremacy of Community law was not explicitly stated in the Treaty of CONCLUSION Rome, but it has been confirmed by the European Court of Justice in judgments interpreting Although the framework for the entire internal provisions of the treaty.) market, or even for the financial sector alone, The European Community is also more than a may not be in place by the end of 1992, a single, unified market. Other aspects of the Commu- sufficient number of measures will probably have nity addressed either by the original Treaty of Rome been adopted and implemented such that the or by the Single European Act include social policy, internal market may be completed by the mideconomic and social cohesion, research and devel- 1990s. An important development for achieving opment, the environment, and economic and mon- this goal has already occurred: Market particietary union. The Single European Act also refers to pants are basing their plans and governments are the goal of a "European Union," although there is framing their policies on the assumption that the considerable disagreement within the Community as to what such a union would entail.17 No. 2-367] 137, July 6, 1988), and "The Main Lines of Commission Policy," statement before the European Parlia- 17. See Jacques Delors, President, European Commission, ment (Strasbourg, January 17, 1989). But see also Margaret statement before the European Parliament regarding the Thatcher, Prime Minister, United Kingdom, speech at the Council meeting in Hanover (31 O.J. Eur. Comm. [Annex, College of Europe (Bruges, September 20, 1988). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

608 Federal Reserve Bulletin • September 1989 internal market will be completed. The commit- structures. A possibility always exists that the initial ment by the more developed EC countries to use harmonization of what are considered basic stan- EC structural funds to assist poorer countries dards and supervisory practices will be insufficient and regions is likely to be important in determin- to prevent market pressures leading to competition ing the willingness of the poorer countries not in laxity among national regulatory authorities; howonly to support legislation to establish the inter- ever, the market could also place a value on more nal market but also to implement it during what stringent regulation and supervision. Although makmight be a difficult transitional period of indus- ing adjustments to the degree of harmonization in trial restructuring. A further issue, which has not the financial sector may be easier than in other yet been resolved, is what steps the Community sectors, the financial sector may require greater may need to take regarding social legislation. initial harmonization to make mutual recognition The goal of free capital movements within the acceptable because of considerations relating to Community is close to realization; by mid-1990, safety and soundness, monetary policy, and market eight countries are expected to permit the unre- stability. stricted movement of capital. The integration of In considering the applicability of mutual recogthe EC financial sector—banking, investment nition beyond the Community, one must keep in services, securities markets, and insurance—is mind that within the Community mutual recognition already well advanced, to some extent because involves political compromises to achieve a comthis process is part of a larger trend toward the mon goal and that it has been accepted and impleglobalization of financial services and markets mented within an established supranational legislaand toward increased international cooperation tive and judicial structure. Even within this and coordination among regulatory authorities. framework, many issues are unresolved with regard The financial sector may be particularly suited to to the extent to which national sovereignty is transthe EC approach of mutual recognition and ferred to the Community, particularly with referhome-country control. The banking sector pre- ence to the powers of the Commission and to sents the fewest difficulties because the major concerns about the democratic foundations of Comindustrial countries have already achieved basic munity institutions. harmonization with regard to consolidated super- Both the approach of mutual recognition used vision and capital standards. Investment services within the Community and the reciprocity approach are more difficult because of much greater dis- being adopted for third countries are relevant to the parities in national regulatory structures and be- question of the interaction and appropriate relationcause of the lack of a multilateral agreement on ship of different national regulatory structures in market risk that is equivalent to the Basle Accord response to the internationalization of financial acon risk-based capital. tivity. The 1985 white paper did not address the Securities markets involve complex national rules external dimension of the program to complete the about the disclosure of information, but market internal market, and the approach to treatment of pressures have already led some EC and non-EC third-country institutions has been developed in the securities regulators to explore the possibility of context of individual directives. Although the Counrecognizing disclosure requirements of other coun- cil has now adopted a common position on a recitries. The insurance sector may be the most difficult procity provision for banking services, some ambiof the financial sectors to integrate. Except for guities remain. For purposes of entry and reinsurance, the insurance industry is currently negotiations with the threat of retaliatory action, much less international in character than the bank- reciprocity appears, at a minimum, to mean reciping and securities industries: More barriers protect rocal national treatment; the criteria also include the domestic markets, and less consultation and coop- concept of effective market access, which, while eration take place internationally among regulators. ambiguous, may refer both to national treatment and to the liberalization of host-country financial Within the European Community, application of structures. For purposes of negotiating goals withthe principle of mutual recognition in the financial out the threat of retaliatory action, the reciprocity sector is expected to lead to market pressures for provision appears to include not only the concept of additional harmonization of national regulatory Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Mutual Recognition: Integration of the Financial Sector in the European Community 609 effective market access but also the concept of vantage in EC markets, pressures could be cretreatment comparable to that of the home country. ated for retaliatory measures in the firms' home Such a goal could be viewed as the equivalent of an countries. Within the Community, the program attempt to extend the principle of mutual recogni- for completion of the internal market might be tion to countries outside the Community without associated with increased political pressures for having established on a more international basis the a more protectionist policy on external trade. foundation for mutual recognition that exists within Reciprocity provisions and other barriers to inthe Community. ternational trade in goods or services could be If mutual recognition were to be used beyond established and strictly interpreted as a political the Community to achieve financial integration, response to what is likely to be a difficult period agreements among nations on basic rules and on of industrial restructuring during which efficient goals for regulatory convergence would be nec- producers of goods or services increase their essary. At present, mutual recognition is being market share and inefficient producers (if not explored as a basis for financial integration out- subsidized by their governments) are forced out. side the Community only with regard to disclo- One hopes however, that the internal market sure requirements for securities and only among program will have beneficial effects externally as countries in which existing rules may be suffi- well as internally. In the financial sector, because ciently similar so that negotiated harmonization the EC program is based on mutual recognition, would not be necessary. Moreover, any agree- which goes well beyond national treatment, comments in this area, in contrast to those in banking pletion of the internal market will create a coorand investment services, would involve primarily dinated regulatory framework for financial serinvestor protection rather than safety and sound- vices and markets and thereby remove existing ness. In the areas of banking, investment ser- barriers to Communitywide competition that revices, and insurance, national treatment, as em- sult from nondiscriminatory differences in nabodied in the OECD Codes of Liberalisation and tional rules. Besides deregulation mandated by the National Treatment Instrument, is in general EC directives, actual or potential competition the currently accepted approach. Whether na- could create pressure for liberalization of rules in tional treatment, effective market access, or domestic markets that are currently highly regusome other concept may become the accepted lated and restricted. Although it is possible that approach if any agreement is reached on trade in the EC reciprocity provisions could lead to the financial services in connection with the current creation of new barriers for third-country insti- Uruguay Round of GATT negotiations remains tutions, it is also possible that the liberalizing to be seen. measures being taken within the Community will Concerns have been expressed outside the serve as a catalyst for further international prog- Community that the EC internal market program ress with regard to trade in financial services. To for the financial sector could, in the worst case, date, the internationalization of financial services impede both the internationalization of financial and markets has both necessitated and facilitated services and markets and the movement toward increased regulatory and supervisory cooperincreased regulatory cooperation and conver- ation and coordination. The EC internal market gence. For example, if some non-EC financial program could be a significant contribution to firms were to be placed at a competitive disad- this process. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

610 Staff Studies The staff members of the Board of Governors of those of the authors and do not necessarily the Federal Reserve System and of the Federal indicate concurrence by the Board of Governors, Reserve Banks undertake studies that cover a by the Federal Reserve Banks, or by members of wide range of economic and financial subjects. their staffs. From time to time the studies that are of general Single copies of the full text of each study are interest to the professions and to others are available without charge. The titles available are published in the Staff Studies series and summa- shown under "Staff Studies" in the list of Fedrized in the FEDERAL RESERVE BULLETIN. eral Reserve Board publications at the back of The analyses and conclusions set forth are each BULLETIN. STUDY SUMMARY THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIREMENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE PRODUCTS Mark J. Warshawsky with the assistance of Dietrich Earnhart—Staff, Board of Governors Prepared as a staff study in the winter of 1988 and spring of 1989 Margin requirements play an important role in marketplace. In the interrelated markets for eqprotecting markets during crises such as the uities and for equity options and futures, the stock market crash of October 1987. Regulated issue of the proper balance is especially delicate. by government or by private organizations, de- Inconsistent levels of protection in the three pending on the market involved, margins consti- markets can create serious distortions in activity. tute a performance bond posted by noncash Some studies have examined required margins investors in stocks, by investors in financial in the equities market, others in the markets for futures, and by sellers of financial options. The financial futures; they have found the size of the margin, which can take a variety of forms such as required margins generally to be more than mincash, Treasury securities, stocks (at a fraction of imally adequate to protect participants from loss. their current market value), or letters of credit, is This study is the first to assess the adequacy and tangible evidence of the ability of investors to consistency of margin requirements in all segmeet their obligations under nearly the full range ments of the equities market—cash, futures, and of likely price movements. options—and the first to combine a broad insti- Deciding how much margin to require involves tutional description of margin arrangements with a difficult issue of balance. On one hand, the a detailed statistical analysis of margins and prices before and after the crash. The study amount must be high enough to give customers reaches the following conclusions: an incentive to meet their commitment and to protect brokers, clearinghouses, and other lenders against losses if investors default on their 1. Differences in clearing arrangements, in the obligations; on the other hand, the amount must liquidity of the relevant investor groups, and in not be so high as to drive participants from the price volatility allow margins on derivative prod- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

611 ucts to be lower than those on stocks and still uidations of their option positions when margin provide protection equivalent to that obtained in calls were made during the stock market crash. the stock market. 4. During the October 1987 crisis, the frequent 2. For futures contracts on the Standard & intraday margin calls, the increase in the level of Poor's index of 500 stocks (S&P 500) and on the margin requirements on derivative instruments, New York Stock Exchange Composite (NYSE) and the absence of cross-margining may have index, the pre-crash margin requirement on ex- exacerbated liquidity problems and helped raise isting positions (maintenance margin) provided concerns about the financial health of the clearclearinghouses a lower level of protection against inghouses. These liquidity problems and conprice moves than that provided in the stock cerns about the clearinghouses might, in turn, (cash) market. Before the October 1987 crash, have contributed to the break in the arbitrage link the maintenance margin in the cash market was between the cash and derivative markets that adequate to cover 98 percent of likely price sent markets into free fall on October 19. changes based on prices from January 1986 5. The increases in the margin levels for futhrough April 1988. The maintenance margin on tures and options contracts during and shortly the S&P 500 futures contract would have had to after the October crisis yielded the clearinghave been 22 percent higher, and that on the houses protection even greater than that pro- NYSE contract 80 percent higher, to provide 98 vided by margins in the cash market. More percent coverage. The protection on the con- recently, however, margin levels have been retracts before the crash was lower than the pro- duced on futures contracts and in some instances tection in the cash market even if the sample the level of protection provided as of June 1989 is period for prices stops in early October 1987, less than in the cash markets. before the market crash. These findings suggest that proposals for mar- 3. The pre-crash level of protection provided gins of equal percentage across all segments of by margins on at-the-money and in-the-money the market could be harmful to the markets' options was adequate and consistent with the well-established mechanisms and their overall level of protection provided by margins in the liquidity. But because the various market segcash market. But the level of margins on out- ments do indeed net out to one market, weakness of-the-money put options may not have pro- in one segment can lead to weakness in others. vided adequate protection. This conclusion is Hence proposals for margins that produce equal buttressed by complaints from individual inves- protection from risk in all segments of the market tors, who dominate the market for stock op- could strengthen market mechanisms and are tions, about excessively quick, involuntary liq- worthy of consideration. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

612 Industrial Production Released for publication July 14 in June was 3.4 percent higher than it was a year earlier. For the second quarter as a whole, pro- Industrial production declined 0.2 percent in duction advanced about 2 percent at an annual June following a revised May decrease of 0.1 rate—the same rate of increase as in the first percent. In June, the production of both autos quarter. Manufacturing output was unchanged in and energy materials fell sharply. Output of most June. Capacity utilization in manufacturing deother major sectors showed little change. At clined 0.3 percentage point further to 83.8 per- 141.1 percent of the 1977 average, the total index cent. Detailed data for capacity utilization are Ratio scale, 1977=100 160 Total Index 140 Manufacturing Nondurable_ Materials Nondurable^ Durable Durable J I I I Consumer Goods Nondurable , , , •* / Durable / ' 1 1 1 Final Products Defense and space Consumer goods 1983 1985 1987 1989 1983 1985 1987 1989 All series are seasonally adjusted. Latest series: June. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

613 1977 = 100 Percentage change from preceding month Percentage cchhaannggee,, Group 1989 1989 JJuunnee 11998888 ttoo JJuunnee 11998899 May June Feb. Mar. Apr. May June Major market groups Total industrial production 141.4 141.1 -.2 .1 .6 -.1 -.2 3.4 Products, total 151.4 151.2 .0 .3 .6 .0 -.1 4.1 Final products 149.9 149.7 .3 .2 .7 .0 -.2 4.0 Consumer goods 138.7 138.3 .2 -.3 .6 -.3 -.3 4.0 Durable 130.9 129.8 .1 -1.1 1.3 -.7 -.8 3.7 Nondurable 141.6 141.5 .2 .0 .4 -.2 -.1 4.2 Business equipment... 168.4 168.0 .7 .8 .8 .4 -.2 6.2 Defense and space 180.1 180.4 -.4 -.3 .7 .1 .2 -2.3 Intermediate products... 156.6 156.6 -.9 .6 .3 .0 .0 4.4 Construction supplies. 139.9 139.9 -1.9 -.1 .3 .1 .0 1.7 Materials 127.8 127.3 -.5 -.1 .7 -.2 -.4 2.3 Major industry groups Manufacturing 147.7 147.7 -.2 .1 .6 -.1 .0 4.0 Durable 146.7 146.5 -.2 -.1 .7 -.1 -.1 3.4 Nondurable 149.2 149.3 -.3 .4 .4 .0 .1 4.7 Mining 102.3 101.2 -2.1 .6 1.1 -.3 -1.1 -1.7 Utilities 117.1 115.7 2.2 .9 -.2 -.2 -1.3 2.1 NOTE. Indexes are seasonally adjusted. shown separately in "Capacity Utilization," Output of other consumer goods, on balance, Federal Reserve monthly statistical release G.3. was essentially unchanged. Output of business In market groups, production of consumer equipment edged down for the first time since goods decreased 0.3 percent in June as automo- last October, reflecting a substantial drop in bile assemblies fell to an annual rate of 6.8 transit equipment, particularly autos for business million units from a rate of 7.1 million units in use. Production of construction supplies, which May; production of light trucks also declined. weakened earlier in the year, has changed little, on balance, for several months. The decline in Total industrial production—Revisions materials production mainly resulted from cur- Estimates as shown last month and current estimates tailed output in the energy sector; coal production fell sharply because of strike activity, and Percentage change Index (1977=100) from previous electricity generation was reduced. MMoonntthh months In industry groups, manufacturing output was Previous Current Previous Current unchanged in June as nondurables edged up but durables fell slightly. Outside manufacturing, Mar 140.6 140.7 .1 .1 production of both mines and utilities dropped Apr 141.4 141.6 .6 .6 May 141.4 141.4 .0 -.1 more than 1 percent. June 141.1 -.2 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

614 Statements to Congress Statement by Alan Greenspan, Chairman, Board was applied through open market operations, and of Governors of the Federal Reserve System, the discount rate was raised Vi percentage point. before the Committee on Banking, Housing, and The determination to resist any pickup in infla- Urban Affairs, U.S. Senate, August 1, 1989. tion also motivated the decision of the Federal Open Market Committee at its February meeting I appreciate this opportunity to appear before to lower the ranges for money and credit growth you in connection with the Federal Reserve's for 1989. This marked the third consecutive year semiannual Monetary Policy Report to the in which the target ranges were reduced, and it Congress.1 In my prepared remarks today I will underscored our commitment to achieving price adhere closely to the matter at hand—that is, stability over time. monetary policy and the state of the nation's Reflecting the economy's apparent strength economy. and the tighter stance of policy, interest rates rose during the first quarter. Short-term market rates increased about 1 percentage point over the ECONOMIC AND MONETARY quarter, leaving them up more than 3 points from DEVELOPMENTS THUS FAR IN 1989 a year earlier, but long-term rates held relatively steady. The year-long rise in short-term rates had Over the course of this year, the contours of the a marked impact on growth of the monetary broad economic setting have changed. As a con- aggregates, restraining the demand for money as sequence, the stance of monetary policy also has funds flowed instead into higher-yielding market shifted somewhat, although the fundamental ob- instruments. jective of our policy has not. That objective By the beginning of the second quarter, the remains to maximize sustainable economic outlook for spending and prices was becoming growth, which in turn requires the achievement more mixed. Scattered indications of an emergof price stability over time. ing softening in economic activity began to ap- Early in the year, the Federal Reserve contin- pear, prompting market interest rates to pull ued on the path toward increased restraint upon back. Rates continued to fall as a variety of which it had embarked in the spring of 1988. At factors pointed to some lessening of price presthe time of our report to the Congress in Febru- sures in the period ahead. In particular, money ary of this year, I characterized the economy as growth weakened further, the underlying trend in strong, with the risks on the side of a further inflation appeared to be less severe than markets intensifying of price pressures. Labor markets had feared, the dollar continued to climb, and had been tightening noticeably, heightening con- domestic demand slackened. Against this background, the Federal Reserve began to ease recerns that inflationary pressures might be buildserve conditions in early June. The easing has ing. Moreover, increases in food and crude oil consisted of several steps, the most recent of prices were raising the major inflation indexes. which took place last week. By the end of July, In view of the dimensions of the inflation most short-term market rates had dropped more threat, the Federal Reserve tightened policy furthan IV2 percentage points from their March ther early this year. Additional reserve restraint peaks, and long-term interest rates were down somewhat less, with bond rates at their lowest levels in more than two years. 1. See "Monetary Policy Report to the Congress," FEDERAL RESERVE BULLETIN, vol. 75 (August 1989), pp. 527-39. Economic activity is estimated to have grown Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

615 in the first half of this year at a rate somewhat markets, provided a notable offset to these cost below that of potential gross national product. pressures. On balance, it appears that firms have This stands in sharp contrast to the performance continued to experience upward pressures on of the preceding two years during which growth costs. The intensity of these pressures as related proceeded at a pace that placed increasing pres- to energy inputs may well diminish in coming sures on labor and capital resources. Job creation months, but it remains to be seen how other has remained the hallmark of the current expan- elements of the cost structure will evolve. sion, however. Even with the more moderate This approach, while helpful in understanding pace of economic growth in the first half of this the interaction of prices and costs, does not tell year, nearly 1V2 million new jobs were added to us how an inflation cycle begins or why it may payrolls. And this occurred apparently without persist. Short-run inflation impulses can originate triggering an acceleration in wages. from a variety of sources, on both the demand Prices did accelerate in the first six months of and the supply sides of the economy. But over this year, but most of the increase may be longer periods of time, inflation cannot persist transitory, related to supply conditions in food without at least passive support from the moneand petroleum markets. After a gradual pickup tary authorities. over the preceding two years, price inflation The strength of the inflation pressures in 1988 outside of food and energy held near its 1988 and into 1989 was, of course, the motive for the pace. progressive tightening of policy that the Federal Excluding food and energy is one traditional Reserve undertook over that period. And the way of estimating the "underlying" rate of infla- outlook for some reduction in these pressures tion. Although there is some logic in abstracting owes in part to that policy restraint. The associfrom these prices, which are quite volatile and ated rise in market interest rates, beginning early can be dominated over the short run by supply last year, opened up wide "opportunity" costs of disturbances, this approach is incomplete. An holding money assets and resulted in a sharp alternate picture of near-term price-setting be- slowing of money growth. This was especially havior can be gleaned by examining the compo- the case for liquid deposits, whose rates were nents of prices, that is, the cost pressures facing adjusted upward only very sluggishly, providing firms and the behavior of their profits. Such an depositors with strong incentives to economize analysis reveals that, in manufacturing, much of on balances. the pickup in inflation thus far in 1989 is ac- Besides the effect of interest rates, several counted for by higher unit energy and labor special factors played a role in slowing money costs. The runup in world crude oil prices, which growth and boosting velocity—that is, the ratio reflected a series of production accidents this of nominal GNP to money. Probably the most spring as well as a degree of output restraint on important of these was the unexpectedly large the part of some Organization of Petroleum Ex- size of personal tax liabilities in April. Many porting Countries oil producers, is the main individuals evidently were surprised by the size reason for the increase in energy costs. of their liabilities, and drew down their money In contrast, movements in hourly compensa- balances below normal levels to make the retion were quite moderate in the first half of this quired payments. As the Internal Revenue Seryear, and the acceleration in unit labor costs vice cashed those checks, M2 registered outright largely reflected slower growth in productivity. declines. Such a deceleration in productivity is typical as The difficulties of the thrift industry also may the pace of economic activity slows. But, given have affected M2 growth. Late last year, as the relatively high levels of resource utilization, public attention increasingly focused on the it also is possible that firms were forced to draw financial condition of the industry and its inon less skilled workers than was the case earlier surance fund, institutions insured by the Federal in the expansion. A significant moderation in the Savings and Loan Insurance Corporation unit cost of imported materials, likely reflecting (FSLIC) began to lose deposits at a significant the higher value of the dollar on foreign exchange rate. These deposit withdrawals were particularly Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

616 Federal Reserve Bulletin • September 1989 strong in the first quarter of this year, and while outcome need not imply a marked downturn in most of the funds apparently were repositioned the economy, and policy will have to be alert to within M2—at commercial banks or money any emerging indications of a cumulative weakfunds—this factor likely also had some damping ening of activity. However, progress on inflation effect on that aggregate. and optimum growth over time also require that More recently, growth of the broader mone- our productive resources not be under such tary aggregates has picked up markedly. The pressures that their prices continue to rise withrestraint imposed by the earlier rise in market out abating. In light of historical patterns of labor interest rates is fading, and households appear to and capital growth and productivity, this progbe rebuilding their tax-depleted balances. The ress very likely will be associated with a more level of M2 on average in May was just 1 percent moderate, and hence sustainable, expansion in at an annual rate above its fourth-quarter base, demand than we experienced in 1987 and 1988. but rapid growth in June and July has lifted the At its meeting earlier this month, the Federal year-to-date increase to around the lower end of Open Market Committee determined that a comits 3 to 7 percent annual target cone. M3 also has bination of continued economic growth and reaccelerated in June and July, placing it well into duced pressures on prices would be promoted by the lower half of its range. growth of money and debt in 1989 within the Ml, which is the most interest sensitive of the annual ranges that were set in February. Moremonetary aggregates, declined at a rate of 3V2 over, it tentatively decided to maintain these percent through June, although it too has same ranges through 1990. strengthened most recently. The unusual drop in The specified ranges, both for this year and Ml in the first half of the year stemmed from next, retain the 4-percentage-point width first sizable declines in NOW accounts and demand instituted for the broader aggregates in 1988. deposits. NOW accounts were reduced both by Considerable uncertainties about the behavior of the large personal tax payments this spring and money and credit remain, and the greater breadth by the high level of interest rates, which drew allows for a range of paths for these aggregates as savings-type balances instead toward market in- financial and economic developments may warstruments or other types of accounts whose rant. Uncertainties about the link between the offering rates adjusted upward more quickly. The narrow transactions aggregate, Ml, and the decline in demand deposits was related in part to economy have, if anything, increased, and the a reduction in balances that businesses are re- Committee once again did not specify a range for quired to hold to compensate their banks for this aggregate. various services; for a set amount of services, In view of the apparent variability, particularly higher market rates translate into lower required over the short run, in the relationships between balances. the monetary aggregates and the economy, policy will continue to be carried out with attention to a wide range of economic and financial indi- MONETARY POLICY AND THE ECONOMY cators. The complex nature of the economy and INTO 1990 the chance of false signals demand that we cast our net broadly—gathering information on Looking ahead at the remainder of 1989 and into prices, real activity, financial and foreign ex- 1990, recent developments suggest that the bal- change markets, and related data. ance of risks may have shifted somewhat away While the monetary aggregates may not be from greater inflation. Even so, inflation remains preeminent on this list, they always receive carehigh—clearly above our objective. Any inflation ful consideration in our policy decisions. This is that persists will hinder the economy's ability to especially true when they exhibit unusual perform at peak efficiency and to create jobs. strength or weakness relative to past patterns Consequently, monetary policy will need to con- and relative to our announced ranges. Thus, the tinue to focus on laying the groundwork for very sluggish growth in M2 for the year to date gradual progress toward price stability. Such an was an important influence in the decision to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 617 begin to ease policy. Velocity may vary consid- tendency of the projections of 2 to 2Vi percent erably over a few quarters, but the provision of real GNP growth over the four quarters of this liquidity, as measured by one or another of the year implies continued moderate economic monetary aggregates, is an important factor in growth throughout the year. For the year as a the performance of the economy over the shorter whole, these projections anticipate that growth is run and over the long run broadly determines the likely to be strongest in the investment and rate of price increase. export sectors of the economy, with expansion of Over the remainder of the year, M2 should consumer expenditures and government purcontinue to be supported by the decline in inter- chases rather subdued. est rates in recent months, which, along with A sectoral pattern of growth such as this would growth of income, is likely to result in an expan- in fact serve the nation's longer-term needs by sion of that aggregate well within its target range. contributing to a better external balance. Funda- Growth in M2 likely will be augmented by a mentally, improvement in our international paycessation of the special influences I noted earlier ments position requires productivity-enhancing that depressed it in the first half of the year. In investment and a higher national saving rate. In particular, households may continue to rebuild this regard the federal government can play a their money balances after the tax-related draw- significant, positive role by reducing the budget downs in April and May. Also, deposit withdraw- deficit. als from thrift institutions have subsided, and The outlook for inflation this year, as reflected enactment of legislation that restores full confi- in the central tendency of the projections exdence in the industry would bode well for deposit pressed at the FOMC meeting, is for a 5 to 5VI flows into FSLIC-insured institutions. percent increase in the consumer price index. A Further steps in the resolution of the diffi- figure in this range would represent the highest culties of the thrift industry also have implica- annual inflation rate in the United States since tions for M3. With deposits flowing in again, 1981; this is a source of concern to the Federal thrift institutions will not have to rely so heavily Reserve. Yet this rate is below that experienced on the Federal Home Loan Banks for their in the first six months. This implies a considerfunding as they did earlier this year. Partly as a able slowing over the remainder of the year, result, we expect M3 to strengthen from its rate reflecting earlier monetary policy restraint and a of growth over the first half of the year, moving prospective moderation in food and energy up into the middle of its target range by year-end. prices. Our outlook for debt growth foresees little Federal Reserve policy is focused on laying the change from the pace of the first two quarters. groundwork for more definite progress in reduc- The broad credit measure that we monitor, the ing inflation pressures in 1990, while continuing debt of domestic nonfinancial sectors, has grown support for the economic expansion. The ranges at about an 8 percent rate this year, near the provisionally established for growth of money midpoint of its 6V2 to 10Vi percent range. We and debt next year are consistent with these have little reason to expect its growth through intentions. They allow for a noticeable pickup in the end of the year to be very different, implying money growth from that likely to prevail this some slowing from the pace of 1988. Neverthe- year, should that be appropriate. If pressures on less, the expansion of debt is likely to exceed prices and in financial markets are less intense nominal GNP growth again this year. than in recent years, velocity would not be Growth of money and debt within the 1989 expected to continue to increase, and faster ranges is expected to be consistent with nominal money growth, perhaps in the top half of the GNP rising this year at a pace not too far from range, would be needed for a time to support last year's increase, according to the projections economic growth. Conversely, if price pressures of FOMC members and other presidents of Re- prove intractable, the ranges are low enough to serve Banks. These projections, however, incor- permit the needed degree of monetary restraint. porate somewhat more inflation and less real Thus, although the 1990 ranges do not repregrowth than we experienced in 1988. The central sent another step in the gradual, multiyear low- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

618 Federal Reserve Bulletin • September 1989 ering of ranges, the Federal Reserve's intent to ulations may boost broad price indexes at one make further progress against inflation remains time or another, sustained inflation requires at intact. Uncertainties about the outlook suggested least the forbearance of the central bank. Morea pause in the process of reducing the ranges; over, as many nations have learned, inflation can however, the Committee recognizes that our goal be corrosive. As it accelerates, the signals of the of price stability will require additional down- market system lose their value, financial assets ward adjustments in these ranges over time. Of lose their worth, and economic progress becourse, as we draw closer to 1990, the economic comes impossible. and financial conditions prevailing will become Thankfully, this bleak scenario is not one that clearer, allowing us to approach our decisions on we in the United States are confronting. We do, the ranges with more confidence. Hence, the however, face a difficult balancing act. The current ranges for money and credit growth in economy has prospered in recent years: The 1990 should be viewed as very preliminary. economic expansion has proved exceptionally The economic projections for 1990 made by durable; employment has surpassed all but the the governors and Reserve Bank presidents cen- most optimistic expectations; and the underlyter in a range of IV2 to 2 percent real GNP growth ing inflation rate, after coming down quickly in and 4V2 to 5 percent inflation for next year. the early 1980s, has accelerated only modestly. Naturally, as I have already noted, there are But now signs of softness in the economy have considerable uncertainties surrounding forecasts shown up. for 1990. In particular, developments in the ex- Accordingly, it is prudent for the Federal Reternal sector will depend in part on economic serve to recognize the risk that such softness activity abroad, as well as on the efforts of U.S. conceivably could cumulate and deepen, resultfirms to become more competitive in world mar- ing in a substantial downturn in activity. We also kets. Domestically, performance will be affected recognize, however, that a degree of slack in by a large number of influences, including impor- labor and product markets will ease the inflatantly the budget deficit. tionary pressures that have built up. So our policy, under current circumstances, is not oriented toward avoiding a slowdown in demand, MONETARY POLICY IN PERSPECTIVE for a slowing from the unsustainable rates of 1987 and 1988 is probably unavoidable. Rather what The Federal Reserve is committed to doing its we seek to avoid is an unnecessary and destrucutmost to ensure prosperity and rising standards tive recession. of living over the long run. Given the powers and The balance that we must strike is to support responsibilities of the central bank, that means moderate growth of demand in the near term, while most importantly maintaining confidence in our concurrently progressing toward our longer-run goal currency by maintaining its purchasing power. of a stable price level. Admittedly, the balance we The principal role of monetary policy is to pro- are seeking is a delicate one. I wish I could say that vide a stable backdrop against which economic the business cycle has been repealed. But some day, decisions can be made. A stable, predictable some event will end the extraordinary string of price environment is essential to ensure that economic advances that has prevailed since late resources can be put to their best use and ample 1982. For example, an inadvertent, excess accumuinvestment for the future can be made. lation of inventories or an external supply shock In the long run, the link between money and could lead to a significant retrenchment in economic prices is unassailable. That link is central to the activity. mission of the Federal Reserve, for it reminds us Moreover, I cannot rule out a policy mistake that without the acquiesence of the central bank, as the trigger for a downturn. We at the Federal inflation cannot take root. Ultimately, the mon- Reserve might fail to restrain a speculative surge etary authorities must face the responsibility for in the economy or fail to recognize that we were lasting price trends. While oil price shocks, holding reserves too tight for too long. Given the droughts, higher taxes, or new government reg- lags in the effects of policy, forecasts inevitably Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 619 are involved and thus errors inevitably arise. Our over time, but that copes with and makes job is to keep such errors to an absolute mini- allowances for any unforeseen weakness in mum. An efficient policy is one that doesn't lose economic activity. It is such a policy that the its bearings, that homes in on price stability Federal Reserve will endeavor to pursue. • Chairman Greenspan presented similar testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, July 20, 1989. Statement by Griffith L. Garwood, Director, Di- account when evaluating proposals for expanvision of Consumer and Community Affairs, sion. Board of Governors of the Federal Reserve Sys- Carrying out that mandate has been anything tem, before the Subcommittee on Consumer and but simple. In fact, CRA enforcement poses a Regulatory Affairs, Committee on Banking, very significant supervisory challenge in that it Housing, and Urban Affairs, U.S. Senate, compels us to look beyond what happens within July 31, 1989. the bank itself, focusing on the role the bank plays in its community. That includes its inter- I want to thank the subcommittee for this action with individuals, organizations, and local opportunity to address issues regarding the governments to learn about credit needs and its Community Reinvestment Act (CRA) and its response when such needs are identified. In enforcement by the Federal Reserve. I am essence, we must look at a bank's participation pleased to be here to discuss the experience of in fostering economic growth and revitalization, the Board of Governors of the Federal Reserve and making the community a better place to live System, for which I serve as Director of the and to do business. Rendering an informed Division of Consumer and Community Affairs. judgement about that role requires an under- The division's responsibilities include rule writ- standing not only of banking, but of neighboring and enforcement authority for federal laws hoods and the often complex social and ecosafeguarding consumer rights in financial ser- nomic forces at work within them. vices, especially credit services, besides CRA. Moreover, the statute is framed so broadly We oversee and provide policy direction for that it provides little practical guidance as to consumer compliance and CRA examinations appropriate measures of compliance. We have performed by Federal Reserve examiners. found there is a fine line between encouraging Through our Systemwide Community Affairs institutions to extend CRA credit and requiring Program, we share knowledge about successful that they do so in specified amounts or types, or approaches to community development lending under prescribed terms. The Board strongly with bankers. Finally, we analyze and report to believes that the Congress has not given it the Board on CRA issues that arise in connec- authority to establish—implicitly or explicitly— tion with applications. lending requirements of any kind under the We have worked hard over the years to purview of the CRA. Avoiding such requiredevelop a multifaceted program that responds ments, and still providing both the encouragefaithfully to our mandate under the CRA. That ment that is called for in the act and the mandate is threefold, and can be simply stated: guidance asked of us by many bankers is not an (1) to encourage banks to help meet the credit easy task. The Board also must determine what needs of their entire communities, including weight to assign to CRA in the applications low- and moderate-income areas, (2) to assess process, given that it is obliged by law to their records during examinations, and (3) to simultaneously consider financial, managerial, take their records of service under the CRA into legal, and competitive factors. Factoring the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

620 Federal Reserve Bulletin • September 1989 CRA assessment into the mix of these other hoods, and much valuable, though less quantificonsiderations in itself has proved challenging. able, technical collaboration among all the actors For central bankers and other financial regula- in the CRA process. It has achieved such results tors, the duties conferred by the CRA require not in spite of the regulatory agencies, as critics them to wear a "hat" very unlike the traditional allege, but because we have built a solid regulaone we wear and, quite frankly, this has taken tory framework to carry out our mandate. In some getting used to. short, I believe the CRA process is working far Nevertheless, in enforcing the CRA we have better than many perceive. endeavored to strike a balance between the competing interests and responsibilities of banks and community groups. In so doing, we have been lambasted by both—which perhaps is the best CRA EXAMINATIONS indication that we have steered the right course. For some years, our actions have been the sub- The cornerstone of CRA enforcement is the CRA ject of considerable controversy. Bankers have examination program, comprehensive in scope charged the Federal Reserve with exhibiting bias yet flexible enough to take into account each toward the community organizations, pressuring bank's asset size and market niche, as well as its applicant banks into negotiated settlements with locale. CRA examinations are our best vehicle to groups filing CRA protests, giving unclear signals encourage better performance and will increasabout what it takes to "pass" CRA examina- ingly be the focal point of our enforcement tions, and unfairly delaying decisions on chal- efforts, as indicated in the CRA Policy Statement lenged applications. On the other hand, commu- issued jointly by the agencies in March. nity organizations have criticized the Federal Each state member bank is examined about Reserve for what they perceive to be a "pro- every eighteen months, or more often if weakbanker" approach to CRA and generally lax nesses have previously been identified (and less enforcement, as well as a reluctance to grant often in the case of top-notch performance). The protestants more time to research their case Federal Reserve has long had a cadre of specialagainst banks in the context of applications. ized consumer compliance examiners whose Even in this highly controversial setting, it is training in CRA-related aspects of bank performy belief that the CRA process has been quite mance sets them apart from other examiners positive, which often seems overlooked in the solely concerned with safety and soundness matrhetoric that the CRA seems to attract. My ters. Examiners bring to their jobs a variety of remarks here will hopefully convey the extent of backgrounds in law, accounting, banking, and our examination effort in which every day on an finance. They are trained at Board schools here ongoing basis we send specially trained examin- in Washington, and in regional or Reserve Bankers to call on banks and members of their com- level seminars. Information about time spent in munities to render CRA assessment and advice. CRA training, as well as other information re- This effort is augmented by a substantial educa- sponding to specific questions posed by Senator tional program that has presented new ideas in Dixon, is presented in the supplements to this community economic development to thousands testimony. of participants. Through the commitments made Following uniform interagency examination by banking organizations in the applications procedures, examiners review and analyze bank process, a multitude of initiatives has been un- activities falling under each of the twelve assessdertaken. In scores of other instances, private ment factors spelled out in Regulation BB. The agreements have been reached in the course of procedures focus the examiner's attention on CRA-related dialogue between banks and mem- each factor in a detailed, methodical way. bers of their communities. Through a step-by-step process for each of the The practical result of all this activity has factors, examiners build a body of information probably been many millions of dollars in credit which, taken as a whole, constitutes the bank's extended in low- and moderate-income neighbor- CRA record. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 621 For example, for the assessment factor per- ronment. They describe the kinds of programs taining to bank marketing and special credit and practices in which institutions should be programs, the examiner would review working engaged to merit ratings on the scale of one to relationships with realtors servicing low- and five within each of the performance categories moderate-income neighborhoods, efforts in pro- and on a composite basis. Obviously, assigning viding mortgage counseling, management assist- ratings involves some judgment on the part of the ance to small or minority businesses, the extent examiner—yet this inherent element of judgment to which bank personnel seek out potential hous- does not imply that they are arbitrary. ing and small business loan demand, advertising I am well aware of the notion that because the practices, and other matters. Direct lending as majority of state member banks—93 percent in well as credit-related services provided in low- 1988 and to date in 1989—are rated at least and moderate-income portions of the community satisfactory, something must be wrong. To the would be studied and compared with lending in contrary, I would be surprised if nearly all banks more affluent parts of the community. The avail- were not satisfactory, given that the concept of a ability of convenient hours, as well as the access- community service obligation is a bedrock prinibility of bank offices to residents of low- and ciple of banking. In fact, it has deep historical moderate-income areas, would also be consid- roots in U.S. banking law, formally enunciated at ered. least as far back as the Banking Act of 1935, To give breadth and a balanced perspective to which declared that banks should serve the the assessment, examiners routinely conduct in- "convenience and needs" of their community. It terviews outside the confines of the bank with was reinforced in the Bank Holding Company business people, government officials, housing Act of 1956, which listed the convenience and and consumer advocates, realtors, trade associ- needs of the community as one of the factors the ation representatives, and many others. The Board must consider in handling applications comments of these individuals—some 925 of under the act. Numerous state statutes reflect whom were interviewed by Federal Reserve ex- this concept as well. aminers last year—are factored into the examin- Particularly with regard to the banks we examers' development of the record. ine, I would also be surprised if market forces did The examiner's objective is, of course, to not work in favor of those banks that are profitevaluate current performance—but it is also to able and are making a strong contribution to the put banks on a path of strengthened CRA perfor- betterment of their communities. Most of the mance. Having the benefit of insight gained from banks directly supervised by the Federal Reserve their close, hard look at bank activities and input have total assets of less than $100 million or are from community contacts, examiners communi- located outside metropolitan areas. Small town cate the findings of their review to bank manage- banks have traditionally been an integral force in ment orally at the end of the examination and in their communities and must be sensitive to local written form once they return to the office. They concerns, or they would soon be out of business. stress areas of weakness and recommend mea- One should also bear in mind that we are sures for improvement, to which bank manage- dealing with a ratings system that gauges performent must respond. Continued supervisory at- mance on a case-by-case basis; we are not seektention through correspondence, follow-up ing to achieve some statistical distribution of high visits, and subsequent examinations is given until and low ratings around a median. However, for improvements are realized. some time the agencies have been undertaking a Ratings are assigned in accordance with the self-evaluation of our CRA efforts, resulting most uniform interagency CRA rating system, which recently in the joint policy statement on CRA sets out five performance categories based on the providing additional guidance on what we believe assessment factors. The standards used to mea- are effective CRA programs. This review is onsure performance are generally qualitative rather going, and as we learn more I would not be than quantitative in nature because they must surprised to see an indication in the ratings of apply to all institutions in every economic envi- somewhat more rigorous measurement. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

622 Federal Reserve Bulletin • September 1989 COMMUNITY AFFAIRS OUTREACH and blighted communities. In the past eighteen months, ten new CDCs have commenced opera- The Community Affairs offices at the Reserve tion. Banks are an important companion to the CRA Given the complexity of inner city redevelopexamination program. It is through these offices ment and rural economic needs, the emphasis in that we develop a body of expertise in commu- our community affairs program is on forging nity development financing and then share it as ongoing relationships between banking and powidely as possible with banks, bank holding tential partners for development. Over the companies, and public-sector representatives. years, several partners, besides government, We have consistently sought to convey a mes- have emerged from such sources as the insursage of "enlightened self interest," showing how ance industry, the philanthropic community, banks can grow and prosper only together with, neighborhood-based development corporaand not independent of, the communities sur- tions, and even new national intermediaries rounding them. such as the Local Initiatives Support Corpora- The need for this program became apparent in tion, Neighborhood Housing Services, and the the very early years of the CRA, when examiners Neighborhood Reinvestment Corporation, and found bankers willing to tackle the tougher credit the development arm of the National Rural needs in their communities, but lacking the ex- Electric Cooperative Association. These techpertise to make such loans and meet the safety nical and financial partners help banks leverage and soundness criteria the law acknowledges. In their community investments and make possi- 1980, we brought to the division a person expe- ble deals that formerly were perceived as "unrienced in community development lending to bankable." provide examiners with information in this field. We have done our utmost to promote such We soon expanded the program to each of the partnerships, and have seen worthwhile results. twelve Reserve Banks. In 1988, for example, many California banks Last year, community affairs staff conducted formed a consortium to address low-income more than 50 educational programs throughout housing needs. In the Boston District, an affordthe country on topics ranging from tax credits for able housing task force involving lenders, comlow-income housing to the use of loan pools, loan munity groups, and government officials recently guarantees and the secondary market. By any completed a credit needs assessment project. A measure, I think you will find the list of these similarly composed council in Trenton, New programs impressive. Another important re- Jersey, worked with the Philadelphia Reserve source is the gamut of publications prepared by Bank to put together a lenders' profile on that community affairs staff on the tools and tech- city, together with recommended financing stratniques of community development lending.1 egies. In Atlanta earlier this year, the Federal As one outgrowth of these educational efforts, Reserve Bank took steps to encourage the use of we have witnessed an increasing interest on the the emerging secondary market for community part of bank holding companies and national development loans by a coalition of Atlanta banks in forming subsidiary community develop- mortgage lenders. ment corporations, or CDCs, through which The community affairs and CRA examination broad investment powers unavailable to banks functions maintain a close working relationship, themselves can be exercised. CDCs can invest in enabling examiners to keep abreast of new dereal estate, take equity positions in small busi- velopments in the financial market and to put nesses, and coventure various projects with city, community affairs staff in touch with bankers in county, or state government and nonprofit devel- need of technical assistance in CRA matters. I opers to benefit low-income families and poor am convinced that our outreach efforts in this area are well placed; judging by the response so far, there is tremendous interest in learning how 1. The attachments to this statement are available on community development lending can be done to request from Publications Services, Board of Governors of the benefit of banks and their communities. the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 623 CRA ISSUES IN BANK EXPANSION few instances has the Board found extension of PROPOSALS the 30-day comment period warranted—when the application has not been promptly made Let me now turn to applications processing—an available for inspection by the parties, for examaspect of our work in which there have recently ple, or in the uncommon event that there has been significant policy developments. The Board been inadequate public notice of the application. is required by law to consider CRA performance But the Board has made clear time and again that when reviewing applications for mergers, acqui- it is not appropriate to extend the comment sitions, or branching. While public attention is period simply because the commenter wants often drawn to an application in which a CRA more time to pursue negotiations with an appliprotest has been filed, the CRA merits of an cant under the pressure of a pending application. application are given careful attention in each The agencies' critics often point to the fact that case, particularly when any of the banks that are very few applications have been denied on CRA party to the application have been assigned a grounds. The Board's longstanding posture has CRA examination rating that is less than satis- been to use the opportunity afforded by the factory. applications process to encourage banks to do a Although our focus today is on the CRA as- better job under the CRA, though not necessarily pects of an application, the Board is required by through denials. When weaknesses have been statute to evaluate several factors besides conve- found in the record of applicant banks—whether nience and needs. Protests on any of these or not the particular application has been the grounds—financial, management, competitive, subject of a CRA protest—many institutions or CRA—are viewed seriously, and are handled have made commitments to address them before in exactly the same way. They are thoroughly processing is completed. Those commitments reviewed by members of the staff and the Board, have been taken into account, together with which sometimes involves seeking out additional examination reports, comments from the public, information from the applicant, its primary reg- and all other information pertinent to an instituulator, and the protestant. tion's record in coming to a disposition of the Although we endeavor to complete our analy- application. Roughly one-third of the some 150 sis so that the case can be acted on by the Board CRA-protested applications that were approved within 60 days, we are not always able to meet involved such commitments. Thus, focusing on that target in both CRA and non-CRA cases. the number of applications denied is misleading Average processing time for the more than 4,000 as the only measure of agency toughness. domestic cases handled by the System in 1987 Because they address problem areas unique to and 1988 was 39 days. However, the bulk of the case at hand, commitments vary widely. cases included in that figure—some 86 percent— Those made most frequently entail measures were decided under delegated authority by the such as enhanced advertising and outreach, often Reserve Banks. Average processing time for the in ways that will reach a non-English-speaking remaining 14 percent of cases requiring Board population; the adoption of a corporate-wide action, which would include most CRA cases, policy for CRA, accompanied by parent comwas 76 days in 1987, and 72 days in 1988. For pany review of subsidiary activities; and special CRA-protested applications, average processing lending efforts in target neighborhoods. Through time was 73 days in 1987 (somewhat less than the this process, dozens of our most prominent bankaverage), and 87 days in 1988 (somewhat more). ing organizations have made CRA commitments One area of controversy has been our prac- for improved performance. tice—on rare occasions—of extending the period This approach has recognized that an adverse for receiving comments from protestants. Our CRA rating or a limited deficiency in perforpolicy on extension of the comment period re- mance may not have warranted denial of the flects the Board's responsibility to process appli- application, particularly if financial, competitive, cations in a timely manner while giving public managerial, and legal factors weighed in favor of comments the attention they deserve. Only in a approval. It also recognized that much could be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

624 Federal Reserve Bulletin • September 1989 gained by securing commitments for improved through outreach into the development and recredit services, given that their fulfillment is finement of products and services; marketing and often monitored through periodic progress re- advertising that reaches the entire community; ports to Federal Reserve Banks and is taken into periodic analysis of loan applications to ensure account at the time of next application. that potential borrowers are treated in a fair, I mentioned earlier that the agencies have equitable manner; and an active managerial role recently issued a comprehensive CRA Policy in CRA planning and oversight. Adopting such a Statement. A product of many years of experi- process will help institutions more effectively ence with the CRA and the difficult issues it address their CRA responsibilities as a routine presents, the statement devotes considerable at- part of doing business. tention to the role of commitments—and sug- An important lesson underscored in the course gests something of a different direction for the of our enforcement efforts is that communication future. It affirms that institutions contemplating that begins and ends with a CRA protest rarely business expansion should have CRA policies brings about long-term benefits. So, as part of and programs in place, and working well, before routine compliance with CRA, the Policy Statefiling an application. While it indicates that com- ment strongly encourages banking organizations mitments for future improvement are entirely to expand their CRA Statements, expounding on appropriate for addressing specific problems in current and future CRA plans and results, to an otherwise satisfactory record, they cannot provide a launching point for discussion with the compensate for a seriously deficient past record community. At the same time, it encourages of CRA performance. neighborhood organizations to react to those This principle was illustrated earlier this year expanded CRA statements, making known their in the Board's denial, in substantial part on concerns at an early stage when they can be dealt CRA grounds, of an application by Continental with most effectively by bank management. Illinois Bancorp., Inc., of Chicago, Illinois, to These comments will be reviewed in the course acquire an Arizona bank. The Board acknowl- of the institution's CRA examination. Commuedged that Continental had adopted its first nity members will, of course, continue to be able formal CRA plan tailored to correct serious to submit comments on applications, and each CRA shortcomings. Yet in the Board's view protest will be analyzed carefully and thor- Continental's past record, in light of its consid- oughly. erable size and resources, failed to show the In all of our CRA enforcement activities— basic results on which that plan, which was in examinations, community affairs outreach, and the very early stages of implementation, could applications processing—we have endeavored to be evaluated. The denial has been well publi- be evenhanded toward both financial institutions cized and, surprisingly, has met sharp criticism and representatives of the communities they from some Chicago community groups—even serve, as well as faithful to the mandate given us before this subcommittee—who view the by the Congress. Perhaps we have not always bank's performance from a somewhat different done it perfectly, but neither has the effort been perspective. Nevertheless, the decision stands as limited or timid as is sometimes portrayed. We as a landmark in signaling that institutions have given significant encouragement to the prishould establish a sound CRA performance vate sector's participation in community develrecord before considering expansion. opment, and we believe we have made a lasting The joint policy statement provides precisely impression on the way the banking industry that type of guidance by describing the elements views its proper role in the community. of an effective CRA program. Its key elements I appreciate this opportunity to speak to the are an assertive community outreach program; a subcommittee and welcome any questions you means of incorporating information gathered may have. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

625 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY 16, 1989 decline in capacity utilization in primary processing industries. 1. Domestic Policy Directive Growth in consumer spending had slowed considerably this year from the pace in 1988. A Information reviewed at this meeting suggested that reduction in growth of spending for services the rate of economic expansion had slowed in recent along with smaller outlays for durable goods, months. Job gains had diminished noticeably in notably motor vehicles, more than offset a March and April, and industrial production was pickup in expenditures for nondurable goods. In growing more slowly than in 1988. On the demand April, enhanced manufacturer incentives spurred side, growth in consumer spending appeared to spending on motor vehicles and boosted retail have slackened, and housing activity had weakened sales after a flat March, but outlays on other considerably. Broad measures of prices had risen durable goods remained weak. After a sizable somewhat more rapidly in 1989, with a significant rise in the second half of 1988, housing starts contribution from sharp increases in energy prices. weakened sharply this year. In April, a substan- Year-over-year increases in labor costs appeared to tial drop in starts of multifamily units brought be continuing on an upward trend but at a more overall housing starts to their lowest level since gradual rate. December 1982. Gains in total nonfarm payroll employment By contrast, recent indicators of business capmoderated substantially in March and April from ital spending showed a rebound in early 1989 the rate recorded over the previous six months. after a decline in the fourth quarter. Shipments of Much of the March-April increase occurred in nondefense capital goods excluding aircraft the services industry, where employment contin- picked up sharply in the first quarter; among the ued to expand at about the 1988 pace. In April, major components, computers posted a sizable job growth slackened at wholesale and retail increase after a sharp fourth-quarter decline, and trade establishments, and factory employment only business purchases of motor vehicles eviremained a bit lower than its January level. denced weakness. Nonresidential construction Although new claims for unemployment insur- activity rebounded sharply in March from a ance continued low, the civilian unemployment February decline, and petroleum drilling turned rate rose from 5.0 percent in March to 5.3 up, apparently in response to increases in oil percent in April. prices. In the first quarter, inventory investment Industrial production increased in April after in the manufacturing sector continued at about declining on balance over the preceding two the average 1988 pace; a substantial part of this months. The April pickup reflected a sizable rise accumulation was in stocks of work-in-process in in motor vehicle assemblies after a weak first the aircraft industry where new orders and proquarter as well as a retracing of the March duction remained on a distinct uptrend. The decline in output of other consumer goods. Pro- overall inventory-to-shipments ratio had changed duction of business equipment continued to rise little from the year-end level. At the retail level, in April at about the strong first-quarter pace. inventory-sales ratios edged up as a result not Total industrial capacity utilization rose in April only of further accumulations in the automotive but remained below its January level. Operating area but also of some rise in apparel and general rates in manufacturing edged up despite a further merchandise stocks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

626 Federal Reserve Bulletin • September 1989 After rising sharply in the first two months of positions but that provided for giving particular the year, producer prices of finished goods ad- weight to potential developments that might revanced at a substantially less rapid pace in March quire some firming during the intermeeting peand April. The April increase reflected another riod. An unchanged availability of reserves over large jump in energy prices; prices of consumer the period was expected to be consistent with the foods turned down, partially reversing their siz- growth of M2 and M3 over the period from able first-quarter increase, and prices of other March through June at annual rates of about 3 finished goods were little changed. At the inter- percent and 5 percent respectively. It was agreed mediate and the crude materials levels, the April that somewhat greater reserve restraint would, price increases were attributable entirely to the or slightly lesser reserve restraint might, be acsurge in energy prices. Both food and energy ceptable depending on indications of inflationary prices contributed to the rise in consumer prices pressures, the strength of the business expanin March. Nevertheless, excluding these compo- sion, the behavior of the monetary aggregates, nents, consumer prices advanced at a slightly and developments in foreign exchange and dofaster rate in the first quarter of 1989 than in the mestic financial markets. fourth quarter of 1988. The year-over-year in- Reserve conditions remained essentially stable crease in this measure of consumer prices had over the intermeeting interval following the edged up only marginally since the beginning of March meeting, except that stronger-than-anticthe year, a pattern also evident in broad mea- ipated federal tax revenues and related reserve sures of labor compensation. flows associated with the April tax date contrib- The nominal U.S. merchandise trade deficit uted for a time to slightly firmer reserve markets. widened somewhat in February, but the average In the reserve maintenance periods completed deficit for January and February together was since the March meeting, adjustment plus seasmaller than that for the fourth quarter. Exports sonal borrowing averaged $565 million while for the January-February period were well above federal funds generally traded around 9% percent their fourth-quarter level; much of the increase or a little below. occurred in agricultural products. Imports ad- With incoming information suggesting a more vanced considerably less, as declines in automo- moderate pace of economic expansion, other tive products, consumer goods, and foods nearly market interest rates declined over the intermeetoffset increases in oil, industrial supplies, and ing period. Rates on short- and intermediate-term capital goods. Available indicators suggested U.S. Treasury issues dropped almost 1 percentthat the pace of economic growth and inflation age point, and those on private money market had increased on balance in the major foreign instruments fell somewhat less. Yields generally industrial countries in early 1989. were down 25 to 50 basis points in long-term debt In foreign exchange markets, the trade- markets, and major indexes of stock prices rose weighted value of the dollar in terms of the other substantially. G-10 currencies rose further on balance over the M2 and M3 grew more sluggishly in April than intermeeting period. The dollar declined early in had been anticipated, as substantial deposit outthe period as market participants perceived cen- flows began after mid-month and continued into tral bank authorities as actively seeking a lower early May. Declines in transaction and other dollar. Despite some continued narrowing of liquid balances were associated primarily with short-term interest rate differentials between dol- outsized personal tax payments and a shortfall in lar-denominated assets and both mark and yen tax refunds. Growth of the broader monetary assets, the dollar subsequently rebounded; mar- aggregates also continued to be restrained by the ket concerns about political uncertainties in Ger- effects of the earlier rise in market interest rates, many and Japan apparently were a factor in the which had substantially increased the opporturise. nity costs of holding deposits. Through April, expansion of M2 had been at a rate well below At its meeting on March 28, the Committee the Committee's range for the year, while growth adopted a directive that called for no immediate of M3 had been in the lower portion of its range. change in the degree of pressure on reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 627 Reflecting the persisting weakness in transac- slowing of the business expansion could not be tions balances in 1989, Ml was below its average ruled out, especially since the effects of earlier level in the fourth quarter of 1988. Growth in policy tightening actions had not been felt fully. total domestic nonfinancial debt slowed some- In this regard, the extended weakness in monewhat in April, damped by strong tax revenues tary growth, at a time of slowing economic that reduced the Treasury's financing needs and expansion, was a worrisome development. The by a virtual halt in refundings of state and local latest information on prices and wages was cited obligations owing to the earlier climb in interest as encouraging, possibly indicating that the unrates. derlying rate of inflation might be leveling out, The staff projection prepared for this meeting although it was still undesirably high. suggested that the expansion of the nonfarm In the course of the Committee's discussion, economy over the remainder of 1989 was likely members observed that the broad indications of to be at a pace somewhat below that officially slower but continuing business expansion were reported for the first quarter. The projection supported by reports on regional economic decontinued to assume that the drought had ended velopments. While conditions varied across the and that normal agricultural growing conditions country, overall activity appeared to be advancwould prevail. The staff anticipated that, with ing in most regions, though evidence of slower margins of unutilized labor and other production growth was apparent in some of them. Retail resources remaining relatively low, most mea- sales had flattened out in a number of areas. The sures of prices and labor costs would increase at weakness in sales was more widespread and somewhat faster rates in 1989 than in 1988. A pronounced in the case of motor vehicles, parmonetary policy to contain inflation would in- ticularly after taking account of incentive provolve slow growth of overall demand and an grams introduced recently by auto manufactureasing of pressures on labor and capital re- ers. Consumer spending was not likely to sources; to the extent that strength in final de- increase rapidly over coming quarters but should mands were to persist, such a policy would imply be sustained at a moderate pace by a high level of additional pressures in financial markets. The employment and further expansion in personal staff projected sluggish consumer outlays for incomes. Housing construction was depressed in goods and services and further weakness in hous- many areas, and this sector of the economy was ing construction over the remainder of 1989. The not expected to make much, if any, net contricontribution of foreign trade to growth was likely bution to the expansion this year, at least on the to be limited, and fiscal policy was expected to be assumption of unchanged financial conditions in moderately restrictive. Growth in business capi- mortgage markets. Business fixed investment tal spending, particularly for equipment pur- presented a mixed picture by industry but, in the chases, was expected to moderate over the rest context of high capacity utilization rates and of the year from its vigorous first-quarter pace. strong pressures to cut costs, further overall growth was viewed as a reasonable prospect In the Committee's discussion of the economic following the sharp pickup in the first quarter. situation and outlook, members focused on ac- Conditions in agriculture were described as facumulating indications that the expansion in busvorable in most parts of the nation, though some iness activity was slowing to a pace that they areas were still affected by drought conditions. generally viewed as more sustainable and more Outside the motor vehicles sector, inventories consistent with reducing inflation pressures over displayed few signs of the imbalances that usutime. The apparent slowing in the growth of ally presage a downturn in production; some of domestic consumer demand would tend to make the recent build-up involved work-in-process inmore domestic resources available for the proventories in industries such as commercial airduction of export goods and the expansion of craft that had firm order backlogs. Gains in net domestic capital. There was little evidence at this exports had contributed importantly to continued point of the kinds of imbalances that normally expansion over recent quarters. While further signal a downturn in economic activity, but some progress in reducing the nation's trade deficit members expressed concern that a cumulative Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

628 Federal Reserve Bulletin • September 1989 was anticipated, some members emphasized the the best promise at this point of being associated potentially adverse implications of a strengthen- with the financial market conditions and moneing dollar for the nation's trade balance and tary growth rates that would support an approdomestic economic growth. On the whole, the priately restrained rate of economic expansion to economic expansion appeared to be stabilizing at accommodate the Committee's anti-inflationary a reduced but sustainable pace that tended to objectives. Given current uncertainties, further reflect both capacity constraints in some indus- developments would need to be evaluated caretries and some slowing in the growth of overall fully and might well call for some adjustment of domestic demand. policy, in either direction, before the next meet- With regard to the outlook for prices and ing of the Committee. wages, a number of members emphasized that In the course of their discussion, the members inflationary pressures were still firmly rooted in took account of a staff analysis that indicated that the economy and that the rate of inflation might unchanged reserve conditions were likely to be well remain unacceptably high for an extended associated with some rebound in the growth of period. However, the slowdown in economic the monetary aggregates during the intermeeting growth should tend to moderate pressures on period. Earlier increases in market interest rates costs over time, and the most recent information in the context of typically sluggish adjustments of on prices and wages had been encouraging. In offering rates on relatively liquid consumer-type addition, the overall outlook for agricultural pro- deposits had fostered slow growth in M2 and to a duction this year had favorable implications for lesser extent in M3, while demand deposits had food prices, and the recent strength of the dollar declined appreciably on balance since year-end. augured well for domestic inflation, albeit at the In recent weeks, transaction and other liquid cost of reduced export opportunities. With re- accounts had been depressed further in conjuncspect to wages, some members commented that tion with larger-than-expected tax payments and recent patterns were better than they had ex- atypically small tax refunds. The staff analysis pected, given the persistence of tight labor mar- postulated some replenishment of tax-depleted kets in many areas and the low rate of unemploy- deposits and a lessening impact from earlier ment for the nation as a whole. However, increases in market rates on interest-sensitive reference also was made to indications of greater deposit accounts, although there was as yet little militancy on the part of labor in some parts of the evidence of a rebound. country and to a recent labor settlement that In the light of indications of slower growth in could have inflationary implications. On balance, business activity and sluggish monetary expanin the context of slowing economic expansion, sion that had left M2 well below the lower bound several members noted that the risks to the of its annual growth cone and M3 near the lower economy apparently had become less one-sided, limit of its annual range, members attached conhaving shifted from a strong potential for greater siderable importance to the need for an upturn in inflation to more equally weighted risks of higher monetary growth. Indeed, the behavior of the inflation and a substantial shortfall in economic monetary aggregates would need to be monitored growth. with special care over the weeks ahead, and a Turning to the conduct of monetary policy, failure of monetary growth to revive during this nearly all of the members endorsed a proposal to period might well signal some further weakening maintain unchanged conditions of reserve avail- in the business expansion and warrant a special ability, at least initially in the intermeeting pe- consultation of the Committee. A pickup in M2 riod. There was considerable uncertainty as to would be needed fairly soon to give some assurwhether monetary conditions were sufficiently ance that this aggregate was on a track that restrictive to foster lower rates of inflation or had would bring it within the Committee's range for become so tight as to cause an even greater the year. In one view the monetary aggregates slowing in the expansion than might be needed to already were sufficiently weak to justify some relieve inflation pressures. In the circumstances, immediate easing of reserve conditions in order most members viewed a steady policy as offering to improve the prospects that adequate monetary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 629 growth would occur to sustain the economic pressure on reserve positions. Some firming or expansion. Other members preferred a more some easing of reserve conditions would be cautious approach, in part to avert the potential acceptable during the intermeeting period deneed for, and resulting market unsettlement that pending on indications of inflationary pressures, would be associated with, a subsequent reversal the strength of the business expansion, the beof the easing, particularly if special factors de- havior of the monetary aggregates, and developpressing recent monetary growth were reversed. ments in foreign exchange and domestic financial With respect to possible adjustments in mone- markets. The reserve conditions contemplated tary policy during the intermeeting period ahead, by the Committee were expected to be consistent a majority of the members supported a directive with growth of M2 and M3 at annual rates of that would make an easing or a tightening of around Wi and 4 percent respectively over the policy equally likely, depending on economic and three-month period from March to June. The financial developments and the behavior of the members agreed that the intermeeting range for monetary aggregates. However, one member the federal funds rate, which provides one mechpreferred a directive that was tilted toward ease anism for initiating consultation of the Commitin order to help assure a prompt policy response tee when its boundaries are persistently exif monetary growth did not rebound relatively ceeded, should be left unchanged at 8 to 12 soon. Other members indicated a preference for percent. retaining the previous intermeeting instruction At the conclusion of the meeting, the following that tilted more toward tightening than toward domestic policy directive was issued to the Fedeasing. Persisting inflationary pressures and, in eral Reserve Bank of New York: this view, the still tentative indications of a slower business expansion argued for a continu- The information reviewed at this meeting suggests ing bias toward restraint. Some members were that the rate of economic growth has slowed in recent concerned that, under prevailing circumstances, months. Gains in total nonfarm payroll employment a move to a symmetrical directive could be moderated substantially in March and April, and emmisinterpreted, when published, as a lessening of ployment in manufacturing was about unchanged over the Committee's commitment to an anti-infla- the two months. The civilian unemployment rate rose considerably to 5.3 percent in April. Industrial productionary policy. tion increased in April after declining on balance in the During the Committee's discussion, consider- preceding two months. Growth in consumer spending ation was given to the technical relationship has slowed considerably in recent months. Housing starts declined further in April. Recent indicators of between the level of adjustment plus seasonal business capital spending show a rebound after a borrowing and that of the federal funds rate. In decline in the fourth quarter. The nominal U.S. mercomparison with experience in earlier years, chandise trade deficit was smaller on average in Januborrowing had been low for some time in relation ary and February than in the fourth quarter. Broad to the federal funds rate. However, the shortfall measures of prices have risen somewhat more rapidly in 1989, with a significant contribution from sharp appeared to have diminished in recent weeks— increases in energy prices. largely because of a surge in seasonal borrow- Interest rates have declined considerably since the ing—and, according to a staff analysis, un- Committee meeting in late March. In foreign exchange changed reserve conditions over the upcoming markets, the trade-weighted value of the dollar in intermeeting period might encompass somewhat terms of the other G-10 currencies rose further on higher average borrowing. In light of the persist- balance over the intermeeting period. Growth of M2 and M3 was sluggish in April, primaring uncertainties in the relationship between borily because of a sizable decline in transactions balrowing and the federal funds rate, the members ances. Through April, expansion of M2 has been at a accepted the need for continued flexibility in the rate below the Committee's range for the year, while conduct of open market operations. growth of M3 has been in the lower portion of its range. At the conclusion of the Committee's discus- The Federal Open Market Committee seeks monesion, all but one of the members indicated that tary and financial conditions that will foster price they favored or could accept a directive that stability, promote growth in output on a sustainable called initially for no change in the degree of basis, and contribute to an improved pattern of inter- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

