Federal Reserve Bulletin, 1989-10

VOLUME 75 • NUMBER 10 • OCTOBER 1989 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Edwin M. Truman The FEDERAL RESERVE BULLETIN is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 659 ASSET SECURITIZATION: budgets and major System initiatives, be- A SUPERVISORY PERSPECTIVE fore the Subcommittee on Domestic Monetary Policy of the House Committee on This article describes the mechanics of the Banking, Finance and Urban Affairs, Ausecuritization process, the structures of gust 3, 1989. asset-backed securities, and the involvement of banking organizations in this pro- 684 Brent L. Bowen, Inspector General of the cess; it also discusses the incentives for Board of Governors, discusses the estabissuing and acquiring asset-backed securilishment, organization, and operation of the ties. Asset securitization is examined from Office of Inspector General and says that a supervisory perspective by outlining the the Inspector General has the independence supervisory issues associated with issuance and the authority to carry out his statutory or ownership of asset-backed securities and responsibilities, before the Subcommittee the supervisory policies and procedures on Domestic Monetary Policy of the House used by the Federal Reserve in this area. Committee on Banking, Finance and Urban Affairs, August 3, 1989. 670 TREASURY AND FEDERAL RESERVE FOREIGN EXCHANGE OPERATIONS 689 RECORD OF POLICY ACTIONS OF THE The dollar ended the three-month period FEDERAL OPEN MARKET COMMITTEE from May through July VA percent lower on At its meeting on July 5-6, 1989, the Coma trade-weighted basis as measured by the mittee reviewed the ranges of growth of the staff of the Board of Governors. The dolmonetary and debt aggregates that it had lar's net movements against individual curestablished in February for 1989 and derencies varied considerably: It was 3 percided on tentative ranges for growth of cent higher against the Japanese yen; V/A these aggregates in 1990. For 1989, the percent higher against the British pound; VA Committee agreed to reaffirm the ranges set percent lower against the German mark; in February of 3 to 7 percent and 3Vi to IVi and VA percent lower against the Canadian percent for M2 and M3 respectively. The dollar. monitoring range for growth of total domestic nonfinancial debt also was maintained at 675 INDUSTRIAL PRODUCTION 6V2 to IOI/2 percent for 1989. On a tentative basis, the Committee decided to use for Industrial production rose 0.2 percent in 1990 the same ranges as in 1989 for growth July after a decline of 0.1 percent (revised) in each of the monetary aggregates and in in June. total domestic nonfinancial debt. It was agreed that these ranges would be reviewed 677 STATEMENTS TO CONGRESS in early 1990 in the light of economic and Wayne D. Angell and Edward W. Kelley, financial conditions prevailing then. Jr., members, Board of Governors of the With regard to the implementation of Federal Reserve System, discuss the Fed- policy for the period immediately ahead, eral Reserve Board's budget and major ini- the Committee adopted a directive that tiatives for 1989 and the Reserve Banks' called for some slight easing in the degree of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

pressure on reserve positions. Some firming AI FINANCIAL AND BUSINESS STATISTICS or some easing of reserve conditions would These tables reflect data available as of be acceptable during the intermeeting pe- August 30, 1989. riod depending on indications of inflationary pressures, the strength of the business A3 Domestic Financial Statistics expansion, the behavior of the monetary A46 Domestic Nonfinancial Statistics aggregates, and developments in foreign A55 International Statistics exchange and domestic financial markets. The contemplated reserve conditions were A71 GUIDE TO TABULAR PRESENTATION, expected to be consistent with growth of STATISTICAL RELEASES, AND SPECIAL M2 and M3 over the period from June TABLES through September at annual rates of about 7 percent. The intermeeting range for the A74 BOARD OF GOVERNORS AND STAFF federal funds rate was lowered by 1 percentage point to 7 to 11 percent. A76 FEDERAL OPEN MARKET COMMITTEE AND STAFF; ADVISORY COUNCILS 698 ANNOUNCEMENTS A78 FEDERAL RESERVE BOARD Continuation of the designation of primary PUBLICATIONS dealers controlled by firms from the United Kingdom and Japan. A80 INDEX TO STATISTICAL TABLES Publication of a brochure on home equity lines of credit. A82 FEDERAL RESERVE BANKS, BRANCHES, AND OFFICES Change in Board staff. Admission of two state banks to member- A83 MAP OF FEDERAL RESERVE SYSTEM ship in the Federal Reserve System. 701 LEGAL DEVELOPMENTS Various bank holding company, bank service corporation, and bank merger orders; and pending cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Asset Securitization: A Supervisory Perspective Thomas R. Boemio and Gerald A. Edwards, Jr., AN OVERVIEW OF ASSET SECURITIZATION of the Board's Division of Banking Supervision and Regulation prepared this article. Michael In its simplest form, asset securitization involves Boennighausen contributed research assistance. the selling of assets. The process first segregates generally illiquid assets into pools and transforms these pools into capital market instruments. The In recent years the number of banks and bank payment of principal and interest on these instruholding companies (referred to here as banking ments depends on the cash flows from the assets organizations) that have issued securities in the pool that underlies the new securities. The backed by their assets and that have acquired new securities may differ from their underlying asset-backed securities as investments has in- assets in terms of denominations, cash flows, and creased markedly. The reason for this increase other features that make the securities more is that securitization activities, if conducted in a attractive to investors. prudent manner, can yield significant financial Asset securitization, as we know it, began and operational benefits for banking organiza- when the federal government encouraged the tions. At the same time, bank supervisors must securitization of residential mortgages. In 1970, carefully assess the effect of asset securitization the Government National Mortgage Association activities on the financial condition, perfor- (GNMA) created the first publicly traded mortmance, and risk profiles of banking organiza- gage-backed security. Soon, the Federal Nations. tional Mortgage Association (FNMA) and the This article examines asset securitization Federal Home Loan Mortgage Corporation from a supervisory perspective. The first sec- (FHLMC), both government-sponsored agention describes the mechanics of the securitiza- cies, also developed mortgage-backed securities. tion process, the structures of asset-backed The guarantees that these government or governsecurities, and the involvement of banking or- ment-sponsored agencies provide, which assure ganizations in this process. It also discusses the investors of the payment of principal and interincentives for issuing and acquiring asset- est, have greatly facilitated the securitization of backed securities. mortgage assets. The second section outlines the supervisory Asset securitization has grown dramatically issues associated with ownership or issuance of over the past few years. The outstanding amount asset-backed securities by banking organizations of residential mortgage-backed, pass-through seand the supervisory policies and procedures used curities, which are the largest segment of the by the Federal Reserve System in light of the asset-backed securities market, has increased growing involvement of banking organizations in approximately 168 percent since year-end 1984 to asset securitization. It summarizes generally ac- $769 billion by year-end 1988 (table 1). In addicepted accounting principles (GAAP) and bank tion to rapid growth in residential mortgageregulatory reporting requirements as they pertain backed securities, recent years have witnessed to sales treatment of asset securitization transac- an explosion in the issuance of securities backed tions. This section also examines the provisions by other assets: credit card receivables, automoof the risk-based capital guidelines that relate to bile loans, boat loans, commercial real estate the asset securitization process. loans, home equity loans, student loans, nonper- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

660 Federal Reserve Bulletin • October 1989 1. Outstanding amount of pass-through securities rities are either guaranteed directly by GNMA, a backed by residential mortgages government agency backed by the full faith and Billions of dollars credit of the U.S. government, or by FNMA or FHLMC, government-sponsored agencies that Type of pass-through are not backed by the full faith and credit of the YYeeaarr TToottaall Private U.S. government but are perceived by the credit GNMA FHLMC FNMA issues' markets to have its implicit support. Privately issued, mortgage-backed securities and other 1984 180.0 70.8 36.2 n.a. 287.0 1985 212.1 100.4 55.0 n.a. 367.5 types of asset-backed securities generally depend 1986 262.7 171.4 97.2 6.3 537.6 1987 317.6 212.6 140.0 14.0 684.2 on some form of credit enhancement provided by 1988 340.5 225.0 178.3 25.1 768.9 the originator or third party to insulate the inves- 1. The source for these data is Financial World Publications, tor from some or all of any credit losses. Usually, n.a. Not available. credit enhancement is provided for several multiples of the historical losses experienced on the forming loans, and lease receivables. The annual particular asset backing the security. issuance of securities backed by assets other One form of credit enhancement is the rethan mortgages has increased from slightly more course provision, or guarantee, that requires than $1 billion in 1985 to more than $16 billion by the originator to cover any losses up to an the end of 1988. amount contractually agreed upon. Some assetbacked securities, such as those backed by The Securitization Process credit card receivables, typically use a "spread account." This account is actually an escrow The asset securitization process begins, as de- account whose funds are derived from a portion picted in the chart, with the segregation of loans of the spread between the interest earned on the or leases into pools that are relatively homoge- assets in the underlying pool and the lower neous with respect to type of credit, maturity, interest paid on securities issued by the trust. and interest rate risk. These pools of assets are The amounts that accumulate in the account are then transferred to a trust or other entity known used to cover credit losses in the underlying as an issuer because it issues the securities that asset pool up to several multiples of historical are acquired by investors. These asset-backed losses on the underlying assets. securities may take the form of debt, certifi- Overcollateralization, another form of credit cates of beneficial ownership, or other instru- enhancement covering a predetermined amount ments. The issuer is typically protected from of potential credit losses, occurs when the value bankruptcy by various structural and legal ar- of the underlying assets exceeds the face value of rangements. A sponsor that provides the assets the securities. Also, the senior-subordinated seto be securitized owns or otherwise establishes curity structure provides credit enhancement, the issuer. generally to the senior class. Under such a struc- Each issue of asset-backed securities has a ture, at least two classes of asset-backed securiservicer responsible for collecting interest and ties are issued, with the senior class having a principal payments on the loans or leases in the priority claim on the cash flows from the underunderlying pool of assets and for transmitting lying pool of assets. Since the senior class has these funds to investors (or a trustee representing this priority claim, cash flows from the underlythem). A trustee monitors the activities of ser- ing pool of assets must first satisfy the requirevicers to ensure that they properly fulfill their ments of the senior class. Only after these rerole. quirements have been met will the cash flows be A guarantor may also be involved to see that directed to service the subordinated class. Thereprincipal and interest payments will be received fore, the subordinated class must absorb credit by investors on a timely basis, even if the ser- losses before any are charged to the senior vicer is unable to collect these payments from the portion. Other forms of credit enhancement inobligors. Many issues of mortgage-backed secu- clude standby letters of credit or surety bonds Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Asset Securitization: A Supervisory Perspective 661 from third parties that protect investors against zations securitize their assets and these transaclosses. tions are treated as sales, both the assets and the An investment banking firm or other organiza- related asset-backed securities (that is, liabilities) tion generally serves as an underwriter for asset- are removed from the balance sheet. The cash backed securities. In addition, for asset-backed proceeds from the securitization transactions are issues that are publicly offered, a credit rating generally used to originate or acquire additional agency will analyze the policies and operations of loans or other assets for securitization, and the the originator and servicer, as well as the struc- process is then repeated. Thus, for the same ture, underlying pool of assets, expected cash volume of loan originations, securitization reflows, and other attributes of such securities. sults in lower amounts of assets and liabilities Before assigning a rating to the issue, the rating when compared with traditional lending activiagency will also assess the extent of loss protec- ties. tion provided to investors by any credit enhancements associated with the issue. (See the chart.) Traditional lending activities are generally The Structure of funded by deposits or other liabilities, and both Asset-Backed Securities the assets and related liabilities are reflected on the balance sheet. Deposit liabilities must gener- Asset securitization involves different kinds of ally increase to fund additional loans. capital market instruments. These instruments In contrast, the securitization process gener- may be structured as "pass-throughs" or "payally does not increase on-balance-sheet liabilities throughs." Under a pass-through structure, the in proportion to the volume of loans or other cash flows from the underlying pool of assets assets being originated and securitized. As dis- are passed through to investors on a pro rata cussed more fully below, when banking organi- basis. This type of security is typically a single- Pass-through, asset-backed securities: structure and cash flows Forwards principal <nid "Passes through" principal and interest interest payments payments Remit • i principal and I interest 1 j | Initial cash Initial cash Initial cash payments proceeds proceeds purchase from from Originator/ securities Sponsor/ Servicer Transfers loans on receivables Provides credit Purchases enhancement for the credit asset pool, for example, enhancement by a letter of credit Cash flows Structure Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

662 Federal Reserve Bulletin • October 1989 class instrument such as a GNMA pass- ests"), represents claims on any cash flows that through. The pay-through structure, which has remain after all obligations to investors and any multiple classes, combines the cash flows from related expenses have been met. Such excess the underlying pool of assets and reallocates cash flows may result from overcollateralizathem to two or more issues of securities that tion or from reinvestment income. Residuals have different cash flow characteristics and can be retained by sponsors or purchased by maturities. An example is the collateralized investors in the form of securities. mortgage obligation (CMO), which has a series of bond classes, each with its own specified Involvement of coupon and stated maturity. In most cases, the Banking Organizations assets that make up the CMO collateral pools are pass-through securities backed by residen- Banking organizations have long been involved tial mortgages. Scheduled principal payments, in asset securitization, particularly in the welland any prepayments, from the underlying col- developed market for securities backed by reslateral go first to the earliest maturing class of idential mortgages. More recently, banking orbonds. This first class of bonds must be retired ganizations, besides substantially augmenting before the principal cash flows are used to retire the volume of their activities in this area, have the later bond classes. The development of the also started securitizing other types of assets, pay-through structure was a result of the desire as mentioned earlier, particularly credit card to broaden the marketability of these securities receivables. Also, many banking organizations to investors who were interested in maturities have increased their reliance on securitization other than those generally associated with pass- for funding, have acted as servicers or trustees through securities. for securitized issues, and have purchased as- Multiple-class, asset-backed securities may set-backed securities or derivative instruments also be issued as derivative instruments such as for investment or other purposes. "stripped" securities. Investors in each class of Currently, securities subsidiaries of bank a stripped security will receive a different por- holding companies may underwrite assettion of the principal and interest cash flows backed securities originated by third parties as from the underlying pool of assets. In their long as the criteria of the Federal Reserve purest form, stripped securities may be issued Board's section 20 orders are met.1 In June as interest-only (IO) strips for which investors 1987, the Comptroller of the Currency (OCC) receive 100 percent of the interest from the permitted national banks to underwrite securiunderlying pool of assets and as principal-only ties backed by their own assets. This decision (PO) strips for which the investors receive all of was challenged, and in December 1988, a fedthe principal. eral district court ruled that such underwriting In addition to these securities, other types of activities were in violation of the Glass-Steagall financial instruments may arise as a result of Act. The decision was recently reversed upon asset securitization. One such instrument is appeal by the OCC. loan servicing rights that are created when organizations purchase the right to act as servicers for pools of loans. The cost of these purchased servicing rights may be recorded as an intangible asset when certain criteria are met. Excess servicing fee receivables, another 1. In April and May 1987, the Board approved applications financial instrument, generally arise when the to underwrite and deal in, to a limited extent, one- to cash flows from the underlying assets that a four-family mortgage-related securities that are rated as investment quality (that is, one of the top four categories) by a servicer expects to receive exceed standard nationally recognized rating agency. The Board found that normal servicing fees. Another instrument, as- these proposals, as limited in the Order, are consistent with set-backed securities residuals (sometimes re- section 20 of the Glass-Steagall Act. In addition, the Board approved applications, in July 1987, to underwrite and deal ferred to as "residuals" or "residual interin, on a limited basis, consumer-receivable-related securities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Asset Securitization: A Supervisory Perspective 663 Banking organizations securitize assets to accom- SUPERVISORY CONSIDERATIONS, POLICIES, plish several objectives. First, in selling rather than AND PROCEDURES REGARDING holding the originated assets, banking organizations ASSET SECURITIZATION are able to lower liabilities and assets and, therefore, reduce their reserve and capital requirements and While clear benefits accrue to banking organizadeposit insurance premiums. Securitization also tions that engage in securitization activities and provides an additional source of funding, generally that invest in asset-backed securities, these acat a lower cost than other funding sources. At the tivities have the potential of increasing the oversame time, the organization can earn fee income all risk profile of the banking organization if they from originating loans that are sold and by then are not carried out in a prudent manner. For the servicing those loans. most part, the risks that financial institutions Decisions to sell rather than hold loans that are encounter in the securitization process are idenused to back securities also affect the timing for tical to those that they face in traditional lending recording fee revenue in the income statement. transactions. These involve credit risk, concen- Once the sales are completed, banking organiza- tration risk, operational risk, liquidity risk, fundtions can immediately recognize income from (1) ing risk, and interest rate risk—including prepaysyndication fees, (2) previously deferred loan ment risk. However, since the securitization fees related to loans that are sold, and (3) any process separates the traditional lending function excess servicing fees created by the asset secu- into several limited roles, such as originator, ritization process. servicer, credit enhancer, trustee, and investor, Thus, asset sales boost standard income mea- the types of risks that a bank will encounter will sures, such as return on assets, in two ways. differ depending on the role it assumes. They serve to bolster income in the period of the As with direct investments in the underlying sale through the generation of fees while reduc- assets, investors in asset-backed securities will ing the total volume of assets and thus raising the be exposed to credit risk, that is, the risk that return on assets ratio. By creating a process, or obligors will default on principal and interest "pipeline," that continually originates and secu- payments. Investors are also subject to the risk ritizes assets, thereby removing them from the that the various parties in the securitization probalance sheet, a banking organization can use its cess, for example, the servicer or trustee, will be systems and loan expertise to originate loans that unable to fulfill their contractual obligations. otherwise might not be made. Thus, a banking Moreover, investors may be susceptible to conorganization can increase its share of markets for centrations of risks across various asset-backed particular types of loans without the deteriora- security issues through overexposure to an orgation of its capital ratios. nization performing several roles in the securiti- The largest purchasers of asset-backed securi- zation process or as a result of geographic conties have been pension funds, insurance compa- centrations within the pool of assets providing nies, savings and loan associations, and commer- the cash flows for an individual issue. Since the cial banks. Investors tend to be risk averse. secondary markets for certain asset-backed se- Thus, asset-backed securities are attractive in- curities are thin, investors may also encounter vestments because they are considered relatively greater-than-anticipated difficulties in selling safe as a result of the government or government- their securities. Furthermore, certain derivative sponsored agencies' guarantees or because of instruments, such as stripped, asset-backed seprivate credit enhancements. Also, the returns curities and residuals, may be extremely sension asset-backed securities are typically higher tive to interest rates and volatile in price. Therethan those on U.S. Treasury securities with fore, these instruments may dramatically affect comparable maturities. Furthermore, investors the risk exposure of investors unless they are are able to diversify their portfolio by acquiring used in a properly structured hedging strategy. different types of assets, for example, mortgages Banking organizations that issue asset-backed or credit card receivables, from different geo- securities may be subject to pressures to sell only graphic areas. their best assets—thus reducing the quality of Digitized for FRASER http://fraser.s\ tlouisfed.org/ Federal Reserve Bank of St. Louis

664 Federal Reserve Bulletin • October 1989 their own loan portfolios. On the other hand, alized borrowing, that is, a financing transacsome banking organizations may feel pressures tion secured by assets. Sales treatment results to relax their credit standards because they can in the removal of the assets from the banking sell assets with higher risk than those they nor- organization's balance sheet, thus reducing tomally would retain for their own portfolios. tal assets relative to earnings and capital, and Banking organizations that service securitiza- thereby producing higher performance and caption issues must ensure that their policies, oper- ital ratios. Treatment of these transactions as ations, and systems will not permit breakdowns financings, however, means that the assets in that may lead to defaults. Issuers and servicers the pool remain on the balance sheet and are may face pressures to provide "moral recourse" subject to capital requirements, and the related by repurchasing securities backed by loans or liabilities are subject to reserve requirements.2 leases they have originated that have deterio- From a supervisory standpoint, outright sales rated and become nonperforming. Funding risk do not present a problem in that such transacmay also be a problem for issuers when market tions transfer all of the risks and rewards of aberrations do not permit the timely issuance of ownership of the underlying assets. On the asset-backed securities that are in the securitiza- other hand, transfers that involve recourse to tion pipeline. the selling institution, if treated as sales, can In view of the increasing involvement of bank- result in credit risk that is not reflected on the ing organizations in the asset securitization pro- balance sheet of that institution. cess and the desire to foster prudent banking For bank holding companies and their nonpractice with respect to this activity, the Federal bank affiliates, or for any other nonbank entity Reserve and the other banking regulators have publishing audited financial statements, these taken several steps over the years to address accounting treatments are determined by securitization activities. These include (1) main- GAAP. Bank holding companies also follow tenance of regulatory reporting requirements for GAAP when preparing regulatory reports filed sales treatment that discourage banks from re- with the Federal Reserve. Insured commercial taining credit risk when securitizing their assets; banks, on the other hand, must report asset (2) issuance of an interagency supervisory policy securitization transactions in accordance with statement, which discusses investments in regulatory reporting requirements set forth in stripped, asset-backed securities and residual the instructions for the commercial bank Reinterests; (3) development of the risk-based cap- ports of Condition and Income (Call Reports). ital framework; and (4) development of examina- The federal banking agencies jointly determine tion guidelines for various aspects of the securi- these reporting requirements, which are pubtization process. lished by the Federal Financial Institutions Examination Council (FFIEC). While these regu- Sales versus Financing Treatment latory reporting requirements usually follow for Reporting Purposes GAAP, special reporting requirements apply to sales of assets, including those involved in asset Asset securitization transactions are frequently securitization. When asset transfers do not instructured to obtain certain accounting treat- volve recourse to the selling institution, then ments, which, in turn, affect reported measures both GAAP and regulatory reporting requireof profitability and capital adequacy. These mea- ments are consistent. sures are used extensively in analyses performed by supervisory agencies and by the public to assess the financial condition and performance of banking organizations. 2. Note, however, that the Federal Reserve's Regulation D In transferring assets into a pool to serve as (Reserve Requirements of Depository Institutions) defines collateral for asset-backed securities, a key what constitutes a reservable liability of a depository institution. Thus, although a given transaction may qualify as an question is whether the transfer should be asset sale for Call Report purposes, it nevertheless could treated as a sale of the assets or as a collater- result in a reservable liability under Regulation D. Digitized for FRASER http://fraser.stlouisfed.org/ ! Federal Reserve Bank of St. Louis

Asset Securitization: A Supervisory Perspective 665 Sales Treatment therein, less the unearned portion of these fees for Financial Reporting Purposes and charges).4 Under GAAP, an asset sale occurs when both the Sales Treatment for Call Report Purposes risks and rewards of ownership have been transferred to the purchaser. Thus, asset transfers for The Call Report instructions for commercial securitization that do not involve direct or indi- banks contain a general rule that applies to all rect recourse to the transferring banking organi- "sales of assets," other than participations in zation are treated as sales. When asset transfers pools of residential mortgages. This instruction involve recourse, on the other hand, sales or provides that a transfer of loans or other assets is financing treatment is determined by the criteria reported as a sale "only if the transferring instispecified by Financial Accounting Standards tution (1) retains no risk of loss from the assets Board Statement No. 77 (FASB 77).3 transferred resulting from any cause and (2) has FASB 77 defines recourse as the right of a no obligation to any party for the payment of transferee of assets to receive payment from the principal or interest on the assets transferred transferor for the "failure of the debtors to pay resulting from any cause." A transfer involving when due, effects of prepayments, or adjust- any retention of risk or obligation for payment, ments resulting from defects in the eligibility of even if limited under the terms of the transfer the transferred receivables." This standard es- agreement, is generally considered a borrowing tablishes the following criteria that, if satisfied, transaction, and the entire amount of the assets permit a transfer of receivables with recourse to transferred must remain on the books of the be considered a sale of the assets rather than a transferring institution. This risk retention may financing transaction: occur directly as a result of recourse provisions 1. The transferor surrenders control of the or, indirectly, as a result of retaining a subordifuture economic benefits relating to the receiv- nated class of an asset-backed security or by ables. some other means. Thus, securitization transactions involving recourse to the originator will 2. The transferor can reasonably estimate its generally be reported as financings for Call Reobligation under the recourse provisions. port purposes. 3. The transferee cannot return the receivables to the transferor except pursuant to the recourse As an exception to the general rule, under the provisions. separate Call Report instruction for "participa- When the transfer of assets is deemed a sale in tion in pools of residential mortgages," banks accordance with these criteria, the assets that engaging in the disposal of residential mortgage have been sold are removed from the transferor's loan pools under the programs of GNMA, balance sheet. FNMA, and FHLMC are able to treat such At the same time, the amount of losses esti- transactions as sales of the underlying mortgages mated to accrue to the seller under the recourse without regard to the amount of risk retained by provisions must be recorded as a direct liability the seller. on the seller's books. This balance sheet liability Banks that sell "private" certificates of partic- (the recourse liability account) must be periodi- ipation in pools of residential mortgages, (that is, cally adjusted to reflect any changes in such loss pools that are not sold through a government estimates. The sales gain or loss is the difference agency program) are permitted to treat such between the sales price, adjusted for this accrual transactions as sales only when the selling "bank of estimated losses, and the recorded amount of does not retain any significant risk of loss, either net receivables (gross receivables, including any directly or indirectly." Recourse is deemed sigfees or charges owed by the debtors included nificant when the maximum contractual exposure 4. Similar but stricter rules applying to CMOs are pre- 3. FASB 77, "Reporting by Transferors for Transfers of sented in FASB Technical Bulletin 85-2, "Collateralized Receivables with Recourse," was issued in December 1983. Mortgage Obligations." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