630 Federal Reserve Bulletin • September 1989 national transactions. In furtherance of these objectives, 2. Foreign Currency Authorization the Committee at its meeting in February established ranges for growth of M2 and M3 of 3 to 7 percent and V/i to lx/i percent, respectively, measured from the fourth At this meeting the Committee approved an quarter of 1988 to the fourth quarter of 1989. The moni- increase in the limit on holdings of foreign toring range for growth of total domestic nonfinancial debt currencies in the System Open Market Acwas set at 6'/2 to 10Vi percent for the year. The behavior of count. Paragraph ID of the Committee's Authothe monetary aggregates will continue to be evaluated in rization for Foreign Currency Operations perthe light of movements in their velocities, developments in mitted the Federal Reserve Bank of New York, the economy and financial markets, and progress toward price level stability. for the System Open Market Account, to main- In the implementation of policy for the immediate tain an overall open position in all foreign future, the Committee seeks to maintain the existing currencies not exceeding $12.0 billion. System degree of pressure on reserve positions. Taking ac- holdings of such currencies had risen rapidly count of indications of inflationary pressures, the this year and totaled nearly $11 billion, based strength of the business expansion, the behavior of the on historical costs. In light of the potential for monetary aggregates, and developments in foreign exchange and domestic financial markets, somewhat further System acquisitions of foreign currengreater reserve restraint or somewhat lesser reserve cies in coordination with similar transactions by restraint would be acceptable in the intermeeting pe- the U.S. Treasury and in cooperation with riod. The contemplated reserve conditions are exforeign monetary authorities, the Committee pected to be consistent with growth of M2 and M3 agreed to raise the limit in Paragraph ID of the over the period from March through June at annual rates of about Wi and 4 percent, respectively. The Authorization to $15.0 billion, effective imme- Chairman may call for Committee consultation if it diately. appears to the Manager for Domestic Operations that reserve conditions during the period before the next meeting are likely to be associated with a federal funds Votes for this action: Messrs. Greenspan, Corrate persistently outside a range of 8 to 12 percent. rigan, Angell, Guffey, Heller, Johnson, Keehn, Kelley, Melzer, Ms. Seger, and Mr. Syron. Vote against this action: Mr. LaWare. Votes for this action: Messrs. Greenspan, Corrigan, Angell, Guffey, Heller, Johnson, Keehn, Kelley, LaWare, Ms. Seger, and Mr. Syron. Vote Mr. LaWare dissented because he wanted to against this action: Mr. Melzer. convey his skepticism about the effectiveness of sterilized intervention in foreign exchange Mr. Melzer dissented because he favored an markets. He did not object to the specific immediate move to slightly less pressure on reserve transactions that had been conducted recently. positions. While inflation was currently too high and Following the meeting the dollar remained might move even higher in the short run, he felt that under strong upward pressure that was resisted the monetary policy restraint of the past two years through very large additional System purchases would eventually reduce inflationary pressures. In of foreign currencies. Effective June 14, 1989, the addition, he was concerned that the very restrictive Committee approved a further increase to $18.0 monetary policy of recent quarters, evidenced by billion in the limit on System holdings of foreign extremely sluggish growth of reserves, the mone- currencies under Paragraph ID of the Authorizatary base, and the monetary aggregates, heightened tion for Foreign Currency Operations. the risks of a recession unless the policy were to be reversed soon. In the event of a recession, a policy Votes for this action: Messrs. Greenspan, Corresponse aimed at a quick recovery could make the rigan, Angell, Guffey, Heller, Johnson, Keehn, longer-term goal of price stability even more difficult Kelley, LaWare, Melzer, Ms. Seger, and Mr. Syto attain. ron. Votes against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

631 Announcements NOMINATIONS SOUGHT FOR APPOINTEES written rather than that of the payable through TO CONSUMER ADVISORY COUNCIL bank. The two amendments require the following: The Federal Reserve Board announced on July 7, 1. Payable through checks of banks are to be 1989, that it is seeking nominations of qualified conspicuously labeled with the name, location, individuals for seven appointments to its Con- and first four digits of the nine-digit routing sumer Advisory Council, to replace members number of the bank on which the check is written whose terms expire on December 31,1989. Nom- and the legend "payable through" followed by inations should be received by August 31, 1989. the name and location of the payable through The Consumer Advisory Council was estab- bank. lished by the Congress in 1976, at the suggestion 2. A bank issuing payable through checks must of the Board, to advise the Board on the exercise bear the risk of loss for the return of such checks of its duties under the Consumer Credit Protec- from a nonlocal payable through bank, to the tion Act and on other consumer-related matters. extent that the return took longer than would The thirty-member Council, with staggered have been required if the check had been rethree-year terms of office, meets three times a turned expeditiously by the bank on which it was year. written. Nominations should include the name, ad- These amendments will become effective on dress, and telephone number of the nominee; February 1, 1991, and on February 1, 1990, past and present positions held; and special respectively. knowledge, interests, or experience related to consumer credit or other consumer financial services. PROPOSED ACTIONS Nominations should be submitted in writing to Dolores S. Smith, Assistant Director, Division of The Federal Reserve Board issued on July 12, Consumer and Community Affairs, Board of 1989, proposed amendments to its Regulation B Governors of the Federal Reserve System, (Equal Credit Opportunity) that implement pro- Washington, D.C. 20551. visions of the Women's Business Ownership Act regarding notifications and recordkeeping for business credit applications. Comments are re- REGULATION CC: AMENDMENTS quested by September 15, 1989. The Federal Reserve Board adopted on July 28, 1989, two amendments to Regulation CC, which REVISED LIST OF OTC STOCKS implements the Expedited Funds Availability NOW AVAILABLE Act, regarding the treatment of bank payable through checks. The Federal Reserve Board published on July 28, The amendments are designed to help ease the 1989, a revised list of over-the-counter (OTC) operational difficulties and lessen the risks im- stocks that are subject to its margin regulations, posed on banks as a result of a 1988 court order. effective August 14, 1989. The court order ruled that payable through This revised List of Marginable OTC Stocks checks must be treated as local or nonlocal based supersedes the List of Marginable OTC Stocks on the location of the bank on which they are that was effective on May 8, 1989. The changes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

632 Federal Reserve Bulletin • September 1989 that have been made to the list, which now banker to pay a civil money penalty of $1 million includes 2,939 OTC stocks, are as follows: 57 in settlement of enforcement proceedings instistocks have been included for the first time, 46 tuted by the Board pursuant to the Bank Holding under National Market System (NMS) designa- Company Act. tion; 85 stocks previously on the list have been Edward S. Buchanan, a former officer and removed for substantially failing to meet the director of First Massachusetts Management requirements for continued listing; and 54 stocks Corporation and First Massachusetts Financial have been removed for reasons such as listing on Corporation, Brockton, without admitting any a national securities exchange or involvement in allegations in the proceeding, agreed to pay a fine an acquisition. of $1 million over a five-year period. This list is published by the Board for the information of lenders and the general public. It includes all over-the-counter securities desig- SYSTEM MEMBERSHIP: ADMISSION nated by the Board pursuant to its established OF STATE BANKS criteria as well as all stocks designated as NMS securities for which transaction reports are re- The following state banks were admitted to memquired to be made pursuant to an effective trans- bership in the Federal Reserve System during the action reporting plan. Additional OTC securities period June 1 through July 31, 1989. may be designated as NMS securities in the interim between the Board's quarterly publica- Colorado tions and will be immediately marginable. The Aspen Alpine Bank next publication of the Board's list is scheduled Florida for November 1989. Pembroke Pines Flamingo Bank Besides NMS-designated securities, the Board Illinois will continue to monitor the market activity of Sandwich Union Bank Sandwich other OTC stocks to determine which stocks Stockton First Bank of Stockton/Warren meet the requirements for inclusion and contin- Streator Union Bank Streator ued inclusion on the list. Maryland Annapolis Bank of Annapolis Pennsylvania SETTLEMENT OF Lemoyne Pennsylvania State Bank ENFORCEMENT PROCEEDINGS Virginia Gloucester Peninsula Trust Bank The Federal Reserve Board announced on July 27, 1989, an agreement by a Massachusetts Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

633 Legal Developments FINAL RULE—AMENDMENT TO REGULATIONS Biomerica, Inc.: $.04 par common G, T, U AND X Bombay Palace Restaurants, Inc.: $.01 par common BSD Medical Corporation - Delaware: $.01 par com- The Board of Governors is amending 12 C.F.R. Parts mon 207, 220, 221 and 224, its Securities Credit Transac- Butler National Corporation: $.10 par common tions; List of Marginable OTC Stocks. The List of Marginable OTC Stocks is comprised of stocks traded Candela Laser Corporation: $.01 par common over-the-counter (OTC) that have been determined by Carolin Mines, Ltd.: Class A, no par common the Board of Governors of the Federal Reserve Sys- Celina Financial Corporation: Class A, $.50 par comtem to be subject to the margin requirements under mon certain Federal Reserve regulations. The List is pub- Chaparral Resources, Inc.: $.10 par common lished four times a year by the Board as a guide for Charlotte Charles, Inc.: $.10 par common lenders subject to the regulations and the general Charter-Crellin, Inc.: $.01 par common public. This document sets forth additions to or dele- Chemex Pharmaceuticals, Inc.: Warrants (expire tions from the previously published List which was 05-29-89), Class 1, warrants (expire 05-20-90) effective May 8, 1989, and will serve to give notice to Circle Express, Inc.: No par common the public about the changed status of certain stocks. CMS Advertising, Inc.: $.01 par common Effective August 14, 1989, accordingly, pursuant to Colorocs Corporation: Class D, warrants (expire the authority of sections 7 and 23 of the Securities 05-04-89) Exchange Act of 1934, as amended (15 U.S.C. §§ 78g Comcast Corporation: 5-Vi% convertible subordinated and 78w), and in accordance with 12 C.F.R. 207.2(k) debentures and 207.6(c) (Regulation G), 12 C.F.R. 220.2(s) and Commonwealth Mortgage Company, Inc.: $.10 par 220.17(c) (Regulation T), and 12 C.F.R. 221.20) and common 221.7(c) (Regulation U), there is set forth below a Comp-U-Check, Inc.: $.10 par common listing of deletions from and additions to the Board's Costco Wholesale Corporation: 7-V4% convertible List of Marginable OTC Stocks: subordinated debentures Crescott, Inc.: $.001 par common Deletions From List De Tomaso Industries, Inc.: $2.50 par common Stocks Removed For Failing Continued Dest Corporation: $.01 par common Listing Requirements Digitech, Inc.: $.10 par common American Carriers, Inc.: No par common Eagle Telephonies, Inc.: $.01 par common American Continental Corporation: $.01 par common, Electro-Catheter Corporation: $.10 par common $1.00 par exchangeable preferred EMS Systems, Ltd.: No par common American Insured Mortgage Investors '84: Depository Energy Conversion Devices, Inc.: $.01 par common units of limited partnership interest Exovir, Inc.: $.01 par common Animed, Inc.: $.01 par common Applied Data Communications, Inc.: $.01 par common Farm House Foods Corporation: $.05 par common Aris Corporation: $.01 par common Ask Corporation: No par common Associated Companies, Inc.: No par common Great Southern Federal Savings Bank (Georgia): $1.00 Avant-Garde Computing, Inc.: No par common par common GTS Corporation: $.01 par common BI Incorporated: No par common Big Bear, Inc.: $.01 par common Haber, Inc.: $.01 par common, Voting, $2.00 par Bio-Technology General Corp.: $.01 par common cumulative convertible preferred Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

634 Federal Reserve Bulletin • September 1989 Harvard Group, PLC: American Depository Receipts TS Industries, Inc.: $.02 par common for ordinary shares (par value 2p) Health Images, Inc.: Series A, $.01 par cumulative United Building Services Corporation of Delaware: convertible preferred $.01 par common United States Antimony Corporation: $.01 par com- Integrated Resources American Insured Mortgage In- mon vestors '85: Depository units of limited partnership interest Vicon Fibert Optics Corporation: $.10 par common Vipont Pharmaceutical, Inc.: Warrants (expire Kaypro Corporation: No par common 06-25-89) Kenilworth Systems Corporation: $.01 par common Kimbark Oil & Gas Company: $.10 par common Stocks Removed For Listing On A National Kings Road Entertainment, Inc.: $.01 par common Securities Exchange Or Being Involved In An Kreisler Manufacturing Corporation: $.50 par com- Acquisition mon American Income Life Insurance Company: $1.00 par Lund Enterprises, Inc.: Warrants (expire 04-30-91) common Apollo Computer, Inc.: $.02 par common, 1-XA% con- Margaux, Inc.: $.01 par common vertible subordinated debentures Maxicare Health Plans, Inc.: No par common, 7% convertible subordinated debentures Bank of Redlands: $1.25 par common Municipal Development Corporation: $.01 par com- Berry Petroleum Company: Class A, $.01 par common mon Blockbuster Entertainment Corp.: $.10 par common Brandywine Savings & Loan Association (Pennsylva- National Business Systems, Inc.: No par common nia): $1.00 par common New Visions Entertainment Corporation: $.001 par Brinkman Instruments, Inc.: $.01 par common common, Series A, par cumulative convertible pre- Brintec Corporation: $.01 par common ferred Nucorp, Inc.: Warrants (expire 10-31-89) Cadnetix Corp.: $.01 par common Cherokee Group, The: No par common OCG Technology, Inc.: $.10 par common Colonial American Bankshares Corporation: $5.00 par Olson Industries, Inc.: $3.00 par common common Component Technology Corp.: $.01 par common Paper Corporation of America: Series B, $.01 par Conversion Industries, Inc.: No par common preferred stock CPI Corporation: $.40 par common Criterion Group, Inc.: Class A, $.01 par common Ragen Corporation: $.125 par common Regina Company, Inc., The: $.0001 par common Enseco Incorporated: $.01 par common Reliable Life Insurance Company, Inc.: Class A, $1.00 Envirodyne Industries, Inc.: $.10 par common par common Excelan, Inc.: $.01 par common Ridge wood Properties, Inc.: $.01 par common Royal Business Group, Inc.: $1.00 par common Falstaff Brewing Corporation: $1.00 par common RTI, Inc.: $.01 par common General Ceramics, Inc.: $1.00 par common Sahlen & Associates, Inc.: $.001 par common Scherer, R.P. Corporation: $1.00 par convertible pre- Holmes, D.H. Company, Limited: $2.50 par common ferred HWC Distribution Corp.: $.01 par common Scribe Systems, Inc.: $.01 par common Southland Financial Corporation: $1.00 par common Irwin Magnetic Systems, Inc.: $.001 par common Staar Surgical Company: $.01 par common ISC Systems Corporation: No par common Status Game Corporation: $.01 par common Itel Corporation: $1.00 par common, Class B, Series, Sun State Savings and Loan Association (Arizona): C, $1.00 par convertible preferred $1.00 par common Kemper Corporation: $5.00 par common Total Health Systems, Inc.: $.01 par common Krueger, W.A. Company: $.20 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 635 Land of Lincoln Savings and Loan: $1.00 par common Chempower, Inc.: $.10 par common Cirrus Logic, Inc.: No par common Mayfair Industries, Inc.: $.01 par common Columbia Pictures Entertainment, Inc.: Warrants (ex- MBS Textbook Exchange, Inc.: $.01 par common pire 06-01-92) Comptronix Corporation: $.01 par common National FSI, Inc.: $.01 par common Conservative Savings Bank (Nebraska): $.01 par com- Network Equipment Technologies, Inc.: $.01 par com- mon mon Consilium, Inc.: No par common Cooker Restaurant Corporation: No par common Pacific Western Bancshares: No par common CRH, PLC: American Depository Receipts Plant Genetics, Inc.: $.01 par common Poly-Tech, Inc.: No par common Duty Free International, Inc.: $.01 par common Polymer International Corp.: $.01 par common Dyncorp: Class A, 17% redeemable preferred Princeville Corp.: $.20 par common Property Trust of America: $1.00 par shares of bene- Eastchester Financial Corporation: $.01 par common ficial interest Fidelity Federal Savings Bank (Virginia): $8.00 par Rowe Furniture Corporation: $1.00 par common common First Financial Management Corp.: 1% convertible Servico, Inc.: $.10 par common subordinated debentures Sound Warehouse, Inc.: $.01 par common First Merchants Corporation: No par common Stocker & Yale, Inc.: $1.00 par common First Western Bancorp, Inc. (Pennsylvania): $5.00 par Stotler Group Inc.: $1.00 par common common Superior Electric Company, The: $1.00 par common Fleet Aerospace, Inc.: $.01 par common Foothill Independent Bancorp: No par common TCF Financial Corporation: $.01 par common Thrifty Rent-A-Car System, Inc.: $.05 par common Goal Systems International, Inc.: No par common Timberjack Corporation: $.01 par common Total System Services, Inc.: $.10 par common Handex Environmental Recovery, Inc.: $.01 par common United Artists Communications, Inc.: $.01 par common Independent Bankgroup, Inc. (Vermont): $1.00 par common Universal Furniture Limited: $.01 par ordinary shares James Madison Limited: $1.00 par common Vitronics Corporation: $.01 par common Kentucky Medical Insurance Company: Class A, Waxman Industries, Inc.: No par common $2.80 par common Additions To The List Lifeline Healthcare Group, Ltd.: $.10 par common AKZO, N.V.: American Depository Receipts Alameda Bancorporation: $2.50 par common Miniscribe Corporation: 7-Vi% convertible subordi- American First Financial Fund 1987 - A Limited nated debentures Partnership Beneficial unit certificates, representing Mission-Valley Bancorp (California): No par common limited partnership interest Nationwide Cellular Service, Inc.: $.01 par common, Bank Maryland Corp.: $.05 par common Warrants (expire 05-04-92) Biogen, Inc.: $.01 par convertible exchangeable pre- New Milford Bank & Trust Company, The (Connectferred icut): $5.00 par common Bytex Corporation: $.10 par common Pioneer Federal Savings Bank (Washington): $1.00 par CCAIR, Inc.: $.01 par common common Cell Technology, Inc.: $.01 par common, Warrants Pop Radio Corporation: $.01 par common (expire 08-27-92) Providence and Worchester Railroad Company: $.50 Chemdesign Corporation: $.01 par common par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

636 Federal Reserve Bulletin • September 1989 Rexhall Industries, Inc.: No par common AMENDMENT TO REGULATION CC Robert Half International, Inc.: 1-XA% convertible subordinated debentures The Board of Governors is amending 12 C.F.R. Part 229, its Regulation CC, Availability of Funds and Schultz Sav-o Stores, Inc.: $.05 par common Collection of Checks. The rule changes will alleviate Sevenson Environmental Services, Inc.: $.10 par com- the operational difficulties and additional risks associmon ated with the acceptance for deposit of bank payable Staples, Inc.: $.0006 par common through checks. Symantex Corporation: $.01 par common The effective date for the amendments to Synetic, Inc.: $.01 par common section 229.38 of the regulation and commentary is February 1, 1990, the effective date for the amend- Tele-Communications, Inc.: Rights (expire 01-31-95) ments to section 229.36 of the regulation and commen- Tocor, Inc.: Units (expire 12-31-94) tary is February 1, 1991. For the reasons set out in the Tseng Labs, Inc.: $.005 par common preamble, 12 C.F.R. Part 229 is proposed to be amended as follows: United Artists Entertainment Company: Class A, $.001 par common, Class B, $.001 par common Part 229—Availability of Funds and Collection Unitog Company: $.01 par common of Checks UNR Industries, Inc.: Warrants (expire 05-31-95) 1. The authority citation for Part 229 continues to read XSIRIUS Scientific, Inc.: $.01 par common as follows: Yankee Energy System, Inc.: $5.00 par common Authority: Title VI of Pub. L. 100-86, 101 Stat, 552, 635, 12 U.S.C. 4001 et seq. CORRECTION TO REGULATION Z 2. In section 229.36, the heading is revised and a new paragraph (e) is added to read as follows: The Board of Governors is correcting a technical error to footnote 10b of 12 C.F.R. Part 226, its Regulation Z (Truth in Lending). On June 9, 1989, the Board issued Section 229.36—Presentment and issuance of a final rule amending Regulation Z to implement the checks Home Equity Loan Consumer Protection Act of 1988. The final rule contained two references to footnote 10b. The first reference accompanies section 226.5b(d)(5)(ii). The second reference accompanies section 226.16(d)(3). This notice changes the second (e) Issuance of payable through checks. A bank that footnote 10b reference to refer to new footnote 36b. arranges for checks payable by it to be payable The following corrections are made to 12 C.F.R. through another bank shall require that the following Part 226: information be printed conspicuously on the face of each check: 1. Section 226.16(d)(3) is corrected by revising the (1) the name, location, and first four digits of the reference to the footnote at the end of the paragraph nine-digit routing number of the bank by which the and by adding a new footnote 36b to read as follows: check is payable; and (2) the words "payable through" followed by the Section 226.16—Advertising name and location of the payable through bank. This provision shall be effective February 1, 1991, and * * * after that date banks that use payable through arrange- (3) * * *36b ments must require their customers to use checks that meet the requirements of this provision. 3. In section 229.38, paragraph (d) is redesignated as paragraph (d)(1), a new heading is added to paragraph (d), and a new paragraph (d)(2) is added to read as 36b. See footnote 10b. follows: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 637 Section 229.38—Liability quired information is deemed conspicuous if it is printed in a type size not smaller than six-point type % % $ $ sfc and if it is contained in the title plate, which is located in the lower left quadrant of the check. The (d) Responsibility for certain aspects of checks required information may be conspicuous if it is QJ * * * located elsewhere on the check. (2) Responsibility for payable through checks. In If a payable through check does not meet the the case of a check that is payable by a bank and payable requirements of this paragraph, the bank by which through a paying bank located in a different check pro- the check is payable may be liable to the depositary cessing region than the bank by which the check is payable, bank or others as provided in section 229.38. For the bank by which the check is payable is responsible for example, a bank by which a payable through check is damages under paragraph (a) of this section, to the extent payable could be liable to a depositary bank that that the check is not returned to the depositary bank suffers a loss, such as lost interest or liability under through the payable through bank as quickly as the check Subpart B, that would not have occurred had the would have been required to be returned under section check met the requirements of this paragraph. The 229.30(a) had the bank by which the check is payable — bank by which the check is payable may be liable for (i) received the check as paying bank on the date additional damages if it fails to act in good faith. the payable through bank received the check; and (ii) returned the check as paying bank in accord- b. Section 229.38 is amended by redesignating the first ance with section 229.30(a)(1). three paragraphs of paragraph (d) as paragraph (d)(1); by adding a new heading to paragraph (d); by adding a Responsibility under this paragraph shall be treated new paragraph (d)(2) to follow newly redesignated as negligence of the bank by which the check is paragraph (d)(1); and by revising the last paragraph of payable for purposes of paragraph (c) of this section. paragraph (d) to read as follows: Section 229.38—Liability 4. Appendix E—Commentary to Part 229 is amended to read as follows: (d) Responsibility for certain aspects of checks a. Section 229.36 is amended by revising the heading ^ * * * and adding a new paragraph (e). (2) Responsibility for payable through checks. This paragraph provides that the bank by which a payable through check is payable is liable for damages APPENDIX E—COMMENTARY under paragraph (a) of this section to the extent that the check is not returned through the payable through bank as quickly as would have been neces- Section 229.36—Presentment and issuance of sary to meet the requirements of section 229.30(a)(1) checks (the 2-day/4-day test) had the bank by which it is payable received the check as paying bank on the day the payable through bank received it. The location of the bank by which a check is payable for (e) Issuance of payable through checks. purposes of the 2-day/4-day test may be determined If a bank arranges for checks payable by it to be from the location or the first four digits of the routing payable through another bank, it must require its number of the bank by which the check is payable. customers to use checks that contain conspicuously This information should be stated on the check. (See on their face the name, location, and first four digits section 229.36(e) and accompanying Commentary.) of the nine-digit routing number of the bank by which Responsibility under paragraph (d)(2) does not inthe check is payable and the legend "payable clude responsibility for the time required for the through" followed by the name and location of the forward collection of a check to the payable through payable through bank. The first four digits of the bank. nine-digit routing number and the location of the bank by which the check is payable must be associ- Generally, liability under paragraph (d)(2) will be ated with the same check processing region. (This limited in amount. Under section 229.33(a), a paying section does not affect section 229.36(b).) The re- bank that returns a check in the amount of $2,500 or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

638 Federal Reserve Bulletin • September 1989 more must provide notice of nonpayment to the the Toledo, Ohio banking market.1 The principals of depositary bank by 4:00 p.m. on the second business Capital are not affiliated with any other depository day following the banking day on which the check is institutions in this market. Based on all of the facts of presented to the paying bank. Even if a payable record, the Board believes that consummation of the through check in the amount of $2,500 or more is not proposal would not result in any adverse effects upon returned through the payable through bank as competition or increase in the concentration of bankquickly as would have been required had the check ing resources in any relevant area. Accordingly, the been received by the bank by which it is payable, the Board concludes that competitive considerations are depositary bank should not suffer damages unless it consistent with approval. has not received timely notice of nonpayment. Thus, The financial and managerial resources of Capital ordinarily the bank by which a payable through and Bank are consistent with approval. Considercheck is payable would be liable under paragraph (a) ations relating to the convenience and needs of the only for checks in amounts up to $2,500, and the communities to be served are also consistent with paying bank would be responsible for notice of approval. nonpayment for checks in the amount of $2,500 or Based on the foregoing and other facts of record, more. the Board has determined that the application should Responsibility under paragraphs (d)(1) and (d)(2) is be, and hereby is, approved. The transaction shall treated as negligence for comparative negligence pur- not be consummated before the thirtieth calendar poses, and the contribution to damages under para- day following the effective date of this Order, or later graphs (d)(1) and (d)(2) is treated in the same way as than three months after the effective date of this the degree of negligence under paragraph (c) of this Order, unless such period is extended for good cause section. by the Board or by the Federal Reserve Bank of Cleveland, acting pursuant to delegated authority. By order of the Board of Governors, effective July 25, 1989. ORDERS ISSUED UNDER BANK HOLDING COMPANY ACT Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, Kelley, and LaWare. Absent and not voting: Governor Heller. Orders Issued Under Section 3 of the Holding Company Act JENNIFER J. JOHNSON Associate Secretary of the Board Capital Holdings, Inc. Sylvania, Ohio Fort Wayne National Corporation Fort Wayne, Indiana Order Approving the Formation of a Bank Holding Company Order Approving Merger of Bank Holding Capital Holdings, Inc., Sylvania, Ohio ("Capital"), Companies has applied for the Board's approval under section 3(a)(1) of the Bank Holding Company Act ("BHC Fort Wayne National Corporation, Fort Wayne, Indi- Act") (12 U.S.C. § 1842(a)(1)), to become a bank ana ("Fort Wayne"), a bank holding company within holding company by acquiring 100 percent of the the meaning of the Bank Holding Company Act outstanding voting shares of Capital Bank, N.A., ("BHC Act"), has applied for the Board's approval Sylvania, Ohio ("Bank"). under section 3 of the BHC Act to acquire by merger Notice of the application, affording interested per- FN Bancorp, Warsaw, Indiana ("Bancorp"), and sons an opportunity to submit comments, has been published (54 Federal Register 3850 (1989)). The time for filing comments has expired, and the Board has considered the application and all comments received in light of the factors set forth in section 3(c) of the 1. The Toledo, Ohio banking market includes: Lucas County, Ohio; Wood County, Ohio, minus the town of Fostoria; the eastern half of BHC Act. Swan Creek Township and the southeastern quadrant of Fulton Capital is a nonoperating corporation organized for Township in Fulton County, Ohio; the townships of Clay, Allen, Harris and Benton in Ottawa County, Ohio; Woodville Township in the purpose of becoming a bank holding company by Sandusky County, Ohio; and the townships of Whiteford, Bedford acquiring Bank, a de novo bank. Bank will operate in and Erie in Monroe County, Michigan. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 639 thereby to acquire its subsidiary bank, First National In this regard, the Board has received comments Bank of Warsaw, Warsaw, Indiana.1 from the Community Reinvestment Alliance, Fort Notice of the application, affording interested per- Wayne, Indiana ("Alliance"). Alliance has alleged sons an opportunity to submit comments, has been that the CRA record of Fort Wayne's lead bank, Fort published (54 Federal Register 7882 (1989)). The time Wayne National Bank, Fort Wayne, Indiana for filing comments has expired, and the Board has ("Bank"), is deficient, particularly with regard to considered the application and all comments received mortgage lending, home improvement lending, and in light of the factors set forth in section 3(c) of the other types of lending in minority and low- and mod- BHC Act. erate-income neighborhoods located in the Fort Fort Wayne is the eleventh largest commercial Wayne banking market.3 banking organization in Indiana, controlling deposits The Board has reviewed the CRA record of Bank in of $1.0 billion, representing approximately 2.7 percent accordance with its practice and procedure. The of the total deposits in commercial banking organiza- Board notes that Bank and Fort Wayne's other subtions in the state.2 Bancorp is the twenty-ninth largest sidiary banks have received satisfactory CRA assesscommercial banking organization in Indiana, control- ments from their primary supervisory agencies. The ling deposits of $218.5 million, representing less than Board also notes that a review of data submitted one percent of the total deposits in commercial bank- pursuant to the Home Mortgage Disclosure Act shows ing organizations in the state. Upon consummation of that Bank has been making loans in all areas of its this proposal, Fort Wayne would become the seventh community, including low- and moderate-income arlargest commercial banking organization in the state, eas. In addition, Bank has participated in several controlling deposits of $1.3 billion, representing ap- government sponsored lending programs, providing proximately 3.2 percent of the total deposits in com- home mortgage and home improvement loans in mimercial banks in the state. Consummation of this nority census tracts, and recently became enrolled in proposal would not significantly affect the concentra- the Indiana Housing Finance Authority Mortgage Fition of banking resources in Indiana. nance Program, which authorizes the bank to originate FHA loans. Bank has made numerous loans to low- Fort Wayne and Bancorp do not compete directly in and moderate-income individuals under the Housing any banking market. Accordingly, consummation of Acquisition Rehabilitation Transaction program, a trithe proposal would not eliminate any significant existparty participation program between Bank, the city of ing competition in any relevant banking market. Con- Fort Wayne, and the Federal National Mortgage Assummation also would not have any significant adsociation. Bank also participates in the Lincoln Life verse effect on probable future competition in any Improved Housing and Indiana Housing Finance Aurelevant banking market. In addition, the financial and thority Home Loan Programs, both of which assist managerial resources of Fort Wayne, Bancorp, and first time home buyers.4 their subsidiaries are consistent with approval. In considering the convenience and needs of the The Board notes that in 1988, Bank has been active community to be served, the Board has taken into in extending credit in an "Enterprise Zone," a govaccount the record of Fort Wayne's banks under the ernmentally defined disadvantaged area.5 In addition, Community Reinvestment Act (12 U.S.C. § 2901 Bank participates in the Indiana Department of Comet seq.) ("CRA"). The CRA requires the federal bank supervisory agencies to encourage financial institu- 3. Alliance also alleges that Bank has not originated any government tions to help meet the credit needs of the local com- guaranteed loans for the last five years despite the fact that these loans munities in which they operate consistent with the safe are listed in Bank's CRA statement. 4. The Board has previously recognized that participation in these and sound operation of such institutions. To accomtypes of programs is an effective means for assuring that the services plish this end, the CRA requires the appropriate fed- of depository institutions reach low- and moderate-income segments eral supervisory authority to "assess the institution's of the communities served by these institutions (see e.g., Bank of Ireland, 75 FEDERAL RESERVE BULLETIN 39, 41 (1989)), and recently record of meeting the credit needs of its entire com- affirmed this position in the Community Reinvestment Act Statement munity, including low- and moderate-income neigh- released jointly by the federal depository institutions regulatory agencies on March 21, 1989. 54 Federal Register 13,742 (1989). As borhoods, consistent with the safe and sound operanoted in the Statement, federal agencies will continue to consider tion of the institution." The Board is required to "take favorably financial-institution leadership in concerted efforts to imsuch record into account in its evaluation" of applica- prove low- and moderate-income areas in the community and participation by financial institutions in public and private partnerships to tions under section 3 of the BHC Act. promote economic and community development efforts. 5. The Enterprise Zone is an area defined by the city of Fort Wayne, the purpose of which is to revitalize the area comprising the Zone by offering tax incentives and financing to businesses and industries 1. After the merger, Fort Wayne will be the surviving corporation. located within the Zone. The Zone is made up primarily of low- and 2. Deposit data are as of June 30, 1987. moderate-income and minority tracts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

640 Federal Reserve Bulletin • September 1989 merce Energy Conservation Program, providing Notice of the application, affording an opportunity for grants for projects such as applying weatherstripping interested persons to submit comments, has been duly to homes. Bank has made a number of small business published (54 Federal Register 10,586 (1989)). The time loans to minority-owned businesses in recent years, for filing comments has expired, and the Board has and is seeking to become a certified Small Business considered the application and all comments received in Administration lender in 1989. Fort Wayne has com- light of the factors set forth in section 3(c) of the Act. mitted to increase efforts to ascertain the credit needs Ponte Vedra is a non-operating company formed for the of the low- and moderate-income and minority areas of purpose of acquiring Bank, a de novo institution. Bank its community, increase advertising of its participation will operate in the St. John's County, Florida banking in special credit programs, and improve advertising of market.1 The principals of Ponte Vedra are not affiliated its general credit programs and services.6 with any other depository institution in the market. Based On the basis of the record in this case, including the on all of the facts of record, the Board believes that past CRA performance of Fort Wayne and its subsid- consummation of the proposal would not result in any iary banks, as well as Fort Wayne's commitments, the adverse effects upon competition or increase in the con- Board concludes that considerations relating to the centration of banking resources in any relevant area. convenience and needs of the communities to be Accordingly, the Board concludes that competitive conserved are consistent with approval. siderations under the Act are consistent with approval. Accordingly, based on the foregoing and other facts The financial and managerial resources and future of record, the Board has determined that the applica- prospects of Ponte Vedra and Bank are consistent with tion should be, and hereby is, approved. The proposal approval. Considerations relating to the convenience shall not be consummated before the thirtieth calendar and needs of the communities to be served also are day following the effective date of this Order, or later consistent with approval. than three months after the effective date of this Based on the foregoing and all of the facts of record, Order, unless such period is extended for good cause and in reliance on commitments made and conditions by the Board or by the Federal Reserve Bank of agreed to by certain investors in Ponte Vedra, the Chicago, acting pursuant to delegated authority. Board has determined that consummation of this By order of the Board of Governors, effective transaction would be in the public interest and that the July 17, 1989. application should be, and hereby is, approved. The transaction shall not be consummated before the thir- Voting for this action: Chairman Greenspan and Governors tieth calendar day following the effective date of this Johnson, Angell, Kelley, and LaWare. Absent and not vot- Order, or later than three months after the effective ing: Governors Seger and Heller. date of the Order, unless such period is extended for good cause by the Board or the Federal Reserve Bank JENNIFER J. JOHNSON of Atlanta, acting pursuant to delegated authority. Associate Secretary of the Board By order of the Board of Governors, effective July 19, 1989. Ponte Vedra Banking Corporation Ponte Vedra Beach, Florida Voting for this action: Chairman Greenspan and Governors Johnson, Angell, Kelley, and LaWare. Absent and not vot- Order Approving Formation of a Bank Holding ing: Governors Seger and Heller. Company JENNIFER J. JOHNSON Ponte Vedra Banking Corporation, Ponte Vedra Associate Secretary of the Board Beach, Florida ("Ponte Vedra"), has applied for the Board's approval under section 3(a)(1) of the Bank Texop Bancshares, Inc. Holding Company Act ("Act") (12 U.S.C. § 1841 Dallas, Texas et seq.), to become a bank holding company by acquiring all of the outstanding voting shares of Ponte Order Approving Acquisition of a Bank Vedra National Bank, Ponte Vedra Beach, Florida ("Bank"). Texop Bancshares, Inc., Dallas, Texas ("Applicant"), a bank holding company within the meaning of the Bank Holding Company Act (the "BHC Act"), has 6. These commitments derive in part from meetings between representatives of Fort Wayne and Alliance. The Reserve Bank arranged these meetings in accordance with 12 C.F.R. 262.25(c), in an effort to narrow the issues in this case, and to provide a forum for the 1. The St. John's County banking market is approximated by resolution of differences between Alliance and Fort Wayne. St. John's County, Florida, minus the city of Hastings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 641 applied for the Board's approval under section 3 of the organization. As proposed by Applicant, this commit- BHC Act (12 U.S.C. § 1842) to acquire control of ment will be satisfied through the issuance of a signif- Texas American Bridge Bank, N.A., a bridge bank icant amount of equity capital and other capital instru- ("Bank") created by the Federal Deposit Insurance ments. Corporation ("FDIC"), to acquire the assets and Based on these and all of the other facts of record, assume the deposits and liabilities of the 24 bank including the bid proposal made by Applicant and subsidiaries of Texas American Bancshares, Inc., Fort accepted by the FDIC, the financial and managerial Worth, Texas ("TAB"). Applicant proposes to imme- resources and future prospects of Applicant, its subdiately enter into a management agreement with the sidiaries and Bank are consistent with approval of this FDIC that provides that Applicant will operate Bank, application. The benefits to the convenience and needs with general discretion over, and responsibility for, of the communities in Texas of maintaining Bank as a the daily operations of Bank. Applicant also proposes viable competitor in Texas weigh in favor of approval to acquire all of the assets and liabilities of Bank of this application. through a purchase and assumption transaction. Applicant competes with Bank in the Dallas and On July 20,1989, the 24 bank subsidiaries of TAB were Houston markets.2 Applicant is the seventh largest of declared insolvent and the FDIC was appointed receiver.1 154 commercial banking organizations in the Dallas Pursuant to section 1 l(i) of the Federal Deposit Insurance market, with deposits of $470 million, controlling 1.7 Act ("FDI Act") as amended by the Competitive Equal- percent of total deposits in the market.3 Bank is the ity Banking Act of 1987 (12 U.S.C. § 1821(i)), the FDIC fifth largest commercial banking organization in the established Bank to acquire the assets and to assume the Dallas market, with deposits of $1,079 billion, controlliabilities and deposits of the closed banks. The FDIC ling 3.9 percent of total deposits in commercial banks solicited offers for the acquisition of Bank from qualified in the market. Upon consummation, Applicant would bidders pursuant to sections ll(i) and 13(f) of the FDI Act be the fifth largest commercial banking organization in (12 U.S.C. §§ 1821(i) and 1823(f)). On July 20, 1989, the the market, controlling $1,549 billion in deposits, or FDIC selected Applicant's bid for Bank. On the same 5.6 percent of market deposits. The Dallas market is day, the FDIC advised that Applicant had been selected considered moderately concentrated, with a Herfindas the winning bidder, and recommended immediate ac- ahl-Hirschman Index ("HHI") of 1000, which would tion on this application in order to permit Bank to operate increase by 13 points to 1013 upon consummation of without the need for liquidation. The OCC has also the proposal.4 recommended approval of the transaction. Applicant is the sixteenth largest of 147 commercial In view of this situation and the need for expeditious banking organizations in the Houston market, with action to protect the interest of Bank's depositors, it deposits of $158 million, controlling 0.7 percent of has been determined, pursuant to section 3(b) of the total deposits in the market. Bank is the sixth largest BHC Act (12 U.S.C. § 1842(b)), section 225.14(h) of commercial banking organization in the Houston marthe Board's Regulation Y (12 C.F.R. 225.14(h)), and ket, with deposits of $455 million, controlling 1.6 section 262.3(1) of the Board's Rules of Procedure (12 C.F.R. 262.3(1)), to dispense with the notice provisions of the BHC Act. 2. The Dallas banking market is approximated by Dallas County, In evaluating an application under section 3 of the the southeast quadrant of Denton County (including Denton and BHC Act, the Board is required to consider the Lewisville), the southwest quadrant of Collin County (including McKinney and Piano), the northern half of Rockwall County, the financial and managerial resources and future pros- communities of Forney and Terrell in Kaufman County, Midlothian, pects of the companies involved, the effect of the Waxahachie, and Ferris in Ellis County, and Grapevine and Arlington in Tarrant County. proposal on competition, and the convenience and The Houston banking market is approximated by the Houston needs of the communities to be served. Under the Ranally Metro Area. proposal, Applicant would immediately provide Bank 3. Market deposit data are as of June 30, 1988. 4. Under the revised Department of Justice Merger Guidelines (49 with new management officials, with proven manage- Federal Register 26,823 (June 29, 1984)), a market in which the ment capability, and Bank would continue to provide a post-merger HHI is between 1000 and 1800 is considered moderately full range of services to its customers. The agreement concentrated. In such markets, the Department of Justice is unlikely to challenge a merger or acquisition resulting in an HHI between 1000 in principle between Applicant and the FDIC will also and 1800 if the increase in the HHI is less than 100 points. The recapitalize Bank. With respect to the financial fac- Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other tors, the Board has relied upon Applicant's commitfactors indicating anticompetitive effects) unless the post-merger HHI ment to maintain adequate capital for the resulting 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 anticompetitive effects implicitly recognizes the competitive effect of limited purpose lenders and other non-depository financial entities. 1. See Appendix. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

642 Federal Reserve Bulletin • September 1989 percent of total deposits in commercial banks in the Appendix market. Upon consummation, Applicant would be the sixth largest commercial banking organization in the The bridge bank has acquired the assets and assumed market, controlling $613 million in deposits, or 2.3 the liabilities and deposits of the following bank subpercent of market deposits. The Houston market is sidiaries of Texas American Bancshares, Inc.: considered moderately concentrated, with an HHI of Texas American Bank/Amarillo, N.A., Amarillo, 1100, which would increase by 2 points to 1102 upon Texas; Texas American Bank/Austin, N.A., Austin, consummation of the proposal. Texas; Texas American Bank/Breckenridge, N.A., On the basis of the foregoing, the Board concludes Breckenridge, Texas; Texas American Bank/Dallas, that consummation of the proposal would not have a N.A., Dallas, Texas; Texas American Bank/Denison, substantial adverse competitive effect in the Dallas or N.A., Denison, Texas; Texas American Bank/Dun- Houston banking markets, or in any other relevant canville, N.A., Duncanville, Texas; Texas American banking market. The Board also concludes that con- Bank/Farmers Branch, N.A., Farmers Branch, Texas; summation of the proposal would not have a signifi- Texas American Bank/Fort Worth, N.A., Fort Worth, cant adverse effect on probable future competition in Texas; Texas American Bank/Forum, N.A., Arlingany relevant banking market. ton, Texas; Texas American Bank/Fredericksburg, Based on the foregoing and all of the facts of record, the N.A., Fredericksburg, Texas; Texas American Bank/ General Counsel and the Staff Director of the Division of Galleria, N.A., Houston, Texas; Texas American Banking Supervision and Regulation have determined, Bank/Greater Southwest, Grand Prairie, Texas; Texas acting pursuant to authority specifically delegated by the American Bank/LBJ, N.A., Dallas, Texas; Texas Board in this case, that the application under section 3 of American Bank/Levelland, Levelland, Texas; Texas the BHC Act should be, and hereby is, approved. This American Bank/Longview, N.A., Longview, Texas; action is limited to approval of the transaction according Texas American Bank/McKinney, N.A., McKinney, to the terms and conditions of Applicant's bid as pre- Texas; Texas American Bank/Midland, N.A., Midsented to the Board, and any significant change in those land, Texas; Texas American Bank/Piano, N.A., Piterms or conditions may require further review by the ano, Texas; Texas American Bank/Prestonwood, Board. N.A., Dallas, Texas; Texas American Bank/Richard- The FDIC has informed the Board that immediate son, N.A., Richardson, Texas; Texas American Bank/ action on Applicant's proposal is necessary in order to Southwest, N.A., Stafford, Texas; Texas American permit Bank to open and operate as a viable competitor Bank/Temple, N.A., Temple, Texas; Texas American that will continue to serve its communities. In light of Bank/Tyler, N.A., Tyler, Texas; Texas American these and all the facts of record in this case, the General Bank/Wichita Falls, N.A., Wichita Falls, Texas. Counsel and the Staff Director of the Division of Banking Supervision and Regulation, acting pursuant to authority Orders Issued Under Section 4 of the delegated by the Board, have determined, in accordance Bank Holding Company Act with section 11(b) of the BHC Act, that Applicant may immediately acquire control of Bank through the management agreement with the FDIC, and that Applicant may consummate its proposed investment in Bank on or after Dresdner Bank AG the fifth calendar day following the effective date of this Frankfurt, Federal Republic of Germany Order. The transaction shall not be consummated later than three months after the effective date of this Order, unless the period for consummation is extended for good Order Approving Acquisition of a Limited cause by the Board or the Federal Reserve Bank of Dallas Partnership Interest in Investment Adviser under delegated authority. By order, approved pursuant to authority delegated by the Board, effective July 21, 1989. Dresdner Bank AG, Frankfurt, Federal Republic of Germany ("Dresdner"), a foreign bank subject to J. VIRGIL MATTINGLY, JR. certain provisions of the Bank Holding Company Act General Counsel ("BHC Act"), has applied for the Board's approval under section 4(c)(8) of the BHC Act (12 U.S.C. WILLIAM TAYLOR § 1843(c)(8)) and section 225.23 of the Board's Regu- Staff Director lation Y (12 C.F.R. 225.23), to acquire indirectly Division of Banking through its subsidiary, Dresdner Asset Management Supervision and Regulation (U.S.A.) Corporation, Boston, Massachusetts ("Dres- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 643 dner U.S.A."), a limited partnership interest of 49 require termination of any grandfathered activity if percent in Oechsle International Advisors L.P., Bos- necessary to prevent adverse effects. ton, Massachusetts ("Oechsle"), a registered invest- Dresdner currently engages in investment advisory ment adviser.1 Substantially all of the remaining inter- and management activities in the United States est in Oechsle would be held by the Oechsle Group, through its U.S. subsidiary, ABD Securities Corpora- L.P., Boston, Massachusetts ("Oechsle Group"). tion ("ABD Securities"), and ABD Securities' wholly Oechsle will engage in the following activities that owned U.S. subsidiary, ABD International Managethe Board has determined to be closely related to ment Corporation ("ABD International"), pursuant to banking and permissible for bank holding companies in section 8(c) of the IBA.5 ABD Securities is a registered Regulation Y: broker-dealer that directly and through subsidiaries (1) providing portfolio investment advice and invest- engages in a broad range of securities activities not ment management services to institutions and indi- permitted to U.S. bank holding companies, including viduals pursuant to 12 C.F.R. 225.25(b)(4)(iii);2 and acting as a floor broker and specialist on the New York (2) serving as investment adviser to investment Stock Exchange. ABD International, however, is a registered investment adviser that engages solely in companies, including sponsoring, organizing and permissible investment advisory and management acmanaging closed-end investment companies pursutivities. ant to 12 C.F.R. 225.25(b)(4)(ii). Oechsle is a registered investment adviser and pro- Notice of the application, affording interested per- vides investment advice and management services to sons an opportunity to submit comments, has been pension plans and tax-exempt institutional investors, duly published (54 Federal Register 25,173 (1989)). principally university endowments. The acquisition of The time for filing comments has expired, and the the proposed limited partnership interest in Oechsle Board has considered the application and all com- would permit Dresdner to expand its investment adments received in light of the public interest factors set visory activities in the United States. Section 8(c) does forth in section 4(c)(8) of the BHC Act. not authorize the expansion of a grandfathered non- Dresdner, with total assets equivalent to approxi- banking activity through the acquisition of a going mately $129 billion, is the 26th largest banking organi- concern and, under these circumstances, an applicazation in the world and the second largest banking tion is required. Accordingly, Dresdner has applied for organization in the Federal Republic of Germany3. In the Board's approval of the proposed acquisition unthe United States, Dresdner maintains state-licensed der section 4(c)(8) and Regulation Y. branches in New York and Chicago and a state- In applications under section 4(c)(8) of the BHC licensed agency in Los Angeles.4 Accordingly, Dres- Act, the Board also evaluates the financial resources dner is subject to the nonbankirig restrictions of sec- of the applicant, including its subsidiaries, and the tion 4 of the BHC Act as if it were a domestic bank effects of the proposed transaction on those holding company. resources.6 In accordance with the principles of na- Dresdner also engages in activities in the United tional treatment and competitive equality, the Board States through subsidiaries, described below, that are has stated it expects a foreign bank to meet the same permissible under section 8(c) of the International general standards of financial strength as domestic Banking Act ("IB A"). Section 8(c) of the IB A permits bank holding companies and to be able to serve as a a foreign bank such as Dresdner to continue to engage source of strength to its United States banking in any nonbanking activities in which it was engaged operations.7 The Board has noted in considering apon July 26, 1978. This authority is subject to review by the Board, which may, after opportunity for a hearing, 5. Dresdner and Bayerische Hypotheken-und Wechsel-Bank AG own 75 percent and 25 percent, respectively, of the voting shares of ABD Securities. 1. Dresdner U.S.A. will initially acquire a 49 percent limited 6. 12 C.F.R. 225.24; Bayerische Vereinsbank AG, 73 FEDERAL partnership interest in the profits and capital of Oechsle with an option RESERVE BULLETIN 155, 156 (1987). to acquire an additional limited partnership interest up to 51 percent 7. The Fuji Bank Limited, 75 FEDERAL RESERVE BULLETIN, 94, 96 after the first anniversary of the closing date and all of the outstanding (1989); Bayerische Vereinsbank AG, 73 FEDERAL RESERVE BULLETIN limited partnership interests under certain conditions after the fifth 155, 156 (1987); Toyo Trust and Banking Co., Ltd., 74 FEDERAL anniversary. Dresdner U.S.A. will also select three members of RESERVE BULLETIN 623 (1988); Taiyo Kobe Bank, Ltd., 74 FEDERAL Oechsle's five-member Advisory Committee. RESERVE BULLETIN 621 (1988); The Long-Term Credit Bank of Japan, 2. Oechsle intends to provide investment management services for Limited, 74 FEDERAL RESERVE BULLETIN 573 (1988); The Sanwa tax-exempt institutional investors with respect to investments in U.S. Bank Limited, 74 FEDERAL RESERVE BULLETIN 578 (1988); Sumitomo and non-U.S. fixed income securities, and investment management Trust & Banking Co., Ltd., 73 FEDERAL RESERVE BULLETIN 749 services to high net-worth individuals. (1987); Ljubljanska Banka-Associated Bank, 72 FEDERAL RESERVE 3. Data are as of December 31, 1988. BULLETIN 489 (1986); The Mitsubishi Trust and Banking Corporation, 4. Dresdner's wholly owned subsidiary, Deutsch-Suedamerika- 72 FEDERAL RESERVE BULLETIN 256 (1986); The Industrial Bank of nische Bank AG maintains a state-licensed agency in Miama, Florida. Japan, Ltd., 72 FEDERAL RESERVE BULLETIN 71 (1986); The Mitsub- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

644 Federal Reserve Bulletin • September 1989 plications of foreign banking organizations that foreign "can reasonably be expected to produce benefits to banks operate outside the United States in accordance the public, such as greater convenience, increased with different regulatory and supervisory require- competition, or gains in efficiency, that outweigh posments, accounting principles, asset-quality standards, sible adverse effects, such as undue concentration of and banking practices and traditions, and that these resources, decreased or unfair competition, conflicts differences make it difficult to compare the capital of interest, or unsound banking practices." 12 U.S.C. positions of domestic and foreign banks. In the past, § 1843(c)(8). In evaluating those factors, the Board the Board has addressed the complex issues involved considered that Dresdner, through ABD Securities, in balancing these concerns in the context of individual engages in securities activities in the United States applications on a case-by-case basis, making adjust- that are not permissible for U.S. bank holding compaments as appropriate to an applicant's capital to reflect nies. As a result, Dresdner could conceivably gain an differences in accounting treatment and regulatory unfair competitive advantage over domestic bank practices. holding companies by combining grandfathered secu- The Board recently has adopted a proposal to sup- rities activities with activities permissible under secplement its consideration of capital adequacy with a tion 4(c)(8). That would occur if the grandfathered risk-based system that is simultaneously being pro- activities were used to support or enhance the section posed by the member countries of the Basle Commit- 4(c)(8) activities, thus allowing Dresdner to offer a tee on Banking Regulations and Supervisory Practices wide array of services not permissible for domestic and the other domestic federal banking agencies.8 The bank holding companies. Board considers the Basle Committee proposal an To address the possible adverse effects of Dresdimportant step toward a more consistent and equitable ner's proposed acquisition of an interest in Oechsle, international norm for assessing capital adequacy. Dresdner has made a series of commitments which are Until that framework becomes effective, however, the consistent with those made in connection with prior Board will continue to evaluate applications involving Board decisions in this area.9 These commitments foreign banking organizations on a case-by-case basis require a complete separation between the operations consistent with its prior precedent. of ABD Securities and its affiliates and Oechsle in In this case, the primary capital ratio of Dresdner, as order to address these concerns. In light of these publicly reported, is below the 5.5 percent minimum commitments, as well as applicable legal restrictions level specified in the Board's Capital Adequacy Guide- under federal securities registration laws, the Board lines. After making adjustments to reflect German believes that Dresdner would not have an unfair banking and accounting practices, as well as consider- competitive advantage in conducting the activities in ation of other information relating to Dresdner's over- question under section 4(c)(8), and that those activities all financial condition, Dresdner's capital ratio meets would not give rise to conflicts of interest. U.S. standards. The Board also considered several In prior decisions, the Board has expressed conadditional factors that mitigate its concerns in this cern that joint ventures could potentially lead to a case. The Board notes that the application involves matrix of relationships between co-ventures that nonbanking activities that generate fee income and could break down the legally mandated separation of that require a small commitment of capital. The Board banking and commerce, create the possibility of also notes that nearly one quarter of Dresdner's con- conflicts of interest and other adverse effects that the solidated assets are mortgage loans funded by mort- BHC Act was designed to prevent, or impair or give gage-backed bonds, and that approximately 50 percent the appearance of impairing the ability of the banking of those loans are either made directly to state and organization to function effectively as an indepenlocal governments of the Federal Republic of Germany dent and impartial provider of credit.10 Further, joint or backed by these public bodies. In light of all the ventures must be carefully analyzed for any possible facts of record, the Board has determined that finan- adverse effects on competition and on the financial cial factors are consistent with approval of the appli- condition of the banking organization involved in the cation. proposal. To approve the application, the Board must find that Dresdner's performance of the activities in question 9. Bayerische Vereinsbank AG, supra; Credit Suisse, 73 FEDERAL RESERVE BULLETIN 160 (1987). is hi Bank Limited, 70 FEDERAL RESERVE BULLETIN 518 (1984). See 10. See, e.g., The Fuji Bank Limited, 75 FEDERAL RESERVE also Policy Statement on Supervision and Regulation of Foreign- BULLETIN 577; The Fuji Bank Limited, 75 FEDERAL RESERVE BUL- Based Bank Holding Companies, Federal Reserve Regulatory Service LETIN 94, 95 (1989); Independent Bankers Financial Corporation, 72 1 4-835 (1979). FEDERAL RESERVE BULLETIN 664 (1986); and Amsterdam-Rotterdam 8. 54 Federal Register 4186 (1989). Bank, N.V., 70 FEDERAL RESERVE BULLETIN 835 (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 645 Oechsle Group has stated that it engages only in Voting for this action: Chairman Greenspan and Governors activities that are permissible for a bank holding Johnson, Seger, Angell, and Kelley. Absent and not voting: Governors Heller and LaWare. company. Furthermore, Dresdner has committed to notify the Board in the event the Oechsle Group JENNIFER J. JOHNSON determines to engage in any securities business that Associate Secretary of the Board is impermissible for a state member bank under the Glass- Steagall Act, and to seek Board approval of First Union Corporation Dresdner's retention of its interest in Oechsle should Charlotte, North Carolina the Oechsle Group's securities activities be inconsistent with the Board's Order approving this applica- Order Approving Application to Engage in tion. Underwriting and Dealing in Certain Securities to a The Board has also considered whether other Limited Extent and in Other Securities Related adverse effects on competition may result from the Activities proposal and notes that, although Oechsle engages in activities that are also provided by ABD Securities First Union Corporation, Charlotte, North Carolina and ABD International, there are numerous compet- ("First Union"), a bank holding company within the itors for these services and Dresdner's proposal meaning of the Bank Holding Company Act ("BHC would have a de minimis effect on existing competition. Act"), has applied for the Board's approval under Moreover, Dresdner's proposal can be expected to result in section 4(c)(8) of the BHC Act (12 U.S.C. some increase in competition due to the financial support § 1843(c)(8)) and section 225.23 of the Board's Reguprovided by Dresdner, thus enabling Oechsle to become a lation Y (12 C.F.R. 225.23) for its subsidiary, First strong competitor. Union Securities, Incorporated, Charlotte, North In light of the facts of record and the commitments Carolina ("Company"), to engage to a limited extent offered by Dresdner to enhance the separation of in underwriting and dealing in: Oechsle from its grandfathered securities affiliates, (1) municipal revenue bonds, including certain inthe Board finds that the proposal would not result in dustrial development bonds; conflicts of interest or decreased or unfair competi- (2) 1-4 family mortgage-related securities; tion. There is also no evidence in the record that (3) commercial paper; and Dresdner's proposal would result in any undue con- (4) consumer-receivable-related securities ("CRRs") centration of resources, unsound banking practices (collectively "ineligible securities"). or other adverse effects. First Union also proposes to underwrite and deal in Based on the foregoing and other facts of record, securities that state member banks are permitted to including Dresdner's commitments, the Board has underwrite and deal in under section 16 of the Banking determined that the balance of public interest factors Act of 1933 (the "Glass-Steagall Act") (12 U.S.C. that it must consider under section 4(c)(8) of the §§ 24 (Seventh) and 335) (hereinafter "bank-eligible BHC Act is favorable. Accordingly, the Board has securities"), as permitted by section 225.25(b)(16) of determined that the application should be, and the Board's Regulation Y (12 C.F.R. 225.25(b)(16)). hereby is, approved. This determination is further In addition, First Union proposes to provide investsubject to all of the conditions set forth in the ment advisory and brokerage activities separately and Board's Regulation Y, including sections 225.4(d) on a combined basis subject to conditions established and 225.23(b), and to the Board's authority to require by the Board.1 such modification or termination of the activities of a First Union also has applied to engage in the followbank holding company or any of its subsidiaries as ing activities: the Board finds necessary to assure compliance with (1) investment advisory and brokerage activities the provisions and purposes of the BHC Act and the separately and on a combined basis to institutional Board's regulations and orders issued thereunder, or and retail customers; to prevent evasion thereof. (2) foreign exchange advisory activities; This transaction shall not be consummated later (3) futures commission merchant activities; than three months after the effective date of this (4) the purchase and sale of silver and gold for the Order, unless such period is extended for good account of customers; and cause by the Board or by the Federal Reserve (5) financial advisory services. Bank of New York, pursuant to delegated authority. 1. See, 12 C.F.R. 225(b)(4) and (b)(15); Bank of New England By order of the Board of Governors, effective Corporation, 74 FEDERAL RESERVE BULLETIN 700 (1988); and PNC July 31, 1989. Financial Corp, 75 FEDERAL RESERVE BULLETIN 396 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

646 Federal Reserve Bulletin • September 1989 The Board has previously determined that these prudential framework of limitations established in activities are permissible for bank holding companies.2 those cases to address the potential for conflicts of Applicant has committed to conduct these activities interest, unsound banking practices or other adverse subject to the particular limits imposed by the Board in effects, the proposed underwriting and dealing activiprevious cases. ties are so closely related to banking as to be a proper First Union, with approximately $29.5 billion in incident thereto within the meaning of section 4(c)(8) assets, is the third largest commercial banking organi- of the BHC Act. First Union has committed to conzation in North Carolina.3 It operates five subsidiary duct its ineligible underwriting and dealing activities banks and engages directly and through subsidiaries in subject to the 5 percent revenue test and the prudential a broad range of permissible nonbanking activities in limitations established by the Board in its previous the United States. Orders.5 Notice of the application, affording interested persons an opportunity to submit comments on the pro- Full-Service Brokerage Activities posal, has been published (54 Federal Register 24,038 (1989)). The time for filing comments has expired, and The Board has previously determined that full-service the Board has considered the application and all securities brokerage for both institutional and retail comments received in light of the public interest customers is closely related to banking, and a proper factors set forth in section 4(c)(8) of the BHC Act. incident to banking under section 4(c)(8) of the BHC Act, and does not violate the Glass-Steagall Act.6 Underwriting and Dealing in Ineligible Under this proposal, Company would provide full- Securities service brokerage to retail customers with respect to ineligible securities that Company may hold as princi- The Board has previously determined that the conduct pal in connection with its authorized underwriting and of the proposed ineligible securities underwriting and dealing activities. In connection with this activity, dealing activity is consistent with section 20 of the First Union has made commitments regarding disclo- Glass-Steagall Act (12 U.S.C. § 377), provided the sure that have been approved by the Board in two underwriting subsidiary derives no more than 5 per- previous Orders.7 cent of its total gross revenue from underwriting and Specifically, First Union has committed to provide dealing in the approved securities over any two-year full and appropriate disclosure of its interest in any period.4 The Board further found that, subject to the transaction, as required by securities laws and fidu- 2. See, 12 C.F.R. 225.25(b)(4) (investment or financial advice), 5 percent gross revenue limit set forth in Citicorp!Morgan!Bankers (b)(15) (securities brokerage), (b)(17) (foreign exchange advisory and Trust. transactional services), (b)(18) (futures commission merchant), and This 5 percent gross revenue limit should be calculated in accord- (b)(19) (investment advice on financial futures and options on futures); ance with the method stated in J.P. Morgan & Co. Incorporated, Bank of New England Corporation, 74 FEDERAL RESERVE BULLETIN et al., 75 FEDERAL RESERVE BULLETIN 192 (1989). 700 (1988) and PNC Financial Corp, 75 FEDERAL RESERVE BULLETIN 5. First Union has not proposed a market share limitation. Accord- 396 (1989) (full-service brokerage to institutional and retail custom- ingly, and in light of the decision in SI A v. Board, the Board has ers); United Virginia Bankshares, Inc., 73 FEDERAL RESERVE BUL- determined not to require First Union to comply with a market share LETIN 309 (1987) (purchase and sale of silver and gold for the account limitation. of customers); and Signet Banking Corporation, 73 FEDERAL RE- The industrial development bonds approved for First Union in this SERVE BULLETIN 59 (1987) and Canadian Imperial Bank of Com- case are only those tax-exempt bonds in which the governmental merce, 74 FEDERAL RESERVE BULLETIN 571 (1988) (financial advisory issuer, or the governmental unit on behalf of which the bonds are services). issued, is the owner for federal income tax purposes of the financed 3. Asset data are as of March 31, 1989. Ranking, based on deposits, facility (such as airports, mass commuting facilities, and water polluis as of December 31, 1988. tion control facilities). Without further approval from the Board, 4. Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust Company may underwrite and deal in only these types of industrial New York Corporation, 73 FEDERAL RESERVE BULLETIN 473 (1987) development bonds. ("Citicorp/Morgan!Bankers Trust"), ajf dsub nom., Securities Indus- The Board's approval of the proposed underwriting and dealing try Association v. Board of Governors of the Federal Reserve System, activities extends only to Company. The activities may not be 839 F.2d 47 (2d Cir. 1988), cert, denied, 108 S. Ct. 2830 (1988) ("S/A conducted by First Union in any other subsidiary without prior Board v. Board"); and Chemical New York Corporation, The Chase Man- review. Pursuant to Regulation Y, no corporate reorganization of hattan Corporation, Bankers Trust New York Corporation, Citicorp, Company, such as the establishment of subsidiaries of Company to Manufacturers Hanover Corporation and Security Pacific Corpora- conduct the activities, may be consummated without prior Board tion, 73 FEDERAL RESERVE BULLETIN 731 (1987) ("Chemical"). approval. Company may also provide services that are necessary incidents to 6. Bank of New England Corporation, 74 FEDERAL RESERVE these approved activities. Any activity conducted as a necessary BULLETIN 700 (1988); Bankers Trust New York Corporation, 14 incident to the ineligible securities activity must be treated as part of FEDERAL RESERVE BULLETIN 695 (1988); and PNC Financial Corp, the ineligible securities activity unless Company has received specific 75 FEDERAL RESERVE BULLETIN 3% (1989). approval under section 4(c)(8) of the BHC Act to conduct the activity 7. PNC Financial Corp, 75 FEDERAL RESERVE BULLETIN at 397independently. Until such approval is obtained, any revenues from the 398; Bankers Trust New York Corporation, 74 FEDERAL RESERVE incidental activity must be counted as ineligible revenue subject to the BULLETIN at 696-698. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 647 ciary principles. Company will inform each brokerage/ The Board's determination is subject to all of the advisory customer at the commencement of the cus- conditions set forth in the Board's Regulation Y, tomer relationship that, as a general matter, Company including those in sections 225.4(d) and 225.23(b), and might be a principal, or might be engaged in an to the Board's authority to require modification or underwriting, with respect to, or might purchase from termination of the activities of a bank holding coman affiliate, those securities for which brokerage/advis- pany or any of its subsidiaries as the Board finds ory services are being provided. At the time a broker- necessary to assure compliance with, and to prevent age order is being taken, the customer will be informed evasion of, the provisions of the BHC Act and the whether Company is acting as agent or as principal Board's regulations and orders issued thereunder. with respect to the security. Confirmations sent to This transaction shall not be consummated later customers also will state whether Company is acting than three months after the effective date of this as agent or principal. Order, unless such period is extended for good cause Moreover, Company will conduct its brokerage and by the Board or by the Federal Reserve Bank of advisory activities within the same framework ap- Richmond, pursuant to delegated authority. proved by the Board in Bank of New England Corpo- By order of the Board of Governors, effective ration. Thus, First Union has committed that, before July 31, 1989. providing any brokerage or advisory services to retail customers, Company will prominently disclose in writ- Voting for this action: Chairman Greenspan and Governors ing to each such customer that Company is not a bank Johnson, Seger, Angell, and Kelley. Absent and not voting: Governors Heller and LaWare. and is separate from any affiliated bank, and that the securities sold, offered, or recommended by Company JENNIFER J. JOHNSON are not deposits, are not insured by the Federal Associate Secretary of the Board Deposit Insurance Corporation, are not guaranteed by an affiliated bank, and are not otherwise an obligation of an affiliated bank, unless such is in fact the case.8 SouthTrust Corporation Consummation of the proposal would provide added Birmingham, Alabama convenience to First Union's customers. In addition, the Board expects that the de novo entry of First Order Approving Application to Underwrite and Union into the market for these services would in- Deal in Certain Securities, to Offer Full-Service crease the level of competition among providers of Brokerage Services, and to Engage in Commercial these services. With regard to each of the proposed Paper Placement activities, First Union has committed to adhere to limitations the Board previously has found adequate to address the possibility of any adverse effects arising SouthTrust Corporation, Birmingham, Alabama from such activities. Accordingly, based upon the ("SouthTrust"), a bank holding company within the facts of record and the commitments made by First meaning of the Bank Holding Company Act ("BHC Union regarding the conduct of these activities the Act"), has applied for the Board's approval under Board has determined that the performance of the section 4(c)(8) of the BHC Act (12 U.S.C. proposed activities by First Union can reasonably be § 1843(c)(8)) and section 225.23 of the Board's Reguexpected to produce public benefits which would lation Y (12 C.F.R. 225.23), for its subsidiary, Southoutweigh adverse effects under the proper incident to Trust Securities, Incorporated, Birmingham, Alabama banking standard of section 4(c)(8) of the BHC Act. ("Company"), to engage to a limited extent in under- Based on the foregoing, the Board has determined writing and dealing in: to, and hereby does, approve the application subject to (1) municipal revenue bonds, including certain inall the terms and conditions established by the Board dustrial development bonds; in the above mentioned regulations and orders, except (2) 1-4 family mortgage-related securities; the market share limitation. (3) commercial paper; and (4) consumer-receivable-related securities (collectively referred to as "ineligible securities"). 8. Moreover, First Union proposes to exercise discretionary port- SouthTrust also proposes to underwrite and deal in folio management for institutional customers only, subject to the same limitations of the Board's J.P. Morgan & Co. Inc. Order, 73 FEDERAL securities that state member banks are permitted to RESERVE BULLETIN 810 (1987). Investment advice would be provided underwrite and deal in under section 16 of the Banking on an integrated basis, i.e., Company would not charge an explicit fee Act of 1933 (the "Glass-Steagall Act") (12 U.S.C. for the investment advice and would receive fees only for transactions executed for customers. §§24 Seventh and 335) (hereinafter "eligible securi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