666 Federal Reserve Bulletin • October 1989 under the recourse provision (or through reten- the bank are the same as they would have been if tion of a subordinate interest in the mortgages) at the assets had not been sold. For example, in the the time of the transfer is greater than the amount transfer of a group of high quality assets with a of the probable loss that the bank has reasonably "reasonably estimated" loss rate of 1 percent, if estimated for the transferred mortgages. Under the transferor assumes the risk of default up to a such circumstances, the issuing bank has re- maximum of 10 percent of the total dollar value tained the entire risk of loss, and the transfer of of the assets transferred, the transferor in effect mortgages must be reported as a financing trans- retains the entire risk inherent in the assets action. transferred. In addition, to remain viable in the The special reporting requirements for trans- market, the transferor may feel moral pressure to fers involving residential mortgages were imple- insulate investors from any losses above the mented so as not to hamper the development of amount it is legally committed to meet. the secondary mortgage markets. When these Finally, when "sales" can only be made with reporting requirements were adopted, sales of recourse, as opposed to selling assets at enough residential mortgages entailed little or no risk of a discount to insulate the purchaser of the retention by the selling institution. The FFIEC is assets from all but catastrophic losses, banks now reviewing the general regulatory reporting may tend to sell only the highest quality assets treatment of asset sales with recourse. In con- and keep those of lower quality. nection with this review, the FFIEC is evaluating As the asset securitization process has the need for the special reporting requirements evolved, the banking agencies have reviewed for residential mortgage sales and the appropriate proposed types of asset securitization transacway to apply capital requirements to transfers of tions for compliance with the rules for reporting residential mortgages with recourse. The FASB sales of assets on the Call Report. One such is also reviewing GAAP accounting standards for transaction approved by the banking agencies did asset sales with recourse in conjunction with its not involve recourse to the selling bank but Financial Instruments Project and expects to instead used a separate spread account, funded develop a comprehensive set of accounting stan- through excess cash flows from the underlying dards for all financial instruments, including pool of assets, to absorb credit losses on the those associated with asset securitization. transferred loans. The Federal Reserve and the Regarding the rationale for the regulatory re- other banking agencies determined that, for regporting requirements for asset sales with re- ulatory reporting purposes, sales treatment is course, the banking regulators historically have appropriate for such structures because the sellconsidered the existence of any risk that may be ing bank does not retain the risk of loss. borne by the seller as the determining factor in deciding if sales treatment is appropriate. Also, Interagency Investment Policy Statement regulators have traditionally been concerned that loss estimation may be virtually impossible for On April 20, 1988, the Federal Reserve, along certain types of loans, such as commercial loans, with the other federal banking agencies, issued a construction loans, and loans to developing policy statement that addressed investment and countries. Such estimates, however, may be pos- trading practices of insured commercial banks. sible for pools of residential mortgages or con- This policy statement also covered stripped, sumer loans. Under GAAP, sales treatment is mortgage-backed securities and residual interprohibited when losses on the transferred loans ests. Supervisory concerns about these instrucannot be estimated. ments arise because of their extreme sensitivity In some asset transfers, the transferor, gener- to interest rates and the resulting price volatility. ally the originator, may be subject to a partial or Generally, POs increase in value when interest limited recourse provision. Even when the terms rates decline because prepayments of mortgages of the transfer ostensibly provide only limited increase, thus shortening their maturities and recourse, it may, in fact, comprise all losses that allowing investors to recover their investment are likely to occur. Thus the potential losses to sooner than they anticipated. In contrast, IOs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Asset Securitization: A Supervisory Perspective 667 and residuals increase in value when interest January 1989, assigns assets and the credit equivrates rise because prepayments decline, maturi- alent amounts of off-balance-sheet items to varities lengthen, and more interest is collected on ous broad risk categories, depending on the level the underlying mortgages. Therefore, banking of credit risk associated with that asset. The organizations sometimes use the purchase of a aggregate dollar value of the amount in each risk PO to offset the effect of interest rate movements category is then multiplied by the risk weight on the value of mortgage servicing, and the associated with it. The resulting weighted values purchase of an 10 or residual to offset interest from each of the risk categories are added torate risk associated with mortgages and similar gether, and this sum is the bank's total of riskinstruments. weighted assets. An organization's capital (com- However, when purchasing an 10, PO, or posed of stockholders' equity and certain other residual, without offsetting hedges, the investor items) is then divided by its total of risk-weighted may be speculating on future interest rate move- assets to calculate its capital ratio.6 The riskments and how those movements will affect the based capital framework will be phased in beginprepayment of the underlying collateral. Further- ning at the end of 1990 and will be fully effective more, stripped, mortgage-backed securities that in 1993. do not have the guarantee of a government The risk-based capital framework has three agency or government-sponsored agency as to main features that will affect the asset securitizaprincipal and interest have an added element of tion activities of banking organizations. First, the credit risk. The interagency policy statement on framework assigns risk weights to loans, assetsuch investments discussed the appropriateness backed securities, and other assets related to of them for banks and the prudential measures securitization. Second, bank holding companies that a bank should take to protect itself from that transfer assets with recourse to the seller as undue risk when it invests in these instruments.5 part of the securitization process will now explic- Under guidelines set forth in the policy state- itly be required to hold capital against their ment, IOs and POs may be unsuitable for an off-balance-sheet credit exposures. Third, bankinstitution's investment portfolio, particularly if ing organizations that provide credit enhanceheld in significant amounts. Generally, these ment to asset securitization issues through guidelines state that banks should not invest in standby letters of credit or by other means will stripped, mortgage-backed securities, such as have to hold capital against the related off- IOs and POs, unless they have highly sophisti- balance-sheet credit exposures. cated and well-managed securities portfolios, The risk weights assigned to an asset-backed mortgage portfolios, or mortgage banking func- security depend on the issuer and whether the tions. In such institutions, however, the acquisi- assets that constitute the collateral pool are morttion of IOs and POs should only be undertaken in gage related, for example, residential mortgages conformance with carefully developed and doc- or pass-through securities. Asset-backed securiumented plans prescribing specific positioning ties issued by a trust or by a single-purpose limits and control arrangements that have been corporation and backed by nonmortgage assets approved by the bank's board of directors. will receive a risk weight of 100 percent. Securities guaranteed by U.S. government Risk-Based Capital Provisions Affecting agencies and those issued by U.S. government- Asset Securitization sponsored agencies are assigned risk weights of 0 and 20 percent respectively because of the low Capital requirements play an important role in degree of credit risk. Accordingly, mortgagethe supervision of banking organizations. The backed, pass-through securities guaranteed by new risk-based capital framework, published in •f ' • 6. The amounts used for this calculation are taken from a 5. Press release, "Supervisory Policy Concerning Selec- banking organization's regulatory reports: the Call Report for tion of Securities Dealers and Unsuitable Investment Prac- commercial banks and the Consolidated Financial Statements tices," Federal Reserve Board, April 20, 1988. for Bank Holding Companies (F.R. Y-9C). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

668 Federal Reserve Bulletin • October 1989 GNMA will have a risk weight of 0 percent. In of the security without undue reliance on any addition, securities such as participation certifi- reinvestment income. cates and CMOs issued by FNMA or FHLMC 4. No material reinvestment risk is associated will have a risk weight of 20 percent. with any funds awaiting distribution to the hold- However, several types of securities issued by ers of the security. FNMA and FHLMC are excluded from the Those privately issued, mortgage-backed selower risk weight and slotted in the 100 percent curities that do not meet the above criteria will risk weight category. Residual interests (for ex- receive a risk weight of 100 percent (table 2). ample, CMO residuals) and subordinated classes If the underlying pool of mortgage-related asof pass-through securities or CMOs that absorb sets is composed of more than one type of asset, more than their pro rata share of loss are as- then the entire class of mortgage-backed securisigned to the 100 percent risk weight category. ties is assigned to the category of the asset with Furthermore, all stripped, mortgage-backed se- the highest risk weight in the pool. If the security curities, including IOs, POs, and similar instru- is backed by a pool consisting of U.S. governments will also receive a risk weight of 100 ment-sponsored agency securities, for example, percent because of their extreme price volatility. FHLMC participation certificates, that qualify The treatment of stripped, mortgage-backed se- for a risk weight of 20 percent and conventional curities will be reconsidered when a method to mortgage loans that qualify for a risk weight of 50 measure interest rate risk is incorporated into the percent, then the security would receive the 50 risk-based capital guidelines. percent risk weight. A privately issued, mortgage-backed security As previously mentioned, bank holding comthat meets the criteria listed below is considered panies report their activities in accordance with either a direct or indirect holding of the underly- GAAP, which permits asset securitization transing mortgage-related assets and is assigned to the actions to be treated as sales when certain critesame risk category as those assets (for example, ria are met, even when there is recourse to the U.S. government agency securities, U.S. gov- seller. With the advent of the risk-based capital ernment-sponsored agency securities, FHA- and guidelines, bank holding companies will be ex- VA-guaranteed mortgages, and conventional plicitly required to hold capital against the offmortgages). However, under no circumstances balance-sheet credit exposure arising from the will a privately issued, mortgage-backed security contingent liability associated with the recourse be assigned to the 0 percent risk-weight category. provisions. This exposure is considered a direct Therefore, private issues that are backed by credit substitute that would be converted at 100 GNMA securities will be assigned to the 20 percent risk-weight category as opposed to the 0 percent category appropriate to the underlying 2. Risk weights accorded to asset-backed securities GNMA securities. The criteria that a privately under the risk-based capital guidelines issued, mortgage-backed security must meet to Risk weight be assigned the same risk weight as the underly- Type of asset-backed securities (percent) ing assets are as follows: GNMAs 000 1. The underlying assets are held by an inde- FHLMC and FNMA securities 222000 pendent trustee, and the trustee has a first prior- Privately issued, mortgage-backed securities collateralized by GNMA, FHLMC, or ity, perfected security interest in the underlying FNMA securities, or by FHA- or VA-guaranteed mortgages' 222000 assets on behalf of the holders of the security. Privately issued, mortgage-backed securities 2. The holder of the security has an undivided collateralized by one- to four-family residential properties' 555000 pro rata ownership interest in the underlying Stripped, mortgage-backed securities, residual interests, and subordinated mortgage assets, or the trust or single purpose class securities 111000000 entity (or conduit) that issues the security has no Asset-backed securities collateralized by nonmortgage assets 111000000 liabilities unrelated to the issued securities. 3. The cash flow from the underlying assets in 1. Privately-issued, mortgage-backed securities must meet the criteria outlined in the risk-based capital guidelines to be accorded the all cases fully meets the cash flow requirements risk weight of the underlying collateral. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Asset Securitization: A Supervisory Perspective 669 percent to an on-balance-sheet credit equivalent • Liquidity and market risks are recognized, amount for appropriate risk weighting. and the organization is not excessively depen- Banking organizations that issue standby let- dent on securitization as a substitute for funding ters of credit as credit enhancements for asset- or as a source of income. backed security issues must hold capital against • Steps have been taken to minimize the potenthese contingent liabilities under the risk-based tial for conflicts of interest due to securitization. capital guidelines. According to the guidelines, • Possible sources of structural failure in secufinancial standby letters of credit are direct credit ritization transactions are recognized, and the substitutes, which are converted in their entirety organization has adopted measures to minimize to credit equivalent amounts. The credit equiva- the effect of such failures, should they occur. lent amounts are then risk weighted according to • The organization is aware of the legal risks and the type of counterparty or, if relevant, to any uncertainty regarding various aspects of securitizaguarantee or collateral. tion. • Concentrations of exposure in the underlying Examination Guidelines asset pools, in the asset-backed securities portfor Asset Securitization7 folio, or in the structural elements of securitization transactions are avoided. The Federal Reserve is also in the process of • All sources of risk are evaluated at the incepdeveloping and implementing guidelines to assist tion of each securitization activity and are monexaminers in the on-site review of the involve- itored on an ongoing basis. ment of banking organizations in securitization, both as participants and as investors. The guide- Moreover, special seminars on asset securitilines provide a more structured framework for zation have been conducted for senior examinassessing the risks associated with the securiti- ers, and in depth coverage of securitization iszation process at banking organizations and for sues will continue to be part of a regular determining that they have implemented certain examiner training program. prudential policies and procedures in this area. In accordance with these guidelines, examiners are to determine that the following conditions are CONCLUSION being satisfied: In recent years the complexity of asset securitization has increased, and this trend most likely • Securitization activities are integrated into the overall strategic objectives of the organiza- will continue. In addition, securitization is intion. creasing in other countries, and international • Sources of credit risk are understood, and prop- markets for asset-backed securities are expected erly analyzed and managed, without excessive reli- to grow rapidly. ance on credit ratings by outside agencies. Asset securitization activities should remain • Credit, operational, and other risks are rec- beneficial to banking organizations when conognized and are addressed through appropriate ducted in a prudent manner. Banking organizapolicies, procedures, management reports, and tions, however, must carefully evaluate the risks other controls. inherent in new forms of asset securitization and maintain appropriate controls, systems, and other measures to minimize these risks. The 7. The Federal Reserve's examination guidelines were Federal Reserve Board will continue to review developed by the Asset Securitization Task Force headed by new asset-backed security structures as they Franklin D. Dreyer, Senior Vice President, Federal Reserve Bank of Chicago. The other members of the task force, from develop to assess the associated risks to banking the Reserve Banks, are James Barnes, Lawrence Cuy, organizations and the financial system and to George Gregorash, Barbara Kavanagh, Mark Levonian, and factor these developments into its supervisory Donald Wilson, and from the Board, Roger Cole and the process. authors. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