648 Federal Reserve Bulletin • September 1989 ties"), as permitted by section 225.25(b)(16) of Regu- Full-Service Brokerage Activities. The Board has lation Y (12 C.F.R. 225.25(b)(16)). previously determined that full-service securities bro- In addition to underwriting and dealing in eligible kerage for both institutional and retail customers is and ineligible securities, SouthTrust proposes to offer closely related and a proper incident to banking under securities brokerage and investment advice on a com- section 4(c)(8) of the BHC Act, and does not violate bined basis ("full-service brokerage") to institutional the Glass-Steagall Act. Bank of New England Corpoand retail customers. SouthTrust also has applied to ration, 74 FEDERAL RESERVE BULLETIN 700 act as agent and advisor in connection with the place- (1988) ("Bank of New England").4 Under this proment of commercial paper with institutional investors. posal, Company will provide full-service brokerage to SouthTrust, with approximately $6.8 billion in con- retail customers with respect to ineligible securities solidated assets, is the second largest commercial that Company may hold as principal in connection banking organization in Alabama.1 It operates 40 sub- with its authorized underwriting and dealing activities. sidiary banks and engages directly and through sub- SouthTrust has made commitments regarding disclosidiaries in a broad range of permissible nonbanking sure that have been approved by the Board previously activities in the United States. with regard to such activity.5 Notice of the application, affording interested per- Specifically, SouthTrust has committed to provide sons an opportunity to submit comments on the pro- full and appropriate disclosure of its interest in any posal, has been published (54 Federal Register 23,267 transaction, as required by securities laws, the Na- (1989)). The time for filing comments has expired, and tional Association of Securities Dealers and fiduciary the Board has considered the application and all principles. Company will inform each brokerage/adcomments received in light of the public interest visory customer at the commencement of the cusfactors set forth in section 4(c)(8) of the BHC Act. tomer relationship that, as a general matter, Company Underwriting and Dealing in Ineligible Securities. might be a principal, or might be engaged in an The Board has previously determined that the conduct underwriting, with respect to, or might purchase from of the proposed ineligible securities underwriting and an affiliate, those securities for which brokerage/advisdealing is consistent with section 20 of the Glass- ory services are being provided. At the time a broker- Steagall Act, provided the underwriting subsidiary age order is being taken, the customer will be informed derives no more than 5 percent of its total gross whether Company is acting as agent or as principal revenue from underwriting and dealing in ineligible with respect to the security. Confirmations sent to securities over any two-year period.2 The Board fur- customers also will state whether Company is acting ther found that, subject to the prudential framework of as agent or principal. limitations established in those cases to address the potential for conflicts of interest, unsound banking practices or other adverse effects, the proposed under- must be treated as part of the ineligible securities activity unless Company has received specific approval under section 4(c)(8) of the writing and dealing activities were so closely related to BHC Act to conduct the activity independently. Until such approval banking as to be a proper incident thereto within the is obtained, any revenues from the incidental activity must be counted meaning of section 4(c)(8) of the BHC Act. SouthTrust as ineligible revenue subject to the 5 percent gross revenue limit set forth in Citicorp/Morgan/Bankers Trust. has committed to conduct its ineligible securities un- This 5 percent gross revenue limit should be calculated in accordderwriting and dealing activities subject to the 5 per- ance with the method stated in J.P. Morgan & Co. Incorporated, cent revenue test and the prudential limitations estab- et al., 75 FEDERAL RESERVE BULLETIN 192 (1989). The industrial development bonds approved for SouthTrust in this lished by the Board in its previous Orders.3 case are only those tax-exempt bonds in which the governmental issuer, or the governmental unit on behalf of which the bonds are issued, is the owner for federal income tax purposes of the financed 1. Asset data and ranking are as of March 31, 1989. facility (such as airports, mass commuting facilities, and water pollu- 2. See Citicorp, J.P. Morgan & Co. Incorporated, and Bankers tion control facilities). Without further approval from the Board, Trust New York Corporation, 73 FEDERAL RESERVE BULLETIN 473 Company may underwrite or deal in only these types of industrial (1987) ("Citicorp/Morgan/Bankers Trust"), ajf d sub nom., Securities development bonds. Industry Association v. Board of Governors of the Federal Reserve The Board's approval of the proposed underwriting and dealing System, 839 F.2d 47 (2d Cir. 1988), cert, denied, 108 S. Ct. 2830 (1988) activities extends only to Company. The activities may not be ("SM v. Board"); and Chemical New York Corporation, The Chase conducted by SouthTrust in any other subsidiary without prior Board Manhattan Corporation, Bankers Trust New York Corporation, Citi- review. Pursuant to Regulation Y, no corporate reorganization of corp, Manufacturers Hanover Corporation, and Security Pacific Company, such as the establishment of subsidiaries of Company to Corporation, 73 FEDERAL RESERVE BULLETIN 731 (1987) ("Chemi- conduct the activities, may be consummated without prior Board cal"). approval. 3. SouthTrust has not proposed a market share limitation and, in 4. See also National Westminster Bank PLC, et al., 72 FEDERAL light of the decision in SIA v. Board, the Board has determined not to RESERVE BULLETIN 584 (1986), ajfd sub nom., Securities Industry require SouthTrust to comply with a market share limitation. Ass'n v. Board of Governors of the Federal Reserve System, 821 F.2d Company may also provide services that are necessary incidents to 810 (D.C. Cir. 1987), cert, denied, 108 S.Ct. 697 (1988). these approved activities. Any activity conducted as a necessary 5. PNC Financial Corp, 75 FEDERAL RESERVE BULLETIN at 396, incident to the ineligible securities underwriting and dealing activity 397-398 (1986). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 649 Moreover, Company will conduct its brokerage and gan/Bankers Trust, Chemical, PNC Financial Corp, advisory activities within the same framework ap- and The Bank of Montreal Orders. proved by the Board in Bank of New England. Thus, The Board's determination is subject to all of the Company has committed that, before providing any conditions set forth in the Board's Regulation Y, brokerage or advisory services to retail customers, including those in sections 225.4(d) and 225.23(b), and Company will prominently disclose in writing to each to the Board's authority to require modification or such customer that Company is not a bank and is termination of the activities of a bank holding comseparate from any affiliated bank, and that the securi- pany or any of its subsidiaries as the Board finds ties sold, offered, or recommended by Company are necessary to assure compliance with, and to prevent not deposits, are not insured by the Federal Deposit evasion of, the provisions of the BHC Act and the Insurance Corporation, are not guaranteed by an affil- Board's regulations and orders issued thereunder. iated bank, and are not otherwise an obligation of an The transaction shall not be consummated later than affiliated bank, unless such is in fact the case.6 In three months after the effective date of this Order, addition, no officer, director or employee of Company unless such period is extended for good cause by the will serve as an officer, director or employee of any Board or by the Federal Reserve Bank of Atlanta, affiliated bank. pursuant to delegated authority. Private Placement of Commercial Paper. The Board By order of the Board of Governors, effective has previously determined that commercial paper place- July 10, 1989. ment is closely related to banking. See, e.g., The Bank of Montreal, 74 FEDERAL RESERVE BULLETIN 500 (1988). Voting for this action: Chairman Greenspan and Governors SouthTrust has proposed to place commercial paper in Seger, Angell, and Kelley. Absent and not voting: Governors Johnson, Heller, and LaWare. accordance with all of the terms and conditions of the Board's Order in The Bank of Montreal.1 JENNIFER J. JOHNSON Consummation of the proposal would provide added Associate Secretary of the Board convenience to SouthTrust's customers. In addition, the Board expects that the de novo entry of SouthTrust into the market for these services would increase the level of Orders Issued Under Sections 3 and 4 of the competition among providers of these services. With Bank Holding Company Act regard to each of the proposed activities, SouthTrust has committed to adhere to limitations the Board previously has found adequate to address the possibility of any Security Bancshares, Inc. adverse effects arising from such activities. Accordingly, Scott City, Kansas the Board has determined that the performance of the proposed activities by SouthTrust can reasonably be Order Approving Acquisition of a Bank and expected to produce public benefits that would outweigh Nonbanking Subsidiary adverse effects under the proper incident to banking standard of section 4(c)(8) of the BHC Act. Based on the foregoing, the Board has determined to Security Bancshares, Inc., Scott City, Kansas approve the proposed activities subject to all of the ("Bancshares"), has applied for the Board's approval terms and conditions established in the Citicorp/Mor- under section 3(a)(3) of the Bank Holding Company Act (the "Act") (12 U.S.C. § 1842(a)(3)) to acquire Farmers State Bank of Oakley, Oakley, Kansas 6. As an incident to the proposed brokerage activities, SouthTrust ("Bank"). Bancshares has also applied under section proposes to offer, through Company, custodial services, cash management services, margin lending, maintenance of customer accounts, 4(c)(8)(C) of the Act to acquire Medlin Insurance and sweep arrangements, previously approved by the Board. BankA- Agency, Inc., Oakley, Kansas ("Medlin Agency"), merica Corporation/Schwab, 69 FEDERAL RESERVE BULLETIN 105, currently a nonbanking subsidiary of Bank, which is 108-109 (1983). Moreover, SouthTrust proposes to exercise discretionary portfolio engaged in general insurance agency activities in a management for institutional customers who desire such services, but community with a population of under 5,000. only within defined parameters and at the customer's request. South- Trust does not intend to market this service. Investment advice would Notice of the applications, affording an opportunity be provided on an integrated basis; Company would not charge an for interested persons to submit comments, has been explicit fee for the investment advice and would receive fees only for duly published (54 Federal Register 14,864 (1989)). transactions executed for customers. See J.P. Morgan & Co. Incor- The time for filing comments has expired, and the porated, 73 FEDERAL RESERVE BULLETIN 810 (1987). 7. SouthTrust has not proposed any quantitative limitations on its Board has considered the applications and all complacement activity, in accordance with the Board's determination in ments received in light of the factors set forth in The Bank of Montreal that quantitative limitations are not necessary to ensure compliance with the Glass-Steagall Act. sections 3(c) and 4(c)(8) of the Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

650 Federal Reserve Bulletin • September 1989 Bancshares controls one subsidiary bank, Security Bancshares's acquisition of Medlin Agency would not State Bank, Scott City, Kansas ("Security Bank"). significantly affect competition in any relevant market. Security Bank (deposits of $53.57 million) and Bank Furthermore, there is no evidence in the record to indicate (deposits of $23.28 million) are among the smaller that approval of this proposal would result in undue banking organizations in Kansas, each controlling concentration of resources, unfair competition, conflicts substantially less than one percent of statewide com- of interest, unsound banking practices, or other adverse mercial bank deposits.1 Consummation of this pro- effects on the public interest. Accordingly, the Board has posal would not increase significantly the concentra- determined that the balance of the public interest factors it tion of banking resources in Kansas. must consider under section 4(c)(8) of the Act is favorable Bank and Security Bank do not compete in the same and consistent with approval. banking market. In light of the facts of record, consum- Based on the foregoing and other facts of record, the mation of this proposal would not have a significant Board has determined that the applications should be, and adverse effect on competition in any relevant banking hereby are, approved. The banking acquisition shall not market. be consummated before the thirtieth calendar day follow- Bancshares's proposed capital injection into Bank will ing the effective date of this Order, and neither the serve to improve the condition of Bank and enhance its banking acquisition nor the nonbanking acquisition shall fixture prospects. Based on this and other facts of record, occur later than three months after the effective date of the Board concludes that the financial and managerial this Order, unless such period is extended for good cause resources and future prospects of Bancshares, Security by the Board or by the Federal Reserve Bank of Kansas Bank, and Bank are consistent with approval. Consider- City, acting pursuant to delegated authority. The determiations relating to the convenience and needs of the com- nation with respect to Bancshares's acquisition of the munities to be served also are consistent with approval. Medlin Agency is subject to all of the conditions set forth Bancshares also has applied to acquire 100 percent of in Regulation Y, including those in sections 225.4(b) and the voting shares of Medlin Agency. Medlin Agency 225.23(b), and to the Board's authority to require modificonducts general insurance agency activities in Oakley, cation or termination of the activities of a holding com- Kansas (where Bank is located) and in surrounding Logan pany or any of its subsidiaries as the Board finds neces- County, a place with a population not exceeding 5,000. sary to assure compliance with the provisions and The Board previously has determined that such activities purposes of the Act and the Board's regulations and are permissible for bank holding companies under section orders issued thereunder, or to prevent evasion thereof. 225.25(b)(8)(iii) of the Board's Regulation Y (12 C.F.R. By order of the Board of Governors, effective 225.25(b)(8)(iii». Bancshares has committed to abide by July 31, 1989. the limitations contained in that section with respect to the conduct of such activities. Voting for this action: Chairman Greenspan and Governors In light of the facts of record, the Board concludes that Johnson, Seger, Angell, and Kelley. Absent and not voting: Governors Heller and La Ware. JENNIFER J. JOHNSON 1. Banking data are as of March 31, 1989. Associate Secretary of the Board APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 4 Nonbanking Activity/ Effective A Company date National City Corporation, Shawmut Mortgage Corporation, July 13, 1989 Cleveland, Ohio Miamisburg, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 651 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 BMR Financial Group, Inc., Bay Bankshares, Inc., Atlanta July 13, 1989 Atlanta, Georgia Clearwater, Florida BOC Banshares, Inc., Bank of Commerce, Kansas City July 13, 1989 Chouteau, Oklahoma Chouteau, Oklahoma Bosshard Banco, Ltd., Bank of Stoddard, Minneapolis June 30, 1989 La Crosse, Wisconsin Stoddard, Wisconsin Ferryville State Bank, Ferryville, Wisconsin Campbell Hill Bancshares, Inc., First State Bank of Campbell St. Louis June 29, 1989 Campbell Hill, Illinois Hill, Campbell Hill, Illinois Central of Kansas, Inc., The Durham State Bank, Kansas City July 26, 1989 Junction City, Kansas Durham, Kansas Central of Kansas V, Inc., Junction City, Kansas Commercial Bankstock, Inc., Mercentile Bancorp, Inc., Kansas City July 24, 1989 Oklahoma City, Oklahoma Moore, Oklahoma Community Illinois Corporation, Community State Bank of Chicago July 7, 1989 Rock Falls, Illinois Rock Falls, Rock Falls, Illinois Country Bank Shares, Inc., Farmers and Merchants Bank, Kansas City June 27, 1989 Milford, Nebraska Milford, Nebraska Dahlonega Bancorp, Inc., Georgia First Bank, Atlanta June 28, 1989 Dahlonega, Georgia Gainesville, Georgia Fifth Third Bancorp, C.S. Bancshares, Inc., Cleveland July 14, 1989 Cincinnati, Ohio Connersville, Indiana Firstar Corporation, The First National Bank of Chicago June 26, 1989 Milwaukee, Wisconsin Wisconsin Rapids, Wisconsin Rapids, Wisconsin Firstar Corporation, Elkhorn Bankshares Corporation, Chicago June 26, 1989 Milwaukee, Wisconsin Elkhorn, Wisconsin F.W.S.F. Corporation, Milwaukee, Wisconsin First Busey Corporation, St. Joseph Bancorp, Chicago July 19, 1989 Urbana, Illinois St. Joseph, Illinois First Commercial Holding First Commercial Bank, Richmond June 26, 1989 Corporation, Asheville, North Carolina Asheville, North Carolina First Financial Bancorp, ILB Financial Corp., Cleveland July 6, 1989 Monroe, Ohio North Manchester, Indiana First Financial Bancorp, Union Trust Company, Cleveland July 5, 1989 Monroe, Ohio Union City, Indiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

652 Federal Reserve Bulletin • September 1989 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date First Holmes Corporation, Citizens Financial Corporation, St. Louis July 7, 1989 Lexington, Mississippi Belzoni, Mississippi First National Financial First National Bank of Cleveland July 19, 1989 Corporation, Manchester, Manchester, Kentucky Manchester, Kentucky Franklin Financial Corporation, Franklin National Bank, Atlanta July 14, 1989 Franklin, Tennessee Franklin, Tennessee Guaranty Bancshares Guaranty Bank of Princeton, Philadelphia July 12, 1989 Corporation, Princeton, New Jersey Shamokin, Pennsylvania Heritage Bancshares Monticello Bancshares, Inc., Minneapolis June 29, 1989 Corporation, Monticello, Minnesota Pennock, Minnesota Hutchinson Financial Iuka Bancshares, Inc., Kansas City June 27, 1989 Corporation, Iuka, Kansas Wichita, Kansas Illinois Financial Services, Inc., PDB Investment Corporation, Chicago July 21, 1989 Chicago, Illinois Norridge, Illinois Jefferson Bankshares, Inc., Chesapeake Bank Corporation, Richmond July 5, 1989 Charlottesville, Virginia Chesapeake, Virginia Lordsburg Financial Corporation, Western Bank, Dallas July 20, 1989 Lordsburg, New Mexico Lordsburg, New Mexico Madison Agency, Inc., State Bank of Hendricks, Minneapolis June 23, 1989 Sioux Falls, South Dakota Hendricks, Minnesota Meridian Bancorp, Inc., First Commercial Bank of Philadelphia July 7, 1989 Reading, Pennsylvania Philadelphia, Philadelphia, Pennsylvania Michigan National Corporation, First State Bank and Trust Chicago June 29, 1989 Farmington Hills, Michigan Company, Port Lavaca, Texas Midlantic Corporation, Central Trust Company, New York July 14, 1989 Edison, New Jersey Rochester, New York Endicott Trust Company, Endicott, New York The First National Bank of Moravia, Moravia, New York The Merchants National Bank & Trust Company of Syracuse, Syracuse, New York Union National Bank, Albany, New York Mountain West Banking International Bancorp, Kansas City July 18, 1989 Corporation, Denver, Colorado Denver, Colorado National Westminster Bancorp Ultra Bancorporation, New York July 12, 1989 NJ, Bridgewater, New Jersey Jersey City, New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 653 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date National Westminster Bank PLC, Ultra Bancorporation, New York July 12, 1989 London, England Bridgewater, New Jersey NatWest Holdings Inc., Wilmington, Delaware National Westminster Bancorp Inc., New York, New York NB Corporation, Chesapeake Bank & Trust, Richmond July 5, 1989 Charlottesville, Virginia Chesapeake, Virginia American Bank, Newport News, Virginia New Richland Bancshares, Inc., State Bank of New Richland, Minneapolis July 14, 1989 New Richland, Minnesota New Richland, Minnesota North Georgia National North Georgia National Bank, Atlanta July 13, 1989 Bancshares, Inc., Woodstock, Georgia Woodstock, Georgia Peoples Bancorp of Winchester Peoples Commercial Bank, Cleveland June 23, 1989 Inc., Winchester, Kentucky Winchester, Kentucky Peoples Heritage Financial First Coastal Banks, Inc., Boston June 22, 1989 Group, Inc., Portsmouth, New Hampshire Portland, Maine Peoples First Corporation, Salem Bank, Inc., St. Louis June 23, 1989 Paducah, Kentucky Salem, Kentucky Pine Creek Bancorp, Inc., The Oakland National Bank, Chicago July 7, 1989 Oakland, Illinois Oakland, Illinois Pioneer Acquisition Corp., Pioneer National Bank of Minneapolis July 6, 1989 Lady smith, Wisconsin Lady smith, Lady smith, Wisconsin SBK Bancshares, Inc., State Bank of Kiel, Chicago June 22, 1989 Kiel, Wisconsin Kiel, Wisconsin State Savings Bancorp, Inc., State Savings Bank of Caro, Chicago July 24, 1989 Caro, Michigan Caro, Michigan Wauneta Falls Bancorp, Inc., Wauneta Falls Bank, Kansas City July 11, 1989 Wauneta, Nebraska Wauneta, Nebraska Section 4 Nonbanking Activity/ Reserve Effective Applicant Company Bank date Algemene Bank Nederland, Lease Plan Holdings N.V., N.V., Amsterdam, The Netherlands Chicago June 23, 1989 Amsterdam, The Netherlands Banc One Corporation, Banc One Brokerage Columbus, Ohio Corporation, Cleveland July 24, 1989 Columbus, Ohio Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

654 Federal Reserve Bulletin • September 1989 Section 4—Continued Nonbanking Activity/ Reserve Effective Applicant Company Bank date First Bank System, Inc., V. J. Schaefer Agency, Minneapolis July 18, 1989 Minneapolis, Minnesota Adams, Minnesota Fleet/Norstar Financial Group, Shatkin Financial Services, Inc., Boston July 11, 1989 Inc., Chicago, Illinois Providence, Rhode Island The Fuji Bank, Limited, Heller Financial, Inc., New York July 12, 1989 Tokyo,Japan Chicago, Illinois Grand Bank Financial Grand Financial Associates, Inc., Chicago July 18, 1989 Corporation, Grand Rapids, Michigan Grand Rapids, Michigan RHNB Corporation, Sterling Commercial Corporation, Richmond June 30, 1989 Rock Hill, South Carolina Charlotte, North Carolina United Saver's Bancorp, Inc., loan servicing activities Boston July 11, 1989 Manchester, New Hampshire U.S. Trust Corporation, Denker & Goodwin New York June 23, 1989 New York, New York Incorporated, Dallas, Texas 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 New York, Irving Trust Company, New York June 29, 1989 New York, New York New York, New York Bank of Long Island, Babylon, New York Dutchess Bank & Trust Company, Poughkeepsie, New York Nanuet National Bank, Nanuet, New York Scarsdale National Bank and Trust Company, Scarsdale, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 655 Reserve Effective Applicant Bank(s) Bank date Crestar Bank, Mountain National Bank of New York June 29, 1989 Richmond, Virginia Clifton Forge, Clifton Forge, Virginia First of America Bank-Northern First of America Bank-Grand Chicago June 30, 1989 Michigan, Traverse, National Cheboygan, Michigan Association, Traverse City, Michigan Norstar Bank, The First National Bank of New York July 5, 1989 Hempstead, New York Downsville, Downsville, New York Texas Commerce Bank-Rio Commerce of Brownsville, Dallas July 13, 1989 Grande Valley, Brownsville, Texas Brownsville, Texas 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. CB&T Bancshares, Inc. v. Board of Governors, No. VanDyke v. Board of Governors, No. 88-5280 (8th 89-1394 (D.C. Cir., filed June 21, 1989). Cir., filed July 13, 1988). MCorp v. Board of Governors, No. 89-1677 (S.D. Baugh v. Board of Governors, No. C88-3037 (N.D. Tex. filed May 2, 1989). Iowa, filed April 8, 1988). Independent Insurance Agents of America, Inc. v. Bonilla v. Board of Governors, No. 88-1464 (7th Cir., Board of Governors, No. 89-4030 (2d Cir., filed filed March 11, 1988). March 9, 1989). Cohen v. Board of Governors, No. 88-1061 (D.N.J., Securities Industry Association v. Board of Governors, filed March 7, 1988). No. 89-1127 (D.C. Cir., filed February 16, 1989). Stoddard v. Board of Governors, No. 88-1148 (D.C. American Land Title Association v. Board of Gover- Cir., filed February 25, 1988). nors, No. 88-1872 (D.C. Cir., filed December 16, Teichgraeber v. Board of Governors, No. 87-2505-0 1988). (D. Kan., filed Oct. 16, 1987). MCorp v. Board of Governors, No. CA3-88-2693-F The Chase Manhattan Corporation v. Board of Gov- (N.D. Tex., filed October 28, 1988). ernors, No. 87-1333 (D.C. Cir., filed July 20, 1987). White v. Board of Governors, No. CU-S-88-623-RDF Lewis v. Board of Governors, Nos. 87-3455, 87-3545 (D. Nev., filed July 29, 1988). (11th Cir., filed June 25, Aug. 3, 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

656 Membership of the Board of Governors of the Federal Reserve System, 1913-89 APPOINTIVE MEMBERS1 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 Charles S. Hamlin Boston Aug. 10, 1914 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg New York do. Term expired Aug. 9, 1918. Frederic A. Delano Chicago do. Resigned July 21, 1918. W.P.G. Harding Atlanta do. Term expired Aug. 9, 1922. Adolph C. Miller San Francisco do. Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss New York Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah Chicago Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Piatt New York June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills Cleveland Sept. 29, 1920 Term expired Mar. 4, 1921. John R. Mitchell Minneapolis May 12, 1921 Resigned May 12, 1923. Milo D. Campbell Chicago Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger Cleveland May 1, 1923 Resigned Sept. 15, 1927. George R. James St. Louis May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.4 Edward H. Cunningham...Chicago do Died Nov. 28, 1930. Roy A. Young Minneapolis Oct. 4, 1927 Resigned Aug. 31, 1930. Eugene Meyer New York Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee Kansas City May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black Atlanta May 19, 1933 Resigned Aug. 15, 1934. M.S. Symczak Chicago June 14, 1933 Reappointed in 1936 and 1948. Resigned May 31, 1961. J.J. Thomas Kansas City do Served until Feb. 10, 1936.3 Marriner S. Eccles San Francisco Nov. 15, 1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick New York Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee Cleveland .do Served until Apr. 4, 1946.3 Ronald Ransom Atlanta .do Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison Dallas Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis Richmond June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper New York Mar. 30, 1938 Served until Sept. 1, 1950? Rudolph M. Evans Richmond Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. ..St. Louis Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton Boston Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe Philadelphia Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton Atlanta Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell Minneapolis .do Resigned June 30, 1952. Wm. McC. Martin, Jr New York April 2, 1951 Reappointed in 1956. Term expired Jan. 31, 1970. A.L. Mills, Jr San Francisco Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J.L. Robertson Kansas City do Reappointed in 1964. Resigned Apr. 30, 1973. C. Canby Balderston Philadelphia Aug. 12, 1954 Served through Feb. 28, 1966. Paul E. Miller Minneapolis Aug. 13, 1954 Died Oct. 21, 1954. Chas. N. Shepardson Dallas Mar. 17, 1955 Retired Apr. 30, 1967. G.H. King, Jr Atlanta Mar. 25, 1959 Reappointed in 1960. Resigned Sept. 18, 1963. George W. Mitchell Chicago Aug. 31, 1961 Reappointed in 1962. Served until Feb. 13, 1976.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

657 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 J. Dewey Daane Richmond Nov. 29, 1963 Served until Mar. 8, 1974.3 Sherman J. Maisel San Francisco Apr. 30, 1965 Served through May 31, 1972. Andrew F. Brimmer Philadelphia Mar. 9, 1966 Resigned Aug. 31, 1974. William W. Sherrill Dallas May 1, 1967 Reappointed in 1968. Resigned Nov. 15, 1971. Arthur F. Burns New York Jan. 1, 1970 Term began Feb. 1, 1970. Resigned Mar. 31, 1978. John E. Sheehan St. Louis Jan. 4, 1972 Resigned June 1, 1975. Jeffrey M. Bucher San Francisco June 5, 1972 Resigned Jan. 2, 1976. Robert C. Holland Kansas City June 11, 1973 Resigned May 15, 1976. Henry C. Wallich Boston Mar. 8, 1974 Resigned Dec. 15, 1986 Philip E. Coldwell Dallas Oct. 29, 1974 Served through Feb. 29, 1980. Philip C. Jackson, Jr Atlanta July 14, 1975 Resigned Nov. 17, 1978. J. Charles Partee Richmond Jan. 5, 1976 Served until Feb. 7, 1986.3 Stephen S. Gardner Philadelphia Feb. 13, 1976 Died Nov. 19, 1978. David M. Lilly Minneapolis June 1, 1976 Resigned Feb. 24, 1978. G. William Miller San Francisco Mar. 8, 1978 Resigned Aug. 6, 1979. Nancy H. Teeters Chicago Sept. 18, 1978 Served through June 27, 1984. Emmett J. Rice New York June 20, 1979 Resigned Dec. 31, 1986. Frederick H. Schultz Atlanta July 27, 1979 Served through Feb. 11, 1982. Paul A. Volcker Philadelphia Aug. 6, 1979 Resigned August 11, 1987. Lyle E. Gramley Kansas City May 28, 1980 Resigned Sept. 1, 1985. Preston Martin San Francisco Mar. 31, 1982 Resigned April 30, 1986. Martha R. Seger Chicago July 2, 1984 Wayne D. Angell Kansas City Feb. 7, 1986 Manuel H. Johnson Richmond Feb. 7, 1986 H. Robert Heller San Francisco Aug. 19, 1986 Resigned July 31, 1989. Edward W. Kelley, Jr Dallas May 26, 1987 Alan Greenspan New York Aug. 11, 1987 John P. LaWare Boston Aug. 15, 1988 Chairmen4 Vice Chairmen4 Charles S. Hamlin Aug. 10, 1914-Aug. 9, 1916 Frederic A. Delano Aug. 10, 1914-Aug. 9, 1916 W.P.G. Harding Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg Aug. 10, 1916-Aug. 9, 1918 Daniel R. Crissinger May 1, 1923-Sept. 15, 1927 Albert Strauss Oct. 26, 1918-Mar. 15, 1920 Roy A. Young Oct. 4, 1927-Aug. 31, 1930 Edmund Piatt July 23, 1920-Sept. 14, 1930 Eugene Meyer Sept. 16, 1930-May 10, 1933 J.J. Thomas Aug 21, 1934-Feb. 10, 1936 Eugene R. Black May 19, 1933-Aug. 15, 1934 Ronald Ransom Aug. 6, 1956-Dec. 2, 1947 Marriner S. Eccles Nov. 15, 1934—Jan. 31, 1948 C. Canby Balderston Mar. 11, 1955-Feb. 28, 1966 Thomas B. McCabe Apr. 15, 1948-Mar. 31, 1951 J.L. Robertson Mar. 1, 1966-Apr. 30, 1973 Wm. McC. Martin, Jr. ..Apr. 2, 1951-Jan. 31, 1970 George W. Mitchell May 1, 1973-Feb. 13, 1976 Arthur F. Burns Feb. 1, 1970-Jan. 31, 1978 Stephen S. Gardner Feb. 13, 1976-Nov. 19, 1978 G. William Miller Mar. 8, 1978-Aug. 6, 1979 Frederick H. Schultz ....July 27, 1979-Feb. 11, 1982 Paul A. Volcker Aug. 6, 1979-Aug. 11, 1987 Preston Martin Mar 31, 1982-Mar. 31, 1986 Alan Greenspan Aug. 11, 1987- Manuel H. Johnson Aug. 22, 1986- EX-OFFICIO MEMBERS' Secretaries of the Treasury Comptrollers of the Currency W.G. McAdoo Dec. 23, 1913-Dec. 15, 1918 John Skelton Williams...Feb. 2, 1914-Mar. 2, 1921 Carter Glass Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger Mar. 17, 1921-Apr. 30, 1923 David F. Houston Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes. May 1, 1923-Dec. 17, 1924 Andrew W. Mellon Mar. 4, 1921-Feb. 12, 1932 Joseph W. Mcintosh Dec. 20, 1924-Nov. 20, 1928 Ogden L. Mills Feb. 12, 1932-Mar. 4, 1933 J.W. Pole Nov. 21, 1928-Sept. 20, 1932 William H. Woodin Mar. 4, 1933-Dec. 31, 1933 J.F.T. O'Connor May 11, 1933-Feb. 1, 1936 Henry Morgenthau Jr. ...Jan. 1, 1934-Feb. 1, 1936 1. Under the provisions of the original Federal Reserve Act, the composed of seven appointive members; that the Secretary of the Federal Reserve Board was composed of seven members, including Treasury and the Comptroller of the Currency should continue to five appointive members, the Secretary of the Treasury, who was serve as members until Feb. 1, 1936, or until their successors were ex-officio chairman of the Board, and the Comptroller of the Cur- appointed and had qualified; and that thereafter the terms of members rency. The original term of office was ten years, and the five original should be fourteen years and that the designation of Chairman and appointive members had terms of two, four, six, eight, and ten years Vice Chairman of the Board should be for a term of four years. respectively. In 1922 the number of appointive members was in- 2. Date after words "Resigned" and "Retired" denotes final day of creased to six, and in 1933 the term of office was increased to twelve service. years. The Banking Act of 1935, approved Aug. 23, 1935, changed the 3. Successor took office on this date. name of the Federal Reserve Board to the Board of Governors of the 4. Chairman and Vice Chairman were designated Governor and Federal Reserve System and provided that the Board should be Vice Governor before Aug. 23, 1935. 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 COMMERCIAL BANKING INSTITUTIONS A17 Major nondeposit funds Domestic Financial Statistics A18 Assets and liabilities, last-Wednesday-of-month series MONEY STOCK AND BANK CREDIT WEEKLY REPORTING COMMERCIAL BANKS A3 Reserves, money stock, liquid assets, and debt Assets and liabilities measures A19 All reporting banks A4 Reserves of depository institutions, Reserve A20 Banks in New York City Bank credit A21 Branches and agencies of foreign banks A5 Reserves and borrowings—Depository A22 Gross demand deposits—individuals, institutions A6 Selected borrowings in immediately available partnerships, and corporations funds—Large member banks FINANCIAL MARKETS POLICY INSTRUMENTS A23 Commercial paper and bankers dollar A7 Federal Reserve Bank interest rates acceptances outstanding A8 Reserve requirements of depository institutions A23 Prime rate charged by banks on short-term A9 Federal Reserve open market transactions business loans A24 Interest rates—money and capital markets A25 Stock market—Selected statistics FEDERAL RESERVE BANKS A26 Selected financial institutions—Selected assets and liabilities A10 Condition and Federal Reserve note statements All Maturity distribution of loan and security holdings FEDERAL FINANCE A28 Federal fiscal and financing operations MONETARY AND CREDIT AGGREGATES A29 U.S. budget receipts and outlays A12 Aggregate reserves of depository institutions A30 Federal debt subject to statutory limitation and monetary base A30 Gross public debt of U.S. Treasury—Types A13 Money stock, liquid assets, and debt measures and ownership A15 Bank debits and deposit turnover A31 U.S. government securities A16 Loans and securities—All commercial banks dealers—Transactions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • September 1989 A32 U.S. government securities dealers—Positions International Statistics and financing A33 Federal and federally sponsored credit agencies—Debt outstanding SUMMARY STATISTICS A55 U.S. international transactions—Summary A56 U.S. foreign trade SECURITIES MARKETS AND A56 U.S. reserve assets CORPORATE FINANCE A56 Foreign official assets held at Federal Reserve A34 New security issues—State and local Banks governments and corporations A57 Foreign branches of U.S. banks—Balance A35 Open-end investment companies—Net sales sheet data and asset position A59 Selected U.S. liabilities to foreign official A35 Corporate profits and their distribution institutions A35 Total nonfarm business expenditures on new plant and equipment A36 Domestic finance companies—Assets and REPORTED BY BANKS IN THE UNITED STATES liabilities and business credit A59 Liabilities to and claims on foreigners A60 Liabilities to foreigners A62 Banks' own claims on foreigners REAL ESTATE A63 Banks' own and domestic customers' claims on foreigners A37 Mortgage markets A63 Banks' own claims on unaffiliated foreigners A38 Mortgage debt outstanding A64 Claims on foreign countries—Combined domestic offices and foreign branches CONSUMER INSTALLMENT CREDIT REPORTED BY NONBANKING BUSINESS A39 Total outstanding and net change ENTERPRISES IN THE UNITED STATES A40 Terms A65 Liabilities to unaffiliated foreigners A66 Claims on unaffiliated foreigners FLOW OF FUNDS A41 Funds raised in U.S. credit markets SECURITIES HOLDINGS AND TRANSACTIONS A43 Direct and indirect sources of funds to credit markets A67 Foreign transactions in securities A44 Summary of credit market debt outstanding A68 Marketable U.S. Treasury bonds and A45 Summary of credit market claims, by holder notes—Foreign transactions Domestic Nonfinancial Statistics INTEREST AND EXCHANGE RATES A69 Discount rates of foreign central banks SELECTED MEASURES A69 Foreign short-term interest rates A70 Foreign exchange rates A46 Nonfinancial business activity—Selected A71 Guide to Tabular Presentation, measures Statistical Releases, and Special A47 Labor force, employment, and unemployment Tables A48 Output, capacity, and capacity utilization A49 Industrial production—Indexes and gross value A51 Housing and construction SPECIAL TABLE A52 Consumer and producer prices A53 Gross national product and income All Pro forma balance sheet and income statement, A54 Personal income and saving March 31, 1989 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 1989 1989 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaatteess Q3 Q4 Ql Q2 Feb. Mar. Apr. May June Reserves of depository institutions2 1 Total 3.1 -.8 -4.2 -8.7 -2.2 -8.1 -7.8 -14.6 -8.0 2 Required 2.9 -1.5 -4.4 -7.6 -2.4 -4.3 -4.3 -20.0 -5.5 3 Nonborrowed 1.3 5.3 .0 -10.2 1.3 -14.9 -17.9 -3.2 -3.4 4 Monetary base 6.5 4.8 4.6 1.5 3.3 4.6 .3 -1.5 3.1 Concepts of money, liquid assets, and debt4 5 Ml 5.2 2.3 -.4 -5.5 1.8r — 1.7r -4.7 -14.9 -4.2 6 M2 3.8 3.6 1.9 1.3 1.4 3.7 1.0 -3.3 6.7 7 M3 5.6' 4.8 3.7r 3.1 2.9 6.7 2.4r -i.r 6.3 8 L 7.1 5.4 4.8 n.a. 3.2 8.6r 4.1 -.2 n.a. 9 Debt 8.6 9.1 8.2 7.4 8.6 7.5 7.0 7.3 n.a. Nontrqnsaction components 10 In M2 3.3 4.1 2.6 3.7 1.2 5.6 3.0 .7 10.3 11 In M3 only6 12.2r 9.(K 10.5' 9.3 8.3r 17.3r 7.5' 6.5r 4.9 Time and savings deposits Commercial banks 12 Savings' 7.9 4.0 -3.7 -14.1 -3.1 -10.8 -19.0 -20.3 -6.1 13 Small-denomination time 11.6 18.0 22.5 29.2 26.5 28.6 34.6 28.7 12.3 14 Large-denomination time9,10 18.2 13.0 18.1 17.8 24.4' 22.9 22.1 9.6 2.7 Thrift institutions 15 Savings 2.1 -2.5 -7.7 -18.8 -13.6 -10.7r —25.5'' -26.0 -8.7 16 Small-denomination time 5.4 6.6 4.3 14.3 5.4 3.4 17.5 22.7 17.2 17 Large-denomination time9 3.9 7.9 1.2 5.8 -2.1 -.3 12.5 8.r 1.5 Debt components4 18 7.1 7.8 7.7 6.6 10.2 12.5 5.1 2.9 n.a. 19 Nonfederal 9.1 9.5 8.4 7.7 8.1 5.9 7.6 8.7 n.a. 1. Unless otherwise noted, rates of change are calculated from average institutions and money market funds. Also excludes all balances held by U.S. amounts outstanding in preceding month or quarter. commercial banks, money market funds (general purpose and broker-dealer), 2. Figures incorporate adjustments for discontinuities associated with the foreign governments and commercial banks, and the U.S. government. implementation of the Monetary Control Act and other regulatory changes to M3: M2 plus large-denomination time deposits and term RP liabilities (in reserve requirements. To adjust for discontinuities due to changes in reserve amounts of $100,000 or more) issued by commercial banks and thrift institutions, requirements on reservable nondeposit liabilities, the sum of such required term Eurodollars held by U.S. residents at foreign branches of U.S. banks reserves is subtracted from the actual series. Similarly, in adjusting for discon- worldwide and at all banking offices in the United Kingdom and Canada, and tinuities in the monetary base, required clearing balances and adjustments to balances in both taxable and tax-exempt, institution-only money market mutual compensate for float also are subtracted from the actual series. funds. Excludes amounts held by depository institutions, the U.S. government, 3. The monetary base not adjusted for discontinuities consists of total money market funds, and foreign banks and official institutions. Also subtracted reserves plus required clearing balances and adjustments to compensate for float is the estimated amount of overnight RPs and Eurodollars held by institution-only at Federal Reserve Banks plus the currency component of the money stock less money market mutual funds. the amount of vault cash holdings of thrift institutions that is included in the L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term currency component of the money stock plus, for institutions not having required Treasury securities, commercial paper and bankers acceptances, net of money reserve balances, the excess of current vault cash over the amount applied to market mutual fund holdings of these assets. satisfy current reserve requirements. After the introduction of contemporaneous Debt: Debt of domestic nonfinancial sectors consists of outstanding credit reserve requirements (CRR), currency and vault cash figures are measured over market debt of the U.S. government, state and local governments, and private the weekly computation period ending Monday. nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- Before CRR, all components of the monetary base other than excess reserves sumer credit (including bank loans), other bank loans, commercial paper, bankers are seasonally adjusted as a whole, rather than by component, and excess acceptances, and other debt instruments. The source of data on domestic reserves are aldded 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • September 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 1989 1989 Apr. May June May 17 May 24 May 31 June 7 June 14 June 21 June 28 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 264,245 267,629 263,991 269,689 260,224 256,587 260,844 259,907 262,225 271,098 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 233,003 234,995 227,688 237,103 230,029 225,478 227,361 225,637 224,643 231,898 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 231,215 230,783 227,291 232,688 230,029 225,478 227,361 225,637 224,643 230,621 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss..... 1,788 4,212 397 4,415 0 0 0 0 0 1,277 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 7,400 8,387 6,754 8,645 6,654 6,654 6,654 6,654 6,654 6,987 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 6,738 6,654 6,654 6,645 6,654 6,654 6,654 6,654 6,654 6,654 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 662 1,733 100 1,991 0 0 0 0 0 333 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 2,326 1,717 1,495 1,734 1,675 1,621 1,995 2,255 939 992 1111100000 FFFFFllllloooooaaaaattttt 800 801 1,425 977 826 655 1,059 1,266 1,611 1,564 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 20,716 21,729 26,630 21.230 21,039 22,179 23,775 24,094 28,378 29,657 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,061 11,061 11,061 11,061 11,061 11,060 11,060 11,060 11,061 11,061 1111133333 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt............... 5,508 6,703 8,518 5,961 7,304 8,447 8,518 8,518 8,518 8,518 1111144444 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 18,989 19,049 19,188 19,045 19,059 19,073 19,171 19,181 19,191 19,201 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 243,781 245,574 247,860 245,707 245,363 246,648 247,829 248,280 247,710 247,298 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 473 486 488 487 485 485 488 490 488 486 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 8,798 14,126 10,072 16,166 8,706 5,154 5,665 5,397 9,274 18,343 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 240 227 251 232 215 260 296 253 242 215 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 2,125 1,855 1,617 1,922 1,743 1,934 1,908 1,778 1,929 1,957 2222200000 OOOOOttttthhhhheeeeerrrrr 373 528 303 381 635 902 341 253 298 328 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 8,121 8,480 8,101 8,630 8,243 8,070 7,741 8,261 8,170 8,217 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 35,893 33,166 34,066 32.231 32,256 31,714 35,325 33,953 32,885 33,033 End-of-month figures Wednesday figures 1989 1989 Apr. May June May 17 May 24 May 31 June 7 June 14 June 21 June 28 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 279,013 256,669 269,037 263,081 256,318 256,669 258,186 262,688 268,271 271,518 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 244,506 223,535 231,767 233,232 224,600 223,535 224,175 227,654 230,162 231,062 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 234,808 223,535 231,767 233,232 224,600 223,535 224,175 227,654 230,162 231,062 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 9,698 0 0 0 0 0 0 0 0 0 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 10,495 6,654 6,654 6,654 6,654 6,654 6,654 6,654 6,654 6,654 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 6,654 6,654 6,654 6,654 6,654 6,654 6,654 6,654 6,654 6,654 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss ............... 3,841 0 0 0 0 0 0 0 0 0 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 1,952 2,033 841 1,707 1,586 2,033 2,082 2,384 832 1,759 3333322222 FFFFFllllloooooaaaaattttt 545 2,064 -203 1,408 1,680 2,064 1,644 1,701 1,640 1,338 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 21,515 22,383 29,978 20,080 21,798 22,383 23,631 24,295 28,983 30,705 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,061 11,060 11,063 11,061 11,060 11,060 11,060 11,060 11,061 11,062 3333355555 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt............... 5,518 8,518 8,518 6,518 8,018 8,518 8,518 8,518 8,518 8,518 3333366666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 19,017 19,073 19,211 19,045 19,059 19,073 19,171 19,181 19,191 19,201 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 243,411 247,525 249,139 245,743 245,921 247,529 248,280 248,164 247,489 247,936 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 476 488 474 485 485 485 488 490 487 481 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 22,952 5,288 12,153 9,986 6,922 5,288 5,207 5,281 19,822 19,244 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 352 429 275 227 276 429 229 293 203 287 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,667 1,616 1,616 1,659 1,616 '1,616 1,616 1,616 1,598 1,598 4444422222 OOOOOttttthhhhheeeeerrrrr 481 524 229 600 483 524 302 242 267 327 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 8,969 7,513 8,178 8,058 7,964 7,513 7,784 8,078 7,984 7,962 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 37,968 33,553 35,765 32,947 30,789 31,937 33,027 37,280 29,190 32,463 1. Includes securities loaned—fully guaranteed by U.S. government securities stock. Revised data not included in this table are available from the Division of pledged with Federal Reserve Banks—and excludes any securities sold and Research and Statistics, Banking Section. scheduled to be bought back under matched sale-purchase transactions. 3. Excludes required clearing balances and adjustments to compensate for 2. Revised for periods between October 1986 and April 1987. At times during float. this interval, outstanding gold certificates were inadvertently in excess of the gold NOTE. For amounts of currency and coin held as reserves, see table 1.12. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.12 RESERVES AND BORROWINGS Depository Institutions' Millions of dollars Monthly averages9 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1986 1987 1988 1988 1989 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June 1 Reserve balances with Reserve Banks2 37,360 37,673 37,830 37,830 36,475 32,834 34,623 35,841 33,199 33,852 2 Total vault cash1 24,077 26,185 27,197 27,197 28,376 29,776 27,059 26,746 27,166 27,151 3 Vault4 22,199 24,449 25,909 25,909 26,993 27,859 25,589 25,456 25,712 25,735 4 Surplus 1,878 1,736 1,288 1,288 1,383 1,917 1,470 1,290 1,454 1,416 5 Total reserves 59,560 62,123 63,739 63,739 63,468 60,693 60,212 61,288 58,911 59,587 6 Required reserves i 58,191 61,094 62,699 62,699 62,323 59,539 59,255 60,511 57,881 58,682 7 Excess reserve balances at Reserve Banks 1,369 1,029 1,040 1,040 1,145 1,154 957 776 1,031 905 8 Total borrowings at Reserve Banks 827 777 1,716 1,716 1,662 1,487 1,813 2,289 1,720 1,490 9 Seasonal borrowings at Reserve Banks 38 93 130 130 76 97 139 213 345 431 10 Extended credit at Reserve Banks 303 483 1,244 1,244 1,046 1,050 1,334 1,707 1,197 917 Biweekly averages of daily figures for weeks ending 1989 Mar. 8 Mar. 22 Apr. 5 Apr. 19 May 3 May 17 May 31 June 14 June 28 July 12 11 Reserve balances with Reserve Banks2 34,485 34,702 34,623 36,239 35,863 33,864 31,964 34,608r 32,95(f 34,869 12 Total vault cash 27,581 26,738 27,095 26,339 27,106 26,644 27,701 26,607 27,630 27,607 13 Vault4 25,962 25,332 25,659 25,174 25,723 25,352 26,071 25,301 26,104 26,192 14 Surplus5 1,620 1,406 1,436 1,166 1,383 1,292 1,631 1,306 1,526 1,415 15 Total reserves 60,446 60,034 60,282 61,413 61,586' 59,216 58,034 59,909'' 59,054r 61,061 1 1 6 7 R Ex eq ce u s ir s e d re s r e e r s v e e r v b es a lances at Reserve Banks i 59,4 9 9 5 0 7 59,2 7 9 3 9 5 58 1 , , 9 3 7 0 7 5 61,1 2 9 2 0 3 60 1 , , 3 2 4 4 5 1 58,3 8 5 5 7 9 56 1 , , 8 1 7 5 7 8 59, 8 0 9 12 7 r r 58,1 9 5 0 4 1 ' ' 60,0 9 6 9 9 2 18 Total borrowings at Reserve Banks 1,800 1,586 2,177 2,582 1,968 1,739 1,649 2,126 965 717 19 Seasonal borrowings at Reserve Banks 116 136 167 190 265 336 373 388 467 483 20 Extended credit at Reserve Banks 1,250 1,164 1,675 1,970 1,387 1,206 1,148 1,657 287 146 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 8. Extended credit consists of borrowing at the discount window under the institutions having required reserve balances at Federal Reserve Banks plus the terms and conditions established for the extended credit program to help amount of vault cash equal to required reserves during the maintenance period at depository institutions deal with sustained liquidity pressures. Because there is institutions having no required reserve balances. not the same need to repay such borrowing promptly as there is with traditional 5. Total vault cash at institutions having no required reserve balances less the short-term adjustment credit, the money market impact of extended credit is amount of vault cash equal to their required reserves during the maintenance similar to that of nonborrowed reserves. period. 9. Data are prorated monthly averages of biweekly averages. 6. Total reserves not adjusted for discontinuities consist of reserve balances Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Nonfinancial Statistics • September 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 Aug. 1 Aug. 8 Aug. 15 Aug. 22 Aug. 29 Sept. 5 Sept. 12 Sept. 19 Sept. 26 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 71,992 67,616 69,245 66,871 64,904 69,394 69,451 65,767 62,866 2 For all other maturities 11,289 10,782 11,136 10,102 10,187 10,001 9,714 9,443 9,450 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 26,473 28,408 27,188 26,570 26,952 27,114 29,922 26,636 27,000 4 For all other maturities 5,947 6,654 7,463 6,700 6,579 6,629 6,581 6,895 6,273 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 15,502 16,127 16,293 16,304 15,212 15,337 15,072 14,596 13,683 6 For all other maturities 15,402 15,083 14,913 12,587 13,177 12,365 11,524 13,136 13,293 All other customers 7 For one day or under continuing contract 26,956 26,384 26,803 27,452 28,070 27,866 27,761 27,123 27,616 8 For all other maturities 9,970 9,845 10,381 10,559 10,701 10,279 9,691 10,429 10,341 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 35,329 34,700 35,575 35,147 34,797 39,559 34,356 37,066 37,013 10 To all other specified customers 14,160 15,158 15,511 14,952 14,010 14,263 13,677 14,421 13,079 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. 2. Brokers and nonbank dealers in securities; other depository institutions; These data also appear in the Board's H.5 (507) release. For address, see inside foreign banks and official institutions; and United States government agencies, front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Extended credit2 AAddjjuussttmmeenntt ccrreeddiitt aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee SSeeaassoonnaall ccrreeddiitt11 First 30 days of borrowing After 30 days of borrowing3 BBBaaannnkkk 7/2 O 8 n /8 9 Ef d fe a c te ti ve Pre ra v t i e o us 7/2 O 8 n /8 9 Ef d fe a c te ti ve Pre r v at i e o us 7/2 O 8 n /8 9 Eff d e a c te ti ve Pre ra v t i e o us Effective date Vi Boston 7 2/24/89 6 Vi 7 2/24/89 6 9.45 7/27/89 9.70 7/13/89 New York 2/24/89 2/24/89 7/27/89 7/13/89 Philadelphia 2/24/89 2/24/89 7/27/89 7/13/89 Cleveland 2/24/89 2/24/89 7/27/89 7/13/89 Richmond 2/24/89 2/24/89 7/27/89 7/13/89 Atlanta 2/24/89 2/24/89 7/27/89 7/13/89 Chicago 2/24/89 2/24/89 7/27/89 7/13/89 St. Louis 2/24/89 2/24/89 7/27/89 7/13/89 Minneapolis 2/24/89 2/24/89 7/27/89 7/13/89 Kansas City 2/24/89 2/24/89 7/27/89 7/13/89 Dallas 2/27/89 2/27/89 7/27/89 7/13/89 San Francisco ... 7 2/24/89 6 Vi 7 2/24/89 6 Vi 9.45 7/27/89 9.70 7/13/89 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 an f k Effective date A le l v l e F l) . — R. B o an f 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. I 1 n 9 7 e 8 f - f — ec J t a D n. e c. 9 3 1, 1977. 6-66 V2 6 6V i 1980—July 2 2 8 9 10 1 - 0 1 1 1 1 0 0 11998844——AApprr.. 1 9 3 8V 9 i -9 9 9 20 6Vi 6 7 W Sept. 26 11 11 Nov. 21 8Vi-9 8Vi May 1 1 1 2 6V1i- 7 7 N De o c v . . 1 5 7 12 1 - 2 1 3 1 1 3 2 Dec. 2 2 4 6 8 8 V i 8 8 W J A u u ly g . 2 1 1 3 0 7 7 - 7 7 V 3 1 /4 * 4 7m 7 V 3/ 4 4 1981—May 5 8 13 1 - 4 1 4 1 1 4 4 11998855——MMaayy 2 2 0 4 7VIVi-8i 7IVVi i O Se c p t. t . 2 2 1 2 0 6 m 8- 8 m - 8 W m m m m 8 D N e o c v . . 4 2 6 13 1 1 - 3 2 1 4 1 1 1 3 3 2 1986—Mar. 1 7 0 1- 1 1 Vi 1 1 V i Nov. 1 m Apr. 21 6Vi-7 6 1979--July 20 3 9 1 V 0 z 10 1982— A Ju u ly g . 2 2 2 3 0 1 1 1 1 l W - l 1 V 1 - i 1 W 2 1 l im l 1 V i J AA u uu ly gg .. 2 2 1 2 1 1 5 5 V V 6 i l -6 6 5 5V Vi i Aug. 17 10-10 Vi lOVi 3 11 11 20 10 Vi 10W 16 10W 10W 11998877——SSeepptt.. 4 5Vi-6 6 Sept. 19 10W-11 11 27 10-10W 10 11 6 6 Oct. 2 1 8 1 0 11 1 1 - 1 2 1 2 1 1 1 1 2 2 Oct. 1 3 1 2 0 3 9V 9 1 V i- 0 1 i 0 9 9 1 V V0 i l 11998888——AAuugg.. 1 9 1 6-66VVi1 6 6V V i 2 Nov. 22 9-9 Vi 9 1980--Feb. 15 12-13 13 26 9 9 1989—Feb. 24 6Vi-7 7 19 13 13 Dec. 14 8W-9 9 27 7 7 May 2 3 9 0 12 1 - 2 1 3 1 12 3 1 1 5 7 8 8 W Y-9l 8 8 V V i i In effect July 28, 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 Nonfinancial Statistics • September 1989 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Type of deposit, and Monetary Control Act deposit interval Effective date Net transaction accounts3' $0 million-$41.5 million 12/20/88 More than $41.5 million ... 12/20/88 Nonpersonal time deposits5 By original maturity Less than 1 Vi years 10/6/83 1 Vi years or more 10/6/83 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 Nov. Dec. Jan. Feb. Mar. Apr. May U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 22,604 18,983 8,223 3,599 1,125 0 0 0 33,,007777 331111 2 Gross sales 2,502 6,051 587 0 0 154 3,688 0 0 321 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 1,000 9,029 2,200 0 0 600 1,600 0 0 1,200 Others within 1 year 5 Gross purchases 190 3,659 2,176 0 1,084 0 0 0 172 0 6 Gross sales 0 300 0 0 0 0 0 0 0 0 7 Maturity shift 18,674 21,504 23,854 5,264 1,750 620 5,418 2,646 1,657 2,863 8 Exchange -20,180 -20,388 -24,588 -2,391 -1,703 -2,703 -2,308 -2,322 -110 -3,628 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 1,824 0 0 0 1,436 0 11 Gross sales 0 452 800 0 0 3 225 0 0 75 12 Maturity shift -17,058 -17,975 -17,720 -3,088 -1,750 -541 -5,319 -2,646 -1,532 -2,036 13 Exchange 16,985 18,938 22,515 2,091 1,703 2,492 2,008 2,322 0 3,328 5 to 10 years 14 Gross purchases 236 2,441 1,579 0 562 0 0 0 228877 0 15 Gross sales 0 0 175 0 0 20 0 0 0 0 16 Maturity shift -1,620 -3,529 -5,946 -2,145 0 -79 -100 0 -125 258 17 Exchange 2,050 950 1,797 300 0 212 200 0 110 200 Over 10 years 18 Gross purchases 158 1,858 1,398 0 432 0 0 0 284 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift 0 0 -188 -31 0 0 0 0 0 -1,086 21 Exchange 1,150 500 275 0 0 0 100 0 0 100 All maturities 22 Gross purchases 24,081 37,170 18,863 3,599 5,028 0 0 0 5,255 311 23 Gross sales 2,502 6,803 1,562 0 0 177 3,913 0 0 396 24 Redemptions 1,000 9,099 2,200 0 0 600 1,600 0 0 1,200 Matched transactions 25 Gross sales 927,999 950,923 1,168,484 98,618 93,650 94,204 110,393 83,677 77,349 123,029 26 Gross purchases 927,247 950,935 1,168,142 100,680 93,584 94,252 112,472 82,821 78,259 113,041 Repurchase agreements1 27 Gross purchases 170,431 314,621 152,613 17,867 15,575 17,208 0 0 2222,,224444 3311,,441199 28 Gross sales 160,268 324,666 151,497 16,463 14,815 21,969 0 0 12,547 41,117 29 Net change in U.S. government securities 29,988 11,234 15,872 7,064 5,721 -5,489 -3,434 -856 15,863 -20,971 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 14 135 148 40 0 125 0 Repurchase agreements2 33 Gross purchases 31,142 80,353 57,259 4,763 7,672 8,980 0 0 7,207 1122,,773322 34 Gross sales 30,521 81,350 56,471 5,132 6,853 11,081 0 0 3,366 16,573 35 Net change in federal agency obligations 222 -1,274 198 -383 683 -2,249 -40 0 3,716 -3,841 36 Total net change in System Open Market Account 30,212 9,961 16,070 6,681 6,404 -7,738 -3,474 -856 19,579 -24,812 1. Sales, redemptions, and negative figures reduce holdings of the System Open 2. In July 1984 the Open Market Trading Desk discontinued accepting bankers Market Account; all other figures increase such holdings. Details may not add to acceptances in repurchase agreements, totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 DomesticN onfinancial Statistics • September 1989 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month Account 1989 1989 May 31 June 7 June 14 June 21 June 28 Apr. May June Consolidated condition statement ASSETS 1 Gold certificate account 11,060 11,060 11,060 11,061 11,062 11,061 11,060 11,063 2 Special drawing rights certificate account 8,518 8,518 8,518 8,518 8,518 5,518 8,518 8,518 3 Coin 432 424 436 449 449 466 432 445 Loans 4 To depository institutions 2,033 2,082 2,384 832 1,759 1,952 2,033 840 5 Other 0 0 0 0 0 0 0 0 6 Acceptances held under repurchase agreements 0 0 0 0 0 0 0 0 Federal agency obligations 7 Bought outright 6,654 6,654 6,654 6,654 6,654 6,654 6,654 6,655 8 Held under repurchase agreements 0 0 0 0 0 3,841 0 0 U.S. Treasury securities Bought outright 9 Bills 100,799 101,439 104,918 107,426 108,326 111,997 100,799 109,031 10 Notes 92,322 92,322 92,322 92,322 92,322 92,497 92,322 92,322 11 Bonds 30,414 30,414 30,414 30,414 30,414 30,314 30,414 30,414 12 Total bought outright1 223,535 224,175 227,654 230,162 231,062 234,808 223,535 231,767 13 Held under repurchase agreements 0 0 0 0 0 9,698 0 0 14 Total U.S. Treasury securities 223,535 224,175 227,654 230,162 231,062 244,506 223,535 231,767 15 Total loans and securities 232,222 232,911 236,692 237,648 239,475 256,953 232,222 239,263 16 Items in process of collection 10,442 8,137 7,872 7,621 6,740 8,294 10,442 6,550 17 Bank premises 761 765 766 767 767 761 761 767 Other assets 18 Denominated in foreign currencies3 13,656 14,831 15,250 18,322 18,956 10,911 13,656 19,213 19 All other4 7,966 8,035 8,279 9,894 10,982 9,843 7,966 10,001 20 Total assets 285,057 284,681 288,873 294,280 296,949 303,807 285,057 295,816 LIABILITIES 21 Federal Reserve notes 229,372 230,023 229,912 229,235 229,666 225,336 229,372 230,847 Deposits 22 To depository institutions 33,553 34,643 38,896 30,788 34,061 37,968 33,553 37,381 23 U.S. Treasury—General account 5,288 5,207 5,281 19,822 19,244 22,952 5,288 12,153 24 Foreign—Official accounts 429 229 293 203 287 352 429 275 25 Other 524 302 242 267 327 481 524 228 26 Total deposits 39,794 40,381 44,712 51,080 53,919 61,753 39,794 50,040 27 Deferred credit items 8,378 6,493 6,171 5,981 5,402 7,749 8,378 6,751 28 Other liabilities and accrued dividends5 3,212 3,136 3,382 3,305 3,258 3,990 3,212 3,272 29 Total liabilities 280,756 280,033 284,177 289,601 292,245 298,828 280,756 290,911 CAPITAL ACCOUNTS 3301 CSuarppitlauls paid in 2 2 , , 1 0 4 8 2 1 2 2, , 1 1 0 4 7 3 2 2, , 1 1 1 4 2 3 2 2 , , 1 1 1 4 2 5 2 2 , , 1 1 1 4 2 5 2 2, , 1 1 1 3 2 5 2 2 , , 0 1 8 4 1 2 2 2 , , 1 1 1 4 7 6 78 398 441 422 447 732 78 649 32 Other capital accounts 33 Total liabilities and capital accounts 285,057 284,681 288,873 294,280 296,949 303,807 285,057 295,816 34 MEcMuOst:o Mdya rfkoer tfaobrleei gUn. San. dT rineatesrunrayt isoencaul riatciecso uhnetlsd i.n. 234,667 234,064 232,171 227,567 233,119 236,761 234,667 362,000 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 271,562 271,888 272,540 273,067 273,315 270,007 271,562 272,983 36 LESS: Held by bank 42,190 41,865 42,628 43,832 43,649 44,671 42,190 42,135 37 Federal Reserve notes, net 229,372 230,023 229,912 229,235 229,666 225,336 229,372 230,847 Collateral held against notes net: 38 Gold certificate account 11,060 11,060 11,060 11,061 11,062 11,061 11,060 11,063 39 Special drawing rights certificate account 8,518 8,518 8,518 8,518 8,518 5,518 8,518 8,518 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 209,794 210,445 210,334 209,656 210,086 208,757 209,794 211,266 42 Total collateral 229,372 230,023 229,912 229,235 229,666 225,336 229,372 230,847 1. Some of these data also appear in the Board's H.4.1 (503) release. For 4. Includes special investment account at the Federal Reserve Bank of Chicago address, see inside front cover. in Treasury bills maturing within 90 days. 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities 5. Includes exchange-translation account reflecting the monthly revaluation at pledged with Federal Reserve Banks—and excludes securities sold and scheduled market exchange rates of foreign-exchange commitments. to be bought back under matched sale-purchase transactions. 3. Valued monthly at market exchange rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holdings1 Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1989 1989 May 31 June 7 June 14 June 21 June 28 Apr. 28 May 31 June 30 2,033 1,995 2,256 939 991 2,454 2,033 1,495 2 Within 15 days 1,940 1,774 2,026 835 926 2,402 1,940 1,339 3 16 days to 90 days 93 222 230 104 65 52 93 156 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 223,535 224,175 227,653 230,162 231,062 228,643 223,535 231,767 10 Within 15 days2 4,691 11,241 7,236 11,704 12,757 7,183 4,691 8,812 11 16 days to 90 days 49,365 47,575 52,378 50,669 50,726 53,969 49,365 56,198 12 91 days to 1 year 76,876 72,755 75,435 75,185 74,975 76,037 76,876 74,546 13 Over 1 year to 5 years 52,786 52,786 52,786 52,786 52,786 51,664 52,786 52,393 14 Over 5 years to 10 years 13,511 13,511 13,511 13,511 13,511 12,781 13,511 13,512 15 Over 10 years 26,306 26,306 26,306 26,306 26,306 27,009 26,306 26,306 16 Federal agency obligations—Total 6,654 6,654 6,654 6,654 6,654 6,779 6,654 6,654 17 Within 15 days2 347 48 29 151 152 240 347 152 18 16 days to 90 days 473 807 778 656 642 726 473 642 19 91 days to 1 year 1,324 1,295 1,295 1,295 1,289 1,279 1,324 1,289 20 Over 1 year to 5 years 3,352 3,346 3,371 3,371 3,386 3,357 3,352 3,386 21 Over 5 years to 10 years 969 969 992 992 996 988 969 996 22 Over 10 years 189 189 189 189 189 189 189 189 1. Components may not add to totals because of rounding. 2. Holdings under repurchase agreements are classified as maturing within 15 days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • September 1989 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1988 1989 11998855 11998866 11998877 11998888 IItteemm DDeecc.. DDeecc.. DDeecc.. DDeecc.. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS22 11 TToottaall rreesseerrvveess33 48.49 58.14 58.69 60.71 60.85 60.71 60.37 60.26 59.85 59.46 58.74 58.35 22 NNoonnbboorrrroowweedd rreesseerrvveess 47.17 57.31 57.92 58.99 57.99 58.99 58.71 58.77 58.04 57.17 57.02 56.86 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt44 47.67 57.62 58.40 60.23 60.31 60.23 59.75 59.82 59.38 58.88 58.22 57.78 44 RReeqquuiirreedd rreesseerrvveess 47.44 56.77 57.66 59.67 59.73 59.67 59.23 59.11 58.90 58.69 57.71 57.44 55 MMoonneettaarryy bbaassee 219.51 241.45 257.99 275.50 274.38 275.50 276.78 277.55 278.61 278.67 278.33 279.06 Not seasonally adjusted 6 Total reserves3 49.59 59.46 60.06 62.21 60.96 62.21 62.07 59.37 58.94 60.01 57.72 58.41 7 Nonborrowed reserves 48.27 58.64 59.28 60.50 58.10 60.50 60.40 57.88 57.13 57.72 56.00 56.92 8 Nonborrowed reserves plus extended credit4 48.77 58.94 59.76 61.74 60.42 61.74 61.45 58.93 58.46 59.43 57.20 57.84 9 Required reserves 48.53 58.09 59.03 61.17 59.84 61.17 60.92 58.22 57.98 59.23 56.69 57.51 10 Monetary base 222.73 245.25 262.08 279.71 275.32 279.71 277.92 274.36 275.62 278.11 277.49 280.18 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS6 11 Total reserves3 48.14 59.56 62.12 63.74 62.41 63.74 63.47 60.69 60.21 61.29 58.91 59.59 12 Nonborrowed reserves 46.82 58.73 61.35 62.02 59.55 62.02 61.81 59.21 58.40 59.00 57.19 58.10 13 Nonborrowed reserves plus extended credit 47.32 59.04 61.83 63.27 61.87 63.27 62.85 60.26 59.73 60.71 58.39 59.01 14 Required reserves 47.08 58.19 61.09 62.70 61.29 62.70 62.32 59.54 59.25 60.51 57.88 58.68 15 Monetary base 223.53 247.71 266.16 283.18 278.65 283.18 281.31 277.66 278.94 281.52 280.54 283.27 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 helpdestatistical release. Historical data and estimates of the impact on required reserves pository institutions deal with sustained liquidity pressures. Because there isnot of changes in reserve requirements are available from the Monetary and Reserves the same need to repay such borrowing promptly as there is with traditional Projections Section. Division of Monetary Affairs. Board of Governors of the short-term adjustment credit, the money market impact of extended credit is Federal Reserve System, Washington, D.C. 20551. similar to that of nonborrowed reserves. 2. Figures incorporate adjustments for discontinuities associated with the 5. The monetary base not adjusted for discontinuities consists of total reserves implementation of the Monetary Control Act and other regulatory changes to plus required clearing balances and adjustments to compensate for float at Federal reserve requirements. To adjust for discontinuities due to changes in reserve Reserve Banks and the currency component of the money stock plus, for instirequirements on reservable nondeposit liabilities, the sum of such required tutions not having required reserve balances, the excess of current vault cash over reserves is subtracted from the actual series. Similarly, in adjusting for disconti- the amount applied to satisfy current reserve requirements. Currency and vault nuities in the monetary base, required clearing balances and adjustments to cash figures are measured over the weekly computation period ending Monday. compensate for float also are subtracted from the actual series. The seasonally adjusted monetary base consists of seasonally adjusted total 3. Total reserves not adjusted for discontinuities consist of reserve balances reserves, which include excess reserves on a not seasonally adjusted basis, plus with Federal Reserve Banks, which exclude required clearing balances and the seasonally adjusted currency component of the money stock and the remainadjustments to compensate for float, plus vault cash held during the lagged ing items seasonally adjusted as a whole. computation period by institutions having required reserve balances at Federal 6. Reflects actual reserve requirements, including those on nondeposit liabili- Reserve Banks plus the amount of vault cash equal to required reserves during the ties, with no adjustments to eliminate the effects of discontinuities associated with maintenance period at institutions having no required reserve balances. implementation of the Monetary Control Act or other regulatory changes to 4. Extended credit consists of borrowing at the discount window under reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1989 1985 1986 1987 1988 Dec. Dec. Dec. Dec. Mar. Apr. May June Seasonally adjusted 1 Ml 620.5 725.9 752.3 790.3 786.3 783.2 773.4 770.7 7 M2 2,567.4 2,811.2 2,909.9 3,069.4 3,078.7 3,081.3 3,072.9' 3,090.0 M3 3,201.7 3,494.9 3,677.6 3,914.2r 3,950. r 3,958.lr 3,954.4r 3,975.1 4 L 3,830.6 4,137.1 4,340.2 4,674.9' 4,724. lr 4,740.2' 4,739.4 n.a. 5 Debt 6,733.3 7,596.9 8,310.7 9,052.1 9,229.4 9,283 .C 9,339.5 n.a. Ml components 6 Currency 167.8 180.5 196.4 211.8 215.6 215.9 216.4 217.4 7 Travelers checks4 5.9 6.5 7.1 7.6 7.3 7.3 7.3 7.2 8 Demand deposits 267.3 303.2 288.3 288.6 284.3 281.5 278.3' 275.1 9 Other checkable deposits 179.5 235.8 260.4 282.3 279.1 278.5 271.5 271.0 Nontransactions components 10 In M2 1,946.9 2,085.3 2,157.7 2,279.2 2,292.5' 2,298.1 2,299.4 2,319.2 11 In M3 only8 634.3 683.7 767.6 844.8r 871.3r 876.8r 881.6r 885.2 Savings deposits9 12 Commercial Banks 125.0 155.8 178.5 192.5 188.6 185.6 182.5 118811..55 13 Thrift institutions 176.6 215.2 237.8 238.8 232.2 227.3 222.4 220.7 Small-denomination time deposits10 14 Commercial Banks 383.3 364.6 385.3 443.1 472.0 485.6 497.2 502.3 15 Thrift institutions 499.2 489.3 528.8 582.2 589.0 597.6 609.0' 617.7 Money market mutual funds 16 General purpose and broker-dealer 176.5 208.0 221.1 239.4 256.0 260.2 259.9 266.2 17 Institution-only 64.5 84.4 89.6 87.6 87.6 87.7 91.6 95.1 Large-denomination time deposits11 18 Commercial Banks12 285.1 288.8 325.4 364.9 385.5 392.6 395.7 3%. 6 19 Thrift institutions 151.5 150.1 162.0 172.9 173.4 175.2 176.3 176.6 Debt components 20 Federal debt 1,585.3 1,805.8 1,957.5 2,114.0 2,162.6 2,171.8 2,177.0 n.a. 21 Nonfederal debt 5,147.9 5,791.1 6,353.1 6,938.1 7,066.7 7,111-3r 7,162.6 n.a. Not seasonally adjusted 27 Ml 633.5 740.4 766.4 804.4 775.1 791.4' 767.2 774.3 73 M2 2,576.2 2,821.1 2,918.7 3,077.1 3,072.1 3,092.9 3,063.4' 3,092.8 74 M3 3,213.3 3,507.4 3,688.5 3,924.0r 3,944.8'' 3,963.6' 3,944.3' 3,975.7 75 L 3,843.7 4,152.0 4,354.5 4,688.5' 4,720.7' 4,742.0' 4,728.1 n.a. 26 Debt 6,723.5 7,581.1 8,292.8 9,037.5 9,190.2 9,246.6' 9,306.2 n.a. Ml components 77 Currency3 170.2 183.0 199.3 214.9 213.9 215.1 216.6 218.5 7,8 Travelers checks4 5.5 6.0 6.5 6.9 7.0 7.0 7.1 7.5 29 Demand deposits5 276.9 314.0 298.6 298.8 275.8 283.3 273.4' 276.5 30 Other checkable deposits 180.9 237.4 262.0 283.7 278.3 286.0 270.2 271.7 Nontransactions components 31 M2T...„ 1,942.7 2,080.7 2,152.3 2,272.8 2,297.0 2,301.5 2,296.2' 2,318.5 32 M3 only8 637.1 686.3 769.8 846.9' 872.7' 870.7r sso^ 883.0 Money market deposit accounts 33 Commercial Banks 332.8 379.6 358.8 352.5 340.1 336.3 327.1 328.3 34 Thrift institutions 180.7 192.9 167.5 150.3 140.2 135.0 129.9 128.6 Savings deposits9 35 Commercial Banks 123.7 154.2 176.6 190.3 187.8 186.2 183.7 118833..33 36 Thrift institutions 174.8 212.7 234.8 235.6 230.7 227.9 223.8 223.5 Small-denomination time deposits10 37 Commercial Banks 384.0 365.3 386.1 444.1 473.0 483.6 493.5 500.0 38 Thrift institutions 499.9 489.8 529.1 582.4 592.0 598.6' 605.8 613.8 Money market mutual funds 39 General purpose and broker-dealer 176.5 208.0 221.1 239.4 256.0 260.2 259.9 266.2 40 Institution-only 64.5 84.4 89.6 87.6 87.6 87.7 91.6 95.1 Large-denomination time deposits11 41 Commercial Banks12 285.4 289.1 325.8 336655..66 387.0 390.5 394.5' 339955..11 42 Thrift institutions 151.8 150.7 163.0 174.0 173.2 173.7 175.2 174.7 Debt components 43 Federal debt 1,583.7 1,803.9 1,955.6 2,111.8 2,149.0 2,155.1 2,159.5 n.a. 44 Nonfederal debt 5,139.8 5,777.2 6,337.2 6,925.7 7,041.2 7,091.5' 7,146.7 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • September 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 1989 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11998866 11998877 11998888 Nov. Dec. Jan. Feb. Mar. Apr. DEBITS TO Seasonally adjusted Demand deposits 1 All insured banks 188,346.0 217,116.2 226,888.4 238,497.5 245,617.5 252,226.7 255,774.3 249,088.3 245,230.1 2 Major New York City banks 91,397.3 104,496.3 107,547.3 112,071.8 111,115.5 109,875.9 121,770.1 111,387.4 107,808.9 3 Other banks 96,948.8 112,619.8 119,341.2 126,425.7 134,502.0 142,350.8 134,004.2 137,700.9 137,421.3 4 ATS-NOW accounts4 2,182.5 2,402.7 2,757.7 2,897.2 3,020.8 2,976.2 3,054.9 3,264.9 2,986.4 5 Savings deposits 403.5 526.5 583.0 574.9 640.7 647.4 649.2 675.2 585.5 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 556.5 612.1 641.2 676.6 698.5 716.3 734.4 721.0 697.5 7 Major New York City banks 2,498.2 2,670.6 2,903.5 3,034.6 3,140.7 3,113.7 3,618.0 3,393.0 3,092.2 8 Other banks 321.2 357.0 376.8 400.6 425.3 449.3 425.9 440.4 433.9 9 ATS-NOW accounts4 15.6 13.8 14.7 15.1 15.8 15.6 16.0 17.1 15.7 10 Savings deposits 3.0 3.1 3.1 3.1 3.4 3.5 3.5 3.6 3.2 DEBITS TO Not seasonally adjusted Demand deposits 11 All insured banks 188,506.7 217,125.1 227,010.7 228,743.0 258,119.4 257,649.6 231,347.8 264,581.6 238,265.6 12 Major New York City banks 91,500.1 104,518.8 107,565.0" 108,689.1 117,470.7 112,480.2 110,047.2 120,202.2 105,461.7 13 Other banks 97,006.7 112,606.2 119,445.7 120,053.9 140,648.8 145,169.4 121,300.6 144,379.4 132,803.9 14 ATS-NOW accounts4 2,184.6 2,404.8 2,754.7 2,714.1 3,163.8 3,245.1 2,762.1 3,228.6 3,205.2 15 MMDA° 1,609.4 1,954.2 2,430.1 2,539.7 2,940.5 3,072.5 2,622.4 2,636.7 2,700.2 16 Savings deposits 404.1 526.8 578.0 523.7 655.6 668.7 573.3 649.6 649.6 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 556.7 612.3 641.7 643.3 699.1 713.7 683.1 782.3 676.6 18 Major New York City banks 2,499.1 2,674.9 2,901.4 2,998.6 3,058.1 2,998.6 3,255.7 3,603.3 3,017.6 19 Other banks 321.2 356.9 377.1 375.9 425.2 448.7 397.8 473.6 418.7 20 ATS-NOW accounts4 15.6 13.8 14.7 14.3 16.3 16.7 14.5 16.9 16.3 21 MMDA 4.5 5.3 6.9 7.3 8.4 8.9 7.8 7.8 8.1 22 Savings deposits 3.0 3.1 3.1 2.8 3.5 3.6 3.1 3.5 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 Nonfinancial Statistics • September 1989 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1988' 1989' CCaatteeggoorryy July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted 1 Total loans and securities2 2,362.7 2,377.6 2,381.5 2,401.4 2,410.2 2,417.2 2,422.8 2,451.9 2,464.9 2,470.9 2,486.3 2,496.8 2 U.S. government securities 349.6 350.9 353.1 355.6 358.8 361.4 360.4 361.8 368.8 370.7 373.5 373.8 3 Other securities 196.8 196.5 195.2 196.8 195.9 194.0 189.6 190.4 189.7 187.2 186.4 185.7 4 Total loans and leases 1,816.3 1,830.1 1,833.2 1,848.9 1,855.6 1,861.9 1,872.9 1,899.7 1,906.5 1,913.1 1,926.5 1,937.3 5 Commercial and industrial ..... 595.0 597.4 598.1 601.6 601.8 601.9 606.6 619.0 617.8 620.6 626.3 624.9 6 Bankers acceptances held ... 4.3 4.3 4.1 4.1 4.3 4.1 4.4 4.2 4.0 4.1 4.2 4.2 7 Other commercial and industrial 590.7 593.2 594.0 597.5 597.4 597.8 602.2 614.8 613.7 616.6 622.1 620.7 8 U.S. addressees4 583.7 586.5 587.2 590.9 591.3 591.8 596.5 609.9 608.3 611.7 616.6 615.2 9 Non-U.S. addressees 6.9 6.7 6.9 6.5 6.1 5.9 5.7 4.9 5.4 4.9 5.5 5.5 10 Real estate 635.8 643.0 650.3 659.8 665.3 672.0 678.9 685.6 691.8 699.5 705.5 712.0 11 Individual 345.6 347.7 350.2 351.6 353.0 355.5 357.9 358.9 360.6 362.9 365.4 366.0 12 Security 38.9 39.6 36.5 38.5 38.2 38.5 37.7 44.7 43.6 40.0 38.0 41.1 13 Nonbank financial institutions 31.1 31.1 30.7 30.4 30.2 30.0 30.3 30.6 29.7 29.2 29.0 30.5 14 Agricultural 29.6 29.6 29.6 29.8 30.3 30.7 30.7 30.7 30.7 30.4 30.3 30.4 15 State and political subdivisions 48.8 48.2 48.0 48.5 47.7 46.8 44.4 44.5 44.6 44.6 44.6 44.5 16 Foreign banks 8.1 8.0 7.2 7.6 8.1 7.6 7.8 8.5 8.1 8.3 9.3 9.2 17 Foreign official institutions 5.0 5.1 5.0 4.8 4.9 4.9 4.8 4.8 4.8 4.8 4.8 4.7 18 Lease financing receivables 28.0 28.1 28.5 28.9 29.1 29.2 29.4 29.6 29.6 29.8 30.0 29.9 19 All other loans 50.3 52.2 49.1 47.5 47.1 44.9 44.4 42.8 45.3 43.0 43.2 43.9 Not seasonally adjusted 20 Total loans and securities2 2,356.7 2,370.5 2,378.9 2,392.6 2,409.2 2,429.6 2,430.7 2,453.6 2,462.8 2,473.9 2,487.4 2,500.9 21 U.S. government securities 348.2 351.2 352.9 352.6 357.5 361.6 362.2 366.3 370.2 370.9 372.6 372.6 22 Other securities 196.3 196.8 195.0 195.6 196.0 193.7 191.7 190.1 188.9 187.2 186.8 186.0 23 Total loans and leases 1,812.2 1,822.5 1,831.0 1,844.4 1,855.7 1,874.2 1,876.9 1,897.2 1,903.7 1,915.9 1,928.0 1,942.4 24 Commercial and industrial ..... 594.0 593.1 593.3 597.0 599.3 605.0 605.8 618.3 621.1 625.2 630.0 629.0 25 Bankers acceptances held ... 4.4 4.3 4.2 4.2 4.3 4.1 4.1 4.1 4.0 4.0 4.3 4.4 26 Other commercial and industrial 589.6 588.8 589.1 592.8 595.0 600.9 601.7 614.2 617.1 621.3 625.8 624.6 2 2 7 8 N U o .S n . - U ad .S d . r e a s d s d ee re s ssees4 58 6 2 . . 9 7 58 6 2 . . 6 2 58 6 2 . . 6 5 58 6 6 . . 2 6 58 6 8 . . 1 9 59 6 4 . . 1 8 59 5 6 . . 3 4 60 5 8 . . 3 9 61 5 1 . . 3 7 61 5 5 . . 3 9 62 5 0 . . 6 2 61 5 9 . . 6 0 29 Real estate 636.2 644.2 651.9 660.7 667.2 673.3 678.9 683.6 689.2 697.4 704.1 712.1 30 Individual 344.6 347.8 351.8 352.6 354.1 359.4 360.7 358.2 357.7 360.3 363.2 364.5 31 Security 38.6 38.3 35.1 36.9 37.6 38.9 38.2 43.8 44.1 42.0 38.9 42.7 32 Nonbank financial institutions 31.1 31.0 30.7 30.1 30.3 31.1 30.7 30.0 29.1 29.1 29.1 30.7 33 Agricultural 30.3 30.4 30.5 30.6 30.5 30.5 30.1 29.8 29.6 29.6 30.1 30.8 34 State and political subdivisions 48.2 47.7 47.3 48.0 47.1 46.6 45.8 45.5 45.1 44.8 44.5 44.2 35 Foreign banks 8.3 7.9 7.4 7.6 8.2 7.9 8.0 8.5 8.0 8.0 9.0 9.1 36 Foreign official institutions 5.0 5.1 5.0 4.8 4.9 4.9 4.8 4.8 4.8 4.8 4.8 4.7 37 Lease financing receivables 27.9 28.0 28.4 28.7 28.9 29.4 29.7 29.7 29.7 29.8 30.0 30.0 38 All other loans 48.2 48.9 49.6 47.3 47.6 47.3 44.1 45.0 45.5 44.8 44.3 44.6 1. Data have been revised because of benchmarking beginning January 1984. 2. Excludes loans to commercial banks in the United States. These data also appear in the Board's G.7 (407) release. For address, see inside 3. Includes nonfinancial commercial paper held, front cover. 4. United States includes the 50 states and the District of Columbia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1989 Source July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted 1 Total nondeposit funds 215.2 219.4 210.0 210.9 217.3 214.6 207.4 210.5 211.2r 204.3' 207.1 223.0 2 Net balances due to related foreign offices3... 13.9 19.2 8.2 5.6 9.3 6.7 8.0 10.7 8.r 2.9 -.1' 8.0 3 Borrowings from other than commercial banks in United States4 201.3 200.3 201.8 205.3 208.0 207.9 199.4 199.9 203.1' 201.4' 207.2' 215.0 4 Domestically chartered banks 166.9 165.8 165.8 167.1 168.7 168.9 162.4 160.7 165.1 162.8 166.5 175.0 5 Foreign-related banks 34.4 34.5 36.C 38.2 39.3 39.0 37.0' 39.2 38.0 38.6' 40.7' 40.0 Not seasonally adjusted 6 Total nondeposit funds 210.8 218.3 206.6r 204.9' 214.1 209.0 206.5 215.3 216.8' 207.0' 214.7 226.0 7 Net balances due to related foreign offices ... 10.8 18.7 9.2 5.2 10.3 9.2 7.7 10.4 7.0 .8 2.6 8.1 8 Domestically chartered banks -14.1 -7.3 -15.7 -20.5 -19.2 -20.7 -20.5 -17.9 -19.8 -23.0' -22.1' -18.5 9 Foreign-related banks 24.9 26.0 24.9 25.7 29.5 29.9 28.2 28.3 26.9 23.9 24.6 26.6 10 Borrowings from other than commercial banks in United States4 199.9 199.6 197.3 199.7r 203.7 199.8 198.9 204.9 209.7 206.2' 212.1 217.9 11 Domestically chartered banks 165.0 165.3 162.1 162.9 167.4 162.9 160.8 164.4 170.2 166.7 171.0 176.3 12 Federal funds and security RP borrowings 159.6 160.3 157.6 158.8 162.8 159.3 157.4 161.2 166.7 162.4 167.3 172.9 13 Other6 5.4 5.0 4.4 4.1 4.6 3.5 3.4 3.2 3.5 4.3 3.7 3.4 14 Foreign-related banks 34.9 34.2 35.3 36.8 36.3 37.0 38.1 40.5 39.5 39.5' 41.1' 41.6 MEMO Gross large time deposits 15 Seasonally adjusted 408.4 414.6 419.7 423.2 424.5 429.2 434.9 440.3 446.6 452.7 456.7' 458.7 16 Not seasonally adjusted 405.9 415.1 421.7 424.7 425.6 429.8 434.5 440.2 448.2' 450.6 455.5 457.2 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 21.3 17.1 23.5 27.2 23.0 24.9 20.3 20.3 20.3 20.9 27.1 27.3 18 Not seasonally adjusted 22.0 11.9 24.6 27.7 16.3 22.9 25.0 25.9 18.1 20.2 34.3 26.2 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 Nonfinancial Statistics • September 1989 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1988r 1989r Account Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 2.535.1 2.535.6 2.551.6 2,591.6 2,601.6 2.587.0 2,624.0 2.627.1 2,623.0 2.659.8 2,660.7 2 Investment securities 526.4 526.8 524.8 532.9 533.5 533.5 535.8 539.1 538.3 541.1 541.6 3 U.S. government securities 335.1 336.4 334.1 341.5 345.3 347.3 351.3 355.5 356.6 359.1 362.2 4 Other 191.3 190.4 190.7 191.4 188.2 186.2 184.5 183.6 181.7 182.0 179.4 5 Trading account assets 22.7 21.2 24.9 24.8 19.2 21.5 20.1 21.8 17.8 19.2 18.2 6 Total loans 1,986.0 1,987.5 2,002.0 2,033.9 2,048.9 2.032.1 2,068.0 2.066.2 2,066.8 2.099.5 2,100.9 7 Interbank loans 158.8 154.9 161.3 170.3 165.7 159.9 173.2 154.9 150.7 160.5 155.0 8 Loans excluding interbank 1.827.2 1.832.7 1.840.7 1.863.6 1,883.2 1.872.2 1,894.9 1,911.3 1,916.2 1,939.0 1,945.9 9 Commercial and industrial 591.9 593.3 595.0 601.3 608.8 604.6 617.6 622.9 627.3 631.1 628.3 10 Real estate 648.0 654.7 661.8 669.6 676.3 679.7 684.1 692.6 699.4 706.7 715.1 11 Individual 350.1 352.7 353.3 355.3 361.4 360.8 358.3 358.1 361.8 363.8 366.0 12 All other 237.2 232.0 230.6 237.5 236.6 227.0 234.8 237.7 227.7 237.4 236.6 13 Total cash assets 223.3 216.6 209.9 237.5 246.3 216.1 227.4 211.5 215.8 248.3 214.2 14 Reserves with Federal Reserve Banks 33.1 31.1 31.7 33.8 34.5 31.5 27.7 30.9 33.4 27.8 27.9 15 Cash in vault 26.5 26.2 26.3 28.7 30.3 27.5 26.6 26.8 26.9 27.9 27.6 16 Cash items in process of collection .. 79.7 76.3 72.9 89.8 92.3 76.4 89.1 75.9 78.8 107.6 78.7 17 Demand balances at U.S. depository institutions 31.9 29.8 29.4 32.4 34.4 28.7 33.3 28.8 28.5 34.9 29.6 18 Other cash assets 52.1 53.2 49.6 52.8 54.8 52.0 50.7 49.0 48.3 50.2 50.5 19 Other assets 189.2 194.5 200.3 200.7 200.0 194.6 191.4 194.1 200.7 206.8 198.7 20 Total assets/total liabilities and capital... 2,947.6 2.946.7 2.961.8 3.029.7 3,047.9 2,997.8 3,042.8 3,032.7 3.039.5 3.114.9 3,073.6 21 Deposits 2,077.4 2.062.8 2,072.2 2.125.8 2,145.7 2,097.1 2,125.2 2,123.7 2,134.2 2.182.6 2,138.2 22 Transaction deposits 609.9 588.3 587.8 628.6 642.7 586.6 602.6 583.2 594.5 628.5 580.5 23 Savings deposits 542.3 536.6 537.8 541.1 535.6 528.8 527.3 523.2 512.0 509.7 507.4 24 Time deposits 925.3 937.9 946.7 956.1 967.5 981.7 995.3 1,017.3 1.027.6 1,044.3 1,050.2 25 Borrowings 451.0 471.8 482.6 479.0 473.1 493.6 502.9 483.6 486.7 510.6 512.7 26 Other liabilities 227.2 220.8 214.5 229.0 233.7 209.1 216.5 223.9 217.4 218.6 218.4 27 Residual (assets less liabilities) 191.9 191.4 192.5 195.9 195.3 198.0 198.2 201.4 201.2 203.2 204.4 MEMO 28 U.S. government securities (including trading account) 352.0 352.6 354.0 361.0 359.4 364.4 366.2 372.1 369.5 372.3 374.4 29 Other securities (including trading account) 197.1 195.4 195.7 196.7 193.4 190.5 189.7 188.8 186.6 188.0 185.4 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,340.9 2.339.8 2,353.9 2,389.8 2,391.9 2.385.1 2,405.9 2,407.8 2,407.8 2,446.0 2,439.9 31 Investment securities 499.9 501.7 499.3 507.1 507.2 507.0 509.0 513.1 513.8 516.1 517.3 32 U.S. government securities 323.3 325.0 322.8 329.9 333.2 334.5 338.1 342.7 344.1 345.9 349.5 33 Other 176.6 176.7 176.5 177.1 174.0 172.6 171.0 170.4 169.7 170.2 167.8 34 Trading account assets 22.7 21.2 24.9 24.8 19.2 21.5 20.1 21.8 17.8 19.2 18.2 35 Total loans 1,818.4 1.816.9 1,829.8 1,858.0 1.865.4 1.856.6 1,876.8 1.872.8 1,876.2 1,910.6 1,904.5 36 Interbank loans 129.9 126.2 131.3 139.7 133.1 131.4 138.9 122.3 120.2 131.5 119.3 37 Loans excluding interbank 1,688.4 1,690.7 1,698.5 1,718.3 1,732.3 1.725.2 1,737.8 1,750.5 1,756.0 1,779.2 1,785.1 38 Commercial and industrial 491.2 490.2 492.7 498.7 500.6 498.9 503.4 506.1 511.3 515.5 511.6 39 Real estate 628.5 634.8 641.3 647.7 654.3 657.7 661.7 669.8 676.0 683.2 691.6 40 Individual 349.8 352.3 353.0 354.9 361.1 360.5 358.0 357.7 361.4 363.5 365.6 41 All other 219.0 213.3 211.6 217.0 216.3 208.1 214.7 216.9 207.3 217.0 216.3 42 Total cash assets 203.6 194.1 190.2 216.6 223.1 193.5 206.4 191.4 195.3 227.0 192.3 43 Reserves with Federal Reserve Banks. 31.4 29.0 29.9 32.6 33.1 30.1 26.6 29.5 30.7 26.7 26.6 44 Cash in vault 26.4 26.1 26.2 28.6 30.3 27.4 26.6 26.8 26.8 27.9 27.6 45 Cash items in process of collection .. 79.4 75.9 72.2 89.0 91.4 75.6 88.1 75.1 77.9 106.6 77.7 46 Demand balances at U.S. depository institutions 30.2 27.7 27.4 30.5 32.4 26.8 31.2 26.6 26.8 32.9 27.5 47 Other cash assets 36.1 35.3 34.4 35.8 35.9 33.6 33.9 33.4 33.1 33.0 32.9 48 Other assets 127.3 132.2 135.6 128.1 129.6 130.6 134.6 133.6 131.6 49 Total assets/liabilities and capital 2,668.6 2,661.3 2,674.5 2,738.6 2.750.5 2.706.7 2,741.8 2.729.9 2,737.7 2,806.6 2,763.9 50 Deposits 2,011.5 1,995.7 2,004.0 2,056.3 2,073.0 2,026.1 2,052.7 2,047.4 2,056.2 2,103.0 2,058.8 51 Transaction deposits 601.2 579.5 578.2 618.7 632.9 577.4 593.5 574.1 584.8 618.7 571.2 52 Savings deposits 539.8 534.1 535.2 538.6 533.1 526.4 524.8 520.7 509.4 507.1 504.8 53 Time deposits 870.5 882.1 890.7 899.0 907.0 922.3 934.4 952.6 961.9 977.2 982.9 54 Borrowings 345.6 359.5 365.2 366.1 363.7 377.1 378.7 362.8 368.2 383.0 387.3 55 Other liabilities 123.0 118.2 116.3 123.8 122.0 109.0 115.8 121.7 115.6 120.9 116.9 56 Residual (assets less liabilities) 188.4 187.8 189.0 192.4 191.8 194.5 194.6 197.9 197.7 199.7 200.8 MEMO 57 Real estate loans, revolving 36.4 37.5 38.5 39.7 40.1 40.7 41.7 42.5 43.4 44.3 45.3 58 Real estate loans, other 592.1 597.3 602.7 608.0 614.2 617.0 620.0 627.3 632.6 638.9 646.2 1. Data have been revised because of benchmarking beginning January 1984. condition report data. Data for other banking institutions are estimates made for Back data are available from the Banking and Monetary Statistics section, Board the last Wednesday of the month based on a weekly reporting sample of of Governors of the Federal Reserve System, Washington, D.C., 20551. These foreign-related institutions and quarter-end condition reports. data also appear in the Board's weekly H.8 (510) release. 2. Commercial banking institutions include insured domestically chartered Figures are partly estimated. They include all bank-premises subsidiaries and commercial banks, branches and agencies of foreign banks, Edge Act and other significant majority-owned domestic subsidiaries. Loan and securities data Agreement corporations, and New York State foreign investment corporations. for domestically chartered commercial banks are estimates for the last Wednes- 3. Insured domestically chartered commercial banks include all member banks day of the month based on a sample of weekly reporting banks and quarter-end and insured nonmember banks. 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 1989 AAccccoouunntt May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 1 Cash and balances due from depository institutions 114,789 101,145 111,852 99,936 126,800 103,762 113,573 103,874 106,464 2 Total loans, leases, and securities, net 1,202,577 1,187,776 1,201,383 1,196,428 1,213,512 1,201,589 1,203,732 1,208,875 1,208,611 3 U.S. Treasury and government agency 135,673' 135,409' 138,362' 139,975' 137,22C 137,634 137,626 140,272 140,742 4 Trading account 13,912 13,280 15,571 15,202 13,216 13,548 13,823 14,427 12,168 5 Investment account 121,760' 122,13c 122,79C 124,773' 124,003' 124,086 123,803 125,845 128,575 6 Mortgage-backed securities 51,250' 51,28C 51,563' 53,727' 53,763' 53,922 53,932 55,782 57,653 All other maturing in 7 One year or less 21,232' 21,208 20,790 20,547 21,031 21,233 20,982 20,990 21,505 8 Over one through five years 41,73c 41,942 42,462 42,391 41,184 41,040 40,922 40,760 40,757 9 Over five years 7,549' 7,699' 7,975' 8,108' 8,026' 7,890 7,%7 8,313 8,660 10 Other securities 71,672' 71,774' 71,731' 72,079' 72,67C 72,054 72,010 72,176 71,651 11 Trading account 1,093 1,046 834 923 1,138 842 1,027 1,045 1,113 12 Investment account 70,579' 70,728' 70,897' 71,156' 71,533' 71,211 70,982 71,131 70,538 13 States and political subdivisions, by maturity 44,501 44,440 44,433 44,439 44,473 44,216 44,153 44,069 43,847 14 One year or less 5,031' 4,974 4,956 4,%1 5,051 4,981 4,971 4,915 4,775 15 Over one year 39,471' 39,467 39,477 39,478 39,422 39,235 39,181 39,154 39,072 16 Other bonds, corporate stocks, and securities 26,078' 26,288' 26,464' 26,717' 27.06C 26,9% 26,830 27,062 26,691 17 Other trading account assets 3,936 3,989 4,090 4,153 4,829 5,232 4,810 4,634 4,870 18 Federal funds sold4 78,96C 67,192' 71,778' 66,895' 77,178' 68,424 69,935 70,210 72,860 19 To commercial banks 54,801 45,932 48,988 42,626 51,929 42,728 44,934 45,070 48,091 20 To nonbank brokers and dealers in securities 16,951 15,361 15,901 16,466 18,223 18,593 19,299 18,841 18,409 21 To others 7,208' 5,898' 6,889' 7,802' 7,026' 7,102 5,702 6,299 6,360 22 Other loans and leases, gross 950,569' 947,699' 953,754' 951.67C 960,00C 956,751 957,770 959,987 956,657 23 Other loans, gross 925,968' 923,094' 929,1%' 927,056' 935,392' 932,189 933,195 935,342 931,986 24 Commercial and industrial 317,898' 316,794' 316,902' 316,763' 318,081' 317,247 316,469 316,022 314,110 25 Bankers acceptances and commercial paper 1,740 1,806 1,681 1,748 1,978 1,840 1,879 1,803 1,781 26 All other 316,158' 314,988' 315,221' 315,014' 316,103' 315,407 314,590 314,220 312,329 27 U.S. addressees 314,220' 313,088' 313,316' 313,001' 314,144' 313,473 312,724 312,319 310,392 28 Non-U.S. addressees 1,937 1,901 1,905 2,014 1,959 1,933 1,866 1,901 1,937 29 Real estate loans 322,338' 323,332' 324,717' 324,93C 325,578' 326,386 328,061 329,207 330,083 30 Revolving, home equity 23,942 24,113 24,217 24,314 24,423 24,534 24,746 24,873 25,031 31 All other 298,3%' 299,219' 300,50C 300,616' 301,155' 301,852 303,315 304,334 305,052 32 To individuals for personal expenditures 169,193 169,142 169,252 169,451 169,681 169,169 169,662 169,256 169,788 33 To depository and financial institutions 44,155 44,375 46,047 45,082 47,523 46,786 45,414 45,689 42,912 34 Commercial banks in the United States 20,230 20,180 21,438 21,005 21,350 20,715 19,924 19,304 17,266 35 Banks in foreign countries 3,641 4,194 3,910 4,122 4,783 4,749 3,921 4,384 3,947 36 Nonbank depository and other financial institutions .. 20,284 20,001 20,698 19,955 21,390 21,322 21,568 22,001 21,699 37 For purchasing and carrying securities 14,940 13,561 14,243 13,654 15,608 14,259 15,667 16,098 16,998 38 To finance agricultural production 5,581 5,592 5,688 5,672 5,686 5,721 5,716 5,738 5,7% 39 To states and political subdivisions 27,375 27,264 27,233 27,158 27,144 27,119 27,037 27,066 26,9% 40 To foreign governments and official institutions 1,887 1,929 2,119 1,969 1,840 1,981 1,912 1,869 1,813 41 All other 22,602' 21,103' 22,995' 22,376' 24,25C 23,522 23,257 24,3% 23,489 42 Lease financing receivables 24,600 24,604 24,558 24,615 24,608 24,562 24,575 24,645 24,671 43 LESS: Unearned income 4,898 4,938 4,948 4,960 4,920 4,932 4,943 4,%1 4,949 44 Loan and lease reserve 33,337 33,348 33,384 33,383 33,465 33,574 33,476 33,442 33,220 45 Other loans and leases, net 912,334' 909,412' 915,422' 913,327' 921,615' 918,245 919,351 921,583 918,488 46 All other assets 132,23C 132,814' 131,254' 129,339 131,337 131,974 130,815 131,739 128,170 47 Total assets 1,449,595' 1,421,734' 1,444,489' 1,425,703 1,471,648 1,437,324 1,448,120 1,444,489 1,443,245 48 Demand deposits 229,729 213,972 222,228 209,927 244,114 219,785 226,209 219,160 219,193 49 Individuals, partnerships, and corporations 177,649 172,058 179,074 168,217 189,983 175,662 180,985 174,885 173,820 50 States and political subdivisions 7,860 5,674 5,744 5,454 5,894 5,420 5,890 6,616 6,078 51 U.S. government 6,491 2,886 1,645 3,435 2,678 3,373 4,547 1,888 2,516 52 Depository institutions in the United States 21,154 19,076 20,634 18,504 25,9% 19,292 19,817 19,736 20,086 53 Banks in foreign countries 6,134 5,707 5,801 6,048 8,515 7,206 6,020 7,030 6,707 54 Foreign governments and official institutions 672 816 1,039 622 669 954 891 866 1,022 55 Certified and officers' checks 9,769 7,755 8,292 7,646 10,378 7,879 8,059 8,138 8,%3 56 Transaction balances other than demand deposits 76,512 73,950 73,531 72,482 74,271 75,6% 74,883 72,702 71,824 57 Nontransaction balances 669,138' 670,331' 673,545' 673,368 673,0% 677,506 676,549 675,376 674,735 58 Individuals, partnerships, and corporations 627,810' 628,66C 631,356' 631,507 631,788 636,409 635,547 634,933 634,580 59 States and political subdivisions 31,955 32,341 32,842 32,663 32,310 32,079 31,974 31,380 31,066 60 U.S. government 972 937 935 930 922 916 882 882 898 61 Depository institutions in the United States 7,742 7,764 7,750 7,568 7,420 7,391 7,466 7,484 7,494 62 Foreign governments, official institutions, and banks .. 659 629 661 701 657 711 679 6% 6% 63 Liabilities for borrowed money 288,844 278,253 292,780 284,177 289,130 277,162 282,707 289,438 291,8% 64 Borrowings from Federal Reserve Banks 1,632 1,035 1,060 985 1,349 1,520 1,720 0 960 65 Treasury tax-and-loan notes 25,598 25,696 25,6% 24,373 21,700 8,003 7,165 25,165 25,191 66 All other liabilities for borrowed money 261,614 251,522 266,024 258,819 266,081 267,639 273,822 264,273 265,746 67 Other liabilities and subordinated notes and debentures .. 85,962 85,298 82,244 85,317 90,394 86,457 86,832 87,093 84,807 68 Total liabilities 1,350,184' 1,321,805' 1,344,328' 1,325,271 1,371,007 1,336,607 1,347,181 1,343,770 1,342,456 69 Residual (total assets minus total liabilities)7 99,411 99,929 100,161 100,432 100,641 100,717 100,940 100,719 100,789 MEMO 70 Total loans and leases (gross) and investments adjusted . 1,165,780 1,159,950 1,169,288 1,171,141 1,178,618 1,176,652 1,177,293 1,182,905 1,181,423 71 Total loans and leases (gross) adjusted 954,498 948,778 955,106 954,933 %3,899 961,731 %2,847 %5,823 964,160 72 Time deposits in amounts of $100,000 or more 214,705 215,464 216,357 216,914 215,385 217,267 217,398 216,782 216,742 73 U.S. Treasury securities maturing in one year or less 19,080' 19,174 19,388 19,552 19,392 19,866 18,862 18,868 18,572 74 Loans sold outright to affiliates—total 1,870 1,839 1,877 1,926 1,775 1,854 1,859 1,863 1,800 75 Commercial and industrial 1,575 1,544 1,555 1,618 1,466 1,542 1,548 1,544 1,479 76 Other 295 295 322 308 309 312 312 319 320 77 Nontransaction savings deposits (including MMDAs) 246,320 245,696 246,665 245,452 246,395 248,402 246,968 246,010 245,348 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 biUionor 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 Nonfinancial Statistics • September 1989 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1989 AAccccoouunntt May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 1 Cash balances due from depository institutions 25,562 20,527 22,828 21,252 28,490 20,524 25,136 21,314 24,700 2 Total loans, leases and securities, net2 215,490 208,549 215,583 212,905 222,681 216,247 217,152 216,649 215,410 Securities 3 U.S. Treasury and government agency 0 0 0 0 0 0 0 0 0 4 Trading account 0 0 0 0 0 0 0 0 0 5 Investment account 14,962 15,056 15,530 15,704 15,244 15,042 15,030 15,095 15,461 6 Mortgage-backed securities 7,240 7,242 7,257 7,263 7,237 7,250 7,260 7,288 7,414 All other maturing in 7 One year or less 2,564 2,758 2,659 2,712 2,804 2,791 2,781 2,855 2,930 8 Over one through five years 3,488 3,371 3,900 4,029 3,500 3,409 3,412 3,295 3,517 9 Over five years 1,670 1,685 1,714 1,700 1,703 1,592 1,576 1,657 1,601 10 Other securities3 0 0 0 0 0 0 0 0 0 11 Trading account 0 0 0 0 0 0 0 0 0 12 Investment account 17,436 17,549 17,589 17,710 17,777 17,772 17,927 18,224 17,761 13 States and political subdivisions, by maturity 12,018 12,042 12,001 11,997 11,990 11,964 11,932 11,904 11,707 14 One year or less 1,168 1,170 1,166 1,162 1,161 1,175 1,178 1,181 1,079 15 Over one year 10,850 10,872 10,835 10,835 10,828 10,788 10,755 10,723 10,628 16 Other bonds, corporate stocks, and securities 5,418 5,507 5,588 5,713 5,787 5,808 5,995 6,320 6,054 17 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold 25,116 20,683 23,787 22,312 27,529 22,727 24,721 23,950 25,085 19 To commercial banks 13,184 10,006 12,567 9,039 13,687 8,086 10,582 9,875 11,277 20 To nonbank brokers and dealers in securities 7,873 7,440 7,504 8,614 9,708 10,335 10,956 10,384 9,994 21 To others 4,058 3,236 3,716 4,658 4,134 4,307 3,182 3,690 3,814 22 Other loans and leases, gross 172,527 169,905 173,337 171,859 176,814 175,424 174,171 174,092 171,809 23 Other loans, gross 166,693 164,070 167,591 166,120 171,076 169,696 168,469 168,363 166,097 24 Commercial and industrial 59,277 58,600 59,230 59,431 60,169 59,746 59,210 57,929 56,879 25 Bankers acceptances and commercial paper 325 355 303 355 422 384 489 404 394 26 All other 58,952 58,245 58,926 59,076 59,747 59,362 58,722 57,525 56,486 27 U.S. addressees 58,321 57,606 58,309 58,393 59,118 58,733 58,120 56,922 55,782 28 Non-U.S. addressees 631 639 617 683 629 628 602 603 703 29 Real estate loans 51,679 51,750 52,022 52,139 52,240 52,495 52,640 52,7% 53,034 30 Revolving, home equity 3,441 3,449 3,461 3,469 3,479 3,481 3,495 3,508 3,524 31 All other 48,238 48,300 48,561 48,669 48,761 49,014 49,145 49,288 49,510 32 To individuals for personal expenditures 19,368 19,368 19,331 19,366 19,347 19,430 19,528 19,498 19,630 33 To depository and financial institutions 17,509 17,402 18,463 17,953 20,126 19,435 18,638 18,998 17,094 34 Commercial banks in the United States 8,212 7,992 8,860 8,444 9,204 8,535 8,104 8,007 6,760 35 Banks in foreign countries 2,195 2,7% 2,544 2,798 3,323 3,215 2,537 2,932 2,529 36 Nonbank depository and other financial institutions 7,102 6,614 7,059 6,711 7,598 7,685 7,9% 8,059 7,804 37 For purchasing and carrying securities 6,395 5,271 5,660 5,033 6,165 5,606 5,971 6,374 7,146 38 To finance agricultural production 161 174 194 170 158 163 155 148 150 39 To states and political subdivisions 6,034 6,015 6,001 5,975 5,982 5,945 5,898 5,974 5,917 40 To foreign governments and official institutions 520 583 753 605 480 625 504 508 476 41 Mother 5,749 4,907 5,936 5,447 6,408 6,249 5,923 6,138 5,772 42 Lease financing receivables 5,834 5,835 5,746 5,739 5,737 5,728 5,701 5,729 5,712 43 LESS: Unearned income 1,610 1,634 1,648 1,656 1,641 1,646 1,655 1,675 1,686 44 Loan and lease reserve 12,940 13,010 13,013 13,024 13,041 13,072 13,041 13,037 13,020 45 Other loans and leases, net6 157,977 155,261 158,677 157,179 162,131 160,706 159,474 159,380 157,103 46 All other assets 59,369 59,792 61,784 58,636 57,284 59,032 54,848 59,411 56,451 47 Total assets 300,421 288,868 300,195 292,793 308,455 295,803 297,137 297,373 296,562 Deposits 48 Demand deposits 50,670 47,475 50,746 46,512 58,706 50,054 50,818 52,866 52,046 49 Individuals, partnerships, and corporations 34,056 33,792 36,203 32,714 38,911 35,302 36,199 36,539 35,773 50 States and political subdivisions 1,379 550 487 493 625 571 1,057 938 850 51 U.S. government 1,215 504 227 670 478 577 693 193 493 52 Depository institutions in the United States 5,009 4,696 5,198 4,674 6,745 4,183 4,787 5,642 5,120 53 Banks in foreign countries 4,880 4,487 4,588 4,814 7,040 5,972 4,590 ,5,710 5,240 54 Foreign governments and official institutions 521 675 868 488 530 785 749 / 628 863 55 Certified and officers' checks 3,610 2,770 3,174 22,,665588 44,,337766 22,,666633 22,,774433 ff 33,,221166 33,,770066 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,544 8,261 8,207 8,113 8,236 8,412 8,446 8,178 8,109 57 Nontransaction balances 112,910 112,666 113,069 113,557 113,778 114,776 113,479 112,939 112,693 58 Individuals, partnerships, and corporations 102,964 102,493 102,610 103,061 103,405 104,455 103,007 102,616 102,309 59 States and political subdivisions 7,673 7,921 8,155 8,178 8,095 8,013 8,186 8,039 8,106 60 U.S. government 24 25 29 28 29 30 30 29 28 61 Depository institutions in the United States 1,996 2,015 2,026 2,005 2,000 1,997 2,004 2,004 1,998 62 Foreign governments, official institutions, and banks 251 212 249 284 249 281 253 250 251 63 Liabilities for borrowed money 70,191 63,324 72,879 67,597 65,776 64,382 66,456 65,433 68,297 64 Borrowings from Federal Reserve Banks 0 0 0 0 0 0 0 0 960 65 Treasury tax-and-loan notes 6,202 6,201 6,082 5,726 5,381 1,772 1,485 6,086 5,%9 66 All other liabilities for borrowed money8 63,990 57,123 66,798 61,871 60,395 62,610 64,971 59,348 61,368 67 Other liabilities and subordinated notes and debentures 29,935 28,669 26,686 28,482 33,420 29,387 29,100 29,314 26,802 68 Total liabilities 272,249 260,395 271,587 264,261 279,916 267,011 268,299 268,730 267,947 69 Residual (total assets minus total liabilities)9 28,172 28,472 28,608 28,532 28,539 28,792 28,837 28,643 28,615 MEMO 70 Total loans and leases (gross) and investments adjusted2'10 208,645 205,195 208,817 210,102 214,472 214,345 213,161 213,479 212,079 71 Total loans and leases (gross) adjusted10 176,247 172,590 175,698 176,688 181,452 181,530 180,204 180,159 178,857 72 Time deposits in amounts of $100,000 or more 42,681 42,571 43,144 43,199 43,084 43,323 42,891 42,576 42,356 73 U.S. Treasury securities maturing in one year or less 3,253 3,165 3,114 3,239 2,950 2,829 2,956 2,978 2,872 1. These data also appear in the Board's H.4.2 (504) release. For address, see 7. Includes trading account securities. inside front cover. 8. Includes federal funds purchased and securities sold under agreements to 2. Excludes trading account securities. repurchase. 3. Not available due to confidentiality. 9. Not a measure of equity capital for use in capital adequacy analysis or for 4. Includes U.S. government-issued or guaranteed certificates of participation other analytic uses. in pools of residential mortgages. 10. Exclusive of loans and federal funds transactions with domestic commer- Digitized for FRA5S. EInRclu des securities purchased under agreements to resell. cial banks. 6. Includes allocated transfer risk reserve. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A21 1.30 LARGE WEEKLY REPORTING U.S. BRANCHES AND AGENCIES OF FOREIGN BANKS1 Assets and Liabilities Millions of dollars, Wednesday figures 1989 AAccccoouunntt May 3 May 10 May 17 May 24 May 31 June 7 June 14 June 21 June 28 1 Cash and due from depository institutions ... 13,042 10,534 11,398 11,026 11,420 10,617 11,621 11,396 11,606 2 Total loans and securities 113322,,110000 130,967 132,963 131,596 130,213 131,484 133,135 133,185 134,216 3 U.S. Treasury and government agency securities 9,006 8,591 8,580 8,687 8,863 8,659 8,132 8,5% 88,,555577 4 Other securities. 6,190 6,184 6,200 6,042 6,137 6,138 6,014 6,006 5,988 5 Federal funds sold 7,216 6,598 8,223 6,815 5,500 7,267 9,030 7,955 7,286 6 To commercial banks in the United States . 6,061 5,448 6,737 5,582 4,489 6,215 8,002 6,915 6,079 7 To others 1,155 1,150 1,486 1,233 1,011 1,052 1,028 1,040 1,207 8 Other loans, gross 109,688 109,594 109,960 110,052 109,713 109,420 109,959 110,628 112,385 9 Commercial and industrial 7711,,777777 7711,,115500 7711,,441100 71,007 71,241 70,716 70,671 71,341 71,337 10 Bankers acceptances and commercial paper 1,773 1,858 1,794 1,761 1,648 1,789 1,888 1,892 1,863 11 All other 70,004 69,292 69,616 69,246 69,593 68,927 68,783 69,449 69,474 12 U.S. addressees 68,366 67,532 67,918 67,543 67,894 67,189 67,048 67,778 67,736 13 Non-U.S. addressees 1,638 1,760 1,698 1,703 1,699 1,738 1,735 1,671 1,738 14 Loans secured by real estate 14,581 14,770 14,814 14,728 14,691 14,736 14,664 15,173 14,912 15 To financial institutions 19,679 19,832 19,776 20,505 19,894 19,880 20,352 20,362 21,972 16 Commercial banks in the United States.. 14,600 14,876 15,122 15,564 14,492 14,651 15,147 15,512 17,036 17 Banks in foreign countries 1,612 1,555 1,434 1,611 1,944 1,758 1,783 1,438 1,490 18 Nonbank financial institutions 33,,446677 33,,440011 33,,222200 3,330 3,458 3,471 3,422 3,412 3,446 19 To foreign governments and official institutions 709 818 741 746 692 686 649 662222 771166 20 For purchasing and carrying securities 1,622 1,607 1,581 1,576 1,563 1,484 2,157 1,642 1,757 21 All other3 1,320 1,417 1,638 1,490 1,632 1,918 1,466 1,488 1,691 22 Other assets (claims on nonrelated parties) .. 32,266 32,488 32,368 32,351 32,669 32,146 32,663 32,638 32,508 23 Net due from related institutions 14,494 16,677 15,349 14,506 18,293 15,789 14,450 15,520 14,096 24 Total assets 119911,,990033 119900,,666677 119922,,007788 189,480 192,596 190,038 191,869 192,741 192,426 25 Deposits or credit balances due to other than directly related institutions 48,340 48,262 48,279 48,246 48,523 48,878 47,970 48,594 48,778 26 Transaction accounts and credit balances . 33,,334444 3,198 3,329 3,421 3,609 3,477 3,014 3,450 4,101 27 Individuals, partnerships, and corporations 1,944 2,004 1,940 1,837 2,107 2,080 1,905 1,934 2,423 28 Other 1,400 1,194 1,389 1,584 1,502 1,397 1,109 1,516 1,678 29 Nontransaction accounts' 4444,,999966 4455,,006644 4444,,995500 44,825 44,914 45,401 44,956 45,144 44,677 30 Individuals, partnerships, and corporations 38,160 38,104 37,980 37,700 37,852 38,211 37,748 37,756 37,632 31 Other 66,,883366 66,,996600 66,,997700 7,125 7,062 7,190 7,208 7,388 7,045 32 Borrowings from other than directly related institutions 82,064 83,826 83,056 83,517 83,596 82,753 81,403 86,325 81,763 33 Federal funds purchased 3355,,881199 3377,,006622 36,398 38,489 38,550 38,762 37,212 41,660 34,949 34 From commercial banks in the United States 18,977 19,931 20,222 18,740 21,099 20,561 21,260 21,367 17,653 35 From others 16,842 17,131 16,176 19,749 17,451 18,201 15,952 20,293 17,296 36 Other liabilities for borrowed money 4466,,224455 4466,,776644 4466,,665588 45,028 45,046 43,991 44,191 44,665 46,814 37 To commercial banks in the United States 31,132' 31,615' 31,118' 29,753' 29,437' 28,777 28,940 29,058 31,098 38 To others 15,113' 15,149' 15,54(T 15,275' 15,214 15,251 15,607 15,716 39 Other liabilities to nonrelated parties 33,479 33,773 33,581 33,196 33,782 33,141 33,333 32,472 32,829 40 Net due to related institutions 28,020 24,804 27,160 24,520 26,694 25,266 29,165 25,350 29,056 41 Total liabilities 191,903 190,667 192,078 189,480 192,596 190,038 191,869 192,741 192,426 MEMO 42 Total loans (gross) and securities adjusted .. 111,439 110,643 111,104 110,450 111,232 110,618 109,986 110,758 111,101 43 Total loans (gross) adjusted 96,243 95,868 96,324 95,721 96,232 95,821 95,840 96,156 96,556 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 DomesticN onfinancial Statistics • September 1989 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations1 Billions of dollars, estimated daily-average balances, not seasonally adjusted Commercial banks TTyyppee ooff hhoo''ddeerr 1988 1989 11998844 11998855 11998866 11998877 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar. June 1 All holders—Individuals, partnerships, and corporations 302.7 321.0 363.6 343.5 328.6 346.5 337.8 354.7 330.4 n.a. 2 Financial business 31.7 32.3 41.4 36.3 33.9 37.2 34.8 38.6 36.3 n.a. 3 Nonfinancial business 166.3 178.5 202.0 191.9 184.1 194.3 190.3 201.2 182.2 n.a. 4 Consumer 81.5 85.5 91.1 90.0 86.9 89.8 87.8 88.3 87.4 n.a. 5 Foreign 3.6 3.5 3.3 3.4 3.5 3.4 3.2 3.7 3.7 n.a. 6 Other 19.7 21.2 25.8 21.9 20.3 21.9 21.7 22.8 20.7 n.a. Weekly reporting banks 1988 1989 11998844 11998855 11998866 11998877 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar. June 7 All holders—Individuals, partnerships, and corporations 157.1 168.6 195.1 183.8 181.8 191.5 185.3 198.3 181.9 182.2 8 Financial business 25.3 25.9 32.5 28.6 27.0 30.0 27.2 30.5 27.2 25.4 9 Nonfinancial business 87.1 94.5 106.4 100.0 98.2 103.1 101.5 108.7 98.6 99.8 10 Consumer 30.5 33.2 37.5 39.1 41.7 42.3 41.8 42.6 41.1 42.4 11 Foreign 3.4 3.1 3.3 3.3 3.4 3.4 3.1 3.6 3.3 2.9 12 Other 10.9 12.0 15.4 12.7 11.4 12.8 11.7 12.9 11.7 11.7 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 1984 1985 1986 1987 1988 IInnssttrruummeenntt Dec. Dec. Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 237,586 298,779 329,991 357,129 455,017 455,017 471,066 487,771 492,821 494,292 497,369 Financial companies' Dealer-placed paper 2 Total 5566,,448855 7788,,444433 110011,,007722 110011,,995588 159,947 159,947 116622,,888844 117733,,994444 172,950 170,549 167,795 3 Bank-related (not seasonally adjusted) 22,,003355 11,,660022 22,,226655 11,,442288 1,248 1,248 n.a. n.a. n.a. n.a. n.a. Directly placed paper 4 Total 111100,,554433 113355,,332200 115511,,882200 117733,,993399 192,442 192,442 119999,,882288 201,997 205,374 207,231 206,497 5 Bank-related (not seasonally adjusted) ^ 42,105 44,778 40,860 43,173 43,155 43,155 n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies 70,558 85,016 77,099 81,232 102,628 102,628 108,354 111,830 114,497 116,512 123,077 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 78,364 68,413 64,974 70,565 66,631 66,631 62,212 62,812 62,458 64,357 62,396 Holder 8 Accepting banks 9,811 11,197 13,423 10,943 9,086 9,086 9,009 9,401 8,336 9,616' 8,908 9 Own bills 8,621 9,471 11,707 9,464 8,022 8,022 7,927 8,497 7,642 8,107 8,115 10 Bills bought 11,,119911 11,,772266 11,,771166 1,479 1,064 1,064 1,082 904 693 l,509r 794 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 1,493 1,596 1,579 1,544 1,400 1,374 13 Others 67,881 56,279 50,234 58,658 56,052 56,052 51,608 51,832 52,579 53,340r 0 Basis 14 Imports into United States 17,845 15,147 14,670 16,483 14,984 14,984 14,917 15,588 14,755 15,234 14,900 15 Exports from United States 16,305 13,204 12,960 15,227 14,410 14,410 13,813 13,927 13,581 14,371 14,452 16 All other 44,214 40,062 37,344 38,855 37,237 37,237 33,482 33,297 34,122 34,752 33,044 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 Average Average Rate Period rate Period rate Period 1986—Mar. 7 9.00 1987 —Jan 7.50 1988 —Jan. Apr. 21 8.50 1986 8.33 Feb 7.50 Feb. July 11 8.00 1987 8.21 Mar 7.50 Mar. Aug. 26 7.50 1988 9.32 Apr 7.75 Apr. May 8.14 May. 1987—Apr. 1 7.75 1986 —Jan. 9.50 June 8.25 June. May 1 8.00 Feb. 9.50 July 8.25 July . 15 8.25 Mar. 9.10 Aug 8.25 Aug. Sept. 4 8.75 Apr. 8.83 Sept 8.70 Sept. Oct. 7 9.25 May 8.50 Oct 9.07 Oct.. 22 9.00 June 8.50 Nov 8.78 Nov. Nov. 5 8.75 July 8.16 Dec 8.75 Dec. Aug. 7.90 1988—Feb. 2 8.50 Sept. 7.50 1989 —Jan. May 11 9.00 Oct.. 7.50 Feb. July 14 9.50 Nov. 7.50 Mar. Aug. 11 10.00 Dec. 7.50 Apr. Nov. 28 10.50 May. June. 1989—Feb. 10 11.00 July . 24 11.50 June 5 11.00 July 31 10.50 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 • September 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. 1989 1989, week ending IInnssttrruummeenntt 11998866 11998877 11998888 Mar. Apr. May June June 2 June 9 June 16 June 23 June 30 MONEY MARKET RATES 1 Federal funds1'2 6.80 6.66 7.57 9.85 9.84 9.81 9.53 9.84 9.68 9.35 9.48 9.58 2 Discount window borrowing1, '3 6.32 5.66 6.20 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 Commercial paper4'5 3 1-month 6.61 6.74 7.58 9.88 9.77 9.58 9.34 9.51 9.32 9.28 9.35 9.35 4 3-month 6.49 6.82 7.66 9.95 9.81 9.47 9.11 9.31 9.05 9.04 9.16 9.10 5 6-month 6.39 6.85 7.68 9.97 9.78 9.29 8.80 9.05 8.71 8.74 8.92 88..7733 Finance paper, directly placed4' 6 1-month 6.57 6.61 7.44 9.77 9.70 9.48 9.24 9.39 9.21 9.17 9.28 9.27 7 3-month 6.38 6.54 7.38 9.70 9.70 9.27 8.77 9.04 8.71 8.73 8.77 8.77 8 Ba 6 n - k m e o rs n t a h c ceptances % ' 6 6.31 6.37 7.14 9.17 9.29 8.97 8.22 8.69 8.25 8.11 8.19 8.15 9 3-month 6.38 6.75 7.56 9.83 9.68 9.35 8.97 9.16 8.88 8.95 9.05 8.94 10 6-month 6.28 6.78 7.60 9.87 9.63 9.15 8.66 8.88 8.56 8.66 8.81 88..5555 Certificates of deposit, secondary market7 11 1-month 6.61 6.75 7.59 9.91 9.81 9.61 9.35 9.52 9.36 9.27 9.36 9.35 12 3-month 6.51 6.87 7.73 10.09 9.94 9.59 9.20 9.39 9.15 9.13 9.29 9.16 13 6-month 6.50 7.01 7.91 10.40 10.13 9.60 9.09 9.33 9.02 9.02 9.24 8.98 14 Eurodollar deposits. 3-month8 6.71 7.06 7.85 10.18 10.04 9.66 9.28 9.50 9.35 9.18 9.30 9.31 U.S. Treasury bills5 Secondary market 15 3-month 5.97 5.78 6.67 8.82 8.65 8.43 8.15 8.54 8.18 8.14 8.13 8.03 16 6-month 6.02 6.03 6.91 8.85 8.65 8.41 7.93 8.33 7.89 7.87 8.05 7.79 17 1-year 6.07 6.33 7.13 8.82 8.64 8.31 7.84 8.16 7.79 7.84 7.92 7.71 Auction average10 18 3-month 5.98 5.82 6.68 8.83 8.70 8.40 8.22 8.50 8.17 8.13 8.22 8.07 19 6-month 6.03 6.05 6.92 8.87 8.73 8.39 8.00 8.36 7.99 7.79 8.08 7.78 20 1-year 6.18 6.33 7.17 8.68 8.75 8.44 8.18 n.a. 8.18 n.a. n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities 21 1-year 6.45 6.77 7.65 9.57 9.36 8.98 8.44 8.80 8.40 8.45 8.53 8.28 22 2-year 6.86 7.42 8.10 9.68 9.45 9.02 8.41 8.76 8.38 8.41 8.50 8.23 2 i 3-year 7.06 7.68 8.26 9.61 9.40 8.98 8.37 8.71 8.33 8.38 8.45 8.20 24 5-year 7.30 7.94 8.47 9.51 9.30 8.91 8.29 8.60 8.28 8.30 8.37 8.13 25 7-year 7.54 8.23 8.71 9.43 9.24 8.88 8.31 8.61 8.31 8.30 8.38 8.16 26 10-year 7.67 8.39 8.85 9.36 9.18 8.86 8.28 8.57 8.28 8.26 8.34 8.14 11 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.% 9.17 9.03 8.83 8.27 8.58 8.33 8.22 8.30 8.10 Composite13 29 Over 10 years (long-term) 8.14 8.64 8.98 9.33 9.18 8.95 8.40 8.70 8.45 8.36 8.44 8.25 State and local notes and bonds Moody's series14 30 Aaa 6.95 7.14 7.36 7.40 7.37 7.22 6.79 6.92 6.80 6.65 6.85 6.75 31 Baa 7.76 8.17 7.83 7.78 7.82 7.66 7.27 7.47 7.35 7.20 7.20 7.15 32 Bond Buyer series15 7.32 7.63 7.68 7.59 7.49 7.25 7.02 7.15 6.95 6.88 7.08 77..0022 Corporate bonds Seasoned issues16 33 All industries 9.71 9.91 10.18 10.18 10.14 9.97 9.50 9.75 9.54 9.45 9.50 9.42 34 Aaa 9.02 9.38 9.71 9.80 9.79 9.59 9.10 9.37 9.16 9.02 9.09 9.02 35 Aa 9.47 9.68 9.94 9.98 9.94 9.77 9.29 9.56 9.35 9.22 9.26 9.21 36 A 9.95 9.99 10.24 10.26 10.20 10.01 9.59 9.79 9.61 9.57 9.60 9.49 37 Baa 10.39 10.58 10.83 10.67 10.61 10.48 10.03 10.27 10.06 9.98 10.05 99..%% 38 A-rated, recently offered utility bonds17 9.61 9.95 10.20 10.37 10.33 10.09 9.66 9.80 9.63 9.70 9.59 9.49 MEMO: Dividend/price ratio18 39 Preferred stocks 8.76 8.37 9.23 9.43 9.50 9.32 8.96 9.26 9.04 8.90 8.93 8.96 40 Common stocks 3.48 3.08 3.64 3.68 3.59 3.52 3.44 3.47 3.40 3.43 3.48 3.43 1. Weekly, monthly and annual figures are averages of all calendar days, places. Thus, average issuing rates in bill auctions will be reported using two where the rate for a weekend or holiday is taken to be the rate prevailing on the rather than three decimal places. preceding business day. The daily rate is the average of the rates on a given day 11. Yields are based on closing bid prices quoted by at least five dealers. weighted by the volume of transactions at these rates. 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields 2. Weekly figures are averages for statement week ending Wednesday. are read from a yield curve at fixed maturities. Based on only recently issued, 3. Rate for the Federal Reserve Bank of New York. actively traded securities. 4. Unweighted average of offering rates quoted by at least live dealers (in the 13. Averages (to maturity or call) for all outstanding bonds neither due nor case of commercial paper), or finance companies (in the case of finance paper). callable in less than 10 years, including one very low yielding "flower" bond. Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. General obligations based on Thursday figures; Moody's Investors Service. and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 15. General obligations only, with 20 years to maturity, issued by 20 state and 150-179 days for finance paper. local governmental units of mixed quality. Based on figures for Thursday. 5. Yields are quoted on a bank-discount basis, rather than in an investment 16. Daily figures from Moody's Investors Service. Based on yields to maturity yield basis (which would give a higher figure). on selected long-term bonds. 6. Dealer closing offered rates for top-rated banks. Most representative rate 17. Compilation of the Federal Reserve. This series is an estimate of the yield (which may be, but need not be, the average of the rates quoted by the dealers). on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 7. Unweighted average of offered rates quoted by at least five dealers early in call protection. Weekly data are based on Friday quotations. the day. 18. Standard and Poor's corporate series. Preferred stock ratio based on a 8. Calendar week average. For indication purposes only. sample of ten issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.36 STOCK MARKET Selected Statistics 1988 1989 IInnddiiccaattoorr 11998866 11998877 11998888 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 136.03r 161.78' 149.97r 156.36' 152.67' 155.35' 160.35' 165.08' 164.56' 169.38' 175.3C 180.76 2 Industrial 155.85 195.31 180.83 188.58 182.25 187.75 194.62 200.00 197.58 204.81 211.81 216.75 3 Transportation 119.87 140.39 134.01 141.83 137.51 144.06 153.09 162.66 153.85 164.32 169.05 173.47 4 Utility 71.36 74.29 72.22 74.19 79.28 74.81 75.87 77.84 87.16 79.69 84.21 87.95 5 Finance 147.19 146.48 127.41 136.09 130.05 128.83 132.26 137.19 146.14 143.26 146.82 154.08 6 Standard & Poor's Corporation (1941-43 = 10)r 236.40r 287.14' 265.88 277.40' 271.02' 276.51' 285.41' 294.01' 292.71' 302.25' 313.93' 323.73 7 American Stock Exchange (Aug. 31, 1973 = 50? 264.91r 316.78' 295.08' 302.83' 292.11' 298.59' 316.14' 323.97' 327.47' 336.82' 349.50' 362.73 Volume of trading (thousands of shares) 8 New York Stock Exchange 141,020' 188,922' 161,386' 162,627' 134,420' 135,233' 168,204' 169,223' 159,024' 161,863' 171,495 180,680 9 American Stock Exchange 11,846 13,832 9,955 9,051 8,497 11,227 10,797 11,780 11,395 11,529 11,699 13,519 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 36,840 31,990 32,740 33,410 33,640 32,740 32,530 31,480 32,130 32,610 33,140 34,730 Free credit balances at brokers4 11 Margin-account 4,880 4,750 5,660 5,065 4,920 5,660 5,790 5,605 5,345 5,450 5,250 6,900 12 Cash-account 19,000 15,640 16,595 14,880 15,185 16,595 15,705 16,195 16,045 16,125 15,965 19,080 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 n 70 80 65 55 65 50 14 50 60 50 50 50 50 1155 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 collatercompanies. With this change the index includes 400 industrial stocks (formerly alized 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 • September 1989 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1988 1989 AAccccoouunntt 11998866 11998877 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. FSLIC-insured institutions 1 Assets 1,163,851 1,250,855 1,299,373 1,311,668 1,323,840 1,332,878' 1,332,859' 1,350,599' 1,337,731' 1,339,455' 1,341,19C 1,345,699 2 Mortgages 697,451 721,593 743,083 751,421 754,389 760,788' 762,997' 776644,,556600'' 776677,,007766'' 776677,,442222'' 776699,,445511'' 777733,,662255 3 Mortgage-backed securities 158,193 201,828 208,509 210,573 211,195 211,675' 212,462' 215,052' 221111,,229955'' 221122,,229988'' 221155,,550088'' 221166,,554433 4 Contra-assets to mortgage assets' . 41,799 42,344 40,296 39,078 38,500 38,303 37,735' 37,561' 37,798' 36,985' 38,009' 38,327 5 Commercial loans 23,683 23,163 24,964 25,099 24,782 25,413' 25,513' 33,917' 33,291' 33,293' 32,928' 32,611 6 Consumer loans 51,622 57,902 61,571 62,417 61,558 61,053' 61,504' 6611,,994433'' 6622,,110088'' 6622,,008822'' 6611,,449911'' 6611,,663300 7 Contra-assets to nonmortgage loans2.... 3,041 3,467 3,389 3,118 3,074 2,932' 2,959' 3,064' 22,,993311 33,,000055'' 33,,112266'' 22,,885533 8 Cash and investment securities 164,844 169,717 178,459 175,793 183,178 184,796' 179,830' 186,995' 178,824' 177,940' 175,948' 176,423 9 Other3 112,898 122,462 126,472 128,561 130,313 130,388' 131,248' 129,757' 125,208' 126,409' 126,999' 126,047 10 Liabilities and net worth . 1,163,851 1,250,855 1,299,373 1,311,668 1,323,840 1,332,878' 1,332,859' 1,350,599' 1,337,731' 1,339,455' 1,341,19C 1,345,699 11 Savings capital 890,664 932,616 968,214 968,294 973,742 976,163 971,493 971,680 963,815 957,347 956,657' 954,484 12 Borrowed money 196,929 249,917 262,745 266,787 273,665 278,301' 281,043' 299,291' 299,358' 305,618' 312,959 318,662 13 FHLBB 100,025 116,363 118,213 120,677 123,436 124,368 127,548 134,168' 135,712' 140,089' 145,992' 147,984 14 Other 96,904 133,554 144,532 146,110 150,229 153,933' 153,495' 165,123' 163,646' 165,529' 166,967' 170,678 15 Other 23,975 21,941 27,110 28,903 26,021 27,558' 29,181 24,128' 29,76C 31,778' 29,598' 31,678 16 Net worth 52,282 46,382 41,304 47,684 50,412 50,856' 51,143' 55,499' 59,147' 59,184' 57,855' 56,274 FSLIC-insured federal savings banks 17 Assets 210,562 284,270 333,596 357,897 367,928 369,682 374,930' 425,983' 423,895' 432,69C 443,196' 455,195 18 Mortgages 113,638 161,926 193,150 204,351 207,952 207,207 210,732' 222277,,886699'' 223311,,666644'' 223355,,339911'' 224411,,331133'' 224466,,771166 19 Mortgage-backed securities 29,766 45,826 53,027 55,688 56,399 56,630 5577,,881155 6644,,995577'' 6622,,7777CC 6655,,889966'' 6688,,005533'' 6699,,993355 20 Contra-assets to mortgage assets1 . n.a. 9,100 10,135 10,893 10,982 10,894 10,901' 13,14c 12,266' 12,672' 13,168' 13,027 21 Commercial loans n.a. 6,504 7,916 8,568 8,694 8,880 9,041' 16,731' 16,171' 16,32C 16,319r 16,508 22 Consumer loans 13,180 17,696 21,449 22,526 22,420 22,421 22,679 2244,,222222'' 2255,,005500 2255,,999911'' 2266,,114488 2266,,772255 23 Contra-assets to nonmortgage loans .... n.a. 678 699 734 785 789 803 889' 812' 856' 935' 828 24 Finance leases plus interest n.a. 591 735 791 804 804 831 88C 905 946' 965 998 25 Cash and investment ... n.a. 35,347 40,837 44,859 48,984 48,818 48,028 61,029' 57,454' 57,989' 59,042' 61,330 26 Other 19,034 24,069 27,316 32,740 34,442 29,178 29,942 35,428' 33,974' 34,646' 36,313' 37,367 27 Liabilities and net worth . 210,562 284,270 333,596 357,897 367,928 369,682 374,930' 425,983' 423,895' 432,69c 443,196' 455,195 28 Savings capital 157,872 203,196 239,590 256,223 261,862 262,922 263,984 298,197' 298,530 301,778 307,588' 315,725 29 Borrowed money 37,329 60,716 70,015 75,859 80,674 80,779 83,628 99,286' 98,304' 102,902' 107,179' 109,997 30 FHLBB 19,897 29,617 31,941 35,357 37,245 37,510 39,630 46,265' 46,47C 48,951' 51,531 53,513 31 Other 17,432 31,099 38,074 40,502 43,429 43,269 43,998 53,021' 51,834' 53,951' 55,648' 56,484 32 Other 4,263 5,324 7,051 8,052 7,374 7,667 8,319' 8,075' 8,275 8,885' 8,608' 9,311 33 Net worth 11,098 15,034 16,843 17,661 17,886 18,194 18,882 20,235' 21,633' 22,142' 23,218' 23,340 Savings banks 34 Assets 236,866 259,643 252,875 253,453 255,510 257,127 258,537 261,361 254,319 254,165 255,226 255,006 Loans 35 Mortgage 118,323 138,494 139,844 141,316 143,626 145,398 146,501 147,597 144,998 145,426 145,174 145,699 36 Other 35,167 33,871 32,941 32,799 32,879 33,234 33,791 3311,,226699 3322,,445500 3322,,336699 3333,,119944 3322,,332299 Securities 37 U.S. government 14,209 13,510 11,563 11,353 11,182 10,896 10,804 1111,,445577 1100,,448855 1100,,331155 1100,,331188 1100,,339911 38 Mortgage-backed securities 25,836 32,772 30,064 30,006 29,190 29,893 2299,,337722 2299,,775511 2299,,225588 2299,,008855 2299,,337733 2299,,557722 39 State and local government 2,185 2,003 1,840 1,901 1,878 1,872 1,887 1,848 1,835 1,829 1,814 1,798 40 Corporate and other . 20,459 18,772 17,527 17,301 17,234 16,886 16,773 17,822 15,964 15,812 15,984 15,588 41 Cash 6,894 5,864 5,186 4,950 5,463 4,825 5,093 7,050 5,532 5,465 5,972 6,068 42 Other assets 13,793 14,357 13,910 13,827 14,058 14,123 14,316 14,567 13,797 13,864 13,397 13,561 43 Liabilities 236,866 259,643 252,875 253,453 255,510 257,127 258,537 261,361 254,319 254,165 255,226 255,006 44 Deposits 192,194 201,497 195,537 195,907 197,665 197,925 199,092 202,058 195,452 195,308 199,399 199,538 45 Regular4 186,345 196,037 189,993 190,716 192,228 192,663 194,095 196,407 190,378 190,422 194,276 194,059 46 Ordinary savings .. 37,717 41,959 40,124 39,738 39,618 39,375 39,482 39,750 38,221 38,049 38,070 36,801 47 Time 100,809 112,429 112,272 114,255 116,387 117,712 119,026 121,148 118,612 119,109 123,162 125,378 48 Other 5,849 5,460 5,544 5,191 5,427 5,262 4,997 5,651 5,074 4,886 7,206 5,479 49 Other liabilities 25,274 35,720 34,686 34,776 35,001 35,997 3366,,001122 3366,,116699 3333,,778822 3333,,664422 3300,,550000 3300,,002200 50 General reserve accounts 18,105 20,633 20,069 20,018 20,151 20,324 20,462 20,337 20,138 20,336 20,338 20,254 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.37—Continued 1988 1989 AAccccoouunntt 11998866 11998877 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. Credit unions5 51 Total assets/liabilities and capital 147,726 173,276 173,044 174,649 174,722 174,406 174,593 175,027 176,270 178,175 177,417 f 52 Federal 95,483 113,068 112,686 113,383 113,474 113,717 114,566 114,909 115,543 117,555 115,416 53 State 52,243 1 60,208 60,358 61,266 61,248 61,135 60,027 60,118 60,727 60,620 62,001 54 Loans outstanding.. 86,137 n.a. 107,065 108,974 110,939 111,624 112,452 113,191 114,012 113,880 114,572 115,249 55 Federal 55,304 69,626 70,944 72,200 72,551 73,100 73,766 74,083 73,917 74,395 75,003 56 State 30,833 1 37,439 38,030 38,739 39,073 39,352 39,425 39,927 39,963 40,177 40,246 57 Savings 134,327 159,314 158,731 157,944 160,174 159,021 159,010 159,106 161,073 164,322 161,388 58 Federal 87,954 t1 104,256 103,657 103,698 104,184 103,223 104,431 104,629 105,262 107,368 105,208 59 State 46,373 55,058 55,074 54,246 55,990 55,798 54,579 54,477 55,811 56,954 56,180 Life insurance companies 60 Assets 937,551 1,044,459 1,113,547 1,121,337 1,131,179 1,139,490 1,144,854 1,157,140 1,167,184 1,173,325 1,184,%3 Securities 61 Government 84,640 84,426 88,218 88,362 87,588 88,883 89,510 88,167 88,747 88,168 88,941 62 United States6.. 59,033 57,078 60,244 60,407 59,874 60,621 61,108 60,685 61,042 60,800 61,175 63 State and local . 11,659 10,681 11,102 11,190 11,054 11,069 11,189 11,126 11,036 10,736 10,848 64 Foreign 13,948 16,667 16,872 16,765 16,660 17,193 17,213 16,356 16,669 16,632 16,918 65 Business 492,807 569,199 618,742 624,917 630,086 633,390 638,350 644,894 655,149 659,826 665,843 n. a. 66 Bonds 401,943 472,684 514,926 520,7% 525,336 527,419 532,197 538,053 545,970 550,630 556,3% 67 Stocks 90,864 96,515 103,816 104,121 104,750 105,971 106,153 106,841 109,179 109,1% 109,447 68 Mortgages 193,842 203,545 221,990 233,438 225,627 227,342 229,234 232,639 233,334 233,827 234,910 69 Real estate 31,615 34,172 35,737 35,920 35,892 36,892 36,673 37,972 38,112 38,690 38,942 70 Policy loans 54,055 53,626 53,142 53,194 53,149 53,157 53,148 53,020 53,210 53,265 53,364 71 Other assets 80,592 89,586 95,718 95,505 98,837 99,826 94,116 95,518 98,632 99,550 102,963 1. Contra-assets are credit-balance accounts that must be subtracted from the NOTE. FSLIC-insured institutions: Estimates by the FHLBB for all institutions corresponding gross asset categories to yield net asset levels. Contra-assets to insured by the FSLIC and based on the FHLBB thrift Financial Report. mortgage loans, contracts, and pass-through securities include loans in process, FSLIC-insured federal savings banks: Estimates by the FHLBB for federal unearned discounts and deferred loan fees, valuation allowances for mortgages savings banks insured by the FSLIC and based on the FHLBB thrift Financial "held for sale," and specific reserves and other valuation allowances. Report. 2. Contra-assets are credit-balance accounts that must be subtracted from the Savings banks: Estimates by the National Council of Savings Institutions for all corresponding gross asset categories to yield net asset levels. Contra-assets to savings banks in the United States and for FDIC-insured savings banks that have nonmortgage loans include loans in process, unearned discounts and deferred loan converted to federal savings banks. fees, and specific reserves and valuation allowances. Credit unions: Estimates by the National Credit Union Administration for 3. Holding of stock in Federal Home Loan Bank and Finance leases plus federally chartered and federally insured state-chartered credit unions serving interest are included in "Other" (line 9). natural persons. 4. Excludes checking, club, and school accounts. Life insurance companies: Estimates of the American Council of Life Insurance 5. Data include all federally insured credit unions, both federal and state for all life insurance companies in the United States. Annual figures are annualchartered, serving natural persons. statement asset values, with bonds carried on an amortized basis and stocks at 6. Direct and guaranteed obligations. Excludes federal agency issues not year-end market value. Adjustments for interest due and accrued and for guaranteed, which are shown in the table under "Business" securities. differences between market and book values are not made on each item separately 7. Issues of foreign governments and their subdivisions and bonds of the but are included, in total, in "other assets." International Bank for Reconstruction and Development. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • September 1989 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal Fiscal Fiscal Type of account or operation year year year 1989 1986 1987 1988 Feb. Apr. May June U.S. budget1 1 Receipts, total 769,091 854,143 908,953 89,369 61,978 68,276 128,952 71,115 108,317 2 On-budget 568,862 640,741 667,462 65,250 38,473 44,677 99,679 49,493 84,110 3 Off-budget 200,228 213,402 241,491 24,119 23,505 23,598 29,273 21,622 24,206 4 Outlays, total 990,258 1,003,830 1,064,044 86.563 89,850 104,055 88,381 96,581 100,528 5 On-budget 806,760 809,998 861,352 68,999 71,324 85,191 71,798 77,851 83,994 6 Off-budget 183,498 193,832 202,691 17.564 18,526 18,864 16,582 18,730 16,534 7 Surplus, or deficit (-), total -221,167 -149,687 -155,090 2,806 -27,871 -35,779 40,572 -25,466 7,789 8 On-budget -237,898 -169,257 -193,890 -3,749 -32,851 -40,513 27,881 -28,358 116 9 Off-budget 16,731 19,570 38,800 6,555 4,979 4,735 12,691 2,891 7,673 Source of financing (total) 10 Borrowing from the public 150,070 162,062 7,359 17,190 13,405 -1,291 10,214 1,098 11 Operating cash (decrease, or increase -14,324 -5,052 -7,963 -8,135 17,009 10,154 -38,788 21,396 -11,649 12 Othei^!!'.;'.!'.!'.'.!'.'.'.'.'.'.'.'.'.'.'.'.'.'.!'.'.'.'. -696 4,669 991 -2,030 -6,328 12,221 -493 -6,144 2,762 MEMO 13 Treasury operating balance (level, end of 31,384 36,436 44,398 41,835 24,826 14,672 53,461 32,065 43,713 period) 7,514 9,120 13,024 11,766 6,298 4,462 22,952 5,289 12,154 14 Federal Reserve Banks 23,870 27,316 31,375 30,069 18,528 10,211 30,508 26,776 31,560 15 Tax and loan accounts 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 1989 1989 111999888777 111999888888 H2 HI H2 HI Apr. May June RECEIPTS 1 All sources 854,143 908,954 421,712 476,115 449,821 528,007 128,952 71,115 108,317 2 Individual income taxes, net 392,557 401,181 192,575 207,659 200,299 233,568 68,533 25,336 49,876 3 Withheld 322,463 341,435 170,203 169,300 179,600 174,230 23,649 29,085 33,338 4 Presidential Election Campaign Fund 33 33 4 28 4 28 6 8 4 5 Nonwithheld 142,957 132,199 31,223 101,614 29,880 121,563 61,704 14,842 18,509 6 Refunds 72,896 72,487 8,853 63,283 9,187 62,255 16,826 18,599 1,975 Corporation income taxes 7 Gross receipts 102,859 109,683 52,821 58,002 56,409 61,585 16,412 2,994 21,418 8 Refunds 18,933 15,487 7,119 8,706 7,384 7,812 1,723 1,068 849 9 Social insurance taxes and contributions, net 303,318 334,335 143,755 181,058 157,603 200,127 39,4% 35,349 31,276 10 Employment taxes and contributions 273,028 305,093 130,388 164,412 144,983 184,569 36,775 2277,,228811 3300,,557722 11 Self-employment taxes and contributions 13,987 17,691 1,889 14,839 3,032 16,371 8,900 11,,228811 22,,338899 12 Unemployment insurance 25,575 24,584 10,977 14,363 10,359 13,279 2,375 7,661 294 13 Other net receipts 4,715 4,659 2,390 2,284 2,262 2,277 346 407 410 14 Excise taxes 32,457 35,540 17,680 16,440 19,434 17,371 2,616 3,640 2,987 15 Customs deposits 15,085 16,198 7,993 7,913 8,535 8,350 1,263 1,466 1,482 16 Estate and gift taxes 7,493 7,594 3,610 3,863 4,054 4,583 1,146 793 736 17 Miscellaneous receipts 19,307 19,909 10,399 9,950 10,873 10,235 1,209 2,605 1,389 OUTLAYS 18 All types 1,003,830 1,064,055 532,839 513,210 553,217 565,958 88,381 96,581 100,528 19 National defense 281,999 290,361 146,995 143,080 150,4% 148,098 21,247 25,012 29,037 20 International affairs 11,649 10,471 4,487 7,150 2,636 6,605 1,366 1,398 867 21 General science, space, and technology 9,216 10,841 5,469 5,361 5,852 6,238 929 1,128 1,171 22 Energy 4,115 2,297 1,468 555 1,966 2,221 280 267 509 23 Natural resources and environment 13,363 14,606 7,590 6,776 8,330 7,022 951 1,3% 1,419 24 Agriculture 26,606 17,210 14,640 7,872 7,725 9,619 2,364 1,470 504 25 Commerce and housing credit 6,182 18,808 3,852 5,951 20,274 4,129 1,334 558 973 26 Transportation 26,222 27,272 14,096 12,700 14,922 13,023 1,746 2,668 2,397 27 Community and regional development 5,051 5,294 2,075 2,765 2,690 1,833 241 -25 563 28 Education, training, employment, and social services 29,724 31,938 15,592 15,451 16,152 18,0% 2,859 3,039 2,654 29 Health 39,968 44,490 20,750 22,643 23,360 24,078 4,028 4,454 4,270 30 Social security and medicare 282,472 297,828 158,469 135,322 149,508 162,195 25,877 27,067 30,430 31 Income security 123,250 129,332 61,201 65,555 64,978 70,937 11,612 12,106 9,826 32 Veterans benefits and services 26,782 29,428 14,956 13,241 15,797 14,891 1,251 2,809 3,590 33 Administration of justice 7,548 9,223 4,291 4,761 4,778 5,233 949 1,066 851 34 General government 5,948 7,658 3,560 4,337 5,137 3,858 156 872 1,140 35 General-purpose fiscal assistance 1,621 1,816 1,175 448 0 0 0 n.a. n.a. 36 Net interest8 , 138,570 151,748 71,933 76,098 78,317 86,009 14,076 14,605 13,376 37 Undistributed offsetting receipts -36,455 -36,967 -17,684 -17,766 -18,771 -18,131 -2,887 -3,309 -3,050 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 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • September 1989 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1987 1988 1989 IItteemm Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 1 Federal debt outstanding 2,250.7 2,313.1 2,354.3 2,435.2 2,493.2 2,555.1 2,614.6 2,707.3 2,763.6 2 Public debt securities 2,246.7 2,309.3 2,350.3 2,431.7 2,487.6 2,547.7 2,602.2 2,684.4 2,740.9 3 Held by public 1,839.3 1,871.1 1,893.1 1,954.1 1,996.7 2,013.4 2,051.7 2,095.2 2,133.4 4 Held by agencies 407.5 438.1 457.2 477.6 490.8 534.2 550.4 589.2 607.5 5 Agency securities 4.0 3.8 4.0 3.5 5.6 7.4 12.4 22.9 22.7 6 Held by public 2.9 2.8 3.0 2.7 5.1 7.0 12.2 22.6 22.3 7 Held by agencies 1.1 1.0 1.0 .8 .6 .5 .2 .3 .4 8 Debt subject to statutory limit 2,232.4 2,295.0 2,336.0 2,417.4 2,472.6 2,532.2 2,586.9 2,669.1 2,725.6 9 Public debt securities 2,231.1 2,293.7 2,334.7 2,416.3 2,472.1 2,532.1 2,586.7 2,668.9 2,725.5 10 Other debt1 1.3 1.3 1.3 1.1 .5 .1 .1 .2 .2 11 MEMO: Statutory debt limit 2,300.0 2,320.0 2,800.0 2,800.0 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 Type and holder 1985 1986 1988 Q2 Q3 Q4 Q1 1 Total gross public debt 1,945.9 2,214.8 2,431.7 2,684.4 2,547.7 2,602.2 2,684.4 2,740.9 By type 2 Interest-bearing debt 1,943.4 2,212.0 2,428.9 2,663.1 2,545.0 2,599.9 2,663.1 2.738.3 3 Marketable 1,437.7 1,619.0 1,724.7 1,821.3 1,769.9 1,802.9 1,821.3 1,871.7 4 Bills 399.9 426.7 389.5 414.0 382.3 398.5 414.0 417.0 5 Notes 812.5 927.5 1,037.9 1,083.6 1,072.7 1,089.6 1,083.6 1.121.4 6 Bonds 211.1 249.8 282.5 308.9 299.9 299.9 308.9 318.4 7 Nonmarketable 505.7 593.1 704.2 841.8 775.1 797.0 841.8 866.6 8 State and local government series 87.5 110.5 139.3 151.5 146.9 147.6 151.5 154.4 9 Foreign issues 7.5 4.7 4.0 6.6 5.7 6.3 6.6 6.7 10 Government 7.5 4.7 4.0 6.6 5.7 6.3 6.6 6.7 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 78.1 90.6 99.2 107.6 104.5 106.2 107.6 110.4 13 Government account series 332.2 386.9 461.3 575.6 517.5 536.5 575.6 594.7 14 Non-interest-bearing debt 2.5 2.8 2.8 21.3 2.7 2.3 21.3 2.6 By holder4 15 U.S. government agencies and trust funds 348.9 403.1 477.6 589.2 534.2 550.4 589.2 607.5 16 Federal Reserve Banks 181.3 211.3 222.6 238.4 227.6 229.2 238.4 228.6 17 Private investors 1,417.2 1,602.0 1,745.2 1,852.8 1,784.9 1,819.0 1,852.8 1,900.2 18 Commercial banks 198.2 203.5 201.2 195.0 202.5 203.0 195.0 n.a. 19 Money market funds 25.1 28.0 14.3 18.8 13.1 10.8 18.8 n.a. 20 Insurance companies 78.5 105.6 120.6 n.a. 132.2 135.0 n.a. n.a. 21 Other companies 59.0 68.8 84.6 86.1 86.5 86.0 86.1 n.a. 22 State and local Treasurys 226.7 262.8 282.6 n.a. 286.3 287.0 n.a. n.a. Individuals 23 Savings bonds 79.8 92.3 101.1 109.6 106.2 107.8 109.6 112.2 24 Other securities 75.0 70.5 72.3 77.8 73.9 76.7 77.8 n.a. 25 Foreign and international 212.5 251.6 287.3 349.5r 332.8r 333.3r 349.5'' 363.1 26 Other miscellaneous investors 462.4 518.9 581.2 n.a. 551.4r 579.4r n.a. n.a. 1. Includes (not shown separately): Securities issued to the Rural Electrifica- 5. Consists of investments of foreign and international accounts. Excludes tion Administration; depository bonds, retirement plan bonds, and individual non-interest-bearing notes issued to the International Monetary Fund. retirement bonds. 6. Includes savings and loan associations, nonprofit institutions, credit unions, 2. Nonmarketable dollar-denominated and foreign currency-denominated se- mutual savings banks, corporate pension trust funds, dealers and brokers, certain ries held by foreigners. U.S. Treasury deposit accounts, and federally-sponsored agencies. 3. Held almost entirely by U.S. Treasury agencies and trust funds. SOURCES. Data by type of security, U.S. Treasury Department, Monthly 4. Data for Federal Reserve Banks and U.S. Treasury agencies and trust funds Statement of the Public Debt of the United States; data by holder. Treasury are actual holdings; data for other groups are Treasury estimates. Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Par value; averages of daily figures, in millions of dollars 1989 1989 IItteemm 11998866 11998877 11998888 Apr/ Mayr June May 24 May 31 June 7 June 14 June 21 June 28 Immediate delivery2 1 U.S. Treasury securities 95,444 110,050 101,623 108,025 120,937 129,260 131,402r 113,442' 137,737 134,464 116,830 122,744 By maturity 2 Bills 34,247 37,924 29,387 29,330 29,376 30,761 29,494 31,853' 33,215 29,154 28,083 29,920 3 Other within 1 year 2,115 3,271 3,426 3,175 3,594 3,388 3,438 3,172 3,820 2,904 2,719 3,400 4 1-5 years 24,667 27,918 27,777 31,432 38,126 34,861 44,123 32,279' 39,013 32,758 27,850 35,386 5 5-10 years 20,455 24,014 24,939 29,716 30,673 35,666 32,898r 29,672' 37,925 39,466 33,791 31,912 6 Over 10 years 13,961 16,923 16,093 14,373 19,167 24,585 21,449 16,466' 23,765 30,183 24,388 22,125 By type of customer 7 U.S. government securities dealers 3,669 2,936 2,761 3,379 2,966 3,200 3,245 3,038 3,268 3,035 3,674 2,986 8 U.S. government securities brokers 49,558 61,539 59,844 64,431 72,410 78,131 79,524 66, Wff 82,777 82,067 72,166 73,008 9 All others3 42,217 45,575 39,019 40,215 45,560 47,929 48,632' 44,295' 51,692 49,361 40,990 46,750 10 Federal agency securities 16,747 18,084 15,903 17,238 16,303 19,904 13,952' 15,115 19,308 22,505 19,594 17,908 11 Certificates of deposit 4,355 4,112 3,369 2,946 2,650 2,940 2,998 2,575' 3,544 2,831 2,678 2,870 12 Bankers acceptances 3,272 2,965 2,316 2,562 2,113 2,508 2,005 2,177 2,879 2,431 2,306 2,377 13 Commercial paper 16,660 17,135 22,927 30,858 29,109 32,185 27,657 29,387 31,460 29,347 32,839 34,595 Futures contracts 14 Treasury bills 3,311 3,233 2,627 2,782 2,501 1,845 2,519' 2,738' 1,724 1,663 1,695 1,794 15 Treasury coupons 7,175 8,963 9,695 8,676 10,280 12,844 12,352' 9,471 12,326 15,145 12,824 11,578 16 Federal agency securities 16 5 1 0 0 3 0 0 0 0 6 6 Forward transactions 17 U.S. Treasury securities 1,876 2,029 2,095 2,021 2,752 1,526 2,378' 2,920' 1,337 1,469 1,001 2,489 18 Federal agency securities 7,830 9,290 8,008 7,875 9,976 9,820 10,462 6,885 9,577 13,017 10,454 7,451 1. Transactions are market purchases and sales of securities as reported to the securities, nondealer departments of commercial banks, foreign banking agencies, Federal Reserve Bank of New York by the U.S. government securities dealers on and the Federal Reserve System. its published list of primary dealers. 4. Futures contracts are standardized agreements arranged on an organized Averages for transactions are based on the number of trading days in the period. exchange in which parties commit to purchase or sell securities for delivery at a The figures exclude allotments of, and exchanges for, new U.S. Treasury future date. securities, redemptions of called or matured securities, purchases or sales of 5. Forward transactions are agreements arranged in the over-the-counter securities under repurchase agreement, reverse repurchase (resale), or similar market in which securities are purchased (sold) for delivery after 5 business days contracts. from the date of the transaction for Treasury securities (Treasury bills, notes, and 2. Data for immediate transactions do not include forward transactions. bonds) or after 30 days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • September 1989 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1989 1989 IItteemm 11998877 Apr. May' June May 31 June 7 June 14 June 21 June 28 Positions Net immediate2 1 U.S. Treasury securities 12,912 -6,216 -22,765 —22,592r -14,757 -6,279 -11,0W -7,686 -8,097 -6,556 -6,088 2 Bills 12,761 4,317 2,238 1,445 1,162 378 162' 424 -18 -443 1,236 3 Other within 1 year 3,705 1,557 -2,236 -963 -1,727 -435 -786r 53 -112 92 -1,035 4 1-5 years 9,146 649 -3,020 -5,651 -2,115 4,651 1,253 2,504 2,099 5,051 5,210 i 5-10 years -9,505 -6,564 -9,663 -9,143r -6,055 -5,050 —5,826r -4,360 -3,932 -5,395 -6,187 6 Over 10 years -3,197 -6,174 -10,084 -8,279 -6,024 -5,822 -5,823 -6,307 -6,134 -5,861 -5,313 7 Federal agency securities 32,984 31,911 28,230 28,602' 27,121 29,491 25,287 26,385 29,442 33,221 29,217 8 Certificates of deposit 10,485 8,188 7,300 6,170 5,778 6,037 6,301 6,259 5,844 5,580 6,241 9 Bankers acceptances 5,526 3,660 2,486 2,534 1,948 2,357 1,812 2,170 2,511 2,428 2,462 10 Commercial paper 88,,008899 77,,449966 66,,115522 99,,115588 88,,660000 88,,883300 99,,332288 1111,,669922 99,,772233 77,,448844 77,,117777 Futures positions 11 Treasury bills -18,059 -3,373 -2,210 -5,134 -5,729 -4,769 -5,711 -5,206 -4,970 -4,484 -4,425 12 Treasury coupons 3,473 5,988 6,224 877' -290 -2,306 -1,840 -1,444 -1,400 -2,231 -3,144 13 Federal agency securities -153 -95 0 0 0 14 0 0 0 16 35 Forward positions 14 U.S. Treasury securities -2,144 -1,211 346 -l,328r -1,378 -1,885 -982 -2,081 -1,448 -1,699 -2,164 15 Federal agency securities -11,840 -18,817 -16,348 -15,334 -16,748 -20,200 -17,277 -19,026 -21,370 -22,976 -18,169 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 98,913 126,709 136,327 158,142' 155,365 151,403 162,357 169,004 167,094 169,858 160,216 1/ Term 108,607 114488,,228888 117777,,447777 222266,,440011rr 222299,,226655 222222,,883388 221144,,554477 223355,,558800 224466,,223311 224477,,885577 225500,,882211 Repurchase agreements 18 Overnight and continuing 141,823 170,763 172,695 207,749' 202,739 208,376 221,214 226,192 229,709 234,141 226,812 19 Term 102,397 121,270 137,056 172,647r 185,554 174,045 167,241 175,489 187,647 198,493 204,167 1. Data for dealer positions and sources of financing are obtained from reports reverses to maturity, which are securities that were sold after having been submitted to the Federal Reserve Bank of New York by the U.S. Treasury obtained under reverse repurchase agreements that mature on the same day as the securities dealers on its published list of primary dealers. securities. Data for immediate positions do not include forward positions. Data for positions are averages of daily figures, in terms of par value, based on 3. Figures cover financing involving U.S. Treasury and federal agency securithe number of trading days in the period. Positions are net amounts and are shown ties, negotiable CDs, bankers acceptances, and commercial paper. on a commitment basis. Data for financing are in terms of actual amounts 4. Includes all reverse repurchase agreements, including those that have been borrowed or lent and are based on Wednesday figures. arranged to make delivery on short sales and those for which the securities 2. Immediate positions are net amounts (in terms of par values) of securities obtained have been used as collateral on borrowings, that is, matched agreements. owned by nonbank dealer firms and dealer departments of commercial banks on 5. Includes both repurchase agreements undertaken to finance positions and a commitment, that is, trade-date basis, including any such securities that have "matched book" repurchase agreements. been sold under agreements to repurchase (RPs). The maturities of some NOTE. Data on positions for the period May 1 to Sept. 30, 1986, are partially repurchase agreements are sufficiently long, however, to suggest that the securi- estimated. ties involved are not available for trading purposes. Immediate positions include Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1989 AAggeennccyy 11998855 11998866 11998877 11998888 Jan. Feb. Mar. Apr. May 1 Federal and federally sponsored agencies 293,905 307,361 341,386 381,498 385,959 390,803 397,318 402,734 n.a. 2 Federal agencies 36,390 36,958 37,981 35,668 35,727 35,768 36,348 36,402 36,275 3 Defense Department' 71 33 13 8 8 8 8 7 7 4 Export-Import Bank2'3 15,678 14,211 11,978 11,033 11,033 11,033 11,007 11,007 11,007 5 Federal Housing Administration 115 138 183 150 143 165 172 182 1% 6 Government National Mortgage Association participation certificates 2,165 2,165 1,615 0 00 00 00 00 00 7 Postal Service6 1,940 3,104 6,103 6,142 6,142 6,142 6,742 6,742 6,445 8 Tennessee Valley Authority 16,347 17,222 18,089 18,335 18,401 18,420 18,419 18,464 18,620 9 United States Railway Association6 74 85 0 0 0 0 0 0 0 10 Federally sponsored agencies7 257,515 270,553 303,405 345,830 350,232 355,035 360,970 366,332 n.a. 11 Federal Home Loan Banks 74,447 88,752 115,725 135,834 139,804 144,343 149,950 154,146 156,354 12 Federal Home Loan Mortgage Corporation 11,926 13,589 17,645 22,797 22,874 21,320 23,392 22,676 21,620 13 Federal National Mortgage Association 93,8% 93,563 97,057 105,459 104,843 105,201 104,666 104,675 105,404 14 Farm Credit Banks8 68,851 62,478 55,275 53,127 52,319 52,441 52,069 51,678 n.a. 15 Student Loan Marketing Association9 8,395 12,171 16,503 22,073 23,852 25,190 23,753 25,361 26,469 16 Financing Corporation n.a. n.a. 1,200 5,850 5,850 5,850 6,450 6,950 6,950 17 Farm Credit Financial Assistance Corporation n.a. n.a. n.a. 690 690 690 690 846 846 18 M Fe E d M er O a l Financing Bank debt12 153,373 157,510 152,417 142,850 142,447 142,123 141,864 141,162r 140,220 Lending to federal and federally sponsored agencies 19 Export-Import Bank 15,670 1144,,220055 1111,,997722 1111,,002277 1111,,002277 1111,,002277 1111,,000011 1111,,000011 1111,,000011 20 Postal Service6 1,690 2,854 5,853 5,892 5,892 5,892 6,492 6,492 6,195 21 Student Loan Marketing Association 5,000 4,970 4,940 4,910 4,910 4,910 4,910 4,910 4,910 22 Tennessee Valley Authority 14,622 15,797 16,709 16,955 17,021 17,040 17,039 17,084 17,240 23 United States Railway Association6 74 85 0 0 0 0 0 0 0 Other Lending13 24 Farmers Home Administration 64,234 65,374 59,674 58,4% 58,4% 58,4% 57,841 5577,,008866 5566,,331111 25 Rural Electrification Administration 20,654 21,680 21,191 19,246 19,225 19,245 19,195 19,230 19,236 26 Other 31,429 32,545 32,078 26,324 25,876 25,513 25,386 25,359'" 25,327 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 • September 1989 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1989 Type of issue or issuer, or use 1986 1988 Nov. Dec. Feb. Mar. Apr. Mayr 1 All issues, new and refunding1 147,011 102,407 108,078 8,551 11,268 6,640 8,054 8,626 7,464 7,435 12,923 Type of issue 2 General obligation 46,346 30,589 29,662 2,368 2,491 1,784 3,955 2,185 2,301 2,342 4,581 3 Revenue 100,664 71,818 78,417 6,183 8,777 4,856 4,099 6,441 5,163 5,093 8,342 Type of issuer 4 State 14,474 10,102 9,254 525 1,011 280 1,896 256 1,407 392 1,989 5 Special district and statutory authority2 89,997 65,460 69,447 5,550 7,690 4,882 3,832 5,962 4,238 4,979 7,543 6 Municipalities, counties, and townships 42,541 26,845 29,377 2,476 2,567 1,478 2,326 2,408 1,819 2,064 3,392 7 Issues for new capital, total 83,492 56,789 75,064 5,830 8,738 4,141 5,222 6,486 6,061 5,938 11,093 Use of proceeds 8 Education 12,307 9,524 13,722 827 2,564 827 826 1,055 1,225 1,024 3,204 9 Transportation 7,246 3,677 6,974 237 636 344 382 445 743 748 603 10 Utilities and conservation 14,594 7,912 7,929 1,055 463 1,335 847 901 759 467 1,165 11 Social welfare 11,353 11,106 17,824 1,991 2,072 509 743 1,329 1,048 1,376 1,944 12 Industrial aid 6,190 7,474 6,276 294 1,010 293 250 253 374 361 321 13 Other purposes 31,802 18,020 22,339 1,426 1,993 834 2,174 2,503 1,912 1,962 3,856 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,, 11998866 11998877 11998888 oorr uussee Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 All issues1 423,726 392,156 408,790 21,818 24,531 12,389 17,374r 14,651' 26,434' 14,384' 20,851 2 Bonds2 355,293 325,648 350,988 19,031 21,096 10,338 14,213r 12,116' 25,512' 13,396' 19,200 Type of offering 3 Public, domestic 231,936 209,279 200,110 17,519 16,798 10,203 11,353' 9,922' 22,930' 11,471' 17,200 4 Private placement, domestic 80,760 92,070 127,700 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 42,596 24,299 23,178 1,512 4,298 135 2,860 2,194 2,582 1,925' 2,000 Industry group 6 Manufacturing 91,548 61,666 69,669 3,552 2,890 1,485 1,660 1,319 7,456' 1,457' 7,528 7 Commercial and miscellaneous 40,124 49,327 61,836 764 3,260 748 2,047 l,118r 882' 843' 2,132 8 Transportation 9,971 11,974 9,975 605 45 0 0 102 0 100 150 9 Public utility 31,426 23,004 19,318 1,346 672 264 635 640 153 1,695' 370 10 Communication 16,659 7,340 5,901 100 289 158 0 230 63 453' 122 11 Real estate and financial 165,564 172,343 184,286 12,664 13,940 7,683 9,871' 8,707' 16,959' 8,850' 8,898 12 Stocks3 68,433 66,508 57,802 2,787 3,435 2,051 3,161 2,535 921 988 1,651 Type 13 Preferred 11,514 10,123 6,544 865 478 495 275 975 310 495 375 14 Common 50,316 43,225 35,911 1,922 2,957 1,556 2,886 1,560 611 493 1,276 15 Private placement3 6,603 13,157 15,346 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 16 Manufacturing 15,027 13,880 7,608 288 430 425 33 832 127 135 380 17 Commercial and miscellaneous 10,617 12,888 8,449 222 52 89 32 270 336 280 115 18 Transportation 2,427 2,439 1,535 25 20 0 220 0 53 169 39 19 Public utility 4,020 4,322 1,898 282 70 20 1,960 11 108 0 192 20 Communication 1,825 1,458 515 0 20 59 5 19 0 93 224 21 Real estate and financial 34,517 31,521 37,798 1,970 2,843 1,459 911 1,402 297 310 702 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May INVESTMENT COMPANIES1 1 Sales of own shares2 381,260 271,237 20,494 20,327 25,780 29,014 22,741 23,149 25,496 24,661 2 Redemptions of own shares3 314,252 267,451 19,362 20,599 25,976 24,494 22,252 24,135 26,183 22,483 3 Net sales 67,008 3,786 1,132 -272 -196 4,520 489 -986 -687 2,178 4 Assets4 453,842 472,297 481,571 470,660 472,297 487,204 482,697 483,067 497,329 509,781 5 Cash position5 38,006 45,090 45,976 43,488 45,090 49,661 47,908 46,262 48,788 49,177 6 Other 415,836 427,207 435,595 427,172 427,207 437,543 434,789 436,805 448,541 460,604 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' 1989 AAccccoouunntt 11998866'' 11998877'' 11998888'' Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ql' 1 Corporate profits with inventory valuation and capital consumption adjustment 282.1 298.7 328.6 293.7 313.0 308.2 318.1 325.3 330.9 340.2 316.3 2 Profits before tax 221.6 266.7 306.8 263.4 281.0 276.2 288.8 305.3 314.4 318.8 318.0 3 Profits tax liability 106.3 124.7 137.9 124.0 132.7 127.3 129.0 138.4 141.2 143.2 144.4 4 Profits after tax 115.3 142.0 168.9 139.4 148.3 148.9 159.9 166.9 173.2 175.6 173.6 5 Dividends 91.3 98.7 110.4 96.9 100.0 102.8 105.7 108.6 112.2 115.2 118.5 6 Undistributed profits 24.0 43.3 58.5 42.6 48.3 46.1 54.2 58.3 61.1 60.4 55.1 7 Inventory valuation 6.7 -18.9 -25.0 -20.0 -19.4 -20.4 -20.7 -28.8 -30.4 -20.1 -38.3 8 Capital consumption adjustment 53.8 50.9 46.8 50.3 51.5 52.4 49.9 48.9 46.9 41.5 36.6 •Trade and services are no longer being reported separately. They are included in Commercial and other, line 10. 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 11998877 11998888 1199889911 Q4 Ql Q2 Q3 Q4 Ql Q21 Q31 1 Total nonfarm business 389.67 429.67 468.78 417.25 422.75 429.01 440.42 445.73 465.51 467.50 478.79 Manufacturing 2 Durable goods industries 71.01 78.12 82.65 76.40 80.13 79.00 80.59 78.97 83.12 80.21 84.08 3 Nondurable goods industries 74.88 87.58 96.01 86.05 81.00 83.82 85.78 90.00 96.77 96.89 98.61 Nonmanufacturing 4 Mining 11.39 12.67 11.79 11.74 12.26 12.87 12.74 11.97 11.89 13.08 12.21 Transportation 5 Railroad 5.92 7.06 25.17 7.08 7.29 6.78 7.07 8.07 8.17 7.10 7.13 6 Air 6.53 7.25 8.04 7.03 7.72 7.44 9.31 6.84 10.15 8.60 10.94 7 Other 6.40 7.04 9.95 6.48 7.48 6.58 7.06 7.20 7.11 7.42 7.78 Public utilities 8 Electric 31.63 31.90 33.09 33.32 31.59 32.55 33.79 33.54 32.70 35.71 34.39 9 Gas and other 13.25 14.60 16.47 12.84 14.56 13.81 14.26 15.25 16.92 15.71 15.79 10 Commercial and other2 168.65 183.44 203.60 176.29 180.72 186.15 189.82 193.87 198.70 202.79 207.86 1. Anticipated by business. insurance; personal and business services; and communication. 2. "Other" consists of construction; wholesale and retail trade; finance and 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 • September 1989 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period 1986 1987 AAccccoouunntt 11998833 11998844 11998855 Q2 Q3 Q4 Q1 Q2 Q3 Q4 ASSETS Accounts receivable, gross 1 Consumer 83.3 89.9 111.9 123.4 135.3 134.7 131.1 134.7 141.6 141.1 2 Business 113.4 137.8 157.5 166.8 159.7 173.4 181.4 188.1 188.3 207.6 3 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 12 Other short-term 11.1 12.9 12.7 15.8 16.4 17.5 21.8 24.8 26.9 28.0 13 Long-term 67.7 77.2 94.4 106.9 111.7 117.5 118.7 121.8 128.2 137.1 14 All other liabilities 31.2 34.5 41.5 40.9 45.0 44.1 46.5 49.1 48.6 52.8 15 Capital, surplus, and undivided profits 28.9 31.5 32.8 35.4 35.6 36.4 36.6 36.3 39.5 31.5 16 Total liabilities and capital 217.6 249.2 298.6 323.7 338.2 351.9 359.9 369.6 383.4 394.3 1. NOTE. Components may not add to totals because of rounding. 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 Type 1986 1987 1988 Jan. Feb. Mar. Apr. May 1 Total 172,060 205,810 234,529 235,969 237,378 240,186 244,882 245,861 Retail financing of installment sales 2 Automotive 26,015 35,782 36,548 37,041 37,301 37,696 38,415 38,816 3 Equipment 23,112 25,170 28,298 28,429 28.385 28,207 28,790 27,638 4 Pools of securitized assets n.a. n.a. n.a. 724 682 855 817 846 Wholesale 5 Automotive 23,010 30,507 33,300 33,664 34.386 33,528 34,383 34,534 6 Equipment 5,348 5,600 5,983 6,183 6,193 6,088 6,153 6,096 7 All other 7,033 8,342 9,341 9,493 9,569 9,682 9,852 9,929 8 Pools of securitized assets2 n.a. n.a. n.a. 0 0 0 0 0 Leasing 9 Automotive 19,827 21,952 24,673 24,558 24,847 25,584 25,544 26,011 10 Equipment 38,179 43,335 57,455 58,354 58,045 59,484 60,246 61,022 11 Pools of securitized assets n.a. n.a. n.a. 721 699 756 733 824 12 Loans on commercial accounts receivable and factored commercial accounts receivable 15,978 18,078 17,7% 16,688 17,404 17,794 18,677 18,772 13 All other business credit 13,557 17,043 21,134 20,114 19,867 20,512 21,272 21,371 Net change 14 15,763 33,750 28,719 -4 1,409 2,808 4,6% 978 Retail financing of installment sales 15 Automotive 5,355 9,767 766 493 260 394 720 401 16 Equipment 629 2,058 3,128 131 -43 -178 583 -1,152 17 Pools of securitized assets n.a. n.a. n.a. n.a. -42 173 -38 2299 Wholesale 18 Automotive -978 7,497 2,793 364 722 -858 856 151 19 Equipment 780 252 383 200 10 -105 65 -56 20 All other 224 1,309 999 152 76 114 170 78 21 Pools of securitized assets2 n.a. n.a. n.a. n.a. 00 00 00 00 Leasing 2222 Automotive 3,552 2,125 2,721 -115 289 736 -40 467 23 Equipment 3,411 5,156 14,120 -506 -310 1,439 762 776 24 Pools of securitized assets2 n.a. n.a. n.a. n.a. -22 57 -23 9911 25 Loans on commercial accounts receivable and factored commercial accounts receivable 213 2,100 -282 -1,108 716 390 883 95 26 All other business credit 2,576 3,486 4,091 385 -247 645 760 100 1. These data also appear in the Board's G.20 (422) release. For address, see 2. Data on pools of securitized assets are not seasonally adjusted, 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 Dec. Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms 1 Purchase price (thousands of dollars) 118.1 137.0 150.0 150.0 165.2 153.7 159.7 169.2 151.8' 150.5 2 Amount of loan (thousands of dollars) 86.2 100.5 110.5 110.8 121.3 111.8 117.7 124.5 112.3r 111.0 3 Loan/price ratio (percent) 75.2 75.2 75.5 75.6 75.2 73.5 74.4 75.0 75.3' 75.2 4 Maturity (years) 26.6 27.8 28.0 28.3 28.8 28.3 27.7 28.4 28.3r 27.8 5 Fees and charges (percent of loan amount) 2.48 2.26 2.19 2.08 1.90 2.14 2.11 1.70 2.12' 1.91 6 Contract rate (percent per year) 9.82 8.94 8.81 9.04 9.20 9.46 9.63 9.88 9.82 10.09 Yield (percent per year) 7 FHLBB series3 10.26 9.31 9.18 9.39 9.52 9.82 9.99 10.17 10.18 10.42 8 HUD series4 10.07 10.17 10.30 10.67 10.55 10.75 10.93 10.84 10.43 10.04 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 9.91 10.16 10.49 10.81 10.69 10.88 11.16 10.88 10.55 10.08 10 GNMA securities6 9.30 9.43 9.83 10.07 10.02 10.07 10.38 10.36 10.11 9.75 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 98,048 95,030 101,329 103,013 102,370 101,922 101,991 102,191 102,564 103,309 12 FHA/VA-insured 29,683 21,660 19,762 19,415 19,354 19,275 19,337 19,607 19,612 19,586 13 Conventional 68,365 73,370 81,567 83,598 83,016 82,647 82,654 82,584 82,952 83,723 Mortgage transactions (during period) 14 Purchases 30,826 20,531 23,110 1,726 1,037 905 1,469 1,163 1,419 1,862 Mortgage commitments7 15 Contracted (during period) 32,987 25,415 23,435 1,350 1,087 3,557 1,771 1,118 1,626' 2,573 16 Outstanding (end of period) 3,386 4,886 2,148 2,148 2,081 4,520 4,807 4,661 4,673' 5,236 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period)* 17 Total 13,517 12,802 15,105 17,425 18,378 18,473 18,714 18,918 19,443 n.a. 18 FHAWA 746 686 620 590 594 594 593 599 586 n.a. 19 Conventional 12,771 12,116 14,485 16,834 17,785 17,880 16,135 18,320 18,857 n.a. Mortgage transactions (during period) 20 Purchases 103,474 76,845 44,077 5,843 3,586 5,088 6,373 5,861 5,141 n.a. 21 Sales 100,236 75,082 39,780 5,510 3,408 4,385 6,037 5,554' 4,474' 6,331 Mortgage commitments9 22 Contracted (during period) 110,855 71,467 66,026 10,101 5,206 8,411 11,227 4,196 5,186 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 FHAA^A 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 • September 1989 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period Type of holder, and type of property 1987 Q4 Q1 Q2 Q3 1 All holders. 