670 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period May closed the period approximately 3 percent higher through July 1989, provides information on Trea- against the Japanese yen and \ VA percent higher sury and System foreign exchange operations. It against the British pound, while it was about VA was presented by Sam Y. Cross, Manager of percent lower against the German mark and VA Foreign Operations of the System Open Market percent lower against the Canadian dollar. Account and Executive Vice President in charge Intervention sales of dollars by the U.S. auof the Foreign Group of the Federal Reserve thorities between May and the end of July totaled Bank of New York. Cathy Weintraub was primar- $11,917 million, of which $7,237.5 million were ily responsible for preparation of the report.1 sold against Japanese yen and $4,679.5 million against German marks—the largest U.S. inter- The dollar was under upward pressure in the first vention for any three-month reporting period. half of the period under review, continuing a The bulk of these dollar sales occurred in May tendency that had begun toward the end of the and early June when the U.S. monetary authorprevious reporting period. The dollar was sup- ities were intervening vigorously, in keeping with ported by strong investment demand until late the Group of Seven (G-7) policy commitments to May. In early June, after a brief period of relative foster exchange rate stability. At the same time, market calm, the dollar came under renewed a statement from the White House expressed upward pressure amid large capital flows precip- concern about the dollar's appreciation and indiitated by escalating tensions in China. These two cated that, if sustained or extended, it could waves of upward pressure were met with heavy undermine international efforts to reduce global and sustained intervention. trade imbalances. For the balance of the period, After mid-June the dollar retreated and, on intervention sales of dollars were modest as balance, ended the three-month period VA percent upward pressures on the dollar subsided. lower on a trade-weighted basis as measured by the staff of the Board of Governors. This reversal in the dollar's direction coincided with changes THE DOLLAR FIRMS IN MAY in the market's assessment of the U.S. economic outlook—in particular, emerging indications of a During May, as in earlier months of 1989, the softening of economic growth and somewhat dollar was buoyed by investment and commerlessened price pressures led to market expecta- cial demand. At the opening of the three-month tions of an easier U.S. monetary policy stance period, investors and commercial interests were and lower short-term interest rates. Economic gaining confidence about increasing the share of and political developments abroad also influ- dollar assets in their overall portfolios and reducenced movements in dollar exchange rates over ing the hedged proportion of their dollar assets. the course of the three-month period. The relatively stable performance of the dollar Against individual currencies, the dollar's net during the previous year had led many to conmovements varied considerably. The dollar clude that it was no longer necessary to maintain costly hedges to protect their dollar exposures against exchange rate loss. Actions to unwind 1. The charts for the report are available on request from these hedge positions continued to exert power- Publications Services, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. ful upward pressure on the dollar, while adjust- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

ments in commercial leads and lags also contrib- improvement in U.S. external performance. On uted to the dollar's upward momentum. May 22, the dollar pierced the DM2.00 level Meanwhile, investors continued to be attracted against the mark and ¥140 against the yen. By to the relatively high interest rates available on May 24, the dollar reached DM2.0150 and dollar-denominated instruments, even though in- ¥142.85, up roughly IVA percent against the mark terest rate differentials favoring the dollar had and yen respectively from the end of April. already narrowed considerably from levels of last As the dollar moved to levels not seen since fall and winter. Also, market sources reported the February 1987 Louvre Accord, market parthe widespread view that the prospect for capital ticipants increasingly came to question the will of gains on long-term fixed income dollar securities the G-7 monetary authorities to halt the dollar's seemed attractive given the growing perception rise. Under these circumstances, official warnthat the U.S. economic expansion was slowing ings about the negative consequences of dollar and that interest rates in the United States were appreciation went unheeded. Instead, market likely to continue to decline. participants gave more credence to statements With sentiment toward the dollar decidedly by some U.S. and foreign officials that seemed to positive during early May, the dollar advanced reinforce the idea that the G-7 monetary authorsmartly. To counter the upward pressure, the ities were prepared to tolerate the recent higher U.S. monetary authorities sold a total of $550 levels for the dollar. Upward pressure continued million against marks and $400 million against to mount as market participants bid for dollars yen between May 1 and May 8, following through amid fears that the currency would go even on operations begun at the end of April. higher. The upward pressures intensified after the May In this environment, the U.S. authorities inten- 12 report of a smaller-than-expected rise in U.S. sified their intervention operations to resist the producer prices during April buoyed both the dollar's rise. They sold a total of $5,785 million U.S. bond and exchange markets. By May 15 the between May 12 and May 31, reflecting sales of dollar broke through the significant technical and $3,000 million against marks and $2,785 million psychological level of DM1.9250 against the against yen. Of these amounts, a total of $2 mark. Attitudes toward the dollar became even billion was sold on May 18 and May 19 alone. more bullish after the May 17 release of prelim- By late May, upward pressure on the dollar inary U.S. trade data for March indicating sharp abated and a more cautious atmosphere returned to the foreign exchange market. A confluence of 1. Federal Reserve reciprocal currency arrangements factors contributed to the dollar's retracement at Millions of dollars the end of the month: The cumulative effect of sizable and persistent central bank intervention Amount of Institution facility, operations came to weigh upon the currency, and July 31, 1989 these operations were viewed as a strong signal that U.S. and foreign officials were seriously Austrian National Bank 250 National Bank of Belgium 1,000 committed to fostering exchange rate stability Bank of Canada 2,000 National Bank of Denmark 250 and were determined to resist the dollar's rise. Bank of England 3,000 Official interest rate increases in Japan, Britain, Bank of France 2,000 Deutsche Bundesbank 6,000 Switzerland, and elsewhere in Europe late in the Bank of Italy 3,000 Bank of Japan 5,000 month, though prompted by domestic considerations, were also seen as contributing to a more Bank of Mexico 700 Netherlands Bank 500 stable exchange rate environment. Moreover, Bank of Norway 250 Bank of Sweden 300 indications of a moderation in the pace of U.S. Swiss National Bank 4,000 economic growth began to accumulate, rein- Bank for International Settlements forcing expectations that U.S. monetary policy Dollars against Swiss francs 600 Dollars against other authorized European might soon be eased and, therefore, that favorcurrencies 1,250 able interest rate differentials would continue to Total 3300,,110000 narrow. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

672 Federal Reserve Bulletin • October 1989 The financial markets took special note of the reductions in the prime lending rate at several June 2 release of U.S. nonfarm payroll figures for U.S. banks on June 5 and an easing of the federal May that showed slower employment growth funds rate on the following day. than the markets had previously anticipated. The bullish sentiment toward the dollar contin- These data were seen as increasing the likelihood ued to build in advance of the June 15 release of that the Federal Reserve would soon ease its U.S. trade data, which were expected to show a monetary stance. The dollar moved sharply greatly reduced trade gap for April. The dollar lower, declining about 2 percent against the yen moved higher immediately after the preliminary over the course of the day. The dollar closed on report of a narrowing of the trade deficit to $8.26 June 2 at DM1.9420 and at ¥140.45, V/i percent billion, from a revised deficit of $9.55 billion in lower against the mark and VA percent lower March. By midmorning in New York trading that against the yen respectively from the levels day, the dollar was pushed up to DM2.0470 reached on May 24, but VA percent and 5VI against the mark and ¥151.90 against the yen, its percent higher respectively from the opening of highest levels in more than two years. At these the reporting period. levels, the dollar was 83/4 percent higher against the mark and 14!/4 percent higher against the yen from the end of April and was trading roughly 31 percent and 26 percent higher respectively from RENEWED UPWARD PRESSURE the record lows reached on January 4, 1988. IN EARLY TO MID-JUNE On June 5, however, the dollar moved abruptly higher amid heightened market sensitivity to political instability. In particular, market atten- THE DOLLAR DECLINED IN LATE JUNE tion shifted to news commentary on the Chinese government's efforts to suppress a student dem- As impressive as the dollar's upsurge had been, onstration that reflected growing pressures for market participants noted that the dollar failed to democratic reform in China. The escalating ten- move above the key technical levels of DM2.05 sions in China led many market participants to against the mark and ¥152 against the yen on anticipate capital outflows from East Asia or June 15, and profit-taking began to move the safe-haven considerations stemming from a reas- dollar lower. Selling momentum quickly built as sessment of the prospects for economic and market participants scrambled to unwind longpolitical stability in the region. A sharp decline in dollar positions. The dollar plunged in volatile the Hong Kong stock index added to the uncer- trading, and many participants started to questainty of the time. The dollar's rise was particu- tion whether this decline was the beginning of a larly pronounced against the yen as the Japanese sea change in the dollar's direction. The dollar currency remained vulnerable to selling pres- closed on June 15 at DM1.9820 against the mark sures, in part because of the additional uncertain- and at ¥145.30 against the yen, down 3LA percent ties associated with Japan's political situation. and 4LA percent respectively from the highs The dollar was bid up strongly, notwithstanding reached only hours earlier. 2. Drawings and repayments by foreign central banks under special swap arrangements with the U.S. Treasury1 Millions of dollars; drawings or repayments (-) Outstanding, Outstanding, Central bank drawing Amount of April 30, May June July July 31, on the U.S. Treasury facility 1989 1989 Central Bank of Venezuela 450.02 0 Central Bank of Bolivia 100.03 ... ... ... 100.0 100.0 1. Data are on a value-date basis. 3. The facility was established on July 11, 1989. 2. The facility expired on May 15, 1989. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 673 At the same time, the dollar was perceived as 3. Net profits or losses (-) on U.S. Treasury and vulnerable to central bank intervention opera- Federal Reserve current foreign exchange operations, May 1-July 31, 19891 tions. Consistent and heavy intervention sales of Millions of dollars dollars by the U.S. authorities, undertaken in coordination with other central banks, continued after U.S. Treasury the dollar moved down from its peak and helped Federal Exchange Reserve Stabilization convince market participants that the G-7 monetary Fund authorities were firmly committed to resisting the 0 77.3 dollar's rise and to maintaining exchange rate stabil- Valuation profits and losses ity. By mid-June, market participants had become on outstanding assets and liabilities as of more aware of the scale of intervention. Interven- July 31, 1989 1,045.5 502.8 B Ess tion sales of dollars by the U.S. authorities between 1. Data are on a value-date basis. June 6 and June 30 totaled $4,952 million, including $3,822.5 million sold against yen and $1,129.5 million sold against marks. minish. Furthermore, corporations reportedly re- By late June, market attention had shifted back to frained from buying dollars as the currency continthe outlook for the U.S. economy and monetary ued to decline. Under these circumstances, the policy. Indications of a softening in economic activ- dollar experienced only a brief bout of upward ity continued to appear, highlighted by the June 23 pressure in the aftermath of a June 25 upper house report of a sharp drop in durable goods orders in by-election in Japan. May. Further, emerging signs pointed to some less- The dollar subsequently resumed its decline as ening of price pressures and to an underlying trend market attention again centered on the prospects in inflation that was less severe than markets had for further narrowing of favorable interest rate previously feared. Market participants noted the differentials. Accumulating signs of slowing U.S. easing in the federal funds rate that had already economic growth were seen by market particitaken place earlier in the month and expected fur- pants as increasing the likelihood that the Fedther declines. The dollar moved lower as market eral Reserve would again ease its monetary participants anticipated that favorable interest rate stance. At the same time, economic statistics differentials would narrow further, thereby dimin- were suggesting buoyant growth and increasing ishing the relative attractiveness of dollar-denomi- inflationary pressures abroad. In these circumnated instruments. stances, the monetary authorities in Germany An undertone of caution set in as the perceptions and several other continental countries anof downside risk associated with holding dollar nounced increases of Vi to 1 full percentage point assets increased. By late June, portfolio adjustments in their official interest rates on June 29. On July to reduce hedging ratios appeared to taper off. 6, the dollar traded as low as ¥137.85 against the Capital flows from East Asia also appeared to di- yen, down 53/4 percent from the June 9 close. Warehousing Operations During the three-month period, the Federal Re- pay and to receive the same amount of foreign serve warehoused foreign currencies for the Ex- currency, as specified by the use of the same change Stabilization Fund (ESF) of the Treasury. exchange rate, neither party incurs any foreign Such warehousing operations have been carried out exchange rate risk by virtue of this transaction. The from time to time since 1963. In carrying out such ESF may realize a profit or loss at the time the an operation, the Federal Reserve buys the foreign warehousing transaction is undertaken and remains currency in a spot purchase from the Treasury and exposed to valuation gains or losses on the foreign simultaneously sells it back to the Treasury at the currencies being warehoused (see table 3). A waresame exchange rate for a future maturity date. A housing transaction is reversed when the Treasury key aspect of this type of transaction is that, since repays dollars and the Federal Reserve repays the both the Federal Reserve and the Treasury agree to foreign currency it has acquired from the Treasury. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

674 Federal Reserve Bulletin • October 1989 During the second week in July, however, Federal Reserve System. To finance a portion of sentiment toward the dollar turned temporarily these operations, the ESF "warehoused" $4,000 more positive. A series of economic reports million equivalent of foreign currencies with the released on July 14 was viewed in the exchange Federal Reserve. market as favoring the dollar. These reports In other operations, the ESF acquired $198.0 confirmed that economic activity was setting into million equivalent of Japanese yen through sales a sustainable rate, while price data suggested that of Special Drawing Rights and repayments under the Federal Reserve might not have as much the Supplementary Financing Facility of the Inleeway to lower interest rates as previously sup- ternational Monetary Fund. Also during the peposed. But then, in his congressional testimony riod, Bolivia drew the full $100 million from a on July 20, Chairman Greenspan stated that the short-term facility established on July 11 by the balance of risks in the U.S. economy had shifted U.S. Treasury through the ESF. The ESF shortaway from greater inflation and that monetary term facility with Venezuela, established on policy had been adjusted accordingly. The testi- March 10, expired in May. There was no activity mony temporarily revived expectations that U.S. in the facility during the period. interest rates would continue to move lower, and As of the end of July, cumulative bookkeeping dollar rates subsequently drifted irregularly or valuation gains on outstanding foreign curlower through the balance of the month. rency balances were $1,045.5 million for the During July, at times when there appeared to Federal Reserve and $502.8 million for the ESF. be upward pressure building toward the dollar, These valuation gains represent the increase in the U.S. authorities entered the market to con- the dollar value of outstanding currency assets tain the pressure. These operations, however, valued at end-of-period exchange rates, comwere modest and intermittent. In fact, the Trad- pared with the rates prevailing at the time the ing Desk at the Federal Reserve Bank of New foreign currencies were acquired. York operated on only three days during July, The Federal Reserve and the ESF regularly selling a total of $230 million dollars against yen invest their foreign currency balances in a variety between July 11 and July 21. On July 31, the of instruments that yield market-related rates of dollar closed the three-month reporting period at return and that have a high degree of quality and DM1.8648 against the mark and at ¥136.90 liquidity. A portion of the balances is invested in against the yen. securities issued by foreign goverments. As of The total intervention sales of $11,917 million the end of July, holdings of such securities by the during the three-month reporting period were Federal Reserve amounted to $5,113.6 million shared equally by the U.S. Treasury, through the equivalent, and holdings by the Treasury Exchange Stabilization Fund (ESF), and the amounted to the equivalent of $5,856.9 million. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