2,597,175 2,943,222 3,200,411 2,943,222 2,984,027 3,058,006 3,132,353 2 1- to 4-family 1,698,524 1,925,189 2,115,184 1,925,189 1,951,400 2,012,270 2,067,929 3 Multifamily.. 247,831 273,899 287,611 273,899 278,144 278,919 281,468 4 Commercial . 555,039 655,266 711,093 655,266 666,461 679,037 695,774 5 Farm 95,781 88,868 86,523 88,868 88,022 87,780 87,182 6 Se C le o c m te m d e f r i c n i a a n l c i b al a n i k n s s 2 t . i tutions . 1, 5 5 0 0 2 7 , , 5 2 3 8 4 9 1, 5 7 9 0 1 0 , , 1 8 5 2 1 0 1, 6 8 6 5 5 2 , , 4 5 5 9 8 3 1, 5 7 9 0 1 0 , , 1 8 5 2 1 0 1, 6 7 0 2 4 3 , , 4 9 6 3 8 7 1, 6 7 2 6 8 4 , , 3 22 8 1 3 1, 6 8 4 1 9 3 , , 1 4 3 7 5 0 1- to 4-family 235,814 275,761 313,897 275,761 280,757 295,425 306,118 Multifamily.. 31.173 33,296 34,715 33,296 33,728 34,184 33,855 Commercial . 222.799 267,663 301,236 267,663 275,360 283,598 293,772 Farm 12,748 14,431 15,610 14,431 14,623 15,176 15,390 Savings institutions 777,312 856,945 908,355 856,945 863,245 872,450 895,230 1- to 4-family 558,412 598,886 648,275 598,886 603,516 615,795 636,794 Multifamily 97,059 106,359 108,319 106,359 107,722 106.367 106,377 Commercial 121,236 150,943 151,016 150,943 151,251 149,536 151,307 Farm 605 Life insurance companies 193,842 ' 2I2,375 ' 233,814 ' 2i2,375 214,815 ' '220,870 ' '225,627 1- to 4-family 12,827 13,226 15,361 13,226 13,653 14,172 14,917 Multifamily 20,952 22,524 23,681 22,524 22,723 23,021 23,139 Commercial 149,111 166,722 185,592 166,722 168,774 174,086 178,166 Farm 10,952 9,903 9,180 9,903 9,665 9,591 9,405 Finance companies4 33,601 40,349 44,966 40,349 41,409 42,518 43,478 23 Federal and related agencies 203.800 192,721 198,549 192,721 196,909 199,474 198,027 24 Government National Mortgage Association. 889 444 67 444 434 42 64 25 1- to 4-family 47 25 53 25 25 24 51 26 Multifamily 842 419 14 419 409 18 13 27 Farmers Home Administration 48,421 43,051 42,018 43,051 43,076 42,767 41,836 28 1- to 4-family 21,625 18,169 18,347 18,169 18,185 18,248 18,268 29 Multifamily 7,608 8,044 8,513 8,044 8,115 8,213 8,349 30 Commercial 8,446 6,603 5,343 6,603 6,640 6,288 5,300 31 Farm 10,742 10,235 9,815 10,235 10,136 10,018 9,919 Federal Housing and Veterans Administration. 5,047 5,574 5,975 5,574 5,660 5,673 5,666 1- to 4-family 2,386 2,557 2,649 2,557 2,608 2,564 2,432 Multifamily 2,661 3,017 3,326 3,017 3,052 3,109 3,234 Federal National Mortgage Association 97,895 96,649 103,013 96,649 99,787 102.368 102,453 1- to 4-family 90,718 89,666 95,833 89,666 92,828 95,404 95,417 Multifamily 7,177 6,983 7,180 6,983 6,959 6,964 7,036 Federal Land Banks 39,984 34,131 32,115 34,131 33,566 33,048 32,566 1- to 4-family 2,353 2,008 1,890 2,008 1,975 1,945 1,917 Farm 37,631 32,123 30,225 32,123 31,591 31,103 30,649 Federal Home Loan Mortgage Corporation ... 11,564 12,872 15,361 12,872 14,386 15,576 15,442 1- to 4-family 10,010 11,430 13,058 11,430 12,749 13,631 13,322 Multifamily 1,554 1,442 2,303 1,442 1,637 1,945 2,120 44 Mortgage pools or trusts 565,428 718,297 809,448 718,297 732,071 754,045 782,802 45 Government National Mortgage Association. 262,697 317,555 340,527 317,555 318,703 322,616 333,177 1- to 4-family 256,920 309,806 331,257 309,806 310,473 314,728 324,573 Multifamily 5,777 7,749 9,270 7,749 8,230 7,888 8,604 Federal Home Loan Mortgage Corporation . 171,372 212,634 224,967 212,634 214,724 216,155 220,684 1- to 4-family 166,667 205,977 218,513 205,977 208,138 209,702 214,195 Multifamily 4,705 6,657 6,454 6,657 6,586 6,453 6,489 Federal National Mortgage Association 97.174 139,960 178,250 139,960 145,242 157,438 167,170 1- to 4-family 95,791 137,988 172,331 137,988 142,330 153,253 162,228 Multifamily 1,383 1,972 5,919 1,972 2,912 4,185 4,942 Farmers Home Administration 348 245 104 245 172 106 106 1- to 4-family 142 121 26 121 65 23 27 Multifamily Commercial 132 63 38 63 58 41 38 Farm 74 61 40 61 49 42 41 59 Individuals and others7 320,658 331,384 339,821 331,384 331,110 340,266 338,054 60 1- to 4-family 177,374 171,317 173,128 171,317 169,459 177,108 172,527 61 Multifamily 66,940 75,437 77,917 75,437 76,071 76,572 77,310 62 Commercial 53,315 63,272 67,868 63,272 64,378 65,488 67,191 63 Farm 23,029 21,358 20,908 21,358 21,202 21,098 21,026 1. Based on data from various institutional and governmental sources, with 5. FmHA-guaranteed securities sold to the Federal Financing Bank were some quarters estimated in part by the Federal Reserve. Multifamily debt refers reallocated from FmHA mortgage pools to FmHA mortgage holdings in 1986:4, to loans on structures of five or more units. because of accounting changes by the Farmers Home Administration. 2. Includes loans held by nondeposit trust companies but not bank trust 6. Outstanding principal balances of mortgage pools backing securities insured departments. or guaranteed by the agency indicated. Includes private pools which are not 3. Includes savings banks and savings and loan associations. Beginning 1987:1, shown as a separate line item. 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. 4. Assumed to be entirely 1- to 4-family loans. 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 1988 1989 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998877 11998888 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Amounts outstanding (end of period) 1 Total 607,721 659,507 646,556 649,132 654,413 659,507 682,020 687,397 691,162 693,654 697,256 By major holder 2 Commercial banks 282,910 318,925 310,132 312,588 316,683 318,925 316,797 318,423 318,242 320,458 332233,,007788 3 Finance companies 140,281 145,180 143,019 143,012 143,488 145,180 141,795 143,419 143,070 144,378 145,523 4 Credit unions 80,087 86,118 84,900 85,338 85,740 86,118 87,093 87,813 88,514 89,072 89,735 5 Retailers 40,975 43,498 42,349 42,614 42,910 43,498 40,986 41,052 41,300 41,301 41,323 6 Savings institutions 59,851 62,099 62,502 61,926 61,922 62,099 62,867 63,109 62,735 61,919 61,429 7 Gasoline companies 3,618 3,687 3,655 3,654 3,671 3,687 3,655 3,677 3,682 3,787 3,809 8 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. n.a. 28,827 29,903 33,487 32,737' 32,359 By major type of credit 9 Automobile 265,976 281,174 279,243 278,902 279,926 281,174 286,382 288,767 288,850 289,531 229900,,554477 10 Commercial banks 109,201 123,259 120,525 120,939 122,392 123,259 122,160 122,983 123,062 123,878 124,962 11 Credit unions 40,351 41,326 41,250 41,293 41,316 41,326 41,707 41,964 42,211 42,388 42,613 12 Finance companies 98,195 97,204 97,257 96,877 96,657 97,204 87,968 88,789 89,567 90,268 90,976 n Savings institutions 18,228 19,385 20,211 19,793 19,561 19,385 19,506 19,464 19,231 18,866 18,601 14 Pools of securitized assets4 n.a. n.a. n.a. n.a. n.a. n.a. 15,042 15,568 14,779 14,132 13,395 15 Revolving 153,884 174,792 168,273 170,131 173,030 174,792 176,716 178,570 182,831 184,486 186,428 16 Commercial banks 99,119 117,572 112,691 114,180 116,593 117,572 111,133 111,706 112,553 114,130 115,408 17 Retailers 36,389 38,692 37,682 37,919 38,170 38,692 36,176 36,257 36,489 36,497 36,504 18 Gasoline companies 3,618 3,687 3,655 3,654 3,671 3,687 3,655 3,677 3,682 3,787 3,809 19 Savings institutions 10,367 10,151 9,614 9,724 9,923 10,151 10,479 10,722 10,860 10,918 11,029 20 Credit unions 4,391 4,691 4,632 4,653 4,673 4,691 4,785 4,866 4,947 5,020 5,100 21 Pools of securitized assets4 n.a. n.a. n.a. n.a. n.a. n.a. 10,489 11,342 14,172 14,134 14,578 22 Mobile home 26,387 25,744 26,185 26,033 26,005 25,744 26,036 25,992 24,168 23,993 23,978 23 Commercial banks 9,220 8,974 9,119 9,225 9,224 8,974 8,974 8,974 8,844 8,836 8,886 24 Finance companies 7,762 7,186 7,334 7,194 7,197 7,186 7,376 7,308 5,687 5,659 5,684 25 Savings institutions 9,406 9,583 9,732 9,614 9,584 9,583 9,687 9,710 9,637 9,498 9,408 26 Other 161,475 177,798 172,855 174,066 175,452 177,798 192,886 194,068 195,314 195,643 196,302 27 Commercial banks 65,370 69,120 67,798 68,244 68,474 69,120 74,532 74,760 73,783 73,614 73,822 28 Finance companies 34,324 40,790 38,428 38,941 39,633 40,790 46,451 47,322 47,816 48,451 48,863 29 Credit unions 35,344 40,102 39,018 39,392 39,752 40,102 40,601 40,983 41,357 41,665 42,022 30 Retailers 4,586 4,807 4,667 4,694 4,739 4,807 4,809 4,795 4,811 4,804 4,819 31 Savings institutions 21,850 22,981 22,945 22,794 22,854 22,981 23,196 23,214 23,006 22,638 22,390 32 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. n.a. 3,296 2,993 4,536 4,471r 4,386 Net change (during period) 33 Total 35,674 51,786 1,890 2,576 5,281 5,094 22,513 5,377 3,765 2,492 3,602 By major holder 34 Commercial banks 19,884 36,015 2,777 2,456 4,095 2,242 -2,128 1,626 -181 2,216 2,620 35 Finance companies 6,349 4,899 -973 -7 476 1,692 -3,385 1,624 -349 1,308 1,145 36 Credit unions 3,853 6,031 253 438 402 378 975 720 701 558 663 37 Retailers3 1,568 2,523 228 265 296 588 -2,512 66 248 1 22 38 Savings institutions 3,689 2,248 -341 -576 -4 177 768 242 -374 -816 -490 39 Gasoline companies 332 69 -54 -1 17 16 -32 22 5 105 22 40 Pools of securitized assets4 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1,076 3,584 -750' -378 By major type of credit 41 Automobile 18,663 15,198 -342 -341 1,024 1,248 5,208 2,385 83 681 1,016 42 Commercial banks 7,919 14,058 1,142 414 1,453 867 -1,099 823 79 816 1,084 43 Credit unions 1,916 975 -46 43 23 10 381 257 247 177 225 44 Finance companies 5,639 -991 -1,448 -380 -220 547 -9,236 821 778 701 708 45 Savings institutions 3,188 1,157 10 -418 -232 -176 121 -42 -233 -365 -265 46 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. n.a. n.a. 526 -789 -647 -737 47 Revolving 16,871 20,908 1,148 1,858 2,899 1,762 1,924 1,854 4,261 1,655 1,942 48 Commercial banks 12,188 18,453 1,175 1,489 2,413 979 -6,439 573 847 1,577 1,278 49 Retailers 1,866 2,303 211 237 251 522 -2,516 81 232 8 7 50 Gasoline companies 332 69 -54 -1 17 16 -32 22 5 105 22 51 Savings institutions 1,771 -216 -195 110 199 228 328 243 138 58 111 52 Credit unions 715 300 11 21 20 18 94 81 81 73 80 53 Pools of securitized assets4 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 853 2,830 -38 444 54 Mobile home -968 -643 -92 -152 -28 -261 292 -44 -1,824 -175 -15 55 Commercial banks 192 -246 -21 106 -1 -250 0 0 -130 -8 50 56 Finance companies -1,052 -576 -35 -140 3 -11 190 -68 -1,621 -28 25 57 Savings institutions -107 177 -36 -118 -30 -1 104 23 -73 -139 -90 58 Other 1,108 16,323 1,176 1,211 1,386 2,346 15,088 1,182 1,246 329 659 59 Commercial banks -415 3,750 482 446 230 646 5,412 228 -977 -169 208 60 Finance companies 1,761 6,466 510 513 692 1,157 5,661 871 494 635 412 61 Credit unions 1,221 4,758 288 374 360 350 499 382 374 308 357 62 Retailers -297 221 17 27 45 68 2 -14 16 -7 15 63 Savings institutions -1,162 1,131 -120 -151 60 127 215 18 -208 -368 -248 64 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. n.a. n.a. -303 1,543 -65r -85 1. The Board's series cover most short- and intermediate-term credit extended 2. More detail for finance companies is available in the G. 20 statistical release. to individuals that is scheduled to be repaid (or has the option of repayment) in 3. Excludes 30-day charge credit held by travel and entertainment companies. two or more installments. 4. Outstanding balances of pools upon which securities have been issued; these These data also appear in the Board's G.19 (421) release. For address, see balances are no longer carried on the balance sheets of the loan originator. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • September 1989 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1988 1989 Item 1986 1987 1988 Nov. Dec Jan. Feb. Mar. Apr. INTEREST RATES Commercial banks2 1 48-month new car3 11.33 10.45 10.85 11.22 n.a. n.a. 11.76 n.a. 2 24-month personal 14.82 14.22 14.68 15.06 n.a. n.a. 15.22 n.a. 3 120-month mobile home 13.99 13.38 13.54 13.61 n.a. n.a. 14.00 n.a. 4 Credit card 18.26 17.92 17.78 17.77 n.a. n.a. 17.83 n.a. Auto finance companies 5 New car 9.44 10.73 12.60 13.20 13.25 13.27 13.07 13.07 6 Used car 15.95 14.60 15.11 15.75 15.80 15.57 15.90 16.12 OTHER TERMS4 Maturity (months) 7 New car 50.0 53.5 56.2 56.2 56.3 56.2 55.7 55.4 8 Used car 42.6 45.2 46.7 46.2 46.0 47.8 47.4 47.1 Loan-to-value ratio 9 New car 93 10 Used car Amount financed (dollars) 11 New car 10,665 11,203 11,663 11,975 12,068 11,956 11,819 11,867 12 Used car 6,555 7,420 7,824 7,991 8,022 8,006 8,022 7,958 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 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 11998888 Q3 Q4 Q1 Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 750.8 846.3 837.5 689.0 741.4 659.8 780.3 723.9 710.4 767.8 763.7 742.6 By sector and instrument 2 U.S. government 198.8 223.6 215.0 144.9 157.5 103.1 168.2 227.7 89.2 188.6 124.4 214.4 3 Treasury securities 199.0 223.7 214.7 143.4 140.0 104.0 163.2 228.2 81.5 167.7 82.8 215.6 4 Agency issues and mortgages -.2 -.1 .4 1.5 17.4 -.9 5.0 -.5 7.7 20.9 41.6 -1.2 5 Private domestic nonfinancial sectors 552.0 622.7 622.5 544.0 584.0 556.6 612.2 496.2 621.2 579.3 639.3 528.2 6 Debt capital instruments 319.3 452.3 468.4 459.0 426.1 441.2 430.3 358.9 474.8 446.7 423.9 372.2 7 Tax-exempt obligations 50.4 136.4 30.8 34.5 33.1 32.7 33.5 22.8 30.6 41.4 37.5 19.7 8 Corporate bonds 46.1 73.8 121.3 99.9 97.2 100.7 81.6 101.4 117.9 90.3 79.1 82.1 9 Mortgages 222.8 242.2 316.3 324.5 295.8 307.8 315.3 234.6 326.3 315.0 307.3 270.3 10 Home mortgages 136.7 156.8 218.7 234.9 220.0 225.0 222.8 169.6 270.7 231.9 207.8 187.4 11 Multifamily residential 25.2 29.8 33.5 24.4 16.3 23.3 16.1 23.9 4.2 16.0 20.9 26.6 12 Commercial 62.2 62.2 73.6 71.6 61.6 64.3 78.3 47.3 52.7 69.4 77.1 61.5 13 Farm -1.2 -6.6 -9.5 -6.4 -2.1 -4.7 -1.9 -6.1 -1.4 -2.4 1.5 -5.2 14 Other debt instruments 232.7 170.3 154.1 85.1 157.9 115.4 181.8 137.3 146.4 132.5 215.4 156.1 15 Consumer credit 81.6 82.5 58.0 32.9 51.1 54.0 56.5 38.6 57.5 31.8 76.3 34.9 16 Bank loans n.e.c 67.1 38.6 65.0 10.8 47.5 21.7 75.2 34.7 72.4 10.7 72.1 38.3 17 Open market paper 21.7 14.6 -9.3 2.3 11.6 1.0 3.9 -3.8 4.0 11.1 35.1 34.4 18 Other 62.2 34.6 40.5 39.1 47.7 38.7 46.2 67.8 12.5 78.9 31.9 48.4 19 By borrowing sector 552.0 622.7 622.5 544.0 584.0 556.6 612.2 496.2 621.2 579.3 639.3 528.2 20 State and local governments 27.4 91.8 44.3 34.0 32.0 34.8 32.9 17.5 27.6 43.5 39.4 26.0 21 Households 231.5 283.6 289.2 267.8 276.5 287.3 277.8 212.6 330.6 282.9 279.8 251.7 22 Nonfinancial business 293.1 247.3 288.9 242.2 275.5 234.5 301.5 266.0 262.9 252.9 320.1 250.5 23 Farm -.4 -14.5 -16.3 -10.6 -4.0 -9.4 3.3 -15.7 -3.4 -2.6 5.5 -2.7 24 Nonfarm noncorporate 123.2 129.3 103.2 107.9 85.3 97.4 116.0 86.3 72.3 96.0 86.7 78.5 25 Corporate 170.3 132.4 202.0 144.9 194.2 146.6 182.1 195.5 194.0 159.5 227.8 174.6 26 Foreign net borrowing in United States 8.4 1.2 9.6 4.3 5.9 12.3 13.9 -1.0 5.2 4.4 15.0 -7.9 27 Bonds 3.8 3.8 3.0 6.8 6.7 6.7 21.6 16.8 -2.7 6.5 6.3 9.5 28 Bank loans n.e.c -6.6 -2.8 -1.0 -3.6 -1.8 -3.7 -6.1 .7 -3.5 2.9 -7.4 1.5 29 Open market paper 6.2 6.2 11.5 2.1 9.6 21.6 -2.5 1.5 6.4 10.7 20.0 11.6 30 U.S. government loans 5.0 -5.9 -3.9 -1.0 -8.6 -12.3 .8 -19.9 5.1 -15.8 -3.9 -30.4 31 Total domestic plus foreign 759.2 847.5 847.1 693.3 747.3 672.0 794.2 722.9 715.6 772.2 778.6 734.7 Financial sectors 32 Total net borrowing by financial sectors 148.7 198.3 307.0 303.3 254.9 306.4 250.2 193.3 263.3 227.2 335.7 358.1 By instrument 33 U.S. government related 74.9 101.5 187.9 185.8 137.5 185.5 167.5 120.3 101.8 150.6 177.2 205.7 34 Sponsored credit agency securities 30.4 20.6 15.2 30.2 44.9 32.0 71.6 56.8 9.4 42.8 70.5 81.7 35 Mortgage pool securities 44.4 79.9 173.1 156.4 92.6 153.5 95.9 63.4 92.4 107.8 106.7 124.0 36 1.1 -.4 -.7 37 Private financial sectors 73.8 96.7 119.1 117.5 117.4 120.8 82.7 73.1 161.5 76.6 158.5 152.4 38 Corporate bonds 33.0 47.9 70.9 67.2 50.7 77.7 42.4 70.1 60.5 32.5 39.7 31.0 39 Mortgages .4 .1 .1 .4 -.1 .2 .8 -.1 * * -.2 .1 40 Bank loans n.e.c .7 2.6 4.0 -3.3 -6.6 6.3 -10.7 -26.8 8.7 -8.6 .6 -4.6 41 Open market paper 24.1 32.0 24.2 28.8 53.6 14.3 5.4 24.6 82.2 26.1 81.7 61.6 42 Loans from Federal Home Loan Banks 15.7 14.2 19.8 24.4 19.7 22.2 44.9 5.4 10.1 26.6 36.8 64.4 By sector 43 Total 148.7 198.3 307.0 303.3 254.9 306.4 250.2 193.3 263.3 227.2 335.7 358.1 44 Sponsored credit agencies 30.4 21.7 14.9 29.5 44.9 32.0 71.6 56.8 9.4 42.8 70.5 81.7 45 Mortgage pools 44.4 79.9 173.1 156.4 92.6 153.5 95.9 63.4 92.4 107.8 106.7 124.0 46 Private financial sectors 73.8 96.7 119.1 117.5 117.4 120.8 82.7 73.1 161.5 76.6 158.5 152.4 47 Commercial banks 7.3 -4.9 -3.6 7.1 -3.9 -13.1 15.0 -22.4 6.2 -8.3 8.9 1.8 48 Bank affiliates 15.6 14.5 4.6 2.9 1.4 11.3 -22.6 -8.5 11.4 7.6 -4.9 8.8 49 Savings and loan associations 22.7 22.3 29.8 34.9 37.8 43.4 48.7 8.6 17.1 54.4 71.0 72.7 50 Finance companies 18.2 52.7 48.4 32.7 47.8 34.0 33.4 51.4 93.7 1.2 45.1 53.6 51 REITs .8 .5 1.0 .8 1.7 2.5 2.2 1.0 1.7 -1.4 5.8 .8 52 CMO Issuers 9.3 11.5 39.0 39.1 32.5 42.7 6.0 43.0 31.5 23.1 32.5 14.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • September 1989 1.57—Continued 1987 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 Q3 Q4 Q1 Q2 Q3 Q4 Q1 All sectors 53 Total net borrowing 907.9 1,045.7 1,154.1 996.6 1,002.2 978.4 1,044.4 916.2 978.9 999.4 1,114.4 1,092.8 54 U.S. government securities 273.8 324.2 403.4 331.5 294.9 288.6 335.7 347.9 191.0 339.2 301.6 420.1 55 State and local obligations 50.4 136.4 30.8 34.5 33.1 32.7 33.5 22.8 30.6 41.4 37.5 19.7 56 Corporate and foreign bonds 83.0 125.4 195.2 174.0 154.6 185.1 145.6 188.2 175.8 129.4 125.1 122.7 57 Mortgages 223.1 242.2 316.4 324.9 295.7 308.0 316.1 234.5 326.3 315.0 307.1 270.4 58 Consumer credit 81.6 82.5 58.0 32.9 51.1 54.0 56.5 38.6 57.5 31.8 76.3 34.9 59 Bank loans n.e.c 61.1 38.3 67.9 3.8 39.1 24.3 58.4 8.6 77.6 5.0 65.3 35.1 60 Open market paper 52.0 52.8 26.4 33.2 74.9 36.9 6.7 22.3 92.5 48.0 136.8 107.6 61 Other loans 82.9 44.0 56.1 61.8 58.8 48.7 91.9 53.3 27.7 89.7 64.7 82.4 62 MEMO: U.S. government, cash balance 6.3 14.4 * -7.9 10.4 -19.6 -54.7 60.9 3.3 16.2 -38.8 -4.3 Totals net of changes in U.S. government cash balances 63 Net borrowing by domestic nonfinancial 744.5 831.9 837.5 696.9 731.1 679.4 835.0 663.0 707.1 751.7 802.5 747.0 64 Net borrowing by U.S. government 192.5 209.3 215.0 152.8 147.1 122.7 222.8 166.8 86.0 172.4 163.2 218.7 External corporate equity funds raised in United States 65 Total net share issues -36.0 20.1 93.9 13.5 -115.0 -47.1 -82.7 -75.6 -131.1 -84.1 -169.1 -143.1 66 Mutual funds 29.3 84.4 161.8 72.3 -.4 13.8 -9.1 5.0 -8.0 0.3 1.1 19.1 67 All other -65.3 -64.3 -68.0 -58.8 -114.5 -60.9 -73.6 -80.5 -123.1 -84.4 -170.2 -162.2 68 Nonfinancial corporations -74.5 -81.5 -80.7 -76.5 -130.5 -78.0 -88.0 -95.0 -140.0 -92.0 -195.0 -180.0 69 Financial corporations 8.2 13.5 11.5 20.1 15.2 18.4 26.4 15.2 23.4 6.4 15.9 13.7 70 Foreign shares purchased in United States .9 3.7 1.3 -2.4 .7 -1.3 -12.0 -.7 -6.5 1.2 9.0 4.1 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 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998844 11998855 11998866 11998877 11998888 Q3 Q4 QL Q2 Q3 Q4 QL 1 Total funds advanced in credit markets to domestic nonfinancial sectors 750.8 846.3 837.5 689.0 741.4 659.8 780.3 723.9 710.4 767.8 763.7 742.6 By public agencies and foreign 2 Total net advances 157.6 193.1 314.0 256.7 239.1 211.1 265.4 262.5 166.1 222222..55 330055..11 333366..22 3 U.S. government securities 38.9 37.9 69.4 68.2 84.8 35.1 123.3 148.6 42.4 25.8 122.3 87.6 4 Residential mortgages 56.5 94.6 170.1 153.2 104.0 146.0 102.7 83.6 106.7 108.3 117.5 126.2 5 FHLB advances to savings and loans 15.7 14.2 19.8 24.4 19.7 22.2 44.9 5.4 10.1 26.6 36.8 64.4 6 Other loans and securities 46.6 46.3 54.6 10.9 30.5 7.8 -5.5 24.9 6.8 61.9 28.4 58.1 Total advanced, by sector 7 U.S. government 17.1 16.8 9.7 -11.9 -7.3 -24.1 -2.6 -8.8 -20.3 9.4 -9.5 7.3 8 Sponsored credit agencies 74.3 95.5 187.2 181.4 131.2 187.0 156.6 103.1 103.4 138.9 179.2 216.0 9 Monetary authorities 8.4 18.4 19.4 24.7 10.5 29.0 30.4 -5.5 4.1 17.1 26.5 -4.9 10 Foreign 57.9 62.3 97.8 62.5 104.7 19.1 81.0 173.7 78.9 57.2 108.9 117.8 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 74.9 101.5 187.9 185.8 137.5 185.5 167.5 120.3 101.8 150.6 177.2 220055..77 12 Foreign 8.4 1.2 9.6 4.3 5.9 12.3 13.9 -1.0 5.2 4.4 15.0 -7.9 Private domestic funds advanced N Total net advances 676.4 756.0 721.0 622.5 645.7 646.4 696.3 580.6 651.3 700.3 650.8 604.2 14 U.S. government securities 234.9 286.2 333.9 263.3 210.2 253.5 212.4 199.3 148.6 313.4 179.3 332.5 15 State and local obligations 50.4 136.4 30.8 34.5 33.1 32.7 33.5 22.8 30.6 41.4 37.5 19.7 16 Corporate and foreign bonds 35.1 40.8 84.1 86.5 81.0 83.7 102.9 115.7 90.2 65.1 53.0 54.6 17 Residential mortgages 105.3 91.8 82.0 106.1 132.2 102.3 136.2 109.9 168.2 139.7 111.1 87.9 18 Other mortgages and loans 266.3 214.9 210.0 156.5 209.0 196.4 256.3 138.3 223.8 167.3 306.6 173.8 19 LESS: Federal Home Loan Bank advances 15.7 14.2 19.8 24.4 19.7 22.2 44.9 5.4 10.1 26.6 36.8 64.4 Private financial intermediation 20 Credit market funds advanced by private financial institutions 581.0 569.8 747.0 566.6 587.6 643.7 553.8 658.1 593.3 473.2 626.0 586.9 21 Commercial banking 168.9 186.3 194.8 136.7 156.0 151.4 253.1 56.8 213.8 141.3 212.2 96.8 22 Savings institutions 150.2 83.0 106.2 141.7 121.1 191.5 155.6 85.3 92.9 186.3 119.9 80.6 23 Insurance and pension funds 121.8 148.9 181.9 211.9 222.2 247.5 154.3 279.3 228.9 173.9 206.8 259.1 24 Other finance 140.1 151.6 264.2 76.3 88.3 53.3 -9.2 236.7 57.8 -28.4 87.2 150.3 75 Sources of funds 581.0 569.8 747.0 566.6 587.6 643.7 553.8 658.1 593.3 473.2 626.0 586.9 26 Private domestic deposits and RPs 321.9 210.6 264.7 145.6 198.4 193.9 265.6 283.6 135.1 167.3 207.5 127.3 2.7 Credit market borrowing 73.8 96.7 119.1 117.5 117.4 120.8 82.7 73.1 161.5 76.6 158.5 152.4 28 Other sources 185.3 262.5 363.2 303.5 271.8 329.0 205.5 301.3 296.7 229.2 260.0 307.2 29 Foreign funds 8.8 19.7 12.9 43.7 9.2 99.5 25.2 -80.1 106.6 -50.4 60.7 -36.3 30 Treasury balances 4.0 10.3 1.7 -5.8 7.3 6.1 -36.1 53.3 -17.5 8.7 -15.2 -8.4 31 Insurance and pension reserves 124.0 131.9 144.3 176.1 219.9 196.1 120.3 265.2 240.0 149.9 224.3 263.6 32 Other, net 48.5 100.7 204.4 89.6 35.4 27.2 96.0 62.9 -32.4 121.0 -9.9 88.3 Private domestic nonfinancial investors 33 Direct lending in credit markets 169.2 282.9 93.1 173.3 175.5 123.6 225.1 -4.4 219.5 303.7 183.3 169.7 34 U.S. government securities 115.4 175.7 59.9 104.4 146.5 70.3 117.8 114.4 87.3 247.0 137.2 194.6 35 State and local obligations 26.5 39.6 -13.6 46.1 20.0 42.4 56.0 -.5 18.3 27.9 34.4 7.7 36 Corporate and foreign bonds -.8 2.4 32.6 5.3 -12.7 28.3 42.1 -39.0 36.6 -29.2 -19.4 -.2 37 Open market paper 4.0 45.6 -3.6 4.3 14.9 -29.7 -9.5 -71.5 76.1 54.0 1.0 -2.0 38 Other 24.2 19.6 17.9 13.3 6.8 12.2 18.7 -7.8 1.2 3.9 30.1 -30.3 39 Deposits and currency 325.4 220.9 285.0 161.8 205.9 229.3 316.3 278.6 136.3 194.1 214.4 138.1 40 Currency 8.6 12.4 14.4 19.0 14.7 17.3 36.8 8.2 11.9 28.6 10.2 9.8 41 Checkable deposits 28.0 40.9 93.2 -2.1 12.2 35.4 14.3 4.5 18.5 -23.8 49.6 -59.6 42 Small time and savings accounts 150.7 138.5 120.6 76.0 120.6 80.2 124.1 189.1 152.4 70.5 70.4 50.7 43 Money market fund shares 49.0 8.9 41.5 28.2 23.8 32.7 63.3 59.1 -34.8 3.0 67.9 59.5 44 Large time deposits 84.3 7.7 -11.4 26.7 32.3 -1.0 89.4 11.7 -15.7 122.0 11.2 55.9 45 Security RPs 10.0 14.6 20.8 16.9 9.5 46.6 -25.6 19.3 14.7 -4.4 8.2 20.7 46 Deposits in foreign countries -5.1 -2.1 5.9 -2.8 -7.3 18.1 13.9 -13.3 -10.7 -1.8 -3.3 1.0 47 Total of credit market instruments, deposits, and currency 494.6 503.7 378.1 335.1 381.4 352.9 541.5 274.2 355.8 497.8 397.7 307.8 48 Public holdings as percent of total 20.7 22.7 37.0 37.0 31.9 31.4 33.4 36.3 23.2 28.8 39.1 45.7 49 Private financial intermediation (in percent) 85.8 75.3 103.6 91.0 90.9 99.5 79.5 113.3 91.0 67.5 96.1 97.1 50 Total foreign funds 66.7 82.0 110.7 106.2 113.9 118.7 106.2 93.6 185.5 6.8 169.7 81.5 MEMO: Corporate equities not included above 51 Total net issues -36.0 20.1 93.9 13.5 -115.0 -47.1 -82.7 -75.6 -131.1 -84.1 -169.1 -143.1 52 Mutual fund shares 29.3 84.4 161.8 72.3 -.4 13.8 -9.1 5.0 -8.0 .3 1.1 19.1 53 Other equities -65.3 -64.3 -68.0 -58.8 -114.5 -60.9 -73.6 -80.5 -123.1 -84.4 -170.2 -162.2 54 Acquisitions by financial institutions 15.8 45.6 48.5 22.6 4.8 5.2 -16.5 -35.7 -6.8 22.4 39.1 4.1 55 Other net purchases -51.8 -25.5 45.4 -9.1 -119.7 -52.4 -66.2 -39.9 -124.3 -106.5 -208.2 -147.2 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 • September 1989 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1987 1988 1989 11998866 Q3 Q4 QI Q2 Q3 Q4 QL Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 5,204.3 5,953.7 6,797.0 7,638.4 8,099.4 8,330.0 8,471.0 8,658.1 8,828.8 9,049.7 9,209.4 By sector and instrument 2 U.S. government 1,177.9 1,376.8 1,600.4 1,815.4 1,897.8 1,960.3 2,003.2 2,022.3 2,063.9 2,117.8 2,155.7 3 Treasury securities 1,174.4 1,373.4 1,597.1 1,811.7 1,893.8 1,955.2 1,998.1 2,015.3 2,051.7 2,095.2 2,133.4 4 Agency issues and mortgages 3.6 3.4 3.3 3.6 3.9 5.2 5.0 7.0 12.2 22.6 22.3 5 Private domestic nonfinancial sectors 4,026.4 4,577.0 5,196.6 5,823.0 6,201.7 6,369.7 6,467.8 6,635.8 6,764.9 6,931.9 7,053.7 6 Debt capital instruments 2,717.8 3,040.0 3,488.4 3,967.6 4,327.4 4,438.5 4,512.2 4,635.3 4,737.8 4,848.3 4,933.0 7 Tax-exempt obligations 471.7 522.1 658.4 689.2 715.5 723.7 727.5 734.8 747.6 756.8 764.9 8 Corporate bonds 423.0 469.2 542.9 664.2 743.7 764.1 789.5 819.0 841.5 861.3 881.8 9 Mortgages 1,823.1 2,048.8 2,287.1 2,614.2 2,868.2 2,950.7 2,995.3 3,081.6 3,148.6 3,230.2 3,286.3 10 Home mortgages 1,200.2 1,336.2 1,490.2 1,720.8 1,884.2 1,943.1 1,972.0 2,043.3 2,105.0 2,160.9 2,195.6 11 Multifamily residential 158.8 183.6 213.0 246.2 265.0 270.0 274.5 276.3 279.5 285.9 291.4 12 Commercial 350.4 416.5 478.1 551.4 629.1 648.7 660.8 674.1 677.1 696.6 713.1 13 Farm 113.7 112.4 105.9 95.8 90.0 88.9 88.0 87.8 87.0 86.8 86.2 14 Other debt instruments 1,308.6 1,536.9 1,708.2 1,855.5 1,874.3 1,931.1 1,955.6 2,000.5 2,027.1 2,083.6 2,120.8 IS Consumer credit 437.7 519.3 601.8 659.8 674.8 692.7 688.9 705.8 721.2 743.7 746.6 16 Bank loans n.e.c 490.2 552.9 592.6 654.2 637.6 654.4 665.6 685.7 686.5 701.9 713.5 17 Open market paper 36.8 58.5 72.2 62.9 68.1 73.8 73.5 77.8 80.3 85.4 95.5 18 Other 344.0 406.2 441.6 478.6 493.7 510.3 527.5 531.2 539.1 552.7 565.1 19 By borrowing sector 4,026.4 4,577.0 5,196.6 5,823.0 6,201.7 6,369.7 6,467.8 6,635.8 6,764.9 6,931.9 7,053.7 20 State and local governments 357.7 385.1 476.9 520.2 546.2 554.2 556.7 563.2 576.0 585.6 595.2 21 Households 1,811.6 2,038.2 2,314.5 2,614.6 2,787.3 2,864.3 2,892.1 2,982.3 3,058.2 3,137.4 3,183.8 22 Nonfinancial business 1,857.1 2,153.7 2,405.2 2,688.3 2,868.2 2,951.2 3,019.0 3,090.2 3,130.7 3,208.9 3,274.6 23 Farm 188.4 187.9 173.4 156.6 148.5 145.5 141.3 143.9 143.6 141.1 140.1 24 Nonfarm noncorporate 645.8 769.0 898.3 1,001.6 1,076.4 1,109.4 1,131.7 1,148.9 1,167.3 1,193.3 1,213.6 25 Corporate 1,022.9 1,196.8 1,333.5 1,530.1 1,643.3 1,696.3 1,746.0 1,797.4 1,819.9 1,874.5 1,920.9 26 Foreign credit market debt held in United States 227.3 235.1 234.7 236.2 237.0 242.3 243.2 244.4 244.6 248.2 248.4 27 Bonds 64.2 68.0 71.8 74.8 75.9 81.6 85.4 85.2 86.5 88.3 90.3 28 Bank loans n.e.c 37.4 30.8 27.9 26.9 24.2 23.3 22.8 22.4 22.7 21.5 21.1 29 Open market paper 21.5 27.7 33.9 37.4 40.6 41.2 42.5 44.0 46.3 50.9 55.5 30 U.S. government loans 104.1 108.6 101.1 97.1 96.3 96.1 92.4 92.7 89.1 87.5 81.5 31 Total domestic plus foreign 5,431.6 6,188.8 7,031.7 7,874.7 8,336.4 8,572.3 8,714.1 8,902.4 9,073.4 9,297.9 9,457.9 Financial sectors 32 Total credit market debt owed by financial sectors 857.9 1,006.2 1,206.2 1,544.7 1,783.8 1,862.8 1,897.7 1,969.7 2,027.3 2,117.7 2,196.8 By instrument 33 U.S. government related 456.7 531.2 632.7 844.2 981.6 1,026.5 1,050.6 1,076.9 1,116.3 1,164.0 1,209.0 34 Sponsored credit agency securities 206.8 237.2 257.8 273.0 283.7 303.2 313.5 317.9 328.5 348.1 364.3 35 Mortgage pool securities 244.9 289.0 368.9 565.4 692.9 718.3 732.1 754.0 782.8 810.9 839.7 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 401.2 475.0 573.4 700.5 802.1 836.3 847.1 892.8 911.1 953.8 987.8 38 Corporate bonds 115.8 148.9 197.5 268.4 324.2 335.6 352.2 367.1 375.6 386.3 393.1 39 Mortgages 2.1 2.5 2.7 2.7 2.9 3.1 3.1 3.1 3.1 3.0 3.1 40 Bank loans n.e.c 28.9 29.5 32.1 36.1 42.2 40.8 31.7 34.3 32.9 34.2 30.6 41 Open market paper 195.5 219.5 252.4 284.6 312.7 323.8 330.6 353.4 358.0 377.4 397.4 42 Loans from Federal Home Loan Banks... 59.0 74.6 88.8 108.6 120.1 133.1 129.5 134.8 141.6 152.8 163.8 43 Total, by sector 857.9 1,006.2 1,206.2 1,544.7 1,783.8 1,862.8 1,897.7 1,969.7 2,027.3 2,117.7 2,196.8 44 Sponsored credit agencies 211.8 242.2 263.9 278.7 288.7 308.2 318.5 322.9 333.5 353.1 369.3 45 Mortgage pools 244.9 289.0 368.9 565.4 692.9 718.3 732.1 754.0 782.8 810.9 839.7 46 Private financial sectors 401.2 475.0 573.4 700.5 802.1 836.3 847.1 892.8 911.1 953.8 987.8 47 Commercial banks 76.8 84.1 79.2 75.6 78.6 82.7 76.4 77.2 76.6 78.8 78.9 48 Bank affiliates 71.0 86.6 101.2 101.3 109.5 104.2 103.5 106.6 106.4 105.6 109.3 49 Savings and loan associations 73.9 93.2 115.5 145.1 165.0 180.0 176.1 186.8 197.8 218.7 230.7 50 Finance companies 171.7 193.2 246.9 308.1 340.7 359.1 369.6 392.5 395.1 406.0 420.4 51 REITs 3.5 4.3 5.6 6.5 6.8 7.3 7.6 8.0 7.6 9.1 9.3 52 CMO issuers 4.2 13.5 25.0 64.0 101.6 103.1 113.9 121.8 127.5 135.7 139.3 All sectors 53 Total credit market debt 6,289.5 7,195.0 8,237.9 9,419.4 10,120.2 10,435.1 10,611.8 10,872.1 11,100.8 11,415.6 11,654.7 54 U.S. government securities 1,629.4 1,902.8 2,227.0 2,653.8 2,874.4 2,981.8 3,048.8 3,094.2 3,175.2 3,276.7 3,359.7 55 State and local obligations 471.7 522.1 658.4 689.2 715.5 723.7 727.5 734.8 747.6 756.8 764.9 56 Corporate and foreign bonds 603.0 686.0 812.1 1,007.4 1,143.9 1,181.4 1,227.1 1,271.3 1,303.6 1,336.0 1,365.2 5/ Mortgages 1,825.4 2,051.4 2,289.8 2,617.0 2,871.1 2,953.8 2,998.4 3,084.7 3,151.7 3,233.3 3,289.3 58 Consumer credit 437.7 519.3 601.8 659.8 674.8 692.7 688.9 705.8 721.2 743.7 746.6 59 Bank loans n.e.c 556.5 613.2 652.6 717.2 704.0 718.4 720.1 742.4 742.1 757.5 765.2 60 Open market paper 253.8 305.7 358.5 384.9 421.4 438.8 446.7 475.3 484.6 513.6 548.4 61 Other loans 512.1 594.4 637.6 690.1 715.1 744.5 754.4 763.7 774.7 797.9 815.4 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 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998833 11998844 11998855 11998866 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Total funds advanced in credit markets to domestic nonfinancial sectors 5,204.3 5,953.7 6,797.0 7,638.4 8,099.4 8,330.0 8,471.0 8,658.1 8,828.8 9,049.7 9,209.4 By public agencies and foreign 7. Total held 1,101.7 1,259.2 1,457.5 1,791.2 1,965.1 2,036.2 2,092.2 2,138.8 2,188.3 2,269.9 2,343.9 3 U.S. government securities 339.0 377.9 421.8 491.2 525.6 559.4 592.7 607.1 610.3 644.2 662.1 4 Residential mortgages 367.0 423.5 518.2 712.3 834.6 862.0 880.6 906.1 934.9 966.0 995.1 5 FHLB advances to savings and loans 59.0 74.6 88.8 108.6 120.1 133.1 129.5 134.8 141.6 152.8 163.8 6 Other loans and securities 336.8 383.1 428.7 479.0 484.8 481.8 489.4 490.8 501.6 506.9 522.9 7 Total held, by type of lender 1,101.7 1,259.2 1,457.5 1,791.2 1,965.1 2,036.2 2,092.2 2,138.8 2,188.3 2,269.9 2,343.9 8 U.S. government 212.8 229.7 245.7 252.3 235.2 233.0 231.4 227.0 224.3 220.3 222.8 9 Sponsored credit agencies and mortgage pools ... 482.0 556.3 657.8 867.8 1,003.7 1,044.9 1,064.0 1,091.6 1,128.9 1,176.1 1,223.0 10 Monetary authority 159.2 167.6 186.0 205.5 219.6 230.1 224.9 229.7 230.8 240.6 235.4 11 Foreign 247.7 305.6 367.9 465.7 506.7 528.2 572.0 590.5 604.4 632.9 662.7 Agency and foreign debt not in line 1 12 Sponsored credit agencies and mortgage pools .. • 456.7 531.2 632.7 844.2 981.6 1,026.5 1,050.6 1,076.9 1,116.3 1,164.0 1,209.0 13 Foreign 227.3 235.1 234.7 236.2 237.0 242.3 243.2 244.4 244.6 248.2 248.4 Private domestic holdings 14 Total private holdings 4,786.6 5,460.8 6,207.0 6,927.6 7,353.0 7,562.5 7,672.5 7,840.5 8,001.3 8,192.0 8,323.0 15 U.S. government securities 1,290.4 1,524.9 1,805.2 2,162.6 2,348.8 2,422.4 2,456.0 2,487.0 2,564.9 2,632.6 2,697.6 16 State and local obligations 471.7 522.1 658.4 689.2 715.5 723.7 727.5 734.8 747.6 756.8 764.9 17 Corporate and foreign bonds 441.7 476.8 517.6 601.7 663.4 688.1 716.3 740.6 756.9 769.1 782.1 18 Residential mortgages 992.2 1,096.5 1,185.1 1,254.7 1,314.6 1,351.1 1,366.0 1,413.6 1,449.6 1,480.8 1,491.9 19 Other mortgages and loans 1,649.6 1,915.2 2,129.5 2,328.1 2,430.7 2,510.2 2,536.2 2,599.2 2,623.8 2,705.4 2,750.2 20 LESS: Federal Home Loan Bank advances 59.0 74.6 88.8 108.6 120.1 133.1 129.5 134.8 141.6 152.8 163.8 Private financial intermediation 21 Credit market claims held by private financial institutions 4,111.2 4,691.0 5,264.4 6,010.1 6,434.5 6,594.8 6,728.4 6,895.8 6,999.4 7,169.6 7,294.3 ?.?, Commercial banking 1,622.1 1,791.1 1,978.5 2,173.2 2,249.0 2,309.9 2,322.7 2,378.2 2,417.3 2,465.9 2,490.1 73 Savings institutions 944.0 1,092.8 1,178.4 1,283.6 1,397.3 1,436.2 1,441.7 1,484.6 1,513.0 1,544.4 1,551.9 24 Insurance and pension funds 1,093.5 1,215.3 1,364.2 1,546.0 1,716.0 1,758.0 1,823.3 1,879.5 1,925.0 1,980.5 2,040.1 25 Other finance 451.6 591.7 743.4 1,007.1 1,072.2 1,090.7 1,140.7 1,153.5 1,144.0 1,179.0 1,212.2 7,6 Sources of funds 4,111.2 4,691.0 5,264.4 6,010.1 6,434.5 6,594.8 6,728.4 6,895.8 6,999.4 7,169.6 7,294.3 27 Private domestic deposits and RPs 2,389.8 2,711.5 2,922.1 3,182.6 3,226.9 3,320.6 3,376.5 3,409.8 3,438.1 3,519.0 3,530.3 28 Credit market debt 401.2 475.0 573.4 700.5 802.1 836.3 847.1 892.8 911.1 953.8 987.8 29 Other sources 1,320.2 1,504.5 1,768.9 2,127.0 2,405.4 2,437.9 2,504.8 2,593.2 2,650.1 2,696.9 2,776.1 30 Foreign funds -23.0 -14.1 5.6 18.6 52.7 62.2 45.9 62.3 51.9 71.5 69.3 31 Treasury balances 11.5 15.5 25.8 27.5 33.0 21.6 23.5 32.6 34.2 29.0 14.1 32 Insurance and pension reserves 1,036.1 1,160.8 1,289.5 1,427.9 1,556.7 1,597.2 1,662.4 1,718.6 1,758.0 1,804.6 1,862.0 33 Other, net 295.6 342.2 448.0 653.0 763.1 756.8 773.1 779.7 806.0 791.8 830.7 Private domestic nonfinancial investors 34 Credit market claims 1,076.6 1,244.8 1,516.0 1,618.1 1,720.6 1,804.0 1,791.2 1,837.5 1,913.0 1,976.1 2,016.5 35 U.S. government securities 548.6 663.6 830.7 915.1 971.0 1,012.3 1,022.4 1,036.2 1,102.4 1,155.4 1,183.9 36 Tax-exempt obligations 170.0 196.3 235.9 222.3 255.9 268.3 265.1 271.9 281.2 288.4 292.1 37 Corporate and foreign bonds 45.4 44.5 47.6 80.1 80.6 84.8 82.7 88.9 83.5 72.1 80.5 38 Open market paper 68.4 72.4 118.0 114.3 114.9 136.3 119.1 139.4 143.9 151.2 156.8 39 Other 244.3 268.0 283.8 286.2 298.2 302.3 301.9 301.1 302.0 309.1 303.2 40 Deposits and currency 2,566.4 2,891.7 3,112.5 3,393.4 3,437.0 3,547.6 3,598.3 3,637.6 3,666.3 3,753.4 3,763.4 41 Currency 150.9 159.6 171.9 186.3 192.4 205.4 204.0 209.9 213.4 220.1 219.1 42 Checkable deposits 350.9 378.8 419.7 512.9 487.5 510.4 491.0 506.0 490.7 522.6 486.7 43 Small time and savings accounts 1,542.9 1,693.4 1,831.9 1,948.3 1,983.4 2,017.1 2,070.7 2,105.9 2,117.0 2,137.7 2,154.3 44 Money market fund shares 169.5 218.5 227.3 268.9 286.4 297.1 322.1 310.4 308.6 320.9 347.0 45 Large time deposits 247.7 332.1 339.8 328.4 326.0 355.1 350.0 343.1 376.9 387.4 390.0 46 Security RPs 78.8 88.7 103.3 124.1 143.6 141.0 142.6 144.4 144.9 150.5 152.3 47 Deposits in foreign countries 25.7 20.6 18.5 24.5 17.8 21.6 17.8 17.8 14.7 14.4 14.0 48 Total of credit market instruments, deposits, and currency 3,643.0 4,136.5 4,628.5 5,011.4 5,157.6 5,351.6 5,389.5 5,475.0 5,579.3 5,729.6 5,780.0 49 Public holdings as percent of total 20.2 20.3 20.7 22.7 23.5 23.7 24.0 24.0 24.1 24.4 24.7 50 Private financial intermediation (in percent) 85.8 85.9 84.8 86.7 87.5 87.2 87.6 87.9 87.4 87.5 87.6 51 Total foreign funds 224.7 291.5 373.5 484.2 559.4 590.5 617.8 652.8 656.3 704.3 731.9 MEMO: Corporate equities not included above 52 Total market value 2,134.0 2,158.2 2,824.5 3,362.0 4,316.0 3,318.5 3,500.2 3,619.7 3,572.5 3,600.9 3,732.4 53 Mutual fund shares 112.1 136.7 240.2 413.5 525.1 460.1 479.2 486.8 478.1 478.3 486.3 54 Other equities 2,021.9 2,021.5 2,584.3 2,948.5 3,790.9 2,858.3 3,021.0 3,133.0 3,094.4 3,122.6 3,246.0 55 Holdings by financial institutions 612.0 615.6 800.0 972.2 1,306.7 1,011.1 1,079.4 1,131.1 1,126.9 1,156.3 1,226.2 56 Other holdings 1,522.0 1,542.6 2,024.5 2,389.8 3,009.3 2,307.4 2,420.8 2,488.7 2,445.6 2,444.6 2,506.2 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 • September 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 Oct. Nov. Dec. Jan. Feb. Mar.' Apr.' May' June 1 Industrial production 125.1 129.8 137.2 139.4 139.9 140.4 140.8 140.5 140.7 141.6 141.4 141.1 Market groupings 2 Products, total 133.3 81.1 145.9 148.1 148.4 149.4 150.1 150.0 150.5 151.5 151.4 151.2 i Final, total 132.5 136.8 144.3 146.4 146.8 147.7 148.2 148.6 148.9 150.0 149.9 149.7 4 Consumer goods 124.0 127.7 133.9 136.4 136.8 138.2 138.5 138.7 138.4 139.2 138.7 138.3 5 Equipment 143.6 148.8 158.2 154.0 159.9 160.4 161.1 161.6 162.8 164.3 164.8 164.7 6 Intermediate 136.2 143.5 151.5 154.0 154.2 155.0 156.6 155.1 156.1 156.6 156.6 156.6 7 Materials 113.8 118.2 125.3 127.5 128.3 128.3 128.1 127.4 127.3 128.1 127.8 127.3 Industry groupings 8 Manufacturing 129.1 134.6 142.8 145.3 145.8 146.3 147.2 146.8 147.0 147.8 147.7 147.7 Capacity utilization (percent)2 9 Manufacturing 79.7 81.1 83.5 84.3 84.4 84.4 84.7 84.3 84.1 84.4 84.1 83.8 10 Industrial materials industries 78.6 80.5 83.7 84.7 85.1 84.9 84.6 84.0 83.7 84.1 83.8 83.3 11 Construction contracts (1982 = 100)3 158.0 164.0 161.0 164.0 158.0 163.0 155.0 148.0 150.0 163.0 159.0 157.0 12 Nonagricultural employment, total4 120.7 124.1 128.6 129.1 129.5 129.9 130.3 130.6 130.8 131.1 131.3 131.6 13 Goods-producing, total 100.9 101.8 105.0 104.3 104.6 104.8 105.3 105.3 105.4 105.5 105.5 105.4 14 Manufacturing, total 96.3 96.8 99.2 99.1 99.3 99.5 99.8 99.8 100.0 99.9 99.9 99.8 15 Manufacturing, production-worker 91.1 91.9 94.3 94.2 94.5 94.7 94.9 95.0 95.1 95.0 95.0 94.8 lb Service-producing 129.0 133.4 138.5 139.5 140.0 140.4 140.8 141.2 141.5 141.8 142.2 142.6 17 Personal income, total 219.4 235.0 252.8' 260. r 259.3' 261.7' 265.8 268.7' 271.3 272.9 273.4 274.2 18 Wages and salary disbursements 210.8 226.3 244.4' 251.2' 251.7' 253.2' 256.1' 257.3' 259.5 261.7 261.8 263.2 19 Manufacturing 177.4 183.8 196.5r 202.7' 201.4' 201.1' 203.C 204.0' 207.5 205.7 205.8 206.6 20 Disposable personal income 218.5' 232.4' 252. lr 259.9' 259.0' 261.4' 264^ 268.1' 270.3 269.6 271.6 273.2 21 Retail sales 199.3 210.8 225. r 229.6 232.4 231.8 233.2 232.2 232.4 235.5 235.3 234.5 Prices7 22 Consumer (1982-84 = 100) 109.6 113.6 118.3 120.2 120.3 120.5 121.1 121.6 122.3 123.1 123.8 124.1 23 Producer finished goods (1982 = 100) ... 103.2 105.4 108.0 109.4 109.8 110.0 111.1 111.7 112.2 113.0 114.2 114.1 1. A major revision of the industrial production index and the capacity 5. Based on data in Survey of Current Business (U.S. Department of Comutilization rates was released in July 1985. See "A Revision of the Index of merce). Industrial Production" and accompanying tables that contain revised indexes 6. Based on Bureau of Census data published in Survey of Current Business. (1977=100) through December 1984 in the FEDERAL RESERVE BULLETIN, vol. 71 7. Data without seasonal adjustment, as published in Monthly Labor Review. (July 1985), pp. 487-501. The revised indexes for January through June 1985 were Seasonally adjusted data for changes in the price indexes may be obtained from shown in the September BULLETIN. the Bureau of Labor Statistics, U.S. Department of Labor. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of 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 Nov. Dec. Jan. Feb. Mar. Apr. May' June HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 182,822 185,010 186,837 187,471 187,618 187,859 187,979 188,102 188,228 188,377 188,518 2 Labor force (including Armed Forces)1 120,078 122,122 123,893 124,737 124,779 125,643 125,383 125,469 125,863 125,806 126,291 3 Civilian labor force 117,834 119,865 121,669 122,510 122,563 123,428 123,181 123,264 123,659 123,610 124,102 4 Nonagricultural industries 106,434 109,232 111,800 112,709 112,816 113,411 113,630 113,930 114,009 114,102 114,445 5 Agriculture 3,163 3,208 3,169 3,238 3,193 3,300 3,223 3,206 3,104 3,112 3,096 Unemployment 6 Number 8,237 7,425 6,701 6,563 6,554 6,716 6,328 6,128 6,546 6,395 6,561 7 Rate (percent of civilian labor force) 7.0 6.2 5.5 5.4 5.3 5.4 5.1 5.0 5.3 5.2 5.3 8 Not in labor force 62,744 62,888 62,944 62,734 62,839 62,216 62,596 62,633 62,365 62,571 62,227 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 99,525 102,310 106,039 106,824 107,097 107,442 107,711 107,888 108,ior 108,308 108,488 10 Manufacturing 18,965 19,065 19,536 19,557 19,589 19,648 19,648 19,680 19,672'' 19,661 19,630 11 Mining 777 721 733 712 711 711 711 714 720 722 710 12 Contract construction 4,816 4,998 5,294 5,191 5,213 5,267 5,270 5,252 5,279' 5,278 5,270 13 Transportation and public utilities 5,255 5,385 5,584 5,616 5,634 5,654 5,667 5,666 5,682 5,700 5,721 14 Trade 23,683 24,381 25,362 25,386 25,453 25,553 25,631 25,685 25,695' 25,746 25,754 15 Finance 6,283 6,549 6,679 6,726 6,744 6,746 6,763 6,774 6,776' 6,790 6,801 16 Service 23,053 24,196 25,464 26,111 26,230 26,318 26,434 26,520 ?6,651' 26,728 26,887 17 Government 16,693 17,015 17,387 17,525 17,523 17,545 17,587 17,597 17,626' 17,683 17,715 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 • September 1989 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1988 1989 1988 1989 1988 1989 SSeerriieess Q3 Q4 Ql' Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql Q2 Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 11 TToottaall iinndduussttrryy 111333888...444 111333999...999 111444000...777 141.4 111666555...222 111666666...333 111666777...555 168.7 888333...888 888444...111 888444...000 83.8 22 MMiinniinngg 111000333...999 111000444...222 111000111...888 102.2 111222666...333 111222555...777 111222555...111 124.7 888222...333 888222...999 888111...333''' 81.8 33 UUttiilliittiieess 111111555...111 111111444...333 111111666...000 116.7 111444000...444 111444000...777 111444111...000 141.4 888111...999 888111...333 888222...333''' 82.6 111444444...000 111444555...888 111444777...000 147.7 111777111...555 111777222...888 111777444...333 175.7 888444...444 888444...444''' 84.1 44 MMaannuuffaaccttuurriinngg 888444...000 55 PPrriimmaarryy pprroocceessssiinngg 1 1 1 1 1 1 2 5 2 5 2 5 5 4 5 4 5 4 . . . . . . 9 9 9 9 9 9 1 1 1 1 1 1555 222 666 777 ... ... 777 777 111 111 555 222 888 777... ... 888 666 1 1 2 6 7 0. . 1 3 111 111 888 444 888 333 ... ... 111 999 1 1 1 1 1 1888 444 999 555 ... ... 555 222 1 1 1 1 1 1999 444 111 666 ... ... 000 555 1 1 4 9 7 2 . . 8 6 888888777222......555444 8 8 8 8 8 8222 777 ... ... 777 999 8 8 8 8 8 8333 777 ... ... 000 333 ''' 86.1 83.2 66 AAddvvaanncceedd pprroocceessssiinngg 111222666...555 111222888...000 111222777...666 127.7 111555000...111 111555000...888 111555111...777 152.6 888444...333 888444...999 888444...111 83.7 77 MMaatteerriiaallss 111333777...111 111333999...222 111333888...666 138.2 111777111...333 111666999...000 111777000...111 171.3 888111...666 888222...444 888111...555 88 DDuurraabbllee ggooooddss 111 999 333 222 222 ... ... 777 888 111 999 333 444 555 ... ... 888 444 111 999 333 222 666 ... ... 333 333 1 9 3 0 7 . . 5 2 1 1 1 1 1 1 000 444 999 999 ... ... 555 888 111 111 000 555 999 111 ... ... 888 222 111 111 111 555 000 222... ... 777 222 1 15 1 4 0 . . 2 6 8 8 8 8 8 8 444 888 ... ... 888 666 888 888 666 999 ... ... 333 555 888 888 333 999 ... ... 888 333 8 8 0 1 . . 7 8 99 MMeettaall mmaatteerriiaallss 111333555...333 111333888...111 111333999...222 140.2 111555000...222 111555111...888 111555333...555 155.3 999000...000 999111...000 999000...777 88.9 1100 NNoonndduurraabbllee ggooooddss 111444888...999 111444888...666 111444888...444 111555000...777 111555222...333 111555444...000 999888...888 999777...666 999666...444 90.3 1111 TTeexxttiillee,, ppaappeerr,, aanndd cchheemmiiccaall 111333999...444 111444444...111 111444555...444 111555777...444 111555999...333 111666111...444 888888...666 999000...555 999000...111 14 Energy materials 111000222...555 111000222...000 111000000...777 101.2 111111999...000 111111888...777 111111888...444 118.3 888666...000 888666...000 888555...(((KKK 85.5 Previous cycle2 Latest cycle3 1988 1988 1989 High Low High Low June Oct. Nov. Dec. Jan. Feb. Mar.' Apr.' May' June Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 83.0 84.0 84.1 84.3 84.3 83.9 83.8 84.1 83.8 16 Mining 92.8 87.8 95.2 76.9 81.2 81.9 83.3 83.6 82.2 80.6 81.2 82.2 82.0 81.2 17 Utilities 95.6 82.9 88.5 78.0 80.8 81.0 80.8 82.0 80.9 82.6 83.3 83.1 82.9 81.8 18 Manufacturing 87.7 69.9 86.5 68.0 83.3 84.3 84.4 84.4 84.7 84.3 84.1 84.4 84.1 83.8 19 Primary processing 91.9 68.3 89.1 65.0 86.6 87.9 88.1 87.9 88.4 87.0 86.4 86.6 86.1 85.7 20 Advanced processing.. 86.0 71.1 85.1 69.5 81.7 82.6 82.6 82.8 83.1 83.0 83.0 83.4 83.2 82.9 21 Materials 92.0 70.5 89.1 68.5 83.2 84.7 85.1 84.9 84.6 84.0 83.8 84.2 84.2 22 Durable goods 91.8 64.4 89.8 60.9 80.7 82.4 82.7 82.1 82.1 81.5 80.9 81.1 80.6 80.3 23 Metal materials 99.2 67.1 93.6 45.7 80.8 87.3 86.9 84.6 86.1 83.8 81.5 82.8 80.9 81.7 24 Nondurable goods 91.1 66.7 88.1 70.7 87.4 89.3 89.4 89.8 90.1 89.0 88.8 8899..22 8888..99 88.7 25 Textile, paper, and chemical 92.8 64.8 89.4 68.8 88.6 90.9 90.9 91.8 91.5 90.3 90.2 90.7 90.2 26 Paper 98.4 70.6 97.3 79.9 97.1 97.8 96.7 98.4 98.1 95.8 95.3 94.7 93.5 27 Chemical 92.5 64.4 87.9 63.5 87.0 90.2 90.5 90.7 90.7 89.8 89.7 90.1 89.5 28 Energy materials 94.6 86.9 94.0 82.3 84.9 85.3 86.2 86.5 84.9 84.9 85.4 86.2 85.9 84.6 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 p p r o o r - - a 1 v 98 g 8 . tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. Mayp Junec Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 137.2 136.5 138.0 138.5 138.6 139.4 139.9 140.4 140.8 140.5 140.7 141.6 141.4 141.1 2 Products 57.72 145.9 145.3 146.5 147.3 147.4 148.1 148.4 149.4 150.1 150.0 150.5 151.5 151.4 151.2 3 Final products 44.77 144.3 144.0 145.0 145.8 145.8 146.4 146.8 147.7 148.2 148.6 148.9 150.0 149.9 149.7 4 Consumer goods 25.52 133.9 133.0 134.2 135.0 134.8 136.4 136.8 138.2 138.5 138.7 138.4 139.2 138.7 138.3 5 Equipment 19.25 158.2 158.5 159.4 160.1 160.4 159.7 159.9 160.4 161.1 161.6 162.8 164.3 164.8 164.7 6 Intermediate products 12.94 151.5 150.0 151.6 152.3 152.9 154.0 154.2 155.0 156.6 155.1 156.1 156.6 156.6 156.6 7 Materials 42.28 125.2 124.5 126.4 126.5 126.5 127.5 128.3 128.3 128.1 127.4 127.3 128.1 127.8 127.3 Consumer goods 8 Durable consumer goods 6.89 125.3 125.3 125.3 125.7 126.3 129.3 129.2 131.9 131.5 131.6 130.1 131.8 130.9 129.8 9 Automotive products 2.98 124.9 127.1 124.4 124.2 126.4 128.9 129.5 134.5 132.5 131.6 128.9 131.2 128.1 125.5 10 Autos and trucks 1.79 122.7 125.3 120.8 123.1 124.8 128.3 129.5 138.0 135.6 133.1 128.3 131.7 127.4 123.6 11 Autos, consumer 1.16 93.4 99.0 93.8 93.0 97.7 101.3 101.0 105.1 99.6 96.0 95.0 98.8 96.0 91.4 12 Trucks, consumer .63 177.0 174.1 170.8 179.0 175.3 178.4 182.4 199.1 202.3 201.9 190.0 192.8 185.5 183.3 13 Auto parts and allied goods 1.19 128.1 129.7 129.9 125.9 128.8 129.8 129.5 129.3 127.9 129.4 129.8 130.5 129.2 128.3 14 Home goods 3.91 125.6 123.9 125.9 126.8 126.2 129.7 128.9 130.0 130.7 131.6 131.1 132.2 133.0 133.2 15 Appliances, A/C and TV 1.24 144.1 138.0 143.3 146.5 144.9 154.4 150.4 151.0 151.0 153.9 151.6 151.7 151.3 152.7 16 Appliances and TV 1.19 143.6 137.1 143.8 146.1 143.7 151.9 148.9 150.0 149.5 153.0 152.3 152.5 151.4 17 Carpeting and furniture .96 136.2 135.9 136.6 137.2 137.1 138.8 139.8 140.5 141.1 141.3 140.7 142.8 144.0 18 Miscellaneous home goods 1.71 106.3 107.0 107.4 106.8 106.6 106.7 107.3 108.9 110.1 110.1 110.9 112.3 113.7 19 Nondurable consumer goods 18.63 137.1 135.8 137.5 138.5 138.0 139.0 139.7 140.5 141.1 141.4 141.4 141.9 141.6 141.5 20 Consumer staples 15.29 144.9 143.5 145.3 146.6 145.8 147.0 147.9 148.9 149.4 149.7 149.9 150.4 150.1 149.9 21 Consumer foods and tobacco 7.80 140.9 139.3 141.1 141.3 141.1 142.4 143.7 144.5 144.8 144.3 143.3 144.2 144.9 22 Nonfood staples 7.49 149.1 147.9 149.6 152.1 150.7 151.8 152.2 153.6 154.2 155.4 156.9 156.9 155.5 155.1 23 Consumer chemical products 2.75 180.0 179.5 181.8 183.8 185.0 186.1 185.7 186.8 187.6 187.8 188.9 187.4 186.5 24 Consumer paper products 1.88 163.4 162.8 164.0 165.3 166.3 167.1 167.8 169.0 174.2 177.0 180.4 180.9 179.5 25 Consumer energy 2.86 110.0 107.7 109.3 113.0 107.6 108.9 109.8 111.6 109.1 110.1 110.7 112.0 109.9 110.5 26 Consumer fuel 1.44 95.4 93.0 94.6 95.5 92.7 95.3 94.1 96.3 96.7 95.0 95.6 97.3 93.5 27 Residential utilities 1.42 124.8 122.6 124.4 130.9 122.8 122.7 125.8 127.1 121.7 125.4 126.1 127.0 Equipment 28 Business and defense equipment 18.01 163.3 163.5 164.6 165.2 165.6 165.1 165.5 166.2 167.1 167.9 168.9 170.2 170.8 170.5 29 Business equipment 14.34 157.6 158.1 159.3 160.2 160.8 160.2 161.2 162.6 163.8 165.0 166.3 167.7 168.4 168.0 30 Construction, mining, and farm 2.08 71.9 72.4 73.6 73.1 74.3 74.2 74.5 74.6 74.3 75.6 76.9 77.1 76.6 76.8 31 Manufacturing 3.27 131.3 130.3 132.4 134.0 135.8 136.2 136.2 137.0 136.3 137.8 138.6 139.7 140.4 140.9 32 Power 1.27 89.4 88.3 89.8 90.9 92.2 91.5 92.1 91.8 92.8 92.7 93.0 93.6 93.1 92.5 33 Commercial 5.22 245.2 247.1 248.2 249.8 248.7 245.4 247.0 248.9 252.4 254.3 257.6 260.1 262.1 262.3 34 Transit 2.49 114.9 115.7 115.9 115.2 116.8 120.3 122.3 124.9 125.7 125.2 123.9 124.8 124.0 120.8 35 Defense and space equipment 3.67 185.9 184.6 184.9 184.9 184.5 184.0 182.2 180.5 180.0 179.3 178.7 179.9 180.1 180.4 Intermediate products 36 Construction supplies 5.95 138.6 137.6 138.4 138.1 138.4 140.0 140.7 141.4 142.3 139.5 139.3 139.7 139.9 139.9 37 Business supplies 6.99 162.5 160.6 162.8 164.4 165.2 165.9 165.7 166.7 168.8 168.4 170.4 171.0 170.8 38 General business supplies 5.67 168.5 165.9 168.6 170.6 171.8 172.3 172.9 173.8 175.9 175.4 177.4 178.4 178.1 39 Commercial energy products 1.31 136.3 137.5 137.6 137.7 136.7 138.2 134.3 135.8 138.2 138.3 140.3 138.8 139.3 Materials 40 Durable goods materials 20.50 135.4 134.9 136.8 136.6 137.8 138.9 139.8 139.0 139.4 138.6 137.9 138.6 138.2 137.9 41 Durable consumer parts 4.92 108.9 110.3 110.1 109.8 111.0 111.4 113.9 112.5 111.7 112.1 110.7 110.4 110.5 108.7 42 Equipment parts 5.94 171.7 171.6 174.1 173.5 174.0 174.9 175.0 174.1 175.2 175.2 175.3 176.6 176.7 177.2 43 Durable materials n.e.c 9.64 126.7 124.8 127.5 127.6 129.2 130.8 131.3 130.9 131.5 129.7 128.8 129.5 128.6 128.6 44 Basic metal materials 4.64 95.9 93.7 98.4 97.3 100.3 101.1 101.4 99.8 100.8 98.4 95.9 97.0 95.6 96.1 45 Nondurable goods materials 10.09 132.0 130.1 132.8 133.1 132.6 134.7 135.1 136.3 137.1 135.9 136.0 137.1 137.2 137.3 46 Textile, paper, and chemical materials 7.53 134.4 132.1 135.3 135.7 134.9 137.4 137.9 139.1 139.9 138.6 139.0 140.3 140.1 140.3 47 Textile materials 1.52 109.9 107.5 108.5 110.1 109.2 109.5 110.1 110.0 112.1 110.7 111.8 114.6 115.7 48 Pulp and paper materials 1.55 147.3 145.4 150.3 148.3 148.1 148.4 147.2 150.3 150.4 147.5 147.3 146.9 145.7 49 Chemical materials 4.46 138.3 135.8 139.2 140.0 139.0 143.1 144.2 145.1 145.7 145.0 145.4 146.8 146.4 50 Miscellaneous nondurable materials ... 2.57 124.9 124.2 125.6 125.6 125.9 126.6 127.0 128.0 129.1 128.0 127.2 127.6 51 Energy materials 11.69 101.5 101.3 102.7 103.2 101.5 101.3 102.3 102.6 100.5 100.5 101.0 102.0 101.5 100.0 52 Primary energy 7.57 106.3 105.6 106.8 106.2 106.8 106.0 108.6 107.6 105.2 104.4 103.7 104.5 103.2 53 Converted fuel materials 4.12 92.8 93.5 95.3 97.7 91.8 92.6 90.7 93.3 92.0 93.3 96.1 97.5 98.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • September 1989 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1988 1989 1977 Groups c S o I d C e pr t o io p n o r- a 1 v 98 g 8 . June July Aug. Sept. Oct. Nov. Dec Jan. Feb. Mar/ Apr. Mayp June' Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 107.5 106.8 108.1 109.0 107.2 107.2 108.1 108.9 107.2 106.8 107.5 108.2 107.9 106.6 2 Mining 9.83 103.4 103.0 104.3 103.8 103.7 103.1 104.7 104.9 103.0 100.9 101.5 102.6 102.3 101.2 3 Utilities 5.% 114.3 113.2 114.4 117.8 113.0 113.9 113.7 115.4 114.0 116.5 117.5 117.4 117.1 115.7 4 Manufacturing 84.21 142.7 142.1 143.6 144.0 144.4 145.3 145.8 146.3 147.2 146.8 147.0 147.8 147.7 147.7 5 Nondurable 35.11 143.9 142.6 144.6 145.1 145.3 146.3 146.7 147.1 148.5 148.1 148.6 149.2 149.2 149.3 6 Durable 49.10 141.9 141.7 142.9 143.2 143.8 144.6 145.2 145.7 146.2 145.9 145.8 146.9 146.7 146.5 Mining 7 Metal 10 .50 93.2 82.2 94.0 96.6 99.1 101.6 104.6 111.9 106.9 98.6 98.1 95.6 8 Coal 11.12 1.60 137.9 126.9 141.5 137.2 142.2 138.5 149.7 155.1 144.7 134.7 137.7 145.5 137.1 128.5 9 Oil and gas extraction 13 7.07 92.9 95.8 93.3 93.2 92.0 91.5 90.8 88.9 88.9 89.5 89.6 89.5 90.8 10 Stone and earth minerals 14 .66 139.9 137.4 140.2 141.3 139.7 142.8 144.0 149.4 150.8 142.5 143.5 144.5 145.2 Nondurable manufactures 11 Foods 7.96 142.7 141.3 143.3 143.3 143.2 144.0 145.7 145.8 146.6 146.3 145.4 146.4 12 Tobacco products .62 105.2 104.5 100.6 105.1 105.0 105.4 102.4 107.0 105.0 104.7 101.5 13 Textile mill products 2.29 116.2 114.3 117.1 116.4 116.2 117.0 117.2 117.9 120.2 119.4 119.7 122.3 123.4 14 Apparel products 2.79 109.1 109.3 109.4 108.9 109.9 109.5 110.1 108.8 110.2 110.2 109.9 110.6 15 Paper and products 3.15 150.3 148.6 152.3 151.0 150.9 151.8 150.7 151.7 153.8 151.7 151.7 150.7 150.3 16 Printing and publishing 4.54 184.2 182.3 184.9 186.7 188.0 188.1 188.5 188.0 193.0 194.6 198.5 200.0 199.6 17 Chemicals and products 8.05 151.9 150.5 153.4 154.8 155.3 156.7 157.5 158.1 159.0 158.5 159.2 159.3 158.5 18 Petroleum products 2.40 96.0 94.1 95.0 96.0 93.7 96.3 95.0 98.0 98.0 96.3 97.0 97.3 95.4 97.3 19 Rubber and plastic products 2.80 174.4 174.4 175.4 175.3 175.3 176.9 177.5 177.5 175.9 175.0 176.4 176.2 176.9 20 Leather and products .53 59.5 58.9 59.1 59.4 59.9 61.0 61.5 60.2 62.9 62.9 61.2 61.4 59.6 Durable manufactures 21 Lumber and products 24 2.30 137.3 136.4 136.6 133.8 133.5 137.5 139.4 143.0 139.9 132.8 133.4 134.8 134.4 22 Furniture and fixtures 25 1.27 162.1 161.2 162.9 164.9 164.9 164.5 165.4 165.4 166.3 164.8 165.8 168.0 169.0 23 Clay, glass, and stone products. 32 2.72 122.6 123.4 122.2 122.6 122.6 123.3 124.7 125.1 126.6 125.4 125.5 124.7 125.3 24 Primary metals 33 5.33 89.2 87.5 91.5 90.8 93.1 94.2 92.7 90.0 93.2 91.1 88.4 90.1 87.7 25 Iron and steel 331.2 3.49 78.1 74.2 80.2 78.9 81.4 83.1 80.8 77.6 82.2 79.1 75.9 77.0 73.5 26 Fabricated metal products 34 6.46 120.9 120.4 121.7 122.1 122.5 122.6 124.6 125.1 124.5 124.5 123.8 123.1 123.8 123.4 27 Nonelectrical machinery 35 9.54 170.8 171.2 173.1 174.1 174.8 173.8 175.4 177.8 178.7 180.8 183.0 184.7 185.6 186.1 28 Electrical machinery 36 7.15 180.1 179.5 181.5 182.2 181.8 183.0 182.2 180.9 180.9 181.7 181.6 182.1 181.0 181.5 29 Transportation equipment 37 9.13 132.1 132.8 131.9 131.8 132.7 134.8 135.2 136.8 136.7 136.4 134.8 136.4 135.1 133.4 30 Motor vehicles and parts 371 5.25 117.2 119.1 116.6 117.5 118.5 121.7 122.9 125.5 124.9 123.4 120.4 122.0 119.1 116.1 31 Aerospace and miscellaneous transportation equipment 372-6.9 3.87 152.4 151.4 152.7 151.3 151.9 152.7 151.9 152.2 152.7 154.0 154.4 155.9 156.8 157.0 32 Instruments 38 2.66 154.3 153.0 156.4 156.8 157.8 159.9 160.4 159.1 161.0 161.3 161.8 163.0 164.8 165.0 33 Miscellaneous manufactures 39 1.46 107.1 107.6 107.8 108.3 108.5 107.7 109.0 110.9 112.2 110.0 112.5 115.3 116.3 Utilities 34 Electric Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total. 517.5 1,824.5 1,813.9 1,822.3 1,828.6 1,828.9 1.853.4 1,855.5 1,875.3 1,885.1 1,879.2 1,878.0 1.892.5 1,881.4 1874.6 36 Final 405.7 1,401.2 1,394.3 1,398.9 1,404.2 1,404.3 1.423.5 1,426.3 1,442.1 1,447.5 1,449.6 1,442.8 1.458.6 1,446.2 1441.1 37 Consumer goods. 272.7 902.4 893.6 895.6 900.4 897.2 915.0 918.4 934.4 935.6 934.3 928.0 937.8 927.2 924.3 38 Equipment 133.0 498.8 500.7 503.2 503.8 507.1 508.4 507.9 507.7 511.9 515.2 514.8 520.8 519.1 516.8 39 Intermediate 111.9 423.3 419.6 423.4 424.3 424.5 430.0 429.3 433.2 437.7 429.6 435.3 433.9 435.1 433.5 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.r Apr/ May Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,750 1,535 1,456 1,466 1,432 1,526 1,508 1,518 1,486 1,403 1,230 1,334 1,347 2 1-family 1,071 1,024 994 1,007 980 1,029 1,027 1,058 1,052 989 870 954 905 3 2-or-more-family 679 511 462 459 452 497 481 460 434 414 360 380 442 4 Started 1,805 1,621 1,488 1,459 1,463 1,532 1,567 1,577 1,678 1,465 1,409 1,343 1,309 5 1-family 1,180 1,146 1,081 1,076 1,039 1,136 1,138 1,141 1,199 1,029 981 1,029 977 6 2-or-more-family 626 474 407 383 424 3% 429 436 479 436 428 314 332 7 Under construction, end of period1 . 1,074 987 919 962 955 951 959 956 957 951 942 925 911 8 1-family 583 591 570 601 5% 597 603 603 602 594 586 580 572 9 2-or-more-family 490 397 350 361 359 354 356 353 355 357 356 345 339 10 Completed 1,756 1,669 1,530 1,539 1,536 1,516 1,429 1,539 1,537 1,610 1,459 1,553 1,436 11 1-family 1,120 1,123 1,085 1,074 1,092 1,088 1,037 1,108 1,141 1,189 1,050 1,111 1,044 12 2-or-more-family 636 546 445 465 444 428 392 431 396 421 409 442 392 13 Mobile homes shipped 244 233 218 223 224 216 227 225 232 212 207 198 221 Merchant builder activity in 1-family units 14 Number sold 748 672 675 712 691 718 650 669 700 621 555 609 635 15 Number for sale, end of period1 357 365 366 363 361 353 364 366 369 375 377 377 381 Price (thousands of dollars)2 Median 16 Units sold 92.2 104.7 113.3 110.0 116.6 112.9 110.4 121.0 113.0 118.0 123.0 117.6 120.0 Average 17 Units sold 112.2 127.9 139.0 140.6 142.7 137.3 137.3 147.7 138.6 145.3 149.0 144.5 146.8 EXISTING UNITS (1-family) 18 Number sold 3,566 3,530 3,594 3,690 3,650 3,680 3,710 3,920 3,550 3,480 3,400 3,400 3,210 Price of units sold (thousands of dollars) 19 Median 80.3 85.6 89.2 91.5 88.5 88.9 88.5 88.7 89.7 91.9 92.0 92.9 92.6 20 Average 98.3 106.2 112.5 115.4 112.6 112.3 112.4 112.0 113.0 117.8 116.1 118.0 118.0 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place »7,043' 397,721' 409,663' 408,112' 411,525' 411,074' 415,442' 425,035' 424,791' 418,465' 419,152 415,867 421,279 22 Private S15,313' 320,108' 328,738' 329,231' 329,848' 331,374' 332,798' 336,254' 339,481' 335,037' 340,038 335,106 335,066 23 Residential 187,147 194,656' 198,101' 197,585' 198,322' 200,78C 202,048' 202,48C 204,707' 202,322' 204,456 203,855 200,731 24 Nonresidential, total 128,166' 125,452' 130,637' 131,646' 113311,,552266'' 130,594' 130,75c 133,774' 134,774' 132,715' 135,982 131,251 134,335 Buildings 25 Industrial 13,747 13,707 14,931' 14,953' 14,872' 15,515' 15,413' 15,045' 15,89C 15,098' 15,698 16,209 16,119 26 Commercial 56,762 55,448 58,104' 59,310' 58,805' 57,284' 56,676' 58,659' 59,35C 58,749' 60,653 55,699 57,734 27 Other 13,216 15,464 17,278' 17,299' 17,70c 17,340' 17,328' 17,744' 17,976' 17,484' 17,634 16,801 17,504 28 Public utilities and other 44,441' 40,833' 40,324' 40,084' 40,149' 40,455' 41,333' 42,326' 41,558' 41,384' 41,997 42,542 42,978 29 Public 71,727' 77,612' 80,922' 78,881' 81,677' 79,700' 82,644' 88,781' 85.31C 83,428' 78,714 80,762 86,214 30 Military 3,868 4,327 3,579' 3,535' 4,373' 2,617' 3,42C 3,905' 3,440 3,433 3,740 3,350 3,432 31 Highway 22,971' 25,343' 28,524' 26,225' 26,274' 28,707' 28,992' 33,674' 30,792' 27,936' 26,091 27,883 27,404 32 Conservation and development... 4,646 5,162 4,474' 4,761' 4,995' 4,343' 4,134' 4,412' 4,121' 4,742' 4,210 2,995 6,613 33 Other 40,242 42,780' 44,345' 44,36C 46,035' 44,033' 46,098' 46,79C 46,957' 47,317' 44,673 46,534 48,765 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 • September 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 llleeevvveeelll 1988 1989 1989 JJJuuunnneee 11998888 11998899 111999888999 JJuunnee JJuunnee Sept. Dec. Mar. June Feb. Mar. Apr. May June CONSUMER PRICES2 (1982-84=100) 1 All items 4.0 5.2 4.8 4.1 6.1 5.7 .4 .5 .7 .6 .2 124.1 2 Food 3.3 6.3 8.8 3.0 8.2 5.6 .4 .8 .5 .6 .2 125.0 3 Energy items .3 8.8 2.7 -.4 10.2 24.8 .6 1.1 5.1 1.6 -1.0 99.0 4 All items less food and energy 4.5 4.5 4.3 4.9 5.2 3.8 .4 .4 .2 .5 .2 128.5 5 Commodities 3.6 3.4 3.1 4.2 4.1 2.0 .2 .3 .2 .4 -.1 119.3 6 Services 4.9 5.1 4.8 5.4 5.9 4.3 .5 .5 .2 .5 .4 133.9 PRODUCER PRICES (1982=100) 8 7 Fin C i o sh n e s d u m g e o r o d fo s ods 2 1 . . 1 5 5 5 . . 4 9 9 5 . . 2 7 2 3 . . 1 0 1 1 3 0 . . 5 2 -2 5 . . 3 1 y.9 y.4 -.6 .4 . . 8 9 - - . . 8 1 1 1 1 1 8 4 . . 4 1 9 Consumer energy -3.5 16.3 -2.7 1.4 39.2 32.7 2.4R i.r 7.2 3.3 -3.1 70.1 1 1 0 1 O Ca th p e it r a l c o e n q s u u ip m m er e n g t oods 3 2 . . 7 2 5 4 . . 2 1 6 5 . . 1 9 4 1 . . 4 7 4 6 . . 6 1 4 4. . 1 6 . . 6 4 R . . 4 V - - . . 1 1 . . 5 4 . . 7 7 1 1 2 1 4 8 . . 0 6 12 Intermediate materials3 5.5 5.0 4.6 4.5 9.1 2.2 .5 .6 .4 .3 -.2 112.6 13 Excluding energy 6.9 4.9 7.2 6.7 6.2 -.3 .3 .4 .0 .2 -.2 120.5 Crude materials 14 Foods 8.9 2.6 29.1 -7.9 16.5 -18.4 -1.4 3.0 -2.8 .4 -2.6 111.4 IS Energy -7.4 10.4 -27.0 12.3 45.9 24.4 1.1 1.7 5.2 2.2 -1.8 77.3 lb Other 15.6 5.0 8.5 12.5 10.9 -10.3 -,5R .6' -1.1 -.4 -1.3 137.7 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. 1988 1989 AAccccoouunntt 11998866RR 11998877'' 11998888'' Q2' Q3' Q4' Ql' Q2 GROSS NATIONAL PRODUCT 1 4,231.6 4,524.3 4,880.6 4,838.5 4,926.9 5,017.3 5,113.1 5,194.9 By source 2 Personal consumption expenditures 2,797.4 3,010.8 3,235.1 3,204.9 3,263.4 3,324.0 3,381.4 3,437.9 3 Durable goods 406.0 421.0 455.2 454.6 452.5 467.4 466.4 470.3 4 Nondurable goods 942.0 998.1 1,052.3 1,042.4 1,066.2 1,078.4 1,098.3 1,116.6 5 Services 1,449.5 1,591.7 1,727.6 1,707.9 1,744.7 1,778.2 1,816.7 1,851.0 6 Gross private domestic investment 659.4 699.9 750.3 748.4 771.1 752.8 769.6 777.9 7 Fixed investment 652.5 670.6 719.6 719.1 726.5 734.1 742.0 745.5 8 Nonresidential 435.2 444.3 487.2 487.1 493.2 495.8 503.1 511.5 9 Structures 139.0 133.8 140.3 139.9 142.0 142.5 144.7 142.6 10 Producers' durable equipment 296.2 310.5 346.8 347.2 351.3 353.3 358.5 368.9 11 Residential structures 217.3 226.4 232.4 232.1 233.2 238.4 238.8 234.0 12 Change in business inventories 6.9 29.3 30.6 29.3 44.6 18.7 27.7 32.4 13 Nonfarm 8.6 30.5 34.2 30.4 41.5 40.8 19.1 25.3 14 Net exports of goods and services -97.4 -112.6 -73.7 -74.9 -66.2 -70.8 -54.0 -52.4 15 Exports 396.5 448.6 547.7 532.5 556.8 579.7 605.6 625.2 16 Imports 493.8 561.2 621.3 607.5 623.0 650.5 659.6 677.5 17 Government purchases of goods and services 872.2 926.1 968.9 960.1 958.6 1,011.4 1,016.0 1,031.4 18 Federal 366.5 381.6 381.3 377.1 367.5 406.4 399.0 403.9 19 State and local 505.7 544.5 587.6 583.0 591.0 604.9 617.0 627.5 By major type of product 20 Final sales, total 4,224.8 4,495.0 4,850.0 4,809.2 4,882.3 4,998.7 5,085.4 5,162.4 21 Goods 1,686.7 1,785.2 1,931.9 1,917.4 1,955.8 1,987.4 2,030.9 2,074.3 22 Durable 721.8 774.3 859.1 857.2 884.0 888.5 894.7 909.1 23 Nondurable 964.9 1,010.9 1,072.8 1,060.2 1,071.8 1,098.9 1,136.2 1,165.2 24 Services 2,119.3 2,304.5 2,499.2 2,472.3 2,520.3 2,570.0 2,620.8 2,665.1 25 Structures 425.6 434.6 449.5 448.8 450.8 459.9 461.3 455.4 26 Change in business inventories 6.9 29.3 30.6 29.3 44.6 18.7 27.7 32.4 27 Durable goods 1.2 22.0 25.0 17.0 41.4 32.0 22.0 12.5 28 Nondurable goods 5.6 7.2 5.6 12.3 3.2 -13.3 5.7 20.0 MEMO 29 Total GNP in 1982 dollars 3,717.9 3,853.7 4,024.4 4,010.7 4,042.7 4,069.4 4,106.8 4,123.9 NATIONAL INCOME 30 Total 3,412.6 3,665.4 3,972.6 3,933.6 4,005.7 4,097.4 4,185.2 n.a. 31 Compensation of employees 2,511.4 2,690.0 2,907.6 2,878.9 2,935.1 2,997.2 3,061.7 3,115.7 32 Wages and salaries 2,094.8 2,249.4 2,429.0 2,405.4 2,452.2 2,505.1 2,560.7 2,606.6 33 Government and government enterprises 393.7 419.2 446.5 443.1 449.6 456.3 466.9 473.5 34 Other 1,701.1 1,830.1 1,982.5 1,962.3 2,002.6 2,048.9 2,093.8 2,133.1 35 Supplement to wages and salaries 416.6 440.7 478.6 473.5 482.9 492.0 501.0 509.2 36 Employer contributions for social insurance 217.3 227.8 249.7 247.7 251.8 255.6 259.7 263.2 37 Other labor income 199.3 212.8 228.9 225.9 231.1 236.5 241.3 246.0 38 Proprietors' income1 282.0 311.6 327.8 331.8 327.0 328.3 359.3 355.1 39 Business and professional 247.2 270.0 288.0 286.5 289.3 296.3 300.3 302.6 40 Farm1 34.7 41.6 39.8 45.4 37.7 32.0 59.0 52.6 41 Rental income of persons2 11.6 13.4 15.7 14.6 16.3 16.1 11.8 8.7 42 Corporate profits1 282.1 298.7 328.6 325.3 330.9 340.2 316.3 n.a. 43 Profits before tax 221.6 266.7 306.8 305.3 314.4 318.8 318.0 n.a. 44 Inventory valuation adjustment 6.7 -18.9 -25.0 -28.8 -30.4 -20.1 -38.3 -21.0 45 Capital consumption adjustment 53.8 50.9 46.8 48.9 46.9 41.5 36.6 31.7 46 Net interest 331.9 353.6 391.5 383.0 396.4 415.7 436.1 458.0 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 Domestic Nonfinancial Statistics • September 1989 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1988' 1989 AAccccoouunntt 11998866'' 11998877'' 1988' Q2 Q3 Q4 Ql' Q2 PERSONAL INCOME AND SAVING 1 Total personal income 3,526.2 3,777.6 4,064.5 4,026.6 4,097.6 4,185.2 4,317.8 4,396.2 2 Wage and salary disbursements 2,094.8 2,249.4 2,429.0 2,405.4 2,452.2 2,505.1 2,560.7 2,606.6 3 Commodity-producing industries 625.6 649.9 696.3 690.8 701.6 714.7 726.6 733.1 4 Manufacturing 473.2 490.3 524.0 519.2 527.2 538.1 546.3 549.5 5 Distributive industries 498.8 531.9 571.9 568.0 578.0 587.5 598.8 610.2 6 Service industries 576.7 648.3 714.4 703.5 723.0 746.7 768.4 789.7 7 Government and government enterprises 393.7 419.2 446.5 443.1 449.6 456.3 466.9 473.5 199.3 212.8 228.9 225.9 231.1 236.5 241.3 246.0 9 Proprietors' income1 282.0 311.6 327.8 331.8 327.0 328.3 359.3 355.1 10 Business and professional1 247.2 270.0 288.0 286.5 289.3 296.3 300.3 302.6 11 Farm1 34.7 41.6 39.8 45.4 37.7 32.0 59.0 52.6 12 Rental income of persons2 11.6 13.4 15.7 14.6 16.3 16.1 11.8 8.7 85.8 92.0 102.2 100.4 103.6 106.4 109.4 111.4 14 Personal interest income 493.2 523.2 571.1 560.0 576.3 598.6 629.0 655.1 15 Transfer payments 521.5 548.2 584.7 581.8 587.4 593.8 616.4 626.2 16 Old-age survivors, disability, and health insurance benefits ... 269.2 282.9 300.5 299.2 301.4 304.0 316.9 322.5 17 LESS: Personal contributions for social insurance 161.9 172.9 194.9 193.4 196.4 199.6 210.0 212.9 18 EQUALS: Personal income 3,526.2 3,777.6 4,064.5 4,026.6 4,097.6 4,185.2 4,317.8 4,396.2 19 LESS: Personal tax and nontax payments 512.9 571.7 586.6 590.7 585.9 597.8 628.3 651.6 20 EQUALS: Disposable personal income 3,013.3 3,205.9 3,477.8 3,435.9 3,511.7 3,587.4 3,689.5 3,744.5 21 LESS: Personal outlays 2,888.5 3,104.1 3,333.1 3,301.9 3,362.1 3,424.0 3,483.8 3,540.9 22 EQUALS: Personal saving 124.9 101.8 144.7 134.0 149.6 163.4 205.7 203.7 MEMO Per capita (1982 dollars) 23 Gross national product 15,385.5 15,800.3 16,346.1 16,316.9 16,400.4 1166,,446688..66 1166,,557799..77 n.a. 24 Personal consumption expenditures 10,123.7 10,306.3 10,554.0 10,524.0 10,580.5 10,634.2 10,662.1 n.a. 25 Disposable personal income 10,905.0 10,970.0 11,337.0 11,273.0 11,377.0 11,466.0 11,625.0 11,609.0 26 Saving rate (percent) 4.1 3.2 4.2 3.9 4.3 4.6 5.6 5.4 GROSS SAVING 525.3 553.8 642.4 633.4 669.8 647.4 693.5 n.a. 669.5 663.8 738.6 722.5 742.4 769.3 792.1 n.a. 29 Personal saving 124.9 101.8 144.7 134.0 149.6 163.4 205.7 203.7 30 Undistributed corporate profits 84.5 75.3 80.3 78.3 77.6 81.7 53.4 n.a. 31 Corporate inventory valuation adjustment 6.7 -18.9 -25.0 -28.8 -30.4 -20.1 -38.3 -21.0 Capital consumption allowances 285.9 303.1 321.7 319.0 332233..11 332299..77 333355..22 334400..33 33 Noncorporate 174.2 183.6 191.9 191.2 192.1 194.4 197.8 201.3 34 Government surplus, or deficit (-), national income and product accounts -144.1 -110.1 -96.1 -89.1 -72.7 -121.9 -98.7 n.a. 35 Federal -206.9 -161.4 -145.8 -141.5 -122.5 -167.6 -147.5 n.a. 36 State and local 62.8 51.3 49.7 52.4 49.8 45.7 48.8 n.a. 37 Gross investment 523.6 549.0 632.8 633.4 661.2 630.8 669.3 677.2 38 Gross private domestic 659.4 699.9 750.3 748.4 771.1 752.8 769.6 777.9 39 Net foreign -135.8 -150.9 -117.5 -115.0 -109.9 -122.0 -100.3 -100.7 40 Statistical discrepancy -1.8 -4.7 -9.6 -0.1 -8.6 -16.6 -24.1 -24.1 1. With inventory valuation and capital consumption adjustments. SOURCE. Survey of Current Business (Department of Commerce). 2. With capital consumption adjustment. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A55 3.10 U.S. INTERNATIONAL TRANSACTIONS Summary Millions of dollars; quarterly data are seasonally adjusted except as noted.1 1988 1989 Item credits or debits 11998866 11998877 11998888 Ql Q2 Q3 Q4 Ql" 1 Balance on current account -133,249 -143,700 -126,548 -32,046 -33,485 -32,340 -28,677 -30,685 2 Not seasonally adjusted -27,556 -33,875 -36,926 -28,191 -26,131 3 Merchandise trade balance -145,058 -159,500 -127,215 -33,446 -31,411 -30,339 -32,019 -27,634 4 Merchandise exports 223,367 250,266 319,251 76,447 78,471 80,604 83,729 88,496 5 Merchandise imports -368,425 -409,766 -446,466 -109,893 -109,882 -110,943 -115,748 -116,130 6 Military transactions, net -4,576 -2,857 -4,606 -964 -1,033 -1,006 -1,604 -1,482 7 Investment income, net 21,647 22,283 2,227 2,795 -2,465 -2,590 4,489 -3,508 8 Other service transactions, net 10,517 10,586 17,702 2,933 4,323 4,971 5,475 5,359 9 Remittances, pensions, and other transfers -4,049 -4,063 -4,279 -1,131 -971 -1,088 -1,090 -1,192 10 U.S. government grants (excluding military) -11,730 -10,149 -10,377 -2,233 -1,928 -2,288 -3,928 -2,228 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -2,024 997 2,999 -1,490 -885 1,961 3,413 1,012 12 Change in U.S. official reserve assets (increase, -) 312 9,149 -3,566 1,503 39 -7,380 2,272 -4,000 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -246 -509 474 155 180 -35 173 -188 15 Reserve position in International Monetary Fund 1,501 2,070 1,025 446 69 202 307 316 16 Foreign currencies -942 7,588 -5,064 901 -210 -7,547 1,791 -4,128 17 Change in U.S. private assets abroad (increase, -) -97,954 -86,363 -81,543 4,528 -15,273 -32,467 -38,332 -28,828 18 Bank-reported claims -59,975 -42,119 -54,481 15,266 -12,602 -26,229 -30,916 -22,601 19 Nonbank-reported claims -7,396 5,201 -1,684 -65 -6,443 255 4,569 20 U.S. purchase of foreign securities, net -4,271 -5,251 -7,846 -4,539 1,333 -1,592 -3,047 -2,554 21 U.S. direct investments abroad, net -26,312 -44,194 -17,533 -6,134 2,439 -4,901 -8,938 -3,673 22 Change in foreign official assets in United States (increase, +) 35,594 45,193 38,882 24,631 5,895 -2,234 10,589 6,914 23 U.S. Treasury securities 34,364 43,238 41,683 27,702 5,853 -3,769 11,897 4,585 24 Other U.S. government obligations -1,214 1,564 1,309 -162 202 572 697 716 25 Other U.S. government liabilities4 ^ 2,141 -2,520 -1,284 -304 -517 -232 -232 -377 26 Other U.S. liabilities reported by U.S. banks3 1,187 3,918 -331 -1,772 774 1,703 -1,036 1,538 27 Other foreign official assets -884 -1,007 -2,495 -833 -417 -508 -737 452 28 Change in foreign private assets in United States (increase, +) < 186,011 172,847 180,418 2,396 59,438 48,413 70,170 42,163 29 U.S. bank-reported liabilities* 79,783 89,026 68,832 -17,137 30,455 23,291 32,223 10,398 30 U.S. nonbank-reported liabilities -2,641 2,450 6,558 1,565 -59 2,350 2,702 31 Foreign private purchases of U.S. Treasury securities, net 3,809 -7,643 20,144 5,928 5,458 3,422 5,336 8,745 32 Foreign purchases of other U.S. securities, net 70,969 42,120 26,448 2,424 9,699 7,454 6,871 8,591 33 Foreign direct investments in United States, net 34,091 46,894 58,436 9,616 13,885 11,896 23,038 14,429 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 1111,,330088 1,878 -10,641 479 -15,729 24,047 -19,434 13,424 36 Owing to seasonal adjustments 3,843 -3,714 -4,556 4,431 4,264 37 Statistical discrepancy in recorded data before seasonal adjustment 11,308 1,878 -10,641 -3,364 -12,015 28,603 -23,865 9,160 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 312 9,149 -3,566 1,503 39 -7,380 2,272 -4,000 39 Foreign official assets in United States (increase, +) excluding line 25 33,453 47,713 40,166 24,935 6,412 -2,002 10,821 7,291 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22 above) -9,327 -9,955 -3,109 -1,547 -1,776 -459 672 7,059 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 96 53 92 41 4 7 40 13 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Reporting banks include all kinds of depository institutions besides commer- (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 • September 1989 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1988r 1989r IItteemm 11998866 11998877 11998888rr Nov. Dec. Jan. Feb. Mar. Apr. Mayp 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 227,159 254,122 322,426 27,538 28,864 28,980 28,839 30,065 30,759 30,473 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 365,438 406,241 440,952 38,087 39,668 37,877 38,220 39,549 39,045 40,710 Trade balance 3 Customs value -138,279 -152,119 -118,526 -10,549 -10,805 -8,897 -9,381 -9,484 -8,286 -10,237 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 Type 1986 1987 Dec. Feb. Mar. Apr. May June" 43,186 48,511 45,798 47,802 48,190 49,373 49,854 50,303 54,941 60,502 2 Gold stock, including Exchange Stabilization Fund 11,090 11,064 11,078 11,057 11,056 11,061 11,061 11,061 11,060 11,063 3 Special drawing rights ' 7,293 8,395 10,283 9,637 9,388 9,653 9,443 9,379 9,134 9,034 4 Reserve position in International Monetary Fund2 11,947 11,730 11,349 9,745 9,422 9,353 9,052 9,132 8,513 5 Foreign currencies 12,856 17,322 13,088 17,363 18,324 19,306 20,298 20,731 26,234 31,517 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 Dec. Jan. Feb. Mar. Apr. May Junep 1 Deposits 480 287 244 347 279 325 351 352 428 275 Assets held in custody 2 U.S. Treasury securities 121,004 155,835 195,126 232,547 228,399 230,860 234,075 235,145 232,004 229,914 3 Earmarked gold 14,245 14,048 13,919 13,636 13,635 13,609 13,602 13,576 13,612 13,545 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 11998866 11998877 Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 1 Total, all currencies 458,012 456,628 518,618 516,608' 506,062' 496,755' 501,682' 519,740' 517,276' 521,436 2 Claims on United States 119,706 114,563 138,034 171,304 169,111 167,143 168,558 177,902' 170,045' 177,987 3 Parent bank 87,201 83,492 105,845 130,834 129,856 127,403 128,115 134,002' 127,476 134,026 4 Other banks in United States 13,057 13,685 16,416 16,366 14,918 14,559 13,506 14,697 13,459' 13,040 5 Nonbanks 19,448 17,386 15,773 24,104 24,337 25,181 26,937 29,203 29,110 30,921 6 Claims on foreigners 315,676 312,955 342,520 307,241' 299,728' 291,892' 2%,240' 303,906' 306,493' 302,808 7 Other branches of parent bank 91,399 96,281 122,155 106,64C 107,179' 102,482' 103,962' 110,434' 114,834 116,506 8 Banks 102,960 105,237 108,859 100,820' 96,932' 93,663' 95,6%' 97,723' %,83C 94,042 9 Public borrowers 23,478 23,706 21,832 18,223' 17,163' 16,931' 16,682' 17,020' 16,101' 16,095 10 Nonbank foreigners 97,839 87,731 89,674 81,558' 78,454' 78,816' 79,90C 78,729' 78,728' 76,165 11 Other assets 22,630 29,110 38,064 38,063' 37,223' 37,720' 36,884' 37,932' 40,738' 40,641 12 Total payable in U.S. dollars 336,520 317,487 350,107 355,663' 358,040' 345,523' 346,990' 366,403' 359,841' 366,315 13 Claims on United States 116,638 110,620 132,023 165,017 163,456 160,520 161,336 170,091' 162,954' 169,7% 14 Parent bank 85,971 82,082 103,251 127,692 126,929 124,496 124,288 129,431' 123,258 128,771 15 Other banks in United States 12,454 12,830 14,657 15,062 14,167 12,908 12,025 13,259 12,539' 11,909 16 Nonbanks 18,213 15,708 14,115 22,263 22,360 23,116 25,023 27,401 27,157 29,116 17 Claims on foreigners 210,129 195,063 202,428 173,837' 177,685' 167,288' 168,293' 178,134' 179,308' 177,308 18 Other branches of parent bank 72,727 72,197 88,284 77,384 80,736 76,221 76,565' 82,797' 87,777 86,625 19 Banks 71,868 66,421 63,707 53,632 54,884 49,391' 50,013' 53,893' 50,815' 49,793 20 Public borrowers 17,260 16,708 14,730 12,415 12,131 11,749' 11,781' 11,831' 11,467 11,282 21 Nonbank foreigners 48,274 39,737 35,707 30,406' 29,934' 29,927' 29,934' 29,613' 29,249' 29,608 22 Other assets 9,753 11,804 15,656 16,809 16,899 17,715 17,361 18,178 17,579' 19,211 United Kingdom 23 Total, all currencies 148,599 140,917 158,695 159,556 156,835 156,529 154,879 154,856 153,146 155,532 24 Claims on United States 33,157 24,599 32,518 39,242 40,089 40,954 40,547 40,715 39,394 39,599 25 Parent bank 26,970 19,085 27,350 33,138 34,243 34,928 34,449 35,315 34,660 35,642 26 Other banks in United States 1,106 1,612 1,259 1,343 1,123 1,128 1,268 1,380 1,227 1,243 27 Nonbanks 5,081 3,902 3,909 4,761 4,723 4,898 4,830 4,020 3,507 2,714 28 Claims on foreigners 110,217 109,508 115,700 110,336 106,388 104,668 103,806 103,443 102,438 104,504 29 Other branches of parent bank 31,576 33,422 39,903 33,243 35,625 35,322 33,650 35,305 32,954 35,537 30 Banks 39,250 39,468 36,735 40,875 36,765 34,907 36,159 35,382 37,079 37,412 31 Public borrowers 5,644 4,990 4,752 4,276 4,019 4,090 3,808 3,757 3,471 3,627 32 Nonbank foreigners 33,747 31,628 34,310 31,942 29,979 30,349 30,189 28,999 28,934 27,928 33 Other assets 5,225 6,810 10,477 9,978 10,358 10,907 10,526 10,698 11,314 11,429 34 Total payable in U.S. dollars 108,626 95,028 100,574 101,341 103,503 102,873 100,863 103,211 98,463 101,612 35 Claims on United States 32,092 23,193 30,439 36,881 38,012 38,591 37,707 38,265 36,772 36,675 36 Parent bank 26,568 18,526 26,304 32,115 33,252 33,925 33,106 34,320 33,499 34,119 37 Other banks in United States 1,005 1,475 1,044 849 964 678 816 937 872 862 38 Nonbanks 4,519 3,192 3,091 3,917 3,796 3,988 3,785 3,008 2,401 1,694 39 Claims on foreigners 73,475 68,138 64,560 59,405 60,472 58,798 57,567 59,201 56,227 58,395 40 Other branches of parent bank 26,011 26,361 28,635 25,574 28,474 27,939 26,475 28,145 25,389 26,036 41 Banks 26,139 23,251 19,188 19,452 18,494 16,778 17,246 17,715 17,680 18,458 42 Public borrowers 3,999 3,677 3,313 2,898 2,840 2,869 2,774 2,786 2,6% 2,737 43 Nonbank foreigners 17,326 14,849 13,424 11,481 10,664 11,212 11,072 10,555 10,462 11,164 44 Other assets 3,059 3,697 5,575 5,055 5,019 5,484 5,589 5,745 5,464 6,542 Bahamas and Caymans 45 Total, all currencies 142,055 142,592 160,321 169,034 170,639 162,352 165,862 179,185' 172,324' 173,137 46 Claims on United States 74,864 78,048 85,318 106,240 105,320 103,016 103,989 111,951' 105,273' 111,823 47 Parent bank 50,553 54,575 60,048 73,654 73,409 71,065 71,100 75,234' 68,%9 73,627 48 Other banks in United States 11,204 11,156 14,277 14,065 13,145 12,742 11,563 12,275 11,563' 10,807 49 Nonbanks 13,107 12,317 10,993 18,521 18,766 19,209 21,326 24,442 24,741 27,389 50 Claims on foreigners 63,882 60,005 70,162 56,128 58,393 52,503 54,732 59,615 60,103' 53,984 51 Other branches of parent bank 19,042 17,296 21,277 18,534 17,954 15,982 18,454 20,048 26,261 21,962 52 Banks 28,192 27,476 33,751 25,549 28,268 24,755 24,514 27,727 22,641' 21,184 53 Public borrowers 6,458 7,051 7,428 5,861 5,830 5,422 5,513 5,480 5,374 5,280 54 Nonbank foreigners 10,190 8,182 7,706 6,184 6,341 6,344 6,251 6,360 5,827' 5,558 55 Other assets 3,309 4,539 4,841 6,666 6,926 6,833 7,141 7,619 6,948' 7,330 56 Total payable in U.S. dollars 136,794 136,813 151,434 161,238 163,518 154,981 158,011 172,148' 166,389' 166,869 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 • September 1989 3.14—Continued 1988 1989 LLiiaabbiilliittyy aaccccoouunntt 11998855 11998866 11998877 Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 57 Total, all currencies 458,012 456,628 518,618 516,608r 506,062' 4%,755' 501,682' 519,740' 517,276' 521,436 58 Negotiable CDs 34,607 31,629 30,929 30,734 28,511 28.538 30,013 30,768 30,278 29,425 59 To United States 156,281 152,465 161,390 174,459' 185,577' 172,055' 174,956' 185,831' 177,583' 178,668 60 Parent bank 84,657 83,394 87,606 106,228' 114,720' 102,521' 105,687' 113,779' 107,455' 110,357 61 Other banks in United States 16,894 15,646 20,559 13,584 14,897 13.539 12,989 14,659 14,307' 13,364 62 Nonbanks 54,730 53,425 53,225 54,647' 55,96C 55,995 56,280 57,393 55,821 54,947 63 To foreigners 245,939 253,775 304,803 287,980' 270,923' 274,015' 274,898' 280,859' 284,629' 288,444 64 Other branches of parent bank 89,529 95,146 124,601 112,315' 111,267' 109,125' 111,582' 116,148' 117^ 121,357 65 Banks 76,814 77,809 87,274 82,833' 72,842' 72,185' 70,484' 71,447' 72,155' 72,809 66 Official institutions 19,520 17,835 19,564 17,743 15,183 18,867' 17,323' 17,911' 17,933' 17,795 67 Nonbank foreigners 60,076 62,985 73,364 75,089' 71,631' 73,838' 75,509' 75,353' 77,452' 76,483 68 Other liabilities 21,185 18,759 21,4% 23,435' 21,051' 22,147' 21,815' 22,282' 24,786' 24,899 69 Total payable in U.S. dollars ... 353,712 336,406 361,438 363,437' 367,090' 353,678' 356,597' 378,460' 371,237' 374,958 70 Negotiable CDs 31,063 28,466 26,768 26,130 24,045 23,6% 25,452 26,287 25,970 25,411 71 To United States 150,905 144,483 148,442 161,081' 173,190' 159,650 161,449 173,471' 164,957' 165,981 72 Parent bank 81,631 79,305 81,783 97,898 107,150 94,531 96,714 105,534' 99,188' 102,421 73 Other banks in United States 16,264 14,609 19,155 12,230 13,628 12,413 11,535 13,355 12,781' 11,744 74 Nonbanks 53,010 50,569 47,504 50,953' 52,412' 52,706 53,200 54,582 52,988 51,816 75 To foreigners 163,583 156,806 177,711 164,828' 160,373' 160,632' 159,542' 168,257' 169,916' 171,865 76 Other branches of parent bank 71,078 71,181 90,469 82,815' 84,021 82,149' 83,253 88,298' 89,425' 90,345 77 Banks 37,365 33,850 35,065 31,138' 28,493' 27,231' 27,060' 28,949' 28,445' 29,592 78 Official institutions 14,359 12,371 12,409 9,121 8,224 10,880' 8,740' 9,953' 9,591' 9,255 79 Nonbank foreigners 40,781 39,404 39,768 41,754' 39,635' 40,372' 40,489' 41,057' 42,455' 42,673 80 Other liabilities 8,161 6,651 8,517 11,398 9,482 9,700 10,154 10,445 10,394' 11,701 United Kingdom 81 Total, all currencies 148,599 140,917 158,695 159,556 156,835 156,529 154,879 154,856 153,146 155,532 82 Negotiable CDs 31,260 27,781 26,988 26,013 24,528 24,253 25,942 26,625 26,157 25,539 83 To United States 29,422 24,657 23,470 32,420 36,784 34,535 35,393 32,757' 29,715 30,986 84 Parent bank 19,330 14,469 13,223 23,226 27,849 24,130 25,562 25,098' 20,455 20,329 85 Other banks in United States 2,974 2,649 1,740 1,768 2,197 2,568 1.915 1,984 1,551 1,720 86 Nonbanks 7,118 7,539 8,507 7,426 6,738 7,837 7.916 5,675 7,709 8,937 87 To foreigners 78,525 79,498 98,689 90,404 86,026 87,519 83,774 85,863' 87,478 88,866 88 Other branches of parent bank 23,389 25,036 33,078 26,268 26,812 26,815 24,553 25,781' 25,800 26,867 89 Banks 28,581 30,877 34,290 33,029 30,609 29,329 28,508 29,094 30,714 30,806 90 Official institutions 9,676 6,836 11,015 9,542 7,873 10,010 8,627 9,429 8,637 8,946 91 Nonbank foreigners 16,879 16,749 20,306 21,565 20,732 21,365 22,086 21,559 22,327 22,247 92 Other liabilities 9,392 8,981 9,548 10,719 9,497 10,222 9,770 9,611 9,7% 10,141 93 Total payable in U.S. dollars ... 112,697 99,707 102,550 102,933 105,514 104,462 103,302 105,942 100,514 102,840 94 Negotiable CDs 29,337 26,169 24,926 23,543 22,063 21,500 23,419 24,302 24,073 23,568 95 To United States 27,756 22,075 17,752 27,123 32,588 30,032 30,442 29,578' 25,493 26,673 % Parent bank 18,956 14,021 12,026 21,003 26,404 22,069 22,998 24,013' 18,524 18,545 97 Other banks in United States 2,826 2,325 1,512 1,366 1,912 2,362 1,600 1,719 1,227 1,368 98 Nonbanks 5,974 5,729 4,214 4,754 4,272 5,601 5,844 3,846 5,742 6,760 99 To foreigners 51,980 48,138 55,919 46,843 46,690 48,421 44,934 47,071' 46,230 47,371 100 Other branches of parent bank 18,493 17,951 22,334 17,443 18,561 18,936 17,139 18,335' 17,755 18,030 101 Banks 14,344 15,203 15,580 14,029 13,407 13,090 13,106 12,907 13,439 13,930 102 Official institutions 7,661 4,934 7,530 4,713 4,348 5,897 4,116 5,467 4,365 4,7% 103 Nonbank foreigners 11,482 10,050 10,475 10,658 10,374 10,498 10,573 10,362 10,671 10,615 104 Other liabilities 3,624 3,325 3,953 5,424 4,173 4,509 4,507 4,991 4,718 5,228 Bahamas and Caymans 105 Total, all currencies 142,055 142,592 160,321 169,034 170,639 162,352 165,862 179,185' 172,324' 173,137 106 Negotiable CDs 610 847 885 1,361 953 1,118 1,138 1,073 1,025 872 107 To United States 104,556 106,081 113,950 116,952 122,332 113,562 114,729 124,736 118,164' 120,150 108 Parent bank 45,554 49,481 53,239 59,883 62,894 56,643 57,684 62,689 59,762' 64,908 109 Other banks in United States 12,778 11,715 17,224 10,823 11,494 9,890 9,743 11,464 11,346' 10,198 110 Nonbanks 46,224 44,885 43,487 46,246 47,944 47,029 47,302 50,583 47,056 45,044 111 To foreigners 35,053 34,400 43,815 48,113 45,161 45,602 47,534 50,855' 50,606' 49,014 112 Other branches of parent bank 14,075 12,631 19,185 24,508 23,686 24,973 25,988 28,010 27,655' 26,478 113 Banks 10,669 8,617 10,769 10,035 8,336 7,179 7,795 8,495' 8,203' 8,258 114 Official institutions 1,776 2,719 1,504 1,060 1,074 1,337 1,379 1,234 1,722' 1,164 115 Nonbank foreigners 8,533 10,433 12,357 12,510 12,065 12,113 12,372 13,116 13,026' 13,114 116 Other liabilities 1,836 1,264 1,671 2,608 2,193 2,070 2,461 2,521 2,529' 3,101 117 Total payable in U.S. dollars 138,322 138,774 152,927 160,786 162,950 154,663 157,890 172,213 166,489' 166,954 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 Nov. Dec. Jan. Feb. Mar. Apr. Mayp 1 Total1 211,834 259,556 300,978r 299,716' 301,756' 304,185' 307,497' 313,713' 306,087 By type 2 Liabilities reported by banks in the United States 27,920 31,838 35,nr 31,443' 36,735' 34,641' 33,417' 39,180' 37,684 3 U.S. Treasury bills and certificates 7755,,665500 88,829 103,841 103,722 98,457 98,192 95,478 96,109 91,798 U.S. Treasury bonds and notes 4 Marketable 91,368 122,432 146,813 149,056 151,075' 155,374' 161,923' 161,081' 160,013 5 Nonmarketable 1,300 300 520 523 527 531 534 538 542 6 U.S. securities other than U.S. Treasury securities 15,596 16,157 14,693 14,972 14,962 15,447 16,145 16,805' 16,050 By area 7 Western Europe 88,629 124,620 128,630' 125,097' 126,040' 124,806' 125,352' 129,261' 125,914 8 Canada 2,004 4,961 10,066 9,584 9,668 9,856 10,156 9,994 9,938 9 Latin America and Caribbean 8,417 8,328 10,525 10,094 9,943 8,875 7,533 7,216' 6,091 10 105,868 116,098 142,826' 145,548' 147,316' 152,236' 156,317' 158,585' 156,023 11 Africa 1,503 1,402 993 1,369 1,093 1,143 1,119 1,065 1,182 12 Other countries 5,412 4,147 7,418 7,501 7,169 6,738 6,485 7,053' 6,397 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. 3. Includes nonmarketable certificates of indebtedness (including those payable NOTE. Based on Treasury Department data and on data reported to the in foreign currencies through 1974) and Treasury bills issued to official institutions Treasury Department by banks (including Federal Reserve Banks) and securities of foreign countries. dealers in the United States. 4. Excludes notes issued to foreign official nonreserve agencies. Includes 3.16 LIABILITIES TO AND CLAIMS ON FOREIGNERS Reported by Banks in the United States Payable in Foreign Currencies1 Millions of dollars, end of period 1988' 1989 IItteemm 11998855 11998866 11998877 June Sept. Dec. Mar.' 1 Banks' own liabilities 15,368 29,702 55,438 56,570 65,148 74,776 76,125 2 Banks' own claims 16,294 26,180 51,271 52,914 63,465 68,988 72,662 3 Deposits 8,437 14,129 18,861 18,790 22,594 25,115 25,645 4 Other claims 7,857 12,052 32,410 34,124 40,871 43,874 47,017 5 Claims of banks' domestic customers 580 2,507 551 1,004 335 364 376 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 • September 1989 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1988r 1989'' Holder and type of liability 11998855 11998866 11998877 Nov. Dec. Jan. Feb. Mar. Apr. Mayp 1 All foreigners 435,726 540,996 618,874 677,381 683,950 660,256 677,624 690,900 683,725 676,277 2 Banks' own liabilities 341,070 406,485 470,070 504,144 513,573 493,030 507,557 523,606 517,108 513,358 3 Demand deposits 21,107 23,789 22,383 22,079 21,894 20,602 21,733 22,483 22,333 22,092 4 Time deposits 117,278 130,891 148,374 149,704 152,194 145,481 151,137 157,978 157,056 155,177 5 Other. 29,305 42,705 51,677 53,981 51,506 52,322 51,005 54,177 56,613 58,267 6 Own foreign offices4 173,381 209,100 247,635 278,380 287,979 274,625 283,682 288,968 281,105 277,823 8 7 Ba U nk .S s . ' T cu re st a o s d u y ry l i b a i b l i ls li t a ie n s d 5 certificates6 6 9 9 4 , , 1 6 3 5 3 6 1 9 3 0 4 , , 3 5 9 1 8 1 1 1 0 4 1 8 , , 7 80 4 4 3 1 1 1 7 6 3 , , 8 2 6 3 1 7 1 1 1 7 4 0 , , 9 3 7 7 6 7 1 1 1 6 1 7 , , 1 2 4 2 1 6 1 1 1 7 0 0 , , 9 0 9 6 2 7 1 10 6 8 7 , , 0 2 4 9 8 5 1 1 0 6 6 6 , , 8 6 2 1 7 7 1 1 0 6 2 2 , , 6 9 6 1 1 9 9 Other negotiable and readily transferable instruments 17,964 15,417 16,776 16,658 16,367 16,763 17,071 16,957 17,259 18,527 10 Other 7,558 28,696 30,285 39,718 39,033 39,321 42,004 42,289 42,532 41,732 11 Nonmonetary international and regional organizations8 5,821 5,807 4,464 4,978 3,224 2,704 3,252 3,764 4,115 3,424 12 Banks' own liabilities 2,621 3,958 2,702 3,722 2,527 1,910 2,679 2,956 3,328 2,989 13 Demand deposits 85 199 124 76 71 67 74 88 163 76 14 Time deposits2 2,067 2,065 1,538 1,584 1,183 565 1,126 1,385 1,484 1,257 15 Other. 469 1,693 1,040 2,062 1,272 1,278 1,479 1,482 1,681 1,531 1 1 6 7 Ba U nk .S s . ' c T u r s e t a o s d u y ry l i b a i b l i ls li t a ie n s d 5 certificates6 3 1 , , 2 7 0 3 0 6 1,8 2 4 5 9 9 1,7 2 6 6 1 5 1,25 8 6 3 69 5 8 7 79 6 5 9 57 5 4 9 8 7 0 4 8 7 7 8 7 6 43 9 5 5 18 Other negotiable and readily transferable instruments 1,464 1,590 1,497 1,163 641 711 463 734 693 305 19 Other 0 0 0 10 0 15 52 0 16 35 20 Official institutions9 79,985 103,569 120,667 138,952 135,165 135,191 132,833 128,895 135,289 129,483 21 Banks' own liabilities 20,835 25,427 28,703 31,129 27,033 32,013 29,321 27,800 33,100 31,451 22 Demand deposits 2,077 2,267 1,757 1,584 1,915 1,627 1,792 1,605 1,783 1,761 23 Time deposits2 10,949 10,497 12,843 12,066 9,686 13,428 12,661 11,006 12,558 11,362 24 Other3 7,809 12,663 14,103 17,479 15,432 16,959 14,867 15,189 18,759 18,328 2 2 5 6 Ba U nk .S s . ' c T u r s e t a o s d u y r y l i b a i b l i ls li t a i n es d 5 certificates6 5 5 9 3 , ,2 1 5 5 2 0 7 7 5 8 , , 6 1 5 4 0 2 9 88 1 , , 8 % 2 5 9 1 10 0 3 7 , , 8 8 4 2 1 3 1 10 0 3 8 , , 7 1 2 3 2 2 1 9 0 8 3 , , 4 1 5 7 7 8 1 9 0 8 3 , , 1 5 9 1 2 2 1 9 0 5 1 , , 4 0 7 9 8 5 1 % 02 , , 1 1 0 8 9 9 9 9 1 8 , , 7 0 9 3 8 2 27 Other negotiable and readily transferable instruments 5,824 2,347 2,990 3,768 4,130 4,598 5,076 5,466 5,875 6,049 28 Other 75 145 146 214 280 124 244 152 205 185 29 Banks14 275,589 351,745 414,280 445,725 458,248 435,464 452,338 469,562 454,368 452,484 30 Banks' own liabilities 252,723 310,166 371,665 395,310 408,576 384,974 399,833 417,332 402,578 400,794 31 Unaffiliated foreign banks 79,341 101,066 124,030 116,930 120,597 110,350 116,152 128,364 121,473 123,0% 32 Demand deposits 10,271 10,303 10,898 10,403 9,980 9,459 9,584 11,012 10,559 11,160 3 3 3 3 5 4 Ow T O n i t m h f e e o r r d 1 e . e ig p n o s o i f t f s i 2 c es4 1 4 1 7 9 3 9 , , , 5 3 5 8 1 6 1 0 1 2 6 0 2 4 6 9 , , , 2 5 1 3 3 0 2 1 0 24 7 3 7 3 9 , , , 6 4 7 3 1 1 5 5 7 27 7 31 8 5 , , , 0 3 4 4 8 7 9 0 9 2 8 8 3 0 0 7 , , , 3 3 9 1 7 0 4 9 3 27 7 2 4 9 1 , , , 6 0 8 2 5 3 5 3 8 2 7 2 8 6 9 3, , , 6 6 8 8 7 8 2 9 9 2 8 8 3 4 8 3 , , , 1 9 2 1 6 4 2 8 0 28 8 3 1 0 0 , , , 1 1 8 0 0 0 8 5 6 2 7 3 7 2 9 7 , , , 8 0 6 7 5 9 8 7 8 3 3 6 7 Ba U nk .S s . ' T cu r s e t a o s d u y r y l i b a i b l i l l s i t a ie n s d 5 certificates6 22 9 , , 8 8 6 3 6 2 41 9 , , 5 9 7 8 9 4 42 9 , , 6 1 1 3 5 4 50 8 , , 4 0 1 8 5 7 49 7 , , 6 6 7 0 1 2 5 7 0 , , 8 4 1 8 9 9 52 7 , , 5 4 0 9 5 1 5 7 2, , 2 3 3 1 1 0 5 6 1 , , 9 7 2 8 1 9 5 7 1 , ,6 1 9 1 0 4 38 Other negotiable and readily transferable instruments 6,040 5,165 5,392 5,6% 5,666 5,870 5,894 5,254 5,032 5,476 39 Other 6,994 26,431 28,089 36,632 36,403 36,800 39,120 39,667 39,836 39,100 40 Other foreigners 74,331 79,875 79,463 87,725 87,313 86,896 89,200 88,679 89,954 90,886 41 Banks' own liabilities 64,892 66,934 67,000 73,982 75,438 74,132 75,724 75,518 78,101 78,124 4 4 4 4 2 3 T D O i e t m h m e e a r 3 n d d e p d o e s p it o s s 2 its 5 8 4 1 , , , 6 7 4 5 7 6 2 3 7 5 1 4 1 1 , , , 0 0 8 9 1 1 7 9 8 5 9 4 3 , , , 6 2 1 0 7 1 4 7 9 6 1 0 3 0 , , , 5 3 0 7 1 9 5 7 1 61 9 4 , , , 0 4 9 2 8 2 2 7 8 5 9 9 5 , , , 4 6 0 5 5 3 0 1 2 6 1 4 0 0 , , , 6 7 2 7 8 7 1 2 1 6 9 4 1 , , , 7 4 2 7 7 6 7 5 5 6 9 6 2, , , 2 8 0 0 2 6 8 8 6 6 9 3 5 , , , 0 5 5 9 0 2 5 0 9 45 Banks' custody liabilities5 9,439 12,941 12,463 13,743 11,876 12,764 13,476 13,161 11,853 12,762 46 U.S. Treasury bills and certificates6 4,314 4,506 3,515 4,849 3,595 4,797 5,250 5,188 3,720 3,652 47 Other negotiable and readily transferable instruments 4,636 6,315 6,898 6,031 5,929 5,584 5,638 5,503 5,658 6,698 48 Other 489 2,120 2,050 2,863 2,351 2,382 2,589 2,471 2,474 2,412 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 9,845 7,4% 7,314 6,128 6,366 6,286 6,064 5,809 5,535 5,611 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 Nov. Dec. Jan.' Feb. Mar. Apr. Mayp 1 Total 435,726 540,996 618,874 677,381 683,950 660,256 677,624' 690,900' 683,725 676,277 2 Foreign countries 429,905 535,189 614,411 672,403 680,726 657,551 674,371' 687,136' 679,611 672,853 3 Europe 164,114 180,556 234,641 233,867 235,979 223,869 228,393 231,905' 230,616 228,054 4 Austria 693 1,181 920 1,599 1,155 1,129 1,777 1,436 1,608 1,427 5 Belgium-Luxembourg 5,243 6,729 9,347 11,100 10,028 8,991 10,508 9,316' 10,114 8,778 6 Denmark 513 482 760 3,089 2,180 1,833 2,082 1,639 1,615 1,642 7 Finland 4% 580 377 359 284 375 560 527 397 432 8 France 15,541 22,862 29,835 24,546 24,762 22,264 24,260 26,824' 25,734 24,318 9 Germany 4,835 5,762 7,022 7,983 6,777 5,794 5,263 5,514 6,968 7,785 10 Greece 666 700 689 683 672 919 933 760 927 1,172 11 Italy 9,667 10,875 12,073 13,339 14,602 11,312 11,073 13,480 12,964 12,543 12 Netherlands 4,212 5,600 5,014 5,939 5,316 5,248 6,011 5,600 5,601 5,862 13 Norway 948 735 1,362 1,342 1,559 1,502 1,367 1,547 1,783 1,479 14 Portugal 652 699 801 739 903 870 813 831 824 985 15 Spain 2,114 2,407 2,621 5,980 5,494 5,750 5,174 4,902 5,794 5,415 16 Sweden 1,422 884 1,379 1,815 1,274 1,299 1,319 1,416 1,730 1,556 17 Switzerland 29,020 30,534 33,766 31,890 34,183 32,519 31,659 29,815' 28,873 28,791 18 Turkey 429 454 703 793 1,012 939 1,246 1,023 1,046 812 19 United Kingdom 76,728 85,334 116,852 111,693 115,926 110,878 113,419^ 115,325 111,604 112,295 20 Yugoslavia 673 630 710 569 529 489 434 440 465 479 21 Other Western Europe1 9,635 3,326 9,798 9,627 8,598 10,906 9,929 10,730 11,521 11,615 22 U.S.S.R 105 80 32 74 138 155 108 102 90 218 23 Other Eastern Europe2 523 702 582 710 589 697 458 677 958 448 24 Canada 17,427 26,345 30,095 26,199 21,040 19,277 20,732 25,694 22,984 18,342 25 Latin America and Caribbean 167,856 210,318 220,372 256,775 266,295 257,809 263,344' 264,598' 267,284 268,611 26 Argentina 6,032 4,757 5,006 7,360 7,804 7,629 6,836 6,415' 6,280 6,493 27 Bahamas 57,657 73,619 74,767 83,728 86,606 82,009 83,455 85,586' 86,053 88,882 28 Bermuda 2,765 2,922 2,344 2,752 2,621 2,381 2,545 2,513' 2,367 2,427 29 Brazil 5,373 4,325 4,005 5,255 5,304 4,675 4,829 4,925 5,554 5,297 30 British West Indies 42,674 72,263 81,494 103,755 109,335 107,026 110,989' 110,809' 112,838 111,663 31 Chile 2,049 2,054 2,210 2,677 2,936 2,969 2,975 3,063 2,933 2,988 32 Colombia 3,104 4,285 4,204 4,277 4,374 4,317 4,470' 4,166' 4,190 4,032 33 Cuba 11 7 12 9 10 10 10 10 10 16 34 Ecuador 1,239 1,236 1,082 1,381 1,379 1,365 1,403' 1,422 1,376 1,285 35 Guatemala 1,071 1,123 1,082 1,187 1,195 1,236 1,259 1,271 1,272 1,232 36 Jamaica 122 136 160 177 269 180 170 223 222 188 37 Mexico 14,060 13,745 14,480 15,470 15,106 15,273 14,867 14,625 14,273 13,979 38 Netherlands Antilles 4,875 4,970 4,975 5,933 6,420 5,763 5,641 5,666 5,767 6,075 39 Panama 7,514 6,886 7,414 4,152 4,353 4,284 4,497' 4,388 4,348 4,435 40 Peru 1,167 1,163 1,275 1,694 1,671 1,716 1,728 1,707 1,763 1,716 41 Uruguay 1,552 1,537 1,582 1,909 1,898 2,011 2,142 2,243 2,258 2,328 42 Venezuela 11,922 10,171 9,048 9,353 9,146 9,159 9,532 9,489' 9,553 9,404 43 Other 4,668 5,119 5,234 5,706 5,868 5,806 5,997' 6,076' 6,227 6,173 44 Asia 72,280 110088,,883311 112211,,228888 114455,,662200 114477,,224466 114466,,559944 115511,,223377'' 115544,,990000'' 114488,,779955 114477,,447755 China 45 Mainland 1,607 1,476 1,162 1,401 1,892 1,566 1,602 1,588' 1,809 1,642 46 Taiwan 7,786 18,902 21,503 24,747 26,058 26,178 26,001 26,143' 28,265 26,923 47 Hong Kong 8,067 9,393 10,180 12,437 11,727 10,891 11,387 10,761 11,422 12,207 48 India 712 674 582 770 6% 689 838 900 1,787 1,009 49 Indonesia 1,466 1,547 1,404 995 1,189 1,189 1,198 1,611 1,168 1,319 50 Israel 1,601 1,892 1,292 1,063 1,471 1,217 1,366 1,156 973 1,113 51 Japan 23,077 47,410 54,322 73,000 73,989 75,337 77,407 83,02c 72,715 70,450 52 Korea 1,665 1,141 1,637 2,654 2,541 2,454 2,502 2,827 3,023 3,194 53 Philippines 1,140 1,866 1,085 1,139 1,163 976 1,014 977 981 992 54 Thailand 1,358 1,119 1,345 1,205 1,236 1,373 1,615 1,151 1,165 1,162 55 Middle-East oil-exporting countries 14,523 12,352 13,988 12,876 12,060 12,426 12,372' 12,029 12,098 13,486 56 Other 9,276 11,058 12,788 13,334 13,225 12,298 13,935' 12,737' 13,389 13,980 57 Africa 4,883 4,021 3,945 3,545 3,991 3,690 3,793' 3,717' 3,665 3,806 58 Egypt 1,363 706 1,151 758 913 771 819 756 721 702 59 Morocco 163 92 194 64 68 90 69 60 82 68 60 South Africa 388 270 202 267 437 250 212 226 256 320 61 Zaire 163 74 67 80 85 74 75 77 73 92 62 Oil-exporting countries4 1,494 1,519 1,014 952 1,017 1,024 1,121 1,062 1,017 882 63 Other 1,312 1,360 1,316 1,425 1,472 1,480 1,4%' 1,536' 1,516 1,742 64 Other countries 3,347 5,118 4,070 6,397 6,175 6,312 6,872 6,322 6,267 6,565 65 Australia 2,779 4,196 3,327 5,426 5,303 5,485 6,037 5,490 5,471 5,702 66 All other 568 922 744 971 872 827 836 832 796 863 67 Nonmonetary international and regional organizations 5,821 5,807 4,464 4,978 3,224 2,704 3,252 3,764' 4,115 3,424 68 International 4,806 4,620 2,830 3,491 2,503 1,725 2,106 2,546' 2,682 2,466 69 Latin American regional 894 1,033 1,272 1,276 589 747 732 995 963 564 70 Other regional 121 154 362 211 133 232 414 223 469 394 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 • September 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 Nov. Dec. Jan. Feb. Mar. Apr. May" 1 Total 401,608 444,745 459,877 486,686' 491,083 481,711' 493,175' 503,875 495,929 489,937 2 Foreign countries 400,577 441,724 456,472 481,877' 489,012' 479,132' 491,270' 501,836 494,094 486,652 3 Europe 106,413 107,823 102,348 108,212' 117,053' 107,477' 113,814' 116,279 111,668 112,852 4 Austria 598 728 793 721 485 544 646 809 805 764 5 Belgium-Luxembourg 5,772 7,498 9,397 8,898' 8,517' 8,301' 7,871' 7,834 8,102 8,435 6 Denmark 706 688 717 599 480 410 790 548 770 470 7 Finland 823 987 1,010 1,157 1,065 911 1,114, 909 1,214 1,280 8 France 9,124 11,356 13,548 12,478 13,243' 13,315 14,920 15,729 16,603 16,078 9 Germany 1,267 1,816 2,039 2,307 2,327 2,398 1,695' 3,110 4,015 3,959 10 Greece 991 648 462 601 433 448 517 586 561 595 11 Italy 8,848 9,043 7,460 7,100 7,946 5,526 5,581 5,866 4,890 5,627 12 Netherlands 1,258 3,296 2,619 2,763 2,547 2,514 2,475 2,808 2,732 3,183 13 Norway 706 672 934 478 455 472 601 432 551 567 14 Portugal 1,058 739 477 253 374 339 331 367 281 371 13 Spain 1,908 1,492 1,853 2,054 1,823 2,182 2,153 2,133 2,309 1,893 16 Sweden 2,219 1,964 2,254 2,083 1,977 2,619 2,622 2,613 2,164 2,157 17 Switzerland 3,171 3,352 2,718 2,984' 3,895 3,510' 3,780' 3,822 4,853 4,2% 18 Turkey 1,200 1,543 1,680 1,265 1,233 1,152 1,108 1,039 1,005 910 19 United Kingdom 62,566 58,335 50,823 58,089' 65,702' 58,065' 62,469' 62,877 55,858 57,%1 20 Yugoslavia 1,964 1,835 1,700 1,450 1,390 1,371 1,348 1,455 1,369 1,366 21 Other Western Europe 998 539 619 916 1,152 1,275 1,560 1,262 1,465 966 22 U.S.S.R 130 345 389 1,218 1,255 1,286 1,389 1,298 1,346 1,155 23 Other Eastern Europe 1,107 948 852 799 754' 838' 845 780 775 820 24 Canada 16,482 21,006 25,368 23,278' 18,889' 16,733' 18,079 19,042 19,154 16,049 25 Latin America and Caribbean 202,674 208,825 214,789 211,855' 214,074' 210,439' 210,538' 220,767 220,089 217,6% 26 Argentina 11,462 12,091 11,996 12,046' 11,826' 11,880 11,802' 11,616 11,516 11,381 27 Bahamas 58,258 59,342 64,587 67,241' 67,006' 68,836' 69,607' 72,804' 75,548 70,442 28 Bermuda 499 418 471 511 483 475 535 707 361 449 29 Brazil 25,283 25,716 25,897 26,399 25,735 25,835 25,369' 25,615 25,945 25,872 30 British West Indies 38,881 46,284 50,042 51,344' 55,640' 50,542' 50,542 57,570 54,711 57,742 31 Chile 6,603 6,558 6,308 5,319 5,217' 5,156 5,141' 5,335 5,224 5,266 32 Colombia 3,249 2,821 2,740 2,983' 2,944' 22,,886677 22,,881133'' 22,,774466 2,661 22,,660000 33 Cuba 0 0 1 0 1 11 11 11 2 11 34 Ecuador 2,390 2,439 2,286 2,162 2,075 2,048 2,026 2,032 2,024 1,944 35 Guatemala4 194 140 144 167 198 185 188 199 210 207 36 Jamaica4 224 198 188 206' 212' 214 202 251 266 271 37 Mexico 31,799 30,698 29,532 25,386 24,636 24,445 24,387' 24,187 24,058 24,007 38 Netherlands Antilles 1,340 1,041 980 1,43C 1,312' 1,222 1,150 1,005 1,010 1,000 39 Panama 6,645 5,436 4,744 2,378' 2,535' 2,535 2,535' 2,460 2,424 2,475 40 Peru 1,947 1,661 1,329 1,014' 1,013' 1,011 952 947 947 938 41 Uruguay 960 940 963 888 910 880 856 875 876 832 42 Venezuela 10,871 11,108 10,843 10,737' 10,733' 10,748 10,957' 10,761 10,635 10,600 43 Other Latin America and Caribbean 2,067 1,936 1,738 1,642' 1,5%' 1,560 1,475 1,658 1,668 1,670 44 Asia 66,212 96,126 106,0% 130,258' 130,867' 113355,,883399'' 114400,,004411'' 113377,,005555 113344,,668811 113311,,661133 China Mainland 639 787 968 777 762 830 881 993 816 959 46 Taiwan 1,535 2,681 4,592 3,845 4,184 3,902 3,960 4,179 3,952 3,715 47 Hong Kong 6,797 8,307 8,218 10,818' 10,136' 8,727 8,004 7,884 8,333 8,855 48 India 450 321 510 568 560 645 628 563 425 411 49 Indonesia 698 723 580 767 674' 669 735 649 726 682 50 Israel 1,991 1,634 1,363 1,231 1,137 1,0%' 1,043' 1,050 1,054 1,041 51 Japan 31,249 59,674 68,658 89,509' 90,161' 99,056' 104,831' 101,471 97,877 93,431 52 Korea 9,226 7,182 5,148 5,390 5,219 4,%1 4,891 5,183 5,198 5,338 53 Philippines 2,224 2,217 2,071 1,900 1,876 1,847 1,900 1,913 1,839 1,810 54 Thailand ^ 845 578 4% 778 850 887 931 986 1,023 975 55 Middle East oil-exporting countries 4,298 4,122 4,858 6,657 6,182' 5,371' 4,681' 5,409 5,130 5,515 56 Other Asia 6,260 7,901 8,635 8,018 9,126' 7,847' 7,556' 6,776 8,309 8,881 57 Africa 5,407 4,650 4,742 5,629 5,718' 5,924 6,072 5,973 6,086 6,084 58 Egypt 721 567 521 532 507' 495 567 543 541 541 59 Morocco 575 598 542 488 511 524 532 541 532 538 60 South Africa 1,942 1,550 1,507 1,698 1,681 1,688 1,718 1,702 1,742 1,753 61 Zaire 20 28 15 18 17 16 16 17 19 19 62 Oil-exporting countries 630 694 1,003 1,491 1,523 1,534 1,522 1,481 1,474 1,504 63 Other 1,520 1,213 1,153 1,402 1,479 1,666 1,717 1,690 1,778 1,729 64 Other countries 3,390 3,294 3,129 2,645 2,410 2,720 2,726 2,720 2,417 2,359 65 Australia 2,413 1,949 2,100 1,586 1,517 1,711 1,686 1,685 1,505 1,167 66 All other 978 1,345 1,029 1,059 894 1,009 1,040 1,034 912 1,192 67 Nonmonetary international and regional organizations 1,030 3,021 3,404 4,809' 2,071' 2,579' 1,905 2,039 1,835 3,284 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 1988r 1989 TTyyppee ooff ccllaaiimm 11998855 11998866 11998877 Nov. Dec. Jan/ Feb/ Mar/ Apr. May" 1 Total 444444433333330000000,,,,,,,444444488888889999999 444444477777778888888,,,,,,,666666655555550000000 444444499999997777777,,,,,,,666666633333335555555 555555533333338888888,,,,,,,666666600000007777777 555555555555557777777,,,,,,,000000055555554444444 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444400000001111111,,,,,,,666666600000008888888 444444444444444444444,,,,,,,777777744444445555555 444444455555559999999,,,,,,,888888877777777777777 486,686 444444499999991111111,,,,,,,000000088888883333333 481,711 493,175 555555500000003333333,,,,,,,888888877777775555555 495,929 489,937 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666660000000,,,,,,,555555500000007777777 66666664444444,,,,,,,000000099999995555555 66666664444444,,,,,,,666666600000005555555 65,403 66666662222222,,,,,,,444444433333338888888 63,974 63,245 66666662222222,,,,,,,666666699999996666666 62,801 63,068 44 OOwwnn ffoorreeiiggnn ooffffiicceess 111111177777774444444,,,,,,,222222266666661111111 222222211111111111111,,,,,,,555555533333333333333 222222222222224444444,,,,,,,777777722222227777777 255,632 222222255555557777777,,,,,,,333333344444445555555 256,848 262,810 222222277777771111111,,,,,,,999999911111115555555 260,222 257,234 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111111111116666666,,,,,,,666666655555554444444 111111122222222222222,,,,,,,999999944444446666666 111111122222227777777,,,,,,,666666600000009999999 123,213 111111122222229999999,,,,,,,444444411111113333333 119,040 124,495 111111133333330000000,,,,,,,000000077777775555555 131,523 130,280 66 DDeeppoossiittss 44444448888888,,,,,,,333333377777772222222 55555557777777,,,,,,,444444488888884444444 66666660000000,,,,,,,666666688888887777777 55,777 66666665555555,,,,,,,888888811111119999999 58,389 62,616 66666666666666,,,,,,,555555555555553333333 69,007 67,569 77 OOtthheerr 66666668888888,,,,,,,222222288888882222222 66666665555555,,,,,,,444444466666662222222 66666666666666,,,,,,,999999922222222222222 67,436 66666663333333,,,,,,,555555599999994444444 60,650 61,879 66666663333333,,,,,,,555555522222222222222 62,516 62,711 88 AAllll ootthheerr ffoorreeiiggnneerrss 55555550000000,,,,,,,111111188888885555555 44444446666666,,,,,,,111111177777771111111 44444442222222,,,,,,,999999933333336666666 42,438 44444441111111,,,,,,,888888888888886666666 41,850 42,626 33333339999999,,,,,,,111111188888889999999 41,382 39,354 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 22222228888888,,,,,,,888888888888881111111 33333333333333,,,,,,,999999900000005555555 33333337777777,,,,,,,777777755555558888888 44444447777777,,,,,,,555555522222224444444 55555553333333,,,,,,,111111177777778888888 3333333,,,,,,,333333333333335555555 4444444,,,,,,,444444411111113333333 3333333,,,,,,,666666699999992222222 8888888,,,,,,,222222288888889999999 11111112222222,,,,,,,000000088888884444444 11 Negotiable and readily transferable 11111119999999,,,,,,,333333333333332222222 22222224444444,,,,,,,000000044444444444444 22222226666666,,,,,,,666666699999996666666 22222225555555,,,,,,,777777700000000000000 22222224444444,,,,,,,999999966666660000000 12 Outstanding collections and other 6666666,,,,,,,222222211111114444444 5555555,,,,,,,444444444444448888888 7777777,,,,,,,333333377777770000000 11111113333333,,,,,,,555555533333335555555 11111116666666,,,,,,,111111133333334444444 13 MEMO: Customer liability on 22222228888888,,,,,,,444444488888887777777 22222225555555,,,,,,,777777700000006666666 22222223333333,,,,,,,111111100000007777777 11111119999999,,,,,,,555555555555556666666 11111117777777,,,,,,,111111166666661111111 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States5 38,102 43,984 40,587 49,783 43,360 46,294 47,775 45,419 46,399 n.a. 1. Data for banks' own claims are given on a monthly basis, but the data for parent foreign bank. claims of banks' own domestic customers are available on a quarterly basis only. 3. Assets owned by customers of the reporting bank located in the United Reporting banks include all kinds of depository institutions besides commercial 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, and foreign branches, agencies, or wholly owned subsidiaries of head office or 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' 1989 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998855 11998866 11998877 June Sept. Dec. Mar. 1 Total 227,903 232,295 235,130 228,219 230,401 233,152 230,888 By borrower 2 Maturity of 1 year or less 160,824 160,555 163,997 163,762 167,956 172,571 167,943 3 Foreign public borrowers 26,302 24,842 25,889 27,551 29,389 26,581 23,822 4 All other foreigners 134,522 135,714 138,108 136,211 138,567 145,990 144,121 5 Maturity over 1 year 67,078 71,740 71,133 64,456 62,444 60,581 62,945 6 Foreign public borrowers 34,512 39,103 38,625 35,792 35,156 35,067 37,941 7 All other foreigners 32,567 32,637 32,507 28,664 27,288 25,514 25,004 By area Maturity of 1 year or less 8 Europe 56,585 61,784 59,027 55,971 54,283 56,037 57,624 9 Canada 6,401 5,895 5,680 6,664 6,410 6,283 5,137 10 Latin America and Caribbean 63,328 56,271 56,535 56,219 55,552 57,867 53,198 11 27,966 29,457 35,919 38,902 42,375 46,160 45,545 12 Africa 3,753 2,882 2,833 2,914 3,120 3,336 3,610 13 All other3 2,791 4,267 4,003 3,092 6,216 2,888 22,,883300 Maturity of over 1 year 14 Europe 7,634 6,737 6,696 5,315 5,306 4,682 4,461 15 Canada 1,805 1,925 2,661 2,333 2,051 1,922 2,280 16 Latin America and Caribbean 50,674 56,719 53,817 49,755 48,274 47,572 49,746 17 Asia 4,502 4,043 3,830 3,622 3,933 3,603 3,686 18 Africa 1,538 1,539 1,747 2,433 2,257 2,301 2,293 19 All other3 926 777 2,381 998 625 501 480 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 • September 1989 3.21 CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks1-2 Billions of dollars, end of period 1987 1988 1989 AArreeaa oorr ccoouunnttrryy 11998855 11998866 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total 385.4 385.1 395.4 384.6 387.7 381.4 370.2r 350.8' 354.4' 349.6' ssi^ 2 G-10 countries and Switzerland 146.0 156.6 162.7 158.1 155.2 160.0 157.0r 151.0' 149.5 154.4' 149.5' 3 Belgium-Luxembourg 9.2 8.3 9.1 8.3 8.2 10.1 9.3 9.1' 9.5 9.0 8.6 4 France 12.1 13.7 13.3 12.5 13.7 13.8 11.5 10.8 10.0 10.7 11.2 5 Germany 10.5 11.6 12.7 11.2 10.5 12.6 11.8 10.6 8.9 9.9 10.0 6 Italy 9.6 9.0 8.7 7.5 6.6 7.3 7.4 6.1 5.8' 6.3' 4.9 7 Netherlands 3.7 4.6 4.4 7.3 4.8 4.1 3.3 3.3 3.0 2.8 2.9 8 Sweden 2.7 2.4 3.0 2.4 2.6 2.1 2.1 1.9 2.0 2.0 2.4 9 Switzerland 4.4 5.8 5.8 5.7 5.4 5.6 5.1 5.6 5.2 5.7 5.2 10 United Kingdom 63.0 71.0 73.7 72.0 72.1 69.1 71.7 70.5 68.1 66.7 66.1' 11 Canada 6.8 5.3 5.3 4.7 4.7 5.5 4.9 5.4 5.2 5.5 4.6 12 Japan 23.9 24.9 26.9 26.3 26.5 29.8 29.9r 27.8' 31.7 35.9 33.6 13 Other developed countries 29.9 25.7 25.7 25.2 25.9 26.2 26. lr 23.7 22.7 20.9 20.8 14 Austria 1.5 1.7 1.9 1.8 1.9 1.9 1.6 1.6 1.6 1.6 1.4 15 Denmark 2.3 1.7 1.7 1.5 1.6 1.7 1.4 1.0 1.1 .9 1.0 16 Finland 1.6 1.4 1.4 1.4 1.4 1.3 1.0 1.2 1.3 1.2 1.0 17 Greece 2.6 2.3 2.1 2.0 1.9 2.0 2.3 2.2 2.1 1.9 2.2 18 Norway 2.9 2.4 2.2 2.1 2.0 2.3 2.0 2.0 2.0 1.8 1.5 19 Portugal 1.2 .8 .9 .8 .8 .5 .4 .4 .4 .5 .5 20 Spain 5.8 5.8 6.3 6.1 7.4 8.0 9.0 7.2 6.3 6.2 6.3 21 Turkey 1.8 1.8 1.7 1.7 1.5 1.6 1.6 1.5 1.3 1.3 1.0 22 Other Western Europe 2.0 1.4 1.4 1.5 1.6 1.6 1.9 1.6 1.9 1.3 1.4 23 South Africa 3.2 3.0 3.0 3.0 2.9 2.9 2.8 2.8 22..77 22..44 2.2 24 Australia 5.0 3.5 3.2 3.1 2.9 2.4 2.1 2.2 11..88 11..88 2.4 25 OPEC countries3 21.3 19.3 20.0 18.8 19.0 17.1 17.2 16.4 17.6 16.5 16.3 26 Ecuador 2.1 2.2 2.1 2.1 2.1 1.9 1.9 1.8 1.8 1.7 1.7 27 Venezuela 8.9 8.6 8.5 8.4 8.3 8.1 8.0 8.0 7.9 77..99 8.0 28 Indonesia 3.0 2.5 2.4 2.2 2.0 1.9 1.9 1.9 1.9 11..88'' 1.8 29 Middle East countries 5.3 4.3 5.4 4.4 5.0 3.6 3.6 3.1 4.3 3.3' 3.2 30 African countries 2.0 1.7 1.6 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.6 31 Non-OPEC developing countries 104.2 99.1 100.7 100.4 97.7 97.6 94.4' 91.3 87.0 85.3' 85.6' Latin America 32 Argentina 8.8 9.5 9.5 9.5 9.3 9.4 9.5 9.4 9.2 8.9 8.4 33 Brazil 25.4 25.2 26.2 25.1 25.1 24.7 23.9 23.7 22.4 22.5 22.7' 34 Chile 6.9 7.1 7.3 7.2 7.0 6.9 6.6 6.4 6.2 5.5' 5.6 35 Colombia 2.6 2.1 2.0 1.9 1.9 2.0 1.9 2.1 2.1 2.0 1.9 36 Mexico 23.9 23.8 24.1 25.3 24.8 23.7 22.5 21.1 2200..66 1199..00 18.2' 37 Peru 1.8 1.4 1.4 1.3 1.2 1.1 1.1 .9 ..88 ..88 .7 38 Other Latin America 3.4 3.1 3.0 2.9 2.8 2.7 2.8 2.6 2.5 2.6 2.8' Asia China 39 Mainland .5 .4 .9 .6 .3 .3 .4 .3 .2 .3 .5 40 Taiwan 4.5 4.9 5.5 6.6 6.0 8.2 6.1 4.9 3.2 3.6 4.9 41 India 1.2 1.2 1.8 1.7 1.9 1.9 2.1 2.3 2.0 2.1 2.6 42 Israel 1.6 1.5 1.4 1.3 1.3 1.0 1.0 1.0 1.0 1.2 .9 43 Korea (South) 9.2 6.6 6.2 5.6 4.9 4.9 5.6 5.9 6.0 6.1 6.2' 44 Malaysia 2.4 2.1 1.9 1.7 1.6 1.5 1.5 1.5 1.6 1.6 1.7 45 Philippines 5.7 5.4 5.4 5.4 5.4 5.1 5.1 4.9 4.5 4.5 4.3 46 Thailand 1.4 .9 .9 .8 .7 .7 1.0 11..11 1.2 1.1 11..00 47 Other Asia 1.0 .7 .6 .7 .7 .7 .7 ..88 .8 .9 ..88 Africa 48 Egypt 1.0 .7 .6 .6 .6 .5 .5 .6 ..55 .4 .5 49 Morocco .9 .9 .9 .9 .8 .9 ..99 ..99 ..88 .9 .9 5 5 0 1 Z O a th ir e e r Africa4 1 . . 1 9 1 . . 1 6 1 . . 1 4 1 . . 1 3 1 . . 1 3 1 . . 0 3 1. .. 2 11 1 .. . 11 2 1 . . 0 2 1. 0 1 1. 0 1 52 Eastern Europe 4.1 3.2 3.0 3.3 3.3 3.0 2.9 3.1 3.0 3.7 3.5 53 U.S.S.R .1 .1 .1 .3 .5 .4 .3 .4 .4 ..77 .7 54 Yugoslavia 2.2 1.7 1.6 1.7 1.7 1.6 1.7 1.7 1.7 11..88 1.7 55 Other 1.8 1.4 1.3 1.3 1.2 1.0 .9 1.0 1.0 1.2 1.2 56 Offshore banking centers 62.9 61.3 63.1 60.7 64.3 54.3 5i.r 43.0' 47.2' 46.5' 50^ 57 Bahamas 21.2 22.0 23.9 19.9 25.5 17.1 15.2r 8.6 12.5 1111..55 15.6' 58 Bermuda .7 .7 .8 .6 .6 .6 .8 1.0 .9 ..88 1.0 59 Cayman Islands and other British West Indies 11.6 12.4 12.2 14.0 12.8 13.3 11.8' 10.5' 12.3' 14.0' 14.4' 6 6 1 0 N Pa e n th am er a la 5 nds Antilles 6 2. . 2 0 4 1 . . 0 8 4 1 . . 3 7 3 1 . . 9 3 3 1 . . 7 2 3 1 . . 7 2 3 1 . . 3 3 3 1 . . 0 2 22 1 .. . 77 2 22 1 .. . 66 0 22.. . 33 9 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 ..11 ..11 ..11 63 Hong Kong 11.4 11.1 11.4 12.5 12.3 11.2 11.3 11.7 10.6 10.2 9.9 6 6 5 4 O Si t n h g e a r p s6 o re 9. . 8 0 9. . 2 0 8. . 6 0 8. . 3 0 8. . 1 0 7. . 0 0 7. . 4 0 6. . 8 0 7. . 0 0 6. . 2 0 6. . 7 0 66 Miscellaneous and unallocated7 16.9 19.8 20.1 18.1 22.3 23.2 21.5 22.3 27.0 21.8 24.8' 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' 1989 Type, and area or country 11998844 11998855 11998866 Dec/ Mar. June Sept. Dec. Mar/ 1 Total 29,357 27,825 25,587 28,303 29,792 30,283 32,244 33,013 35,806 2 Payable in dollars 26,389 24,296 21,749 22,785 24,339 25,131 27,215 27,817 30,401 3 Payable in foreign currencies 2,968 3,529 3,838 5,518 5,453 5,152 5,029 5,196 5,405 By type 4 Financial liabilities 14,509 13,600 12,133 12,424 14,139 14,070 14,953 14,753 16,175 5 Payable in dollars 12,553 11,257 9,609 8,643 10,472 10,560 11,558 11,266 12,472 6 Payable in foreign currencies 1,955 2,343 2,524 3,781 3,667 3,510 3,395 3,487 3,703 7 Commercial liabilities 14,849 14,225 13,454 15,878 15,653 16,213 17,291 18,260 19,631 8 Trade payables 7,005 6,685 6,450 7,305 6,454 6,768 6,479 6,247 6,760 9 Advance receipts and other liabilities .. 7,843 7,540 7,004 8,573 9,200 9,446 10,812 12,014 12,871 10 Payable in dollars 13,836 13,039 12,140 14,142 13,867 14,571 15,657 16,551 17,929 11 Payable in foreign currencies 1,013 1,186 1,314 1,737 1,786 1,642 1,635 1,709 1,702 By area or country Financial liabilities 12 Europe 6,728 7,700 7,917 8,320 9,377 9,215 10,353 9,559 11,168 13 Belgium-Luxembourg 471 349 270 213 251 279 336 287 317 14 France 995 857 661 364 390 353 354 249 231 15 Germany 489 376 368 551 553 503 488 548 372 16 Netherlands 590 861 542 884 1,008 880 1,014 897 951 17 Switzerland 569 610 646 558 691 638 734 1,163 889 18 United Kingdom 3,297 4,305 5,140 5,557 6,301 6,390 7,257 6,268 8,213 19 Canada 863 839 399 360 394 403 421 638 603 20 Latin America and Caribbean 5,086 3,184 1,944 1,189 1,452 1,448 1,057 1,239 677 21 Bahamas 1,926 1,123 614 318 289 250 238 184 189 22 Bermuda 13 4 4 0 0 0 0 0 0 2 2 3 4 B Br r a it z is il h West Indies 2,10 3 3 5 1,8 2 4 9 3 1,1 3 4 2 6 1215 % 1,09 0 9 1,15 0 4 81 0 2 64 0 5 47 0 1 25 Mexico 367 15 22 13 15 26 2 1 15 26 Venezuela 137 3 0 0 2 0 0 0 0 27 Asia 1,777 1,815 1,805 2,452 2,836 2,928 3,116 3,313 3,722 28 Japan 1,209 1,198 1,398 2,042 2,375 2,331 2,462 2,563 2,950 29 Middle East oil-exporting countries2 . 155 82 8 8 11 11 4 3 1 30 Africa 14 12 1 4 5 2 3 1 5 0 0 1 1 3 1 1 0 3 31 Oil-exporting countries 41 50 67 100 75 74 3 2 2 32 All other4 Commercial liabilities 4,001 4,074 4,446 5,505 5,619 5,722 6,687 7,274 7,693 33 Europe 48 62 101 132 154 147 205 169 133 34 Belgium-Luxembourg 438 453 352 426 414 408 438 455 569 35 France 622 607 715 908 810 791 1,185 1,684 1,345 36 Germany 245 364 424 423 457 508 647 590 667 37 Netherlands 257 379 385 559 527 482 486 410 451 38 Switzerland 1,095 976 1,341 1,588 1,722 1,771 2,105 2,032 2,409 39 United Kingdom 40 Canada 1,975 1,449 1,405 1,301 1,392 1,167 1,109 1,207 1,147 41 Latin America and Caribbean 1,871 1,088 924 864 980 1,035 997 999 1,186 42 Bahamas 7 12 32 18 19 61 19 45 35 43 Bermuda 114 77 156 168 325 272 222 184 376 44 Brazil 124 58 61 46 59 54 58 91 100 45 British West Indies 32 44 49 19 14 28 30 31 29 46 Mexico 586 430 217 189 164 233 177 179 197 47 Venezuela 636 212 216 162 122 140 204 176 179 48 Asia 5,285 6,046 5,080 6,565 5,883 6,279 6,627 6,899 7,430 49 Japan ... 1,256 1,799 2,042 2,578 2,508 2,659 2,763 3,087 3,046 50 Middle East oil-exporting countries2'3 2,372 2,829 1,679 1,964 1,062 1,320 1,298 1,386 1,526 51 Africa 588 587 619 574 575 626 465 564 692 52 Oil-exporting countries 233 238 197 135 139 115 1065 201 271 53 All other4 1,128 982 980 1,068 1,204 1,383 1,407 1,317 1,482 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 • September 1989 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1987 1988' 1989 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998844 11998855 11998866 Dec/ Mar. June Sept. Dec. Mar.p 1 Total 29,901 28,876 36,265 30,942 31,067 37,633 37,415 31,882 30,049 2 Payable in dollars 27,304 26,574 33,867 28,469 28,993 35,593 34,984 29,622 27,851 3 Payable in foreign currencies 2,597 2,302 2,399 2,473 2,074 2,040 2,431 2,260 2,198 By type 4 Financial claims 19,254 18,891 26,273 20,341 20,304 26,265 26,327 20,233 18,346 5 Deposits 14,621 15,526 19,916 14,953 12,693 19,551 19,127 14,556 13,610 6 Payable in dollars 14,202 14,911 19,331 13,813 12,105 18,822 18,180 13,525 12,759 7 Payable in foreign currencies 420 615 585 1,140 588 730 947 1,031 850 8 Other financial claims 4,633 3,364 6,357 5,388 7,612 6,714 7,200 5,677 4,737 9 Payable in dollars 3,190 2,330 5,005 4,574 6,491 5,819 6,257 4,953 3,8% 10 Payable in foreign currencies 1,442 1,035 1,352 814 1,120 895 942 724 841 11 Commercial claims 10,646 9,986 9,992 10,600 10,763 11,367 11,088 11,649 11,703 12 Trade receivables 9,177 8,696 8,783 9,535 9,650 10,332 10,103 10,574 10,447 13 Advance payments and other claims 1,470 1,290 1,209 1,065 1,113 1,036 985 1,075 1,256 14 Payable in dollars 9,912 9,333 9,530 10,081 10,397 10,952 10,546 11,144 11,1% 15 Payable in foreign currencies 735 652 462 519 366 415 542 505 507 By area or country Financial claims 16 Europe 5,762 6,929 10,744 9,523 9,812 11,514 10,534 9,867 8,888 17 Belgium-Luxembourg 15 10 41 7 15 16 49 10 7 18 France 126 184 138 332 308 181 278 224 230 19 Germany 224 223 116 103 95 169 123 138 168 20 Netherlands 66 161 151 351 335 336 359 345 379 21 Switzerland 66 74 185 65 54 105 84 215 173 22 United Kingdom 4,864 6,007 9,855 8,455 8,790 10,428 9,311 8,578 7,619 23 Canada 3,988 3,260 4,808 2,844 2,669 2,913 3,612 2,338 2,171 24 Latin America and Caribbean 8,216 7,846 9,291 6,994 6,451 10,842 11,130 6,951 6,215 25 Bahamas 3,306 2,698 2,628 1,994 2,329 4,176 4,074 1,781 2,138 26 Bermuda 6 6 6 7 43 87 188 19 25 27 Brazil 100 78 86 63 86 46 44 47 49 28 British West Indies 4,043 4,571 6,078 4,414 3,461 6,030 6,358 4,617 3,582 29 Mexico 215 180 174 172 154 147 133 151 117 30 Venezuela 125 48 21 19 35 28 27 22 26 31 Asia 961 731 1,317 883 1,2% 878 930 801 929 32 Japan 353 475 999 605 1,133 646 737 603 685 33 Middle East oil-exporting countries2 13 4 7 10 7 6 6 6 8 34 Africa 210 103 85 65 53 60 % 107 91 35 Oil-exporting countries3 85 29 28 7 7 10 9 10 9 36 All other4 117 21 28 33 24 58 26 169 51 Commercial claims 37 Europe 3,801 3,533 3,725 4,180 4,170 4,694 4,286 4,835 4,793 38 Belgium-Luxembourg 165 175 133 178 193 158 171 174 198 39 France 440 426 431 650 552 684 542 665 750 40 Germany 374 346 444 562 637 773 613 590 626 41 Netherlands 335 284 164 133 150 172 145 207 156 42 Switzerland 271 284 217 185 173 262 183 317 242 43 United Kingdom 1,063 898 999 1,073 1,059 1,095 1,172 1,181 1,193 44 Canada 1,021 1,023 934 936 1,166 937 977 970 1,0% 45 Latin America and Caribbean 2,052 1,753 1,857 1,930 1,930 2,067 2,104 2,143 2,031 46 Bahamas 8 13 28 19 14 13 12 31 32 47 Bermuda 115 93 193 170 171 174 161 156 175 48 Brazil 214 206 234 226 209 232 234 296 275 49 British West Indies 7 6 39 26 24 25 22 20 21 50 Mexico 583 510 412 368 374 411 463 457 476 51 Venezuela 206 157 237 283 274 304 266 226 210 52 Asia 3,073 2,982 2,755 2,915 2,853 2,994 3,026 2,944 3,110 53 Japan 1,191 1,016 881 1,158 1,107 1,168 %2 928 1,060 54 Middle East oil-exporting countries 668 638 563 450 408 446 437 441 421 55 Africa 470 437 500 401 419 425 425 434 386 56 Oil-exporting countries3 134 130 139 144 126 136 137 122 94 57 All other4 229 257 222 238 225 250 270 324 286 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 Jan.- Nov. Dec. Jan. Feb. Mar. Apr. May" May U.S. corporate securities STOCKS 1 Foreign purchases 249,122 181,048 78,086 11,973 11,224 11,923 18,384 15,811 14,079 17,890 2 Foreign sales 232,849 183,039 76,789 11,861 12,467 11,789 18,495' 15,442 14,235 16,828 3 Net purchases, or sales (-) 16,272 -1,991 1,298 112 -1,243 134 -111' 370 -157 1,062 4 Foreign countries 16,321 -1,816 1,506 89 -1,198 167 -81' 507 -150 1,064 5 Europe 1,932 -3,353 -260 -901 -771 -99 -126 71 182 -289 6 France 905 -281 312 -49 -64 38 159 70 168 -123 7 Germany -70 218 -53 -20 -53 30 59 59 14 -215 8 Netherlands 892 -535 -126 -30 -1 128 -64 4 -125 -69 9 Switzerland -1,123 -2,242 -1,868 -268 -273 -345 -1,181 91 -141 -293 10 United Kingdom 631 -954 1,549 -579 -424 74 800 -107 288 494 11 Canada 1,048 1,087 -52 576 274 320 -361 130 -66 -75 12 Latin America and Caribbean 1,318 1,249 2,304 98 -21 599 575' 636 104 390 13 Middle East' -1,360 -2,473 245 151 -132 -100 265 220 -345 206 14 Other Asia 12,896 1,365 -928 138 -567 -603 -544 -536 -28 784 15 Japan 11,365 1,922 -761 133 -407 -563 -487 -458 -16 763 16 Africa 123 188 47 21 -1 29 4 5 10 -1 17 Other countries 365 121 151 6 19 21 106 -19 -7 50 18 Nonmonetary international and regional organizations -48 -176 -209 23 -45 -33 -30 --113377 -6 -2 BONDS2 19 Foreign purchases 105,856 86,362 44,328 7,650 8,423 6,137 9,610 10,423 9,736 8,421 20 Foreign sales 78,312 58,301 30,468 4,795 4,441 4,757' 4,736 7,025 5,157 8,793 21 Net purchases, or sales (-) 27,544 28,062 13,860 2,856 3,982 1,380' 4,874 3,398 4,579 -372 22 Foreign countries 26,804 28,604r 13,710 2,825 3,978 1,360' 4,908 3,358 4,578 -494 23 Europe 21,989 17,338 8,518 1,240 2,560 499' 2,055 2,794 3,215 -45 24 France 194 143 251 13 -130 107 41 -16 27 93 25 Germany 33 1,344 172 -122 75 15 38 148 135 -164 26 Netherlands 269 1,514 139 171 17 30 -21 69 51 9 27 Switzerland 1,587 513 241 -13 273 130 131 4 90 -114 28 United Kingdom 19,770 13,088 7,514 1,141 2,468 149' 1,751 2,578 2,365 670 29 Canada 1,296 711 696 5 178 180 129 213 115 59 30 Latin America and Caribbean 2,857 1,930 1,539 58 240 229 651 301 219 139 31 Middle East' -1,314 -178' 22 143 159 -128 160 87 3 -100 32 Other Asia 2,021 8,900 2,822 1,353 840 552 1,893 -50 990 -563 33 Japan 1,622 7,686 1,549 1,210 746 392 1,567 -285 608 -734 34 Africa 16 -8 24 -1 0 3 2 5 4 10 35 Other countries -61 -89 88 26 2 24 18 8 33 5 36 Nonmonetary international and regional organizations 740 -542' 150 31 3 20 --3344 4411 11 112222 Foreign securities 37 Stocks, net purchases, or sales (-) 1,081 -l,901r -3,949 —237r -1,102 -891 -629 -147 -956 -1,326 38 Foreign purchases 95,458 75,203r 38,917 7,745r 7,472 6,856 8,070 9,477 6,721 7,794 39 Foreign sales 94,377 77,104r 42,866 7,982' 8,573 7,748 8,698 9,624 7,676 9,120 40 Bonds, net purchases, or sales (-) -7,946 -9,869r -1,915 620' -1,720 -247 -484 -653' -181 -350 41 Foreign purchases 199,089 217,648r 90,312 21,258' 20,510 14,835 18,711 23,395 15,946 17,425 42 Foreign sales 207,035 227,517r 92,227 20,637' 22,230 15,083 19,195 24,047' 16,127 17,775 43 Net purchases, or sales (-), of stocks and bonds -6,865 -11,770' -5,863 383' -2,822 -1,139 -1,112 -800' -1,136 -1,676 44 Foreign countries -6,757 -12,251' -6,463 347r -2,916 -1,115 -1,190 -992' -1,330 -1,835 45 Europe -12,101 -10,205' -5,629 -476 -1,543 -80 -797 -1,399 -1,734 -1,620 46 Canada -4,072 -3,799 -1,861 392 -658 -378 -530 -584 191 -561 47 Latin America and Caribbean 828 1,386 407 23 -32 68 79 161 195 -97 48 Asia 9,299 987' 686 338r -189 -872 -34 885' 71 635 49 Africa 89 -54 -3 18 -33 6 -9 -16 11 4 50 Other countries -800 -567 -61 52 -461 139 100 -40 -65 -196 51 Nonmonetary international and regional organizations -108 481r 599 36 94 -23 78 192 193 115599 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 • September 1989 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1989 1988 1989 Country or area 1987 1988 J M an a . y - Nov. Dec. Jan/ Feb/ Mar. Apr. May" Transactions, net purchases or sales (-) during period1 1 Estimated total2 25,587 48,884r 28,318 8,648' 384' 2,828 8,783 8,640 29 8,039 2 Foreign countries2 30,889 48,187'' 27,050 8,304' 2,384 2,040 9,907 8,297 291 6,516 3 Europe2 23,716 14,343'' 10,716 1,776'' 33C 2,141 3,775 2,143 -1,814 44,,447722 4 Belgium-Luxembourg 653 923 114 133 -90 9 127 -23 -87 8888 5 Germany2 13,330 -5,268' -146 -966' -374' 938 -31 -181 -693 -179 6 Netherlands -913 -356 -636 135 -114 268 135 242 -643 -638 7 Sweden 210 -323 3 355 118 -115 297 -508 398 -69 8 Switzerland2 1,917 -1,074 2,776 -411 -18' 214 438 1,768 440 -83 9 United Kingdom 3,975 9,674 4,941 l,953r -232' -348 1,533 1,207 -1,298 3,847 10 Other Western Europe 4,563 10,776 3,674 577 1,054 1,175 1,277 -363 74 1,511 11 Eastern Europe -19 -10 -10 -2 -15 0 0 0 -5 -5 12 Canada 4,526 3,761 287 -368 788 54 17 -55 114 157 13 Latin America and Caribbean -2,192 703 222 582 -104 -104 525 113 -132 -179 14 Venezuela 150 -109 -108 0 0 -37 1 -53 -18 0 15 Other Latin America and Caribbean -1,142 1,120 -92 506 140 -163 247 132 -231 -78 16 Netherlands Antilles -1,200 -308 422 77 -244 % 276 34 117 -101 17 Asia 4,488 27,606' 16,737 6,869' 1,021' 626 5,955 5,659 1,743 2,756 18 Japan 868 21,752 9,765 4,224 -157 116 2,503 1,855 2,624 2,668 19 Africa -56 -13 41 -8 -7 -1 15 -2 32 -3 20 All other 407 1,786 -954 -548 358 -676 -379 439 350 -687 21 Nonmonetary international and regional organizations -5,300 70C 1,270 345r -2,000' 788 -1,124 344 -262 1,524 22 International -4,387 1,142 1,216 489 -2,019 777 -1,072 424 -252 1,340 23 Latin America regional ' 3 -31 31 10 10 0 -10 -8 -21 70 Memo 24 Foreign countries2 30,889 48,187' 27,050 8,303' 2,384' 2,040 9,907 8,297 291 6,516 25 Official institutions 31,064 26,624' 10,957 2,1% 2,243' 2,019 4,299 6,549 -842 -1,068 26 Other foreign2 -181 21,560" 16,093 6,106' 141' 21 5,609 1,747 1,133 7,583 Oil-exporting countries 27 Middle East1 -3,142 1,963' 5,526 2,119' 1,09c 129 3,560 2,607 -471 -299 28 Africa4 16 1 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 July 31, 1989 Rate on July 31, 1989 Rate on July 31, 1989 Country Country Country Percent Month Percent Month Percent Month effective effective effective Austria.. 6.0 June 1989 France 8.75 June 1989 Norway 8.0 June 1983 Belgium . 9.25 June 1989 Germany, Fed. Rep. of. 5.0 June 1989 Switzerland 4.5 Apr. 1989 Brazil ... 49.0 Mar. 1981 Italy 13.5 Mar. 1989 United Kingdom2 Canada.. 12.32 July 1989 Japan 3.25 May 1989 Venezuela 8.0 Oct. 1985 Denmark 8.0 June 1989 Netherlands 6.0 June 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 1989 CCoouunnttrryy,, oorr ttyyppee 11998866 11998877 11998888 Jan. Feb. Mar. Apr. May June July 1 Eurodollars 6.70 7.07 7.86 9.28 9.61 10.18 10.01 9.66 9.28 8.86 2 United Kingdom 10.87 9.65 10.28 13.06 12.97 13.00 13.09 13.08 14.17 13.91 3 Canada 9.18 8.38 9.63 11.34 11.69 12.22 12.58 12.44 12.35 12.24 4 Germany 4.58 3.97 4.28 5.63 6.36 6.57 6.42 6.96 6.93 7.00 5 Switzerland 4.19 3.67 2.94 5.31 5.69 5.75 6.05 7.26 7.09 6.92 6 Netherlands 5.56 5.24 4.72 5.99 6.75 6.88 6.70 7.30 7.11 7.07 7 France 7.68 8.14 7.80 8.55 9.11 9.07 8.61 8.81 8.89 9.05 8 Italy 12.60 11.15 11.04 11.84 12.26 12.88 12.21 12.27 12.35 12.46 9 Belgium 8.04 7.01 6.69 7.59 8.04 8.28 8.17 8.45 8.51 8.46 10 Japan 4.96 3.87 3.% 4.24 4.21 4.21 4.20 4.25 4.46 4.71 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 • September 1989 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1989 CCoouunnttrryy//ccuurrrreennccyy 11998866 11998877 11998888 Feb. Mar. Apr. May June July 1 Australia/dollar2 67.093 70.136 78.408 85.64 81.69 80.35 77.36 75.61 75.66 2 Austria/schilling 15.260 12.649 12.357 13.022 13.148 13.161 13.691 13.912 13.308 3 Belgium/franc 44.662 37.357 36.783 38.792 39.136 39.148 40.723 41.414 39.559 4 Canada/dollar 1.3896 1.3259 1.2306 1.1891 1.1954 1.1888 1.1925 1.1986 1.1891 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 7.2094 7.2912 7.2803 7.5820 7.7087 7.3527 7 Finland/markka 5.0721 4.4036 4.1933 4.3006 4.2994 4.1961 4.3409 4.4302 4.2699 8 France/franc 6.9256 6.0121 5.9594 6.3004 6.3321 6.3223 6.5815 6.7135 6.4105 9 Germany/deutsche mark 2.1704 1.7981 1.7569 1.8505 1.8686 1.8697 1.9461 1.9789 1.8901 10 Greece/drachma 139.93 135.47 142.00 154.72 157.34 159.23 165.41 170.42 163.84 11 Hong Kong/dollar 7.8037 7.7985 7.8071 7.8009 7.7969 7.7828 7.7799 7.7934 7.8040 12 India/rupee 12.597 12.943 13.899 15.240 15.467 15.718 16.102 16.420 16.416 13 Ireland/punt 134.14 148.79 152.49 144.10 142.84 142.67 137.39 134.92 141.26 14 Italy/lira 1491.16 1297.03 1302.39 1355.28 1372.50 1371.80 1415.83 1434.40 1367.39 15 Japan/yen 168.35 144.60 128.17 127.74 130.55 132.04 137.86 143.98 140.42 16 Malaysia/ringgit 2.5830 2.5185 2.6189 2.7307 2.7535 2.7211 2.6967 2.7086 2.6809 17 Netherlands/guilder 2.4484 2.0263 1.9778 2.0895 2.1085 2.1098 2.1938 2.2292 2.1318 18 New Zealand/dollar2 52.456 59.327 65.558 61.629 61.547 61.167 60.718 57.376 57.537 19 Norway /krone 7.3984 6.7408 6.5242 6.7254 6.8059 6.7964 7.0337 7.1852 6.9480 20 Portugal/escudo 149.80 141.20 144.26 152.10 154.05 154.54 160.71 164.92 158.31 21 Singapore/dollar 2.1782 2.1059 2.0132 1.9285 1.9407 1.9497 1.9575 1.9572 1.9589 22 South Africa/rand 2.2918 2.0385 2.1900 2.4570 2.5393 2.5480 2.6710 2.7828 2.6909 23 South Korea/won 884.61 825.93 734.51 680.28 675.68 672.10 669.25 669.43 669.83 24 Spain/peseta 140.04 123.54 116.52 115.67 116.40 116.146 121.39 126.55 118.73 25 Sri Lanka/rupee 27.933 29.471 31.847 33.115 33.416 34.021 34.145 33.475 34.764 26 Sweden/krona 7.1272 6.3468 6.1369 6.3238 6.3933 6.3689 6.5756 6.6872 6.4653 27 Switzerland/franc 1.7979 1.4918 1.4642 1.5740 1.6110 1.6469 1.7290 1.7089 1.6281 28 Taiwan/dollar 37.837 31.756 28.636 27.716 27.591 26.998 25.788 26.023 25.816 29 Thailand/baht 26.314 25.774 25.312 25.386 25.542 25.524 25.757 25.909 25.771 30 United Kingdom/pound2 146.77 163.98 178.13 175.34 171.34 170.08 163.07 155.30 162.68 MEMO 31 United States/dollar3 112.22 96.94 92.72 95.77 96.99 97.24 100.81 103.09 99.12 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