675 Industrial Production Released for publication August 16 duction fell sharply, and output of construction supplies, on balance, remained weak. At 141.7 Industrial production rose 0.2 percent in July percent of the 1977 average, the total index in following a revised 0.1 percent decline in June. July was 2.7 percent higher than it was a year The July gain mainly reflected a rebound in the earlier. Manufacturing output rose 0.2 percent in output of total materials as well as continued July. Capacity utilization in manufacturing, at strength in business equipment excluding motor 83.9 percent, was about unchanged from June. vehicles. In contrast, automobile and truck pro- Detailed data for capacity utilization are shown Ratio scale, 1977=100 160 140 120 100 80 160 140 120 100 80 180 160 140 120 100 All series are seasonally adjusted. Latest series: July. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

676 Federal Reserve Bulletin • October 1989 1977 = 100 Percentage change from preceding month Percentage ccchhhaaannngggeee,,, Group 1989 1989 JJJuuulllyyy 111999888888 tttooo JJJuuulllyyy 111999888999 June July Mar. Apr. May June July Major market groups Total industrial production 141.4 141.7 .1 .7 -.1 -.1 .2 2.7 Products, total 151.9 151.9 .3 .7 .1 .1 .0 3.7 Final products 150.7 150.6 .2 .9 .2 .1 -.1 Consumer goods 139.4 138.9 -.3 .8 -.2 .1 -.4 3.5 Durable 130.5 127.2 -1.1 1.6 -.7 -.5 -2.5 1.5 Nondurable 142.7 143.3 .0 .6 .0 .3 .4 Business equipment... 168.9 169.3 .8 .9 .7 .0 .2 Defense and space 181.1 181.7 -.3 .7 .5 .2 .3 — 1.7 Intermediate products... 156.1 156.4 .6 .3 -.2 -.1 .2 Construction supplies. 139.8 139.3 -.1 .6 -.6 .4 -.4 Materials 127.2 127.8 -.1 .8 -.4 -.4 .5 1.1 Major industry groups Manufacturing 148.1 148.3 .1 .7 .0 .0 .2 3.3 Durable 146.8 146.7 -.1 .7 .0 -.1 .0 2.7 Nondurable 149.9 150.6 .4 .7 .0 .2 .5 4.1 Mining 100.4 100.7 .6 .9 -.8 -1.1 .3 -3.5 Utilities 114.9 115.8 .9 -.4 -.7 -1.2 .8 1.2 NOTE. Indexes are seasonally adjusted. separately in "Capacity Utilization," Federal back from a high level in June. Nondurable Reserve monthly statistical release G.3. consumer goods rose again as all major sectors In market groups, durable consumer goods fell posted gains. 2.5 percent in July, owing mainly to a significant The further large increase in business equipcurtailment in output of both autos and light ment excluding motor vehicles again was led by trucks for consumer use; auto assemblies fell gains in manufacturing and commercial equipfrom an annual rate of 6.8 million units in June to ment as well as aircraft production. Materials a rate of 6.0 million units in July. In addition, the output rose in July, with increases widespread; output of home goods, which had grown rapidly this rebound followed two months during which during the first half of this year, fell noticeably in most categories of durable and nondurable mate- July as the production of appliances dropped rials had weakened. The main exception to this pattern was textile materials, which has been strong since March. Energy materials, following Total industrial production—Revisions two months of strike-related declines, edged up Estimates as shown last month and current estimates in July. In industry groups, manufacturing production Percentage change Index (1977=100) from previous rose slightly in July as most nondurable indus- MMoonntthh months tries advanced. Durables were unchanged in July as production of motor vehicles and parts fell, Previous Current Previous Current but primary metals and aerospace industries Apr 141.6 141.7 .6 .7 rose. Outside manufacturing, production at both May 141.4 141.6 -.1 -.1 June 141.1 141.4 -.2 -.1 mines and utilities increased following declines July 141.7 .2 during most of the second quarter. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

677 Statements to Congress Statement by Wayne D. Angell and Edward W. cover actual costs plus imputed taxes and return Kelley, Jr., Members, Board of Governors of the on capital (what we call the private sector adjust- Federal Reserve System, before the Subcommit- ment factor) and the cost of float, increased costs tee on Domestic Monetary Policy of the Commit- in priced services actually increase our earnings tee on Banking, Finance and Urban Affairs, U.S. contribution to the Treasury. Second, many fis- House of Representatives, August 3, 1989. cal agency operations are provided to the Treasury Department and other agencies on a reim- It is a pleasure for Governor Kelley and me to bursable basis. Altogether, 58 percent of our visit with this subcommittee today. This is the total expenses are either recovered through pricthird time that I have had the opportunity to ing or are reimbursable. discuss and review the Federal Reserve System's expenses and budget with you. Today as we look at the Federal Reserve System's budget for 1989, HISTORICAL OVERVIEW Governor Kelley will discuss the Board's budget and major initiatives, and my comments will It may be helpful to put the budget for 1989 in focus on the Reserve Bank budgets, as well as perspective by sketching the most recent tenmajor System initiatives. year history of System expenses. Between 1978 The Board has recently made available to the and 1988, Federal Reserve System expenses inpublic and to this subcommittee copies of our creased at an average annual rate of 6.8 percent; publication entitled Annual Report: Budget Re- System employment decreased at a rate of 0.1 view, 1988-89 presenting detailed information percent; and volume increased 41 percent. Alabout spending plans for 1989. Some of the though unit costs did increase in the early 1980s attached tables have been updated for 1988 ac- as Federal Reserve Bank volumes adjusted to tual experience and, therefore, small variations pricing after implementation of the Monetary exist from data in that document.1 Control Act, since 1983, when the transition to For 1989, the Federal Reserve System has pricing was completed, unit cost for the composbudgeted operating expenses of $1.4 billion, an ite of all functions has declined 0.8 percent per increase of 5.5 percent over 1988 actual ex- year on average even while improvements have penses. Before getting to the substance of our been made in the quality of services. 1989 budget, I would remind the subcommittee of For priced services, a decline in unit costs has two aspects of Federal Reserve System opera- been particularly sharp in the electronic payment tions that affect our budget in unusual ways. areas in which equipment is more readily substi- First, 41 percent of System expenses arise from tuted for human resources, in which volume services provided to depository institutions for growth has been the highest, and in which the which, by law, we charge fees adequate to cover general decline in the cost of computing equipall costs. Since additional costs of these services ment relative to capacity has had the greatest are covered by additional revenues, any in- effect. In commercial check processing, on the creases in costs do not result in reduced earnings other hand, for which there has been a significant returned to the U.S. Treasury. In fact, since fees effort to increase availability and other improvements in the quality of services, there has been an increase in unit cost of 1.7 percent per year 1. The attachments to this statement are available on since 1983. In the most recent year-over-year request from Publications Services, Board of Governors of comparison (1988 over 1987) check unit costs the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

678 Federal Reserve Bulletin • October 1989 rose 4.5 percent due to implementing provisions percent greater than our 1988 expenses. While of the Expedited Funds Availability legislation this increase was somewhat higher than the level (EFA). experienced in 1986, 1987, or 1988, it was neces- For nonpriced cash operations—involving the sary in light of new initiatives facing the Board distribution of currency and coin—the decline in and of some areas for which we had to commit unit cost has also been sharp; since 1983 the additional resources. Also, the very low inaverage decline has been 4.1 percent per year. In creases in 1986 and 1987 reflected the initial fiscal agency operations, also nonpriced, there savings associated with our successful program has been an increase in unit cost of 1.2 percent to reduce staff 10 percent while assuming a per year since 1983, but a decline in unit cost of growing workload. While the effect on our year- 3.1 percent since 1986. to-year increment has now disappeared, the sav- From 1987 to 1988 we have seen an increase in ings from this staff reduction continue each year overall unit costs of 1.8 percent in the composite, since the Board has not increased the number of mainly reflecting the implementation of the Ex- positions since that reduction. pedited Funds Availability Legislation. The impact of a long-term productivity gain is perhaps best seen in our trend in Reserve Bank TEN-YEAR TREND employment. In spite of significant growth in volumes of operations, major transition adjust- Over the last ten years the Board's expenses ments following new legislation, and rapid have increased at an average annual rate of 6.0 changes in the banking industry, actual employ- percent. In real terms, this rate of increase is 1.4 ment has decreased from 1978 to 1988 by 142 percent per year. The number of employees employees. included in the 1989 budget is virtually identical In presenting our spending plans for 1989, I to the number at the end of 1978 in spite of would like to mention that both the Reserve dramatic increases in the Board's workload. Key Bank budgets and the Board's budget must be pieces of legislation that have affected the approved by the Board of Governors. Reserve Board's workload over the period include the Bank budgets are first approved by the Bank's Financial Institutions Regulatory and Interest Board of Directors and then reviewed by the Rate Control Act, the International Banking Act, Committee on Federal Reserve Bank Activities the Monetary Control Act, and most recently the before submission to the Board of Governors. Expedited Funds Availability Section of the Governor Kelley oversees the Board's budget, Competitive Equality Banking Act. Recently, of and I will turn to him for that discussion. course, we have devoted a meaningful amount of our resources to issues related to the savings and loan problem. BUDGET OF THE BOARD OF GOVERNORS Each of these acts has had substantial cost implications for the Board. Typically, however, I am happy to address you today on the 1989 after an initial period of adjustment, we have budget of the Board of Governors of the Federal found ways to reduce the volume of resources Reserve System. Since the budget process of the necessary to meet our ongoing responsibilities Board has been discussed in testimony provided along with newly assigned functions. For inin earlier years, and since it is thoroughly cov- stance, implementation of the Monetary Control ered in the Annual Report: Budget Review for Act in 1980 required extensive data processing 1988-89, I do not plan to discuss it today. resources to accommodate the collection of re- Instead I will limit myself to the major themes of serve data for the almost 35,000 financial instituthe 1989 budget, some trend information you tions the act added to the 5,400 previously covmay find useful, and a discussion of some of the ered by the Federal Reserve. To accommodate more significant issues facing the Board. the cost growth related to the increase, steps were taken in 1985 to streamline the transmis- In November 1988 the Board approved a 1989 sion, editing, storage, and analysis of these data; budget of $96.0 million. This amount was 6.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 679 those steps have been extremely successful in crease in expenses included funding for the folreducing costs. In an organization that must lowing: a 4.1 percent general pay increase (equal gather, store, and manipulate large quantities of to the federal general pay increase) and for the data, an aggressive office automation program initial costs of our new compensation program; a has substantially improved the productivity of major survey of consumer finances to update and staff members and has been, in part, responsible expand the volume of information available for for our ability to limit the size of our staff. monetary and economic policymaking; and continuation of our other efforts to enhance the supervision function. We also initiated a program MAJOR ISSUES to consolidate key banking structure and financial data into a database to be used throughout Financial Services Industry Developments the Federal Reserve System. This program is of particular importance since the number of finan- Basic changes in the financial and banking indus- cial institutions that do business in more than one tries have forced us in recent years to plan for Reserve Bank District is growing. Finally, there and deal with new and complex issues. Earlier in was a 20 percent increase in the cost of the Office the 1980s, deregulation forced us to increase the of the Inspector General that the Board estabquantity and quality of our supervision efforts. lished in 1987. This increase reflected simply the Recently, efforts to assist in resolving the savings full-year cost of a complete staff rather than the and loan problem, combined with the large num- part-year costs during 1988 while the office was ber of problem institutions in the banking indus- starting up. try, have greatly increased our workload. International Issues NEW COMPENSATION PROGRAM Increasingly, we find ourselves analyzing a The complexity of the issues I have discussed global economy in which we must foresee prob- has required us to take steps to ensure that we lems to react correctly and quickly when they do are able to recruit and retain a very capable staff. occur. The debt situation in less developed coun- As we have testified in each of the past two tries, our own foreign trade deficit and exchange years, the major threat to our ability to maintain rate issues, and international supervision con- such a staff has been the growing disparity betinue to require significant resources. tween our salaries and those of the marketplace, particularly for some of our key job families. Our Monetary Policy 1989 budget provides funding to implement a new compensation program that is more market and Both of the above sets of issues created new performance appreciative than our former syscomplexities in the management of monetary tem and will offer compensation that is competpolicy. To confront these issues, we have re- itive with the private sector or government agensearched new analytical concepts and have en- cies that perform work similar to our own. hanced our data collection through new surveys In 1987 and again in 1988, as interim measures that supplement our traditional methods of deal- to combat this problem, we adjusted the salary ing with this critical mission. structure for some job families. These changes were to maintain some measure of comparability Other New Initiatives with the marketplace. As entry level salaries for such professional positions as economists and As we informed you last year, we continue to be attorneys escalated, and as salary compression able to hold the line on expenses and employ- and turnover of experienced people became a ment because of the dedication of our staff and greater problem, it became clear that such meaour aggressive program to improve productivity sures were not adequate. In response we developed a more comprehensive program to ensure through automation. Factors leading to the in- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

680 Federal Reserve Bulletin • October 1989 that the Board's overall salary structure was add that the volumes cited explain only part of equitable and competitive. Surveys were con- the effect of workload growth—the complexity of ducted of salary rates for jobs similar to those at the issues involved has greatly increased also. the Board, and salary administration procedures In summary then, the 1989 budget provides the were developed. The surveys found that there resources necessary for the Board to properly were a significant number of employees who perform its critical functions. At the same time were not being properly compensated in compar- the budget continues to demonstrate the restraint ison to market rates. that the Board has always shown in the use of To rectify this situation the Board has ap- resources. proved a new compensation program for employ- At this point I would return the presentation to ees, the first phase of which we initiated on July Governor Angell for a discussion of the Reserve 2. The plan is to phase in the new program over Bank budgets. an eighteen-month period, reaching the final adjustment in January 1991. The new compensation program for all of our RESERVE BANK BUDGETS employees will increase our 1989 salary costs $1.6 million, or 1.7 percent of the budget. Had the The total budgeted expense of the Reserve whole program been implemented in 1989, rather Banks—both priced and nonpriced—was held to than being phased in, the full-year cost would the 1989 budget objective of 5.5 percent over have been $4.6 million or 4.8 percent. The in- estimated 1988 expenditures. Again these increases in certain job families are greater than creases include the cost of EFA, which is exothers, however, since the increases are targeted pected to account for 0.4 percent of the overall at those career paths that were found to be increase. Besides EFA, eight major initiatives underpaid in the surveys conducted by the con- account for much of the budgeted increase in sultants to the Board. Future increases for em- Reserve Bank expenses. To fund these major ployees will be tied to the market. initiatives of $26.4 million, the remainder of the budget increase was limited to 3.5 percent so as to meet the budget objective. PRODUCTIVITY The larger initiatives for 1989 include the following: Throughout this statement, I have referred to our 1. Automation ($9.8 million). Reserve Bank having handled increases in the workload with- operations in today's environment require a out corresponding increases in staffing levels. I more fail-safe computer environment, more use might cite some examples for the period 1980 of office automation, and extended communicathrough 1988: tion networks. Included are projects to make the • Because of the Monetary Control Act, the nation's payments system more available and number of financial institutions from which the reliable, and to provide for disaster recovery. Board was required to collect reserve data rose 2. Facility improvements ($5.7 million). Many from 5,400 to more than 40,000 in 1981. of the System's facilities are 40 to 50 years old • The number of bank holding companies and are no longer efficient. In 1989, building (BHCs) monitored has risen from approximately projects in four Districts account for most of this 3,100 to approximately 6,400. increase. One project is for asbestos manage- • The number of bank and BHC examination ment; the others will provide needed office and reports analyzed rose from approximately 600 to vault space. Later in my remarks, I shall stress approximately 1,400 in the same period. the need for the Congress to remove the limita- • The number of bank holding companies un- tion on Federal Reserve Branch building funds to der extra supervisory review rose from 300 to enable us to continue to meet public needs for approximately 1,500. Federal Reserve services. These examples are typical of the kinds of 3. Increased supervisory and regulatory activincreases the Board has encountered. I would ities ($3.1 million). The Reserve Banks require Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 681 greater resources to conduct more holding com- or 8.9 percent, and employment is expected to pany examinations, to implement Regulation CC increase by 16. The staff is expected to expand (EFA), and to handle the greater complexity of primarily to accommodate a service the System examinations generally. intends to offer in 1989 called Government Noti- 4. Programs for the U.S. Treasury ($2.2 mil- fication of Change. Requested by the Treasury, lion). These programs will lead to long-run effi- this service converts paper documents to elecciencies in the issuance of savings bonds and tronic form at the Reserve Banks. Volume for the other public debt instruments but result in addi- ACH service is expected to increase 14.7 percent tional expenses at some Reserve Banks. The and unit cost to decrease 7.2 percent. programs involve more centralization of opera- Expenses for the funds transfer service are extions and increased automation. pected to increase $3.8 million, or 6.2 percent, It may be helpful to turn to the 1989 budgeted reflecting a staff increase of two and an increase in expenses on a program basis for four service lines. volume of 4.0 percent. The growth of volume in this Expenses for Services to Financial Institutions service has slowed because of mergers of bank and the Public total $884.8 million and account holding companies and bank consolidations. for almost two-thirds of the Reserve Banks' 1989 Expenses for the book-entry securities service budgets. Expenses are budgeted to increase 4.3 will increase $3.8 million, or 14.9 percent, while percent over actual 1988. Employment is bud- employment and volume remain flat. Unit cost is geted at 9,049 employees, an increase of 16 increasing 9.9 percent and can be attributed to employees or 0.2 percent over 1988. Revenue two factors, increased support costs to test and from these services is expected to offset $704 maintain the Book-Entry Securities System million of the $885 million. (BESS) and improvements in contingency capa- Commercial check processing is by far the bilities. largest service ($440.1 million), comprising al- Expenses for Supervision and Regulation, most half the budgeted expenses of this service which total $201.5 million, are expected to inline and employing 5,478. Expenses for this crease $16.4 million, or 8.9 percent, over 1988. service are increasing $11.4 million, or 2.6 per- This area now accounts for 15.1 percent of total cent over 1988, and the number of staff members expenses, compared with 12.8 percent in 1983. A will decrease by nine. The Banks expect to staff level of 2,250 is budgeted, an increase of 41, process 15.4 billion commercial checks in 1989, or 1.9 percent, over 1988. Expenses have inan increase of 2.8 percent, while unit cost is creased at an annual rate of 8.9 percent since expected to increase 2.2 percent. Added ex- 1983 and staff levels have grown by 395, or 21 penses of $5.4 million and additional staff of 134 percent. can be attributed to the full-year effect of the The 1989 increase in costs and employment is Expedited Funds Availability Act, which went the result of continued growth in the number of into effect in September 1988. Some consolida- bank holding companies; increases in the number tion of operations and the discontinuance of a of de novo banks that, under Board guidelines, number of temporary employees will offset the require more frequent examinations; the Sysbudget increases needed to implement the Expe- tem's enhanced program for examinations of dited Funds Availability Act. international operations of U.S. banks and U.S. Expenses for the currency and coin service are offices of foreign banks; and monitoring for comexpected to rise $5.4 million, or 3.8 percent. The pliance with Regulation CC. The increase for number of employees in this service has been staff, spread over most Districts, is moderate decreased by 10, to 1,717. Volume is expected to compared with that in recent years. Other factors increase 4.2 percent and unit cost to decline 1.3 contributing to the cost increment are a greater percent. Approximately 17.9 billion pieces are emphasis on monitoring reserve accounts with expected to pass through high speed currency respect to daylight and overnight overdrafts, the sorters. full-year effects of the development of the Na- Expenses for the automated clearinghouse ser- tional Information Center, and the continued vice are expected to increase 6.0 million in 1989 expansion in the use of microcomputers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

682 Federal Reserve Bulletin • October 1989 Expenses for Services to the U.S. Treasury the structure of officers' salaries. All structure and Other Government Agencies are budgeted adjustments are approved by the Board of at $148.4 million, an increase of $6.8 million, or Governors. 4.8 percent, from 1988. These services account Merit increases are the primary source of for approximately 11 percent of operating costs. higher expenses for salaries. Also contributing Staffing is budgeted to decrease by 14, or 0.8 are promotions, reclassifications, and higher percent, to 1,805. Approximately $99 million of levels of staffing. These increases are partially the $149 million are reimbursable expenses. offset by position vacancies, by the replace- The reduction in employment reflects major ment of a departing employee with one at lower efforts over several years by the Reserve Banks pay, and by reduced expenses for overtime. and the Treasury to promote efficiency, generally Expenses for retirement and other benefits, through consolidation and automation of opera- which account for 11 percent of the Banks' tions. Most Districts have budgeted reductions budget, are anticipated to increase 10.9 percent for 1989. in 1989. This increase is a result of the continued Major operational changes are taking place in escalation in hospital and medical costs, a rise in the savings bonds area. The Ohio Project fea- the maximum salary subject to Social Security tures centralized issuance of over-the-counter tax, and increased participation in the System's savings bonds. The Masterfile Payroll program thrift plan. involves accounting for and printing bonds Nonpersonnel expenses account for 37 percent purchased through payroll deduction plans. of the Banks' expenses and are projected to These projects, when fully implemented, are increase 6.0 percent in 1989. Within this category expected to save the Treasury about $25 million are the following: annually. Equipment expenses are 7.7 percent higher for Expenses for Monetary and Economic Policy 1989 and will account for 12 percent of total at the Federal Reserve Banks total $95.8 million operating costs. The increase results from the and account for approximately 7 percent of their purchase of data processing and data communi- 1989 budgets. Expenses are expected to increase cations equipment to handle increased workloads $8.5 million, or 9.8 percent, over 1988. Employ- and improve contingency functions, and the fullment will increase 20 or 2.6 percent to 786. year impact of equipment purchased to meet the Net additions to the staff, salary actions, and demands of the Expedited Funds Availability automation initiatives are the main sources of Act. higher spending. The 1989 staffing level is slightly Building expenses, which account for 9 perlower than that budgeted for 1988. cent of total expenses, are expected to increase A brief review of Reserve Bank expenses on 8.5 percent in 1989. Building expansion and an object of expense basis also might be useful to renovation projects contribute to increased exthe subcommittee. penses for property depreciation, real estate Personnel expenses consist of salaries for taxes, utilities, and other building operations. officers and employees, other expenses to com- Depreciation expenses will also increase in 1989 pensate personnel, and retirement and other as numerous smaller renovation and repair benefits. The major resource of the Reserve projects are completed. Banks is their people, and total personnel costs Shipping costs account for 6 percent of the account for 63 percent of total Federal Reserve 1989 budget and will increase 2.2 percent next expenses. Personnel costs are expected to in- year. This increase is primarily the result of crease $40.1 million, or 5.0 percent, in 1989. expanded check routes necessary for EFA. Salaries—the major component of this cate- Table 7 depicts the plans of the Reserve Banks gory—are budgeted to increase 5.1 percent. for capital spending in 1989. By their nature, Each Federal Reserve Bank conducts an annual capital outlays vary greatly from year to year. survey as a starting point for determining its Outlays for buildings and for data processing and salary structure for staff members other than communications equipment continue to domiofficers. Nationwide surveys are used to adjust nate Reserve Bank capital budgets. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 683 SPECIAL BUDGET EMPHASIS In 1989 the check imaging project, building upon the first three years of results, will test an Before concluding my testimony I would like to imaging system at two Reserve Banks with highmention briefly several initiatives that will have a speed check processors. Total 1989 expenses for major impact on Reserve Bank expenditures and the project are estimated to be $1.7 million and operations into the next decade. will be recovered through the pricing of services. As you may remember, the Expedited Funds The digital image processing technology dis- Availability Act gave the Federal Reserve Board cussed above for checks is also under developregulatory authority to improve the check collection ment as a means of detecting counterfeit U.S. and return check systems. As a result of the EFA, currency. This Optical Counterfeit Detection the Reserve Banks implemented several new ser- System (OCDS) program is one of several provices to expedite the handling of returned checks. grams designed to detect counterfeits that come The Reserve Banks began to offer the new services into the Federal Reserve. These research and on September 1,1988, to speed the return of unpaid development efforts are budgeted for $1.7 million checks. Federal Reserve volumes of returned in 1989. checks have increased approximately 25 percent A study by the Federal Reserve has indicated since the implementation of the service. that, to meet the needs of users, the System must In 1989 the Reserve Banks have budgeted extend the number of hours it provides electronic $19.3 million and 348 employees for EFA; these payment services and that to better control risk numbers represent the full-year effect of an in- in the payments system, it must improve the crease of $5.4 million and 134 employees over reliability of these services. The study also indi- 1988 levels of expenditure and employment. cated that users of electronic payments are look- These expenses will be recovered through fees ing for more flexibility in the range of services charged to users. offered as well as cost effectiveness. In 1989 the For 1989 the Board of Governors has approved Federal Reserve will complete its testing of research and development on three projects in- equipment to satisfy these requirements. tended to provide long-range benefits to the The Federal Reserve is installing the equippayments system. Because spending on such ment at three Reserve Banks and developing projects is relatively high and short-term, the software for the automated clearinghouse ser- Federal Reserve accounts for it separately from vice. The program, budgeted at $6.1 million for its operating expenses but includes it in its total 1989, will also demonstrate the use of faultbudget. The budget for special projects in 1989 is tolerant equipment for the transfer of funds and $11.1 million, or $6.2 million more than was securities and will be recovered through fees. Of budgeted for special projects in 1988. course as part of our long-range strategy for In mid-1985 the Federal Reserve began re- improving the payments mechanism, the Federal search on digital image capture as it might be Reserve System continues to place emphasis on applied to check processing. The archiving of the quality and reliability of its electronic payinformation on checks written by the U.S. ment services. This strategy involves not only Treasury and the processing of return items are improving the reliability of Fedwire operations, the potential applications with the most strin- but also involves providing contingency progent requirements. The information captured cessing facilities to address both noncatastrophic from such checks must be especially detailed and catastrophic outages. and of high quality and therefore requires a The Federal Reserve System takes great pride large capacity for data storage. These two in its efforts to improve efficiency. I mentioned check processes were thus selected as the most earlier that I would return to the subject of likely to determine the feasibility of the tech- facility planning. We recognize that facilities nology. If the technology is successful, it could have an effect on how well we operate, and we replace the Federal Reserve's current practice are concerned that we may be unable to conof microfilming government checks and could struct, expand, or modernize Branch Federal speed the handling of return items. Reserve Bank Buildings unless there is a change Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