71 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 June 1989 A101 SPECIAL TABLES—Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1988 June 1989 All June 30, 1988 June 1989 A78 September 30, 1988 August 1989 All December 31, 1988 August 1989 A78 Terms of lending at commercial banks May 1988 September 1988 A70 August 1988 January 1989 All November 1988 April 1989 All February 1989 June 1989 A84 Assets and liabilities of U.S. branches and agencies of foreign banks June 30, 1988 January 1989 A78 September 30, 1988 May 1989 All December 31, 1988 June 1989 A90 March 31, 1989 August 1989 A84 Pro forma balance sheet and income statements for priced service operations June 30, 1987 November 1987 A74 September 30, 1987 February 1988 A80 March 31, 1988 August 1988 A70 March 31, 1989 September 1988 All Digitized for FRASER Special tables begin on next page. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Special Tables • September 1989 4.31 Pro forma balance sheet for priced services of the Federal Reserve System1 Millions of dollars Item March 31, 1989 March 31, 1988 Short-term assets2 Imputed reserve requirement on clearing balances 217.9 222.0 Investment in marketable securities 1.598.1 1,628.0 Receivables 61.2 58.4 Materials and supplies 6.3 6.0 Prepaid expenses 23.4 9.0 Items in process of collection 3.509.2 2,875.8 Total short-term assets 5,416.2 4,799.2 Long-term assets3 Premises 275.8 258.7 Furniture and equipment 123.9 119.4 Leases and leasehold improvements 6.2 3.0 Prepaid pension costs 41.1 23.4 Total long-term assets 447.0 404.5 Total assets 5,863.2 5,203.7 Short-term liabilities Clearing balances and balances arising from early credit of uncollected items 2,219.5 2,091.3 Deferred available items 3,105.7 2,634.5 Short-term debt 90.9 73.4 Total short-term liabilities 5,416.2 4,799.2 Long-term liabilities Obligations under capita] leases 1.2 1.2 Long-term debt 128.7 120.8 Total long-term liabilities 129.9 122.0 Total liabilities 5,546.1 4,921.2 Equity 317.1 282.5 Total liabilities and equity4 5,863.2 5,203.7 1. Details may not sum to totals because of rounding. collected for government agencies; and items associated with providing fixed 2. The imputed reserve requirement on clearing balances and investment in availability or credit prior to receipt and processing of items. The cost base for marketable securities reflect the Federal Reserve's treatment of clearing balances providing services that must be recovered under the Monetary Control Act maintained on deposit with Reserve Banks by depository institutions. For includes the cost of float (the difference between the value of gross CIPC and the presentation of the balance sheet and the income statement, clearing balances are value of deferred availability items) incurred by the Federal Reserve during the reported in a manner comparable to the way correspondent banks report period, valued at the federal funds rate. The amount of float, or net CIPC, compensating balances held with them by respondent institutions. That is, represents the portion of gross CIPC that involves a financing cost. respondent balances held with a correspondent are subject to a reserve require- 3. Long-term assets on the balance sheet have been allocated to priced services ment established by the Federal Reserve. This reserve requirement must be with the direct determination method, which uses the Federal Reserve's Planning satisfied with either vault cash or with nonearning balances maintained at a and Control System to ascertain directly the value of assets used solely in priced Reserve Batik. Following this model, clearing balances maintained with Reserve services operations and to apportion the value of jointly used assets between Banks for priced service purposes are subjected to imputed reserve requirements. priced services and nonpriced services. Also, long-term assets include an estimate Therefore, a portion of the clearing balances held with the Federal Reserve is of the assets of the Board of Governors directly involved in the development of classified on the asset side of the balance sheet as required reserves and is priced services. reflected in a manner similar to vault cash and due from bank balances normally Long-term assets include amounts for capital leases and leasehold improveshown on a correspondent bank's balance sheet. The remainder of clearing ments and for prepaid pension costs associated with priced services. Effective balances is assumed to be available for investment. For these purposes, the January 1, 1987, the Federal Reserve Banks implemented Financial Accounting Federal Reserve assumes that all such balances are invested in three-month Standards Board Statement No. 87, Employer's Accounting for Pensions. Treasury bills. 4. A matched-book capital structure has been used for those assets that are not The account "items in the process of collection" (CIPC) represents the gross "self-financing" in determining liability and equity amounts. Short-term assets amount of Federal Reserve CIPC as of the balance sheet date, stated on a basis are financed with short-term debt. Long-term assets are financed with long-term comparable with a commercial bank. Adjustments have been made for intra- debt and equity in a proportion equal to the ratio of long-term debt to equity for System items that would otherwise be double-counted on a consolidated Federal the bank holding companies used in the model for the private sector adjustment Reserve balance sheet; items associated with nonpriced items, such as items factor (PSAF). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