684 Federal Reserve Bulletin • October 1989 in the "building proper" fund. As you know from would be recovered through revenues from the the information provided to the subcommittee sale of Federal Reserve services. With a normal last year, the Federal Reserve at this time is close planning and building horizon of about five years, to depleting its authorized fund for Federal Re- we are in jeopardy of being unable to provide serve Branch buildings. Without relief, we are services to the financial community and the public. not able to do the planning and preparatory work We recommend to the subcommittee that the to provide needed improvements for operations limitation on branch construction expenditures at the following branches: be eliminated. Branch Estimated cost (millions of dollars) CONCLUSION Birmingham 35 Nashville 30 Both Governor Kelley and I thank you for this Houston 15 opportunity to address the subcommittee on the San Antonio 10 El Paso 10 Federal Reserve System budget. The existing Salt Lake City 10 budget processes are working well in controlling costs, while at the same time encouraging quality As you may realize, branch operations consist improvements. We welcome your comments and mainly of priced service operations and a signif- would be pleased to address any questions you icant portion of the capital cost of the facilities may have on our budget. • Statement by Brent L. Bowen, Inspector Gen- plans. I appointed an Assistant Inspector General, Board of Governors of the Federal Reserve eral in February 1989. System, before the Subcommittee on Domestic Very little had to be changed when the Inspec- Monetary Policy of the Committee on Banking, tor General Act Amendments of 1988 were Finance and Urban Affairs, U.S. House of Rep- passed on October 18, 1988. By November 16, resentatives, August 3, 1989. we had provided the Board with an updated charter to reflect the semiannual and other reporting relationships with the Congress and to I am pleased to appear today to discuss the solidify the reporting relationship to the Chairestablishment and operation of the Office of man. Indeed, all of the provisions of the amend- Inspector General at the Board of Governors of ments were instituted immediately except for the the Federal Reserve System. subpoena power, which could only be authorized by the Congress. That provision took effect in April with the new law. HISTORY, RESPONSIBILITIES, AND For the record, our office is charged by law to AUTHORITY accomplish the following: (1) conduct and supervise audits and investigations of Board pro- The Board established the Office of Inspector grams and operations; (2) recommend and pro- General on July 6, 1987, in line with the provi- vide leadership and coordination for activities sions of the Inspector General Act of 1978, with that promote economy, efficiency, and effeca staff authorization of nine. The Board ap- tiveness in Board programs and operations; (3) pointed me as the Inspector General on July 20, help prevent and detect fraud, waste, and 1987. By November, I had hired an investigator, abuse; and (4) keep the Chairman and the five auditors, and a staff assistant. Soon thereaf- Congress fully and currently informed, through ter, we conducted a vulnerability assessment that semiannual reports and other means, about any formed the basis for our 1988 and 1989 annual fraud and other serious problems or deficiencies Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 685 in Board programs and operations and the sta- The IG staff members are well versed in audittus of corrective actions. ing and investigative standards and techniques In addition, the office has added an opera- and have a good balance of skills and experience. tions review or general management audit func- To illustrate, we have two certified information tion, oversees the financial audit of the Board's systems auditors, two certified public accounbooks by a public accounting firm, reviews tants, a candidate for certification as an internal regulations and legislation for economy and auditor, and an experienced investigator who is efficiency, and is responsible for following up also certified as a fraud examiner. The Assistant on recommendations made by other auditing IG holds certifications as both an internal auditor entities. and an information systems auditor, and I am a The new legislation limits the Inspectors certified fraud examiner. I have an attorney- General (IGs) of the Board and of the Treasury client relationship with a senior attorney in the in a way that other IGs are not affected. That is, Board's Legal Division and have used several in the case of the Board, the Chairman can auditors and technical and professional people prohibit me as IG from carrying out or complet- from the Federal Reserve Banks for short periing any audit or investigation or from issuing ods of time to assist in our operations reviews any subpoena to prevent the disclosure of in- and audits. formation relating to policy matters that could reasonably be expected to have a significant INDEPENDENCE influence on the economy or market behavior. If this were to occur, I am required to inform The members of the Board recognize the critical this and other relevant committees of the Con- importance of an independent IG function and gress. have been highly supportive of our work. The Office of Inspector General has full independence of operation and activity and quick access to members of the Board individually and to the ORGANIZATION AND STAFFING Board as a whole. Those being audited and I have not always agreed on our recommenda- The office is organized according to three major tions; but each has respected our policy of open functions: audits, operations reviews, and in- and honest communications and our "call it as vestigations. Auditors perform comprehensive we see it" approach, and top management has evaluations of the Board's programs and oper- addressed our recommendations. The first audit ations, supervise the audit of the annual finan- my office performed was of Board member excial statements performed by the Board's exter- penses. That audit sent a message to the staff that nal auditor, and advise Board managers and the IG is independent and that the office will other staff members on management systems address all operations and activities of the orgaand internal controls. Staff members from nization with the full support of the members of throughout the Federal Reserve System assist the Board. Access to information throughout the us in performing management audits, or opera- organization is immediate and complete. tions reviews as we call them, of the Board's While I have independent contract and personoffices and divisions. These operations reviews nel authority, I have chosen, for the most part, to focus on ensuring the efficient and effective follow the Board's processes as an administraadministration of programs, delivery of ser- tive convenience, departing only to appoint the vices, and compliance with applicable laws, Assistant Inspector General as an officer of the regulations, policies, and procedures. The Spe- Board, a function of the full Board for all other cial Assistant for Investigations has established officer appointments. Only the Chairman and a full investigative program to address allega- then the Board as a whole review the office's tions of possible and actual fraud, mismanage- budget proposals. After approval, budget of the ment, and abuse; violations of laws and regula- Office of Inspector General becomes a line item tions; and "Hotline" complaints. in the Board's consolidated budget. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

686 Federal Reserve Bulletin • October 1989 COMMENT ON FINANCIAL CONTROLS tions comply with the U.S. General Accounting Office's Government Auditing Standards. I contract with a public accounting firm to certify Thus far, we have conducted, or are conductthe fairness of the Board's financial statements ing, an audit or a survey of Board member each year. To make this certification, these au- expenses, contingency planning efforts, automaditors must evaluate internal controls to identify tion program management, distributed data proany areas of material weaknesses and have found cessing systems, procurement activities, comnone. In accordance with Government Auditing pensation practices, information security, Standards, the auditors prepared a report on personal computer software and security, physicompliance with applicable laws and regulations cal security controls, and a data processing reand a report on internal accounting controls for porting system, as well as the certification of the both 1987 and 1988. While some nonmaterial Board's financial statements discussed earlier. items were identified in each of these years, they These audits resulted in recommendations for were corrected immediately. The managing part- improving internal controls and for improving the ner and I present our findings to the full Board. economy and efficiency of Board operations. We The General Accounting Office's (GAO) June also assisted an external auditor in their review 1988 report for the House Banking Committee, of the System's Benefit Office, and participated which addressed Federal Reserve administrative with other financial institutions regulatory agenexpenses, confirmed the appropriateness of these cies in a review of the administrative activities of expenses for 1985 and 1986. Our office will begin the Federal Financial Institutions Examinations our annual audit of sensitive payments in con- Council. Our audit plan calls for us to initiate the formance with GAO guidelines as part of the annual certification of the Board's financial statefinancial audit of the Board's books this fall. ments and audits in inventory management, rec- In addition, our office reviews the work of the ords management, bank holding company perforpublic accounting firm's evaluation of the proce- mance systems, computer access security, and dures used to examine the Federal Reserve secure voice systems by the end of the year. Banks, and we have just completed an operations review of the Division of Federal Reserve Bank Operations that includes an evaluation of its OPERATIONS REVIEWS approach in evaluating the Federal Reserve Banks. The second major functional area of our responsibilities is more programmatic in nature:We conduct operations reviews of the Board's offices AUDITS and divisions on a five-year cycle. Review teams composed of staff members from the Federal Let me now give you a brief overview of our Reserve Banks who have expertise in the area work as it relates to the three main functional under review and staff members from the Office areas. First, with respect to audits, our office has of Inspector General do the following: (1) deterinitiated eleven audits (including one survey) and mine whether stated program objectives are behas issued reports on six of these to date. Six ing achieved; (2) assess the efficiency and effecmore will be initiated by the end of the year in tiveness with which these objectives are being accordance with our annual plan. I have already achieved; (3) assess the quality of services promentioned our contract with a public accounting vided to the Board and the System; (4) determine firm to issue an opinion on the fairness of the the existence and adequacy of administrative Board's financial statements. We have the same controls; (5) determine compliance with applicafirm certify the financial statements of the Fed- ble laws, regulations, policies, and procedures; eral Financial Institutions Examinations Council (6) follow up on any findings and recommendaas well, since the Board provides administrative tions from previous audits or reviews; and (7) support to that organization. Both our internal identify areas for possible improvement. After a audits and the public accounting firm's evalua- formal report has been issued by the Office of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 687 Inspector General, the team leader and I present ADDITIONAL ACTIVITIES our findings to the full Board. Thus far, we have reviewed six functional While we had to spend some important time in areas: the Office of the Secretary, the Division setting up the office with policies and proceof Human Resources Management, the Division dures and appropriate equipment and facilities, of Banking Supervision and Regulation, the we thought it important to conduct immediate Equal Employment Opportunity Program, the operational activities and begin our program of Division of Hardware and Software Systems, audits, operations reviews, and investigations. and a combined look at the Office of Federal We also take an active role in other areas Reserve Bank Activities and the Division of associated with the inspector general function: Federal Reserve Bank Operations. Later this We follow up on our own and GAO reports on year we plan to review the Office of Executive the Federal Reserve Board's activities, review Director for Information Resource Management Board policies and procedures, participate in and the Division of Applications Development automation steering groups as formal audit repand Statistical Services. Reviews of the Divi- resentatives, and participate in fraud and secursions of Monetary Policy, Research and Statis- ity violation prevention campaigns. We are also tics, and International Finance will be con- structuring ourselves to review relevant legisladucted in 1990, with the remaining offices and tion and regulations as prescribed by the IG divisions scheduled for 1991 and 1992. Act, and are addressing ways to prevent fraud, waste, abuse, mismanagement, and violations of security. I am a member of the Federal Reserve System's Conference of General Audi- INVESTIGATIONS tors, participate with the President's Council on Integrity and Efficiency's Coordinating Confer- We introduced the criminal investigation func- ence, and serve on the Council's Communication in the Office of Inspector General by estab- tions Subcommittee. Our office members are lishing a hotline in late 1987 that is available 24 affiliated with professional organizations such hours per day. Many of our hotline calls have as the Association of Federal Investigators, placed us in the ombudsman role of referring the American Institute of Certified Public Acproblems and concerns to management. Other countants, the Association of Government calls have involved administrative issues in- Accountants, the Institute of Internal Auditors, volving violations of the Board's standards of and the National Association of Certified Fraud conduct or management policies. Besides our Examiners. hotline calls, we have received complaints from Board managers, Board employees, other federal and State agencies, private citizens, and corporate entities and have initiated some in- FUTURE DIRECTION vestigations based on audit referrals or our own concerns. There have been a few potential Our office is now in the process of charting a criminal violations in which the results of our course that will carry us through the 1990s. While investigations were discussed with an Assistant our initial vulnerability assessment served a very U.S. Attorney and disposed of administratively useful purpose in getting our operation started, it at his suggestion. Incidentally, our hotline num- is important that we continually ensure ourselves ber is (202) 452-6400 should anyone reading or that our work focuses on timely and significant hearing this statement have an issue to bring to issues. While we plan to continue with the audits, our attention. We conduct all of our investiga- operations reviews, and additional activities tions using Quality Standards for Investigations cited above—and to continue our emphasis on a established by the President's Council on Integ- full investigations program—our efforts will adrity and Efficiency and, in each case, maintain dress more of the main mission areas of the confidentiality and privacy as required by law. Board's operations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

688 Federal Reserve Bulletin • October 1989 SUMMARY our "call it as we see it" approach and policy of open communications. We are moving forward The Chairman and other members of the Board with our mission to prevent and detect problems have insisted on a qualified Office of Inspector and to assist Board management in having more General, and I have the independence and au- efficient and more effective operations. Our rethority to carry out my statutory responsibilities. ports are available to this and other committees While some members of the organization are still of the Congress and to the public, and of course getting acquainted with the concept, we are we will be submitting our first formal report to respected for our integrity and appreciated for you this fall. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

689 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON JULY 5-6,1989 goods other than automobiles also softened in May, and output of construction supplies regis- 1. Domestic Policy Directive tered a decline for the fourth consecutive month. Production of business equipment excluding au- The information reviewed at this meeting tended tomobiles continued to advance strongly in April to confirm earlier indications that economic and May, partly as a result of a surge in the growth had slowed this year. Recent data on manufacture of computers but also owing to production and spending suggested a fairly con- gains for a variety of other types of equipment, sistent pattern of weakness in housing and in particularly capital goods for manufacturing inconsumer goods, notably motor vehicles. Run- dustries. Total industrial capacity utilization rening counter to that trend was a further sizable traced its April rise in May but remained well increase in spending for business equipment fol- above its relatively high level of a year ago. lowing a strong first quarter; in addition, the Operating rates in manufacturing slipped further trade deficit had narrowed further. Broad mea- in May for primary processing industries, while sures of prices continued to rise more rapidly those for advanced processing industries were than in 1988, reflecting sharp upward pressures sustained at the already high levels evident in on energy and food prices. There had been no earlier months of the year. discernible step-up in the pace of wage inflation, Despite considerable gains in real disposable however, even though levels of labor utilization income in recent quarters, the sluggish growth in remained relatively high. consumer spending that had emerged earlier in Growth in total nonfarm payrolls moderated 1989 continued into the second quarter. In May, substantially in recent months from the pace of a decline in expenditures was led by a reduction the previous two years. Employment in manu- in outlays for motor vehicles, although spending facturing and construction fell in May and on also was flat or down for a broad range of other balance had changed little in both sectors since goods, both durable and nondurable. In contrast January. Job growth in services was relatively to outlays on goods, growth in purchases of weak in May, judged by recent standards, as services was well maintained. Housing starts gains in trade and business services were small. declined slightly further in May, as single-family Despite the slower pace of payroll growth this starts slipped back to their weak level of March. year, the factory workweek remained high by Starts of multifamily units were little changed in historical standards in May, and initial claims for May from the seven-year low recorded in April. unemployment insurance had increased only Home sales had fallen this year. slightly through mid-June. The civilian unem- Recent indicators of business capital spending ployment rate, at 5.2 percent in May, stayed suggested a further substantial increase in the close to its average level in earlier months of the second quarter after a strong first quarter. Shipyear. ments of nondefense capital goods advanced Industrial production increased on balance in sharply in April, with solid gains for most broad April and May at about the reduced rate experi- categories, and remained high in May. Nonresienced earlier in the year. Assemblies of motor dential construction activity had changed little in vehicles, which had turned up in April, fell recent quarters although industrial structures put appreciably in May. Production of consumer in place strengthened somewhat, perhaps re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

690 Federal Reserve Bulletin • October 1989 fleeting sustained high levels of factory utiliza- workers remained near the average pace evident tion in some industries. Inventory investment by since mid-1988. manufacturers continued in April at about the In foreign exchange markets, the dollar refirst-quarter pace and such inventories remained corded significant gains against most of the other in line with shipments. Much of the increase in G-10 currencies in the weeks after the Committee factory inventories was concentrated in work- meeting on May 16; in mid-June, the dollar in-process stocks in the aircraft industry, where reached a two and one-half year high against the production had been strong. In the retail sector, mark and a one and one-half year high against the dealer stocks of automobiles remained high, and yen. Smaller-than-anticipated trade deficits aninventories at other retail establishments had nounced for March and April, political events in risen a bit relative to sales, measured on a China and Japan, and expectations of capital constant-dollar basis, but there were only limited gains in U.S. bond and equity markets appeared indications of excess stocks in the nonautomo- to have helped trigger buying pressure at a time tive segments of retailing. of narrowing differentials between interest rates The nominal U.S. merchandise trade deficit in the United States and abroad. The dollar narrowed in April from a first-quarter average subsequently fell back sharply in often volatile that was the smallest in four years. Exports trading, its weighted-average value in terms of strengthened a little in April when a decline in the other G-10 currencies more than retracing the sales of agricultural products from their high earlier rise. The decline in the value of the dollar March levels was outweighed by increases in occurred largely in the absence of significant new most other major trade categories, especially economic developments or clear indications of a industrial supplies and machinery. Appreciable reassessment of economic fundamentals by mardeclines in imports of automotive products, ket participants. machinery, and foods more than offset a rise in At its meeting on May 16, the Committee oil imports. Available data suggested some adopted a directive calling for no immediate slowing recently in the growth of economic change in the degree of pressure on reserve activity in the major foreign industrial countries positions. The Committee agreed that somewhat following robust expansion in the first quarter; greater or somewhat lesser reserve restraint inflation rates had moved up in most of those would be acceptable over the intermeeting period countries. depending on indications of inflationary pres- Continuing a pattern of sharp increases this sures, the strength of the business expansion, the year, producer prices of finished goods were up behavior of the monetary aggregates, and develsubstantially further in May. The May rise was opments in foreign exchange and domestic finanled by further advances in prices of food and cial markets. This policy stance was expected to energy products, but prices of nonfood, non- be consistent with growth of M2 and M3 at energy goods also rose after being about un- annual rates of around IV2 and 4 percent respecchanged in April. In April and May, increases in tively over the period from March through June. prices of most materials were noticeably smaller Immediately after the Committee meeting, the than those registered for finished goods. The Manager for Domestic Operations directed operconsumer price index rose sharply further in ations toward maintaining the existing degree of April and May. Over the first five months of the pressure on reserve positions. A technical upyear consumer prices increased at a faster rate ward revision was made to the assumed level of than in 1988; however, excluding food and en- adjustment plus seasonal borrowing to bring it in ergy, the rate of increase in these prices differed line with desired overall conditions in reserve little from last year's pace, partly because of the markets; this revision resulted from the recent, damping effect of the appreciation of the dollar unusual strength of seasonal borrowing that peron the prices of a broad range of imported goods. haps was associated with heavier demands for Recent data for labor compensation indicated crop-production loans at a time of weak deposit that year-over-year increases in average hourly growth at agricultural banks. Later in the interearnings of production and nonsupervisory meeting period, a variety of developments began Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 691 to suggest that a slackening in inflation pressures projection continued to assume that normal agrimight be in prospect as indications of slower cultural growing conditions would prevail. Aleconomic expansion continued to accumulate, though the recent strengthening of the dollar was monetary growth remained sluggish, and the tending to damp import prices and thereby dodollar climbed further. In these circumstances, mestic inflation, the staff anticipated that, with the Manager for Domestic Operations acted in margins of unutilized labor and other production early June to reduce somewhat the degree of resources still relatively low, most measures of pressures on reserve positions. Adjustment plus prices and labor costs would increase at slightly seasonal borrowing averaged about $550 million faster rates in 1989 than in 1988. Inflationary over the three full reserve maintenance periods pressures were expected to abate a bit in 1990, completed since the May 16 meeting, while the partly in response to gradually mounting slack in federal funds rate moved down about VA percent- labor and product markets. The staff projected age point to 9Vi percent or slightly higher more that the contribution of foreign trade to growth recently. would be very limited, as real export gains Other market interest rates also fell over the dropped well below the pace of recent quarters, intermeeting period in response to indications of and that fiscal policy would remain moderately a continuing softness in the economy and a better restrictive. In view of expected meager gains in outlook for inflation as well as to the easing of employment and real income, consumer spendmonetary policy. Short-term market rates ing would be sluggish through 1990. Housing dropped 25 to 70 basis points, and the prime rate activity was projected to benefit from the recent was lowered Vz percentage point to 11 percent in drop in interest rates. Relatively sluggish final early June. In long-term debt markets, yields on demands along with reduced capacity utilization Treasury coupon issues dropped 70 to 90 basis rates were expected to have a restraining effect points. Stock prices rallied through much of the on the growth of business capital spending. intermeeting period, and major indexes reached In the Committee's discussion of current and new post-1987-crash highs before giving up most prospective economic conditions, members foof those gains. cused on accumulating indications of reduced M2 and M3 declined in May, primarily because growth in business activity and on the implicaof sizable reductions in transaction and other tions for the outlook for the economy and prices. liquid deposit balances that seemed to be related The members generally concluded that continuto the clearing of unexpectedly large payments to ing expansion at a relatively slow pace was a cover federal tax liabilities for 1988. Through reasonable expectation for the next several quarmid-June, growth of these aggregates appeared ters and that the associated lessening of presto have rebounded in conjunction with some sures on labor and capital resources was likely to rebuilding of tax-depleted balances and the de- foster progress in curbing inflation over time. clines in market interest rates that brought some Members noted that the economic outlook was narrowing of the large opportunity costs associ- subject to considerable uncertainty and that subated with holding liquid deposits. Nonetheless, stantial deviations from current expectations the growth of M2 for the year to date remained might well occur. The latest information sugbelow the lower end of the Committee's annual gested some risk that the expansion might target range. Ml continued to contract through weaken further, but current business conditions mid-June, as weakness in transaction balances, provided few indications of the kinds of imbalespecially in demand deposits, persisted. Domes- ances and distortions that often lead to downtic nonfinancial debt expanded in May at a turns in economic activity. Some members emslightly lower rate than it did in the first quarter. phasized that a recession, should one The staff projections prepared for this meeting materialize, might be aggravated by the debt suggested that growth of the nonfarm economy burdens or debt exposure of many business and over the remainder of 1989 and for 1990 was financial firms. At the same time, inflation relikely to be at a pace a little lower than that mained unacceptably high and cost pressures estimated for the first half of this year. The substantial; however, in the context of a weaker Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

692 Federal Reserve Bulletin • October 1989 economic outlook and an extended period of With regard to specific sectors of the economy, slow monetary growth, the risks of a sustained current data and business contacts did not sugacceleration in inflation appeared to be more gest any general backup in inventories apart from limited than they had earlier in the year. None- motor vehicles; however, there were some retheless, a policy designed to bring about some cent reports of marginally excessive inventories reduction in underlying inflation pressures and in a few nonautomotive businesses, and a further improvement in the nation's external accounts slippage in the growth of final demand could lead might be associated with relatively slow growth to efforts to pare inventories and production of domestic spending for some time. schedules. The members generally anticipated In keeping with the usual practice at meetings continued overall growth in business fixed inwhen the Committee considers its long-run ob- vestment, though at a pace much reduced from jectives for monetary growth, the members of the that experienced earlier in the year. Nonresiden- Committee and the Federal Reserve Bank presi- tial construction activity was lagging in many dents not currently serving as members provided areas, but the demand for business equipment specific projections of growth in real and nominal remained relatively vigorous, in part because of GNP, the rate of unemployment, and the rate of sales abroad. Housing activity was weak in a inflation. With regard to the rate of expansion in number of markets, including some that had real GNP, the projections had a central tendency displayed considerable vigor until recently, but of 2 to 2VI percent for 1989 as a whole, implying the decline in mortgage rates was believed likely continuing growth at a reduced pace in the sec- to sustain activity in this sector of the economy. ond half of the year; for the year 1990 the central A key element in the outlook for overall busitendency was Wi to 2 percent. Projections of ness activity was the prospects for consumer growth in nominal GNP converged on rates of 6 spending; many members saw little basis for to 7 percent for 1989 and 5 ¥2 to 63A percent for anticipating further slowing in the expansion of 1990. The projected rates of unemployment cen- consumer expenditures, but others were less tered around 5V2 percent for the fourth quarter of persuaded and some cited in particular the pos- 1989 and 5!/2 to 6 percent for the fourth quarter of sibility that relatively weak sales of motor vehi- 1990. With respect to the rate of inflation, the cles might continue. Foreign trade was another projections had a central tendency for the con- important sector bearing on the economic outsumer price index of 5 to 5l/2 percent for 1989 and look. Some further growth in net exports was 4V2 to 5 percent for 1990. In making these pro- viewed as a reasonable prospect, but the imjections the members took account of the Com- provement might be limited if the dollar remained mittee's decisions at this meeting with regard to strong and growth slowed in key economies the objectives for monetary growth in 1989 and abroad. Finally, a number of members stressed 1990. The members assumed that progress would that some acceleration in monetary growth from be made in reducing the federal budget deficit the pace in the first half of the year likely was and that fluctuations in the exchange value of the needed to help support expansion in business dollar would not be of sufficient magnitude to activity. affect economic growth and inflation materially Turning to the outlook for inflation, members in the period through the end of 1990. generally anticipated that reduced economic In their review of specific developments bear- growth in line with the central tendency of their ing on the outlook for the economy, members forecasts would contribute to some damping of observed that growth appeared to be slowing in underlying inflationary pressures by 1990. The many parts of the country but that the utilization rate of increase in the consumer price index of labor and capital resources remained high in might well moderate over the balance of this most regions and continued to improve in others year, assuming relief from special factors that from relatively depressed levels. In general, bus- had affected food and energy prices during the iness sentiment remained favorable, though the first half. In particular, the larger farm crops that emergence of somewhat more cautious attitudes were anticipated this year would tend to reduce was detected in a number of areas and industries. pressures on food prices, and recent oil price Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 693 developments suggested some softening in con- took account of a staff analysis that indicated that sumer energy prices. Other favorable develop- the more rapid growth in M2 and M3 since ments included generally restrained increases in mid-May was likely to persist over the months wages despite ongoing labor shortages in many ahead and that by the fourth quarter both aggreparts of the nation and, as evidenced in part by gates would be well within the current ranges for business contacts around the country, some ap- the year. The staff assessment incorporated the parent lessening of inflationary expectations. In impact of the recent declines in market interest addition, commodity prices had been subdued in rates, which would tend to reduce the opporturecent months, supporting indications of less nity costs of holding M2 balances, and also intense demands in industrial sectors and per- assumed that there would be no special factors haps pointing to slower increases in consumer influencing the growth of the aggregates such as prices in the months ahead. On the negative side, those experienced earlier in the year. Expansion some members stressed that underlying inflation in total domestic nonfinancial debt was projected pressures remained strong and, given current to continue at a rate around the middle of its levels of resource use, an expansion in line with range through year-end; growth in this measure the forecasts of most members might avert accel- had been trending lower in recent years but it erating inflation but was less likely to foster any remained at a pace appreciably above that for significant decline over the forecast horizon. nominal GNP. The members concluded that the More generally, the members' forecasts pointed ranges set in February for 1989 were still consisto a rate of inflation that was unacceptably high tent with the Committee's objectives of fostering and that moderated only slightly over this period; sustained expansion in economic activity and moreover, the risks of some acceleration, while progress toward price stability. small, were not negligible especially if economic The ranges for 1989 represented reductions growth turned out to be appreciably faster than from those for 1988, and the members agreed that most members currently anticipated, putting ad- restrained monetary growth and further reducditional pressure on resources. tions in the ranges would be needed over time to Against the background of the Committee's achieve and maintain price stability. Views difviews regarding prospective economic develop- fered, however, as to whether the ranges for 1990 ments and in keeping with the requirements of should be reduced at this meeting. the Full Employment and Balanced Growth Act A majority of the members indicated a preferof 1978 (the Humphrey-Hawkins Act), the Com- ence for extending the 1989 ranges provisionally mittee at this meeting reviewed the ranges for to 1990, subject to the usual review next Februgrowth in the monetary and debt aggregates that ary in light