73 4.32 Pro forma income statement for priced services of the Federal Reserve System1 Millions of dollars Quarter ending March 31 IItteemm 1989 1988 Income services provided to depository institutions2 177.1 163.2 Production expenses3 138.2 130.5 Income from operations 38.9 32.7 Imputed costs4 Interest on float 14.3 11.2 Interest on debt 4.2 4.1 Sales taxes 1.8 2.1 FDIC insurance .4 20.8 .4 17.8 Income from operations after imputed costs 18.1 14.9 Other income and expenses5 Investment income 41.1 29.1 Earnings credits 34.4 6.7 27.3 1.9 Income before income taxes 24.8 16.8 Imputed income taxes6 8.4 5.4 Net income 16.4 11.4 MEMO Targeted return on equity6 8.2 8.2 1. The income statement reflects income and expenses for priced services. through adjustments to the institution's reserve or clearing balance or by valuing Included in these amounts are the imputed costs of float, imputed financing costs, the float at the federal funds rate and billing the institution directly. and the income related to clearing balances. Float recovered through per-item fees is valued at the federal funds rate and has Details may not add to totals because of rounding. been added to the cost base subject to recovery in the first quarter of 1989 2. Income represents charges to depository institutions for priced services. Total float 1,122.6 This income is realized through one of two methods: direct charges to an Unrecovered float 91.2 institution's account or charges against accumulated earnings credits. Income Float subject to recovery 1,031.4 includes charges for per-item fees, fixed fees, package fees, explicitly priced float, Sources of float recovery account maintenance fees, shipping and insurance fees, and surcharges. Income on clearing balances 122.4 3. Production expenses include direct, indirect, and other general administra- As of adjustments 427.7 tive expenses of the Federal Reserve Banks for providing priced services. Also Direct charges 159.8 included are the expenses of staff members of the Board of Governors working Per-item fees 321.5 directly on the development of priced services, which amounted to $0.4 million in Also included in imputed costs is the interest on debt assumed necessary to the first quarter for both 1989 and 1988. finance priced-service assets and the sales taxes and FDIC insurance assessment 4. Imputed float costs represent the value of float to be recovered, either that the Federal Reserve would have paid had it been a private-sector firm. explicitly or through per-item fees, during the period. Float costs include those for 5. Other income and expenses consist of income on clearing balances and the checks, book-entry securities, noncash collection, ACH, and wire transfers. cost of earnings credits granted to depository institutions on their clearing The following table depicts the daily average recovery of float by the Federal balances. Income on clearing balances represents the average coupon-equivalent Reserve Banks for the first quarter of 1989. In the table, unrecovered float yield on three-month Treasury bills applied to the total clearing balance mainincludes that generated by services to government agencies or by other central tained, adjusted for the effect of reserve requirements on clearing balances. bank services. Expenses for earnings credits are derived by applying the average federal funds Float recovered through income on clearing balances represents increased rate to the required portion of the clearing balances, adjusted for the net effect of investable clearing balances as a result of reducing imputed reserve requirements reserve requirements on clearing balances. through the use of a deduction for float for cash items in process of collection 6. Imputed income taxes are calculated at the effective tax rate derived from a when calculating the reserve requirement. This income then reduces the float model consisting of the 25 largest bank holding companies. The targeted return on required to be recovered through other means. equity represents the after-tax rate of return on equity that the Federal Reserve As-of adjustments and direct charges refer to midweek closing float and would have earned had it been a private business firm, based on the bank holding interterritory check float, which may be recovered from depositing institutions company model. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Board of Governors ALAN GREENSPAN, Chairman MARTHA R. SEGER MANUEL H. JOHNSON, Vice Chairman WAYNE D. ANGELL OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director BOB STAHLY MOORE, Special Assistant to the Board CHARLES J. SIEGMAN, Senior Associate Director DAVID H. HOWARD, Deputy Associate Director ROBERT F. GEMMILL, Staff Adviser LEGAL DIVISION DONALD B. ADAMS, Assistant Director PETER HOOPER III, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel KAREN H. JOHNSON, Assistant Director 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 DAVID J. STOCKTON, Assistant Director DIVISION OF CONSUMER JOYCE K. ZICKLER, Assistant Director AND COMMUNITY AFFAIRS LEVON H. GARABEDIAN, Assistant Director (Administration) GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director DIVISION OF MONETARY AFFAIRS ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director BRIAN F. MADIGAN, Assistant Director DIVISION OF BANKING RICHARD D. PORTER, Assistant Director SUPERVISION AND REGULATION NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM TAYLOR, Staff Director DON E. KLINE, Associate Director OFFICE OF THE INSPECTOR GENERAL FREDERICK M. STRUBLE, Associate Director WILLIAM A. RYBACK, Deputy Associate Director BRENT L. BOWEN, Inspector General STEPHEN C. SCHEMERING, Deputy Associate Director BARRY R. SNYDER, Assistant Inspector General RICHARD SPILLENKOTHEN, Deputy Associate Director HERBERT A. BIERN, Assistant Director JOE M. CLEAVER, Assistant Director ROGER T. COLE, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSS AN, Assistant Director LAURA M. HOMER, Securities Credit Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

75 and Official Staff EDWARD W. KELLEY, JR. JOHN P. LA WARE 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, Assistant Director 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

76 Federal Reserve Bulletin • September 1989 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL SILAS KEEHN THOMAS C. MELZER ROGER GUFFEY EDWARD W. KELLEY, JR. MARTHA R. SEGER MANUEL H. JOHNSON JOHN P. LAWARE 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. SIEGMAN, 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

All 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. SILBERSTEIN, 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

78 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SERVICES, THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A MS-138, Board of Governors of the Federal Reserve System, MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. Washington, D.C. 20551 or telephone (202) 452-3244. When a WELCOME TO THE FEDERAL RESERVE. MARCH 1989. 14 PP. charge is indicated, payment should accompany request and be PROCESSING AN APPLICATION THROUGH THE FEDERAL REmade payable to the Board of Governors of the Federal Reserve SERVE SYSTEM. August 1985. 30 pp. System. Payment from foreign residents should be drawn on a INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. U.S. bank. 440 pp. $9.00 each. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- December 1986. 264 pp. $10.00 each. TIONS. 1984. 120 pp. ANNUAL REPORT. ANNUAL REPORT: BUDGET REVIEW, 1988-89. CONSUMER EDUCATION PAMPHLETS FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or Short pamphlets suitable for classroom use. Multiple copies $2.50 each in the United States, its possessions, Canada, are available without charge. and Mexico. Elsewhere, $35.00 per year or $3.00 each. BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint Consumer Handbook on Adjustable Rate Mortgages of Part I only) 1976. 682 pp. $5.00. Consumer Handbook to Credit Protection Laws ANNUAL STATISTICAL DIGEST Federal Reserve Glossary 1974-78. 1980. 305 pp. $10.00 per copy. A Guide to Business Credit and the Equal Credit Opportunity 1981. 1982. 239 pp. $ 6.50 per copy. Act 1982. 1983. 266 pp. $ 7.50 per copy. A Guide to Federal Reserve Regulations 1983. 1984. 264 pp. $11.50 per copy. How to File A Consumer Credit Complaint 1984. 1985. 254 pp. $12.50 per copy. If You Use A Credit Card 1985. 1986. 231 pp. $15.00 per copy. Series on the Structure of the Federal Reserve System 1986. 1987. 288 pp. $15.00 per copy. The Board of Governors of the Federal Reserve System 1987. 1988. 272 pp. $15.00 per copy. The Federal Open Market Committee SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- Federal Reserve Bank Board of Directors RIES OF CHARTS. Weekly. $30.00 per year or $.70 each in Federal Reserve Banks the United States, its possessions, Canada, and Mexico. Organization and Advisory Committees Elsewhere, $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Lock-Ins THE FEDERAL RESERVE ACT and other statutory provisions A Consumer's Guide to Mortgage Closings affecting the Federal Reserve System, as amended A Consumer's Guide to Mortgage Refinancing through August 1988. 608 pp. $10.00 Making Deposits: When Will Your Money Be Available? REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- When Your Home is on the Line: What You Should Know ERAL RESERVE SYSTEM. About Home Equity Lines of Credit ANNUAL PERCENTAGE RATE TABLES (Truth in Lending—Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one address, $2.00 each. PAMPHLETS FOR FINANCIAL INSTITUTIONS INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; Short pamphlets on regulatory compliance, primarily suit- 10 or more to one address, $1.25 each. able for banks, bank holding companies, and creditors. FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; updated at least monthly. (Requests must be prepaid.) Limit of 50 copies Consumer and Community Affairs Handbook. $75.00 per year. The Board of Directors' Opportunities in Community Rein- Monetary Policy and Reserve Requirements Handbook. vestment $75.00 per year. The Board of Directors' Role in Consumer Law Compliance Securities Credit Transactions Handbook. $75.00 per year. Combined Construction/Permanent Loan Disclosure and The Payment System Handbook. $75.00 per year. Regulation Z Federal Reserve Regulatory Service. 3 vols. (Contains all Community Development Corporations and the Federal three Handbooks plus substantial additional material.) Reserve $200.00 per year. Construction Loan Disclosures and Regulation Z Rates for subscribers outside the United States are as Finance Charges Under Regulation Z follows and include additional air mail costs: How to Determine the Credit Needs of Your Community Federal Reserve Regulatory Service, $250.00 per year. Regulation Z: The Right of Rescission Each Handbook, $90.00 per year. The Right to Financial Privacy Act Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

79 Signature Rules in Community Property States: Regulation B 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. Signature Rules: Regulation B Warshawsky. November 1987. 25 pp. Timing Requirements for Adverse Action Notices: Regula- 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANKtion B ING MARKETS, by James V. Houpt. May 1988. 47 pp. What An Adverse Action Notice Must Contain: Regulation B 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR Understanding Prepaid Finance Charges: Regulation Z THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. Porter, and David H. Small. April 1989. 28 pp. STAFF STUDIES: Summaries Only Printed in the Bulletin Studies and papers on economic and financial subjects that REPRINTS OF BULLETIN ARTICLES are of general interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series Most of the articles reprinted do not exceed 12 pages. may be sent to Publications Services. Staff Studies 114-145 are out of print. Limit of 10 copies 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF Foreign Experience with Targets for Money Growth. 10/83. BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by Intervention in Foreign Exchange Markets: A Summary of Thomas F. Brady. November 1985. 25 pp. Ten Staff Studies. 11/83. 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- A Financial Perspective on Agriculture. 1/84. DEXES OF THE MONETARY AGGREGATES, by Helen T. Survey of Consumer Finances, 1983. 9/84. Farr and Deborah Johnson. December 1985. 42 pp. Bank Lending to Developing Countries. 10/84. 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE Survey of Consumer Finances, 1983: A Second Report. ECONOMIC RECOVERY TAX ACT: SOME SIMULATION 12/84. RESULTS, by Flint Brayton and Peter B. Clark. Decem- Union Settlements and Aggregate Wage Behavior in the ber 1985. 17 pp. 1980s. 12/84. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN The Thrift Industry in Transition. 3/85. BANKING BEFORE AND AFTER ACQUISITION, by Stephen A Revision of the Index of Industrial Production. 7/85. A. Rhoades. April 1986. 32 pp. Financial Innovation and Deregulation in Foreign Industrial 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: Countries. 10/85. A REEXAMINATION AND AN APPLICATION, by John T. Recent Developments in the Bankers Acceptance Market. Rose and John D. Wolken. May 1986. 13 pp. 1/86. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRIC- The Use of Cash and Transaction Accounts by American ING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Families. 2/86. Alice P. White, Paul F. O'Brien, and Mary M. Financial Characteristics of High-Income Families. 3/86. McLaughlin. January 1987. 30 pp. Prices, Profit Margins, and Exchange Rates. 6/86. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Agricultural Banks under Stress. 7/86. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Foreign Lending by Banks: A Guide to International and April 1987. 18 pp. U.S. Statistics. 10/86. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Recent Developments in Corporate Finance. 11/86. Alice P. White. September 1987. 14 pp. Measuring the Foreign-Exchange Value of the Dollar. 6/87. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF PRO- Changes in Consumer Installment Debt: Evidence from the POSED CEILINGS ON CREDIT CARD INTEREST RATES, by 1983 and 1986 Surveys of Consumer Finances. 10/87. Glenn B. Canner and James T. Fergus. October 1987. Home Equity Lines of Credit. 6/88. 26 pp. U.S. International Transactions in 1988. 5/89. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

80 Index to Statistical Tables References are to pages A3-A73 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, 10 Financial institutions, 26 Turnover, 15 Foreign banks, U.S. branches and agencies, 21 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 BANKERS acceptances, 9, 23, 24 EMPLOYMENT, 47 Bankers balances, 18-20. (See also Foreigners) Eurodollars, 24 Bonds (See also U.S. government securities) New issues, 34 FARM mortgage loans, 38 Rates, 24 Federal agency obligations, 4, 9, 10, 11, 31, 32 Branch banks, 21, 57 Federal credit agencies, 33 Business activity, nonfinancial, 46 Federal finance Business expenditures on new plant and equipment, 35 Debt subject to statutory limitation, and types and own- Business loans (See Commercial and industrial loans) ership of gross debt, 30 Receipts and outlays, 28, 29 CAPACITY utilization, 48 Treasury financing of surplus, or deficit, 28 Capital accounts Treasury operating balance, 28 Banks, by classes, 18 Federal Financing Bank, 28, 33 Federal Reserve Banks, 10 Federal funds, 6, 17, 19, 20, 21, 24, 28 Central banks, discount rates, 69 Federal Home Loan Banks, 33 Certificates of deposit, 24 Federal Home Loan Mortgage Corporation, 33, 37, 38 Commercial and industrial loans Federal Housing Administration, 33, 37, 38 Commercial banks, 16, 19 Federal Land Banks, 38 Weekly reporting banks, 19-21 Federal National Mortgage Association, 33, 37, 38 Commercial banks Federal Reserve Banks Assets and liabilities, 18-20 Condition statement, 10 Commercial and industrial loans, 16, 18, 19, 20, 21 Discount rates (See Interest rates) Consumer loans held, by type, and terms, 39, 40 U.S. government securities held, 4, 10, 11, 30 Loans sold outright, 19 Federal Reserve credit, 4, 5, 10, 11 Nondeposit funds, 17 Federal Reserve notes, 10 Real estate mortgages held, by holder and property, 38 Federal Reserve System Time and savings deposits, 3 Balance sheet for priced services, 72 Commercial paper, 23, 24, 36 Condition statement for priced services, 73 Condition statements (See Assets and liabilities) Federal Savings and Loan Insurance Corporation insured Construction, 46, 51 institutions, 26 Consumer installment credit, 39, 40 Federally sponsored credit agencies, 33 Consumer prices, 46, 48 Finance companies Consumption expenditures, 53, 54 Assets and liabilities, 36 Corporations Business credit, 36 Nonfinancial, assets and liabilities, 35 Loans, 39, 40 Profits and their distribution, 35 Paper, 23, 24 Security issues, 34, 67 Financial institutions Cost of living (See Consumer prices) Loans to, 19, 20, 21 Credit unions, 26, 39. (See also Thrift institutions) Selected assets and liabilities, 26 Currency and coin, 18 Float, 4, 73 Currency in circulation, 4, 13 Flow of funds, 41, 43, 44, 45 Customer credit, stock market, 25 Foreign banks, assets and liabilities of U.S. branches and agencies, 21 DEBITS to deposit accounts, 15 Foreign currency operations, 10 Debt (See specific types of debt or securities) Foreign deposits in U.S. banks, 4, 10, 19, 20 Demand deposits Foreign exchange rates, 70 Banks, by classes, 18-21 Foreign trade, 56 Ownership by individuals, partnerships, and Foreigners corporations, 22 Claims on, 57, 59, 62, 63, 64, 66 Turnover, 15 Liabilities to, 20, 56, 57, 59, 60, 65, 67, 68 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

81 GOLD REAL estate loans Certificate account, 10 Banks, by classes, 16, 19, 20, 38 Stock, 4, 56 Financial institutions, 26 Government National Mortgage Association, 33, 37, 38 Terms, yields, and activity, 37 Gross national product, 53 Type of holder and property mortgaged, 38 Repurchase agreements, 6, 17, 19, 20, 21 HOUSING, new and existing units, 51 Reserve requirements, 8 Reserves INCOME and expenses, Federal Reserve System, 76-77 Commercial banks, 18 Income, personal and national, 46, 53, 54 Depository institutions, 3, 4, 5, 12 Industrial production, 46, 49 Federal Reserve Banks, 10 Installment loans, 39, 40 U.S. reserve assets, 56 Insurance companies, 26, 30, 38 Residential mortgage loans, 37 Interest rates Retail credit and retail sales, 39, 40, 46 Bonds, 24 Consumer installment credit, 40 SAVING Federal Reserve Banks, 7 Flow of funds, 41,43, 44,45 Foreign central banks and foreign countries, 69 National income accounts, 53 Money and capital markets, 24 Savings and loan associations, 26, 38, 39, 41. (See also Mortgages, 37 Thrift institutions) Prime rate, 23 Savings banks, 26, 38, 39 International capital transactions of United States, 55-69 Savings deposits (See Time and savings deposits) International organizations, 59, 60, 62, 65, 66 Securities (See also specific types) Inventories, 53 Federal and federally sponsored credit agencies, 33 Investment companies, issues and assets, 35 Foreign transactions, 67 Investments (See also specific types) New issues, 34 Banks, by classes, 18, 19, 20, 21, 26 Prices, 25 Commercial banks, 3, 16, 18-20, 38 Special drawing rights, 4, 10, 55, 56 Federal Reserve Banks, 10, 11 State and local governments Federal Reserve System, 76-77 Deposits, 19, 20 Financial institutions, 26, 38 Holdings of U.S. government securities, 30 New security issues, 34 LABOR force, 47 Ownership of securities issued by, 19, 20, 26 Life insurance companies (See Insurance companies) Rates on securities, 24 Loans (See also specific types) Stock market, selected statistics, 25 Banks, by classes, 18—20 Stocks (See also Securities) Commercial banks, 3, 16, 18-20 New issues, 34 Federal Reserve Banks, 4, 5, 7, 10, 11 Prices, 25 Federal Reserve System, 76-77 Financial institutions, 26, 38 Student Loan Marketing Association, 33 Insured or guaranteed by United States, 37, 38 TAX receipts, federal, 29 MANUFACTURING Thrift institutions, 3. (See also Credit unions and Savings Capacity utilization, 48 and loan associations) Production, 48, 50 Time and savings deposits, 3, 13, 17, 18, 19, 20, 21 Margin requirements, 25 Trade, foreign, 56 Member banks (See also Depository institutions) Treasury cash, Treasury currency, 4 Federal funds and repurchase agreements, 6 Treasury deposits, 4, 10, 28 Reserve requirements, 8 Treasury operating balance, 28 Mining production, 50 UNEMPLOYMENT, 47 Mobile homes shipped, 51 U.S. government balances Monetary and credit aggregates, 3, 12 Commercial bank holdings, 18, 19, 20 Money and capital market rates, 24 Treasury deposits at Reserve Banks, 4, 10, 28 Money stock measures and components, 3, 13 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 18-20, 21, 30 Mutual funds, 35 Dealer transactions, positions, and financing, 32 Mutual savings banks (See Thrift institutions) Federal Reserve Bank holdings, 4, 10, 11, 30 Foreign and international holdings and transactions, 10, NATIONAL defense outlays, 29 30, 68 National income, 53 Open market transactions, 9 Outstanding, by type and holder, 26, 30 OPEN market transactions, 9 Rates, 24 U.S. international transactions, 55-69 PERSONAL income, 54 Utilities, production, 50 Prices Consumer and producer, 46, 52 VETERANS Administration, 37, 38 Stock market, 25 Prime rate, 23 WEEKLY reporting banks, 19-21 Producer prices, 46, 52 Wholesale (producer) prices, 46, 52 Production, 46, 49 Profits, corporate, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

82 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 Donald E. Nelson Birmingham 35283 Nelda P. Stephenson Fred R. Herr1 Jacksonville 32231 Hugh Brown James D. Hawkins1 Miami 33152 Jose L. Saumat James Curry III Nashville 37203 Patsy R. Williams Melvin K. Purcell 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. 1. Senior Vice President. 2. Executive Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

83 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories A*41 1M4 • •/ // ALASKA // 11 // \ ® / J / # y yp %Ll •AN LEGEND Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch * Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest NEW HANDBOOK AVAILABLE FROM THE containing all Board regulations and related statutes, REGULATORY SERVICE interpretations, policy statements, rulings, and staff opinions. For those with a more specialized interest in The Federal Reserve Board has announced publica- the Board's regulations, parts of this service are pubtion of The Payment System Handbook. The new lished separately as handbooks pertaining to monetary handbook, which is part of the Federal Reserve Reg- policy, securities credit, consumer affairs, and, availulatory Service, deals with expedited funds availabil- able for the first time in September 1988, The Payment ity, check collection, wire transfers, and risk-reduc- System Handbook. tion policy. It includes Regulation CC (Availability of For domestic subscribers, the annual rate for The Funds and Collection of Checks), Regulation J (Col- Payment System Handbook is $75. For subscribers lection of Checks and Other Items and Wire Transfers outside the United States, the price, including addiof Funds by Federal Reserve Banks), the Expedited tional air mail costs, is $90. For the Federal Reserve Funds Availability Act and related statutes, official Regulatory Service, not including handbooks, the an- Board commentary on Regulation CC, and policy nual rate is $200 for domestic subscribers and $250 for statements on risk reduction in the payment system. In subscribers outside the United States. All subscription addition, it contains detailed subject and citation in- requests must be accompanied by a check payable to dexes. It is published in loose-leaf binder form and is "Board of Governors of the Federal Reserve updated monthly. System." Orders should be addressed to Publications To promote public understanding of its regulatory Services, Mail Stop 138, Board of Governors of the functions, the Board publishes the Federal Reserve Federal Reserve System, Washington, D.C. 20551. Regulatory Service, a three-volume loose-leaf service Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Publications of Interest FEDERAL RESERVE CONSUMER CREDIT Three booklets on the mortgage process are also PUBLICATIONS available: A Consumer's Guide to Mortgage Refinancing, A Consumer's Guide to Mortgage Lock-Ins, and The Federal Reserve Board publishes a series of A Consumer's Guide to Mortgage Closings. These pamphlets covering individual credit laws and topics, booklets were prepared in conjunction with the Fedas pictured below. The series includes such subjects as eral Home Loan Bank Board and in consultation with how the Equal Credit Opportunity Act protects wom- other federal agencies and trade and consumer en against discrimination in their credit dealings, how groups. to use a credit card, and how to resolve a billing error. Copies of consumer publications are available free The Board also publishes the Consumer Handbook of charge from Publications Services, Mail Stop 138, to Credit Protection Laws, a complete guide to con- Board of Governors of the Federal Reserve System, sumer credit protections. This 44-page booklet ex- Washington, D.C. 20551. Multiple copies for classplains how to use the credit laws to shop for credit, room use are also available free of charge. apply for it, keep up credit ratings, and complain about an unfair credit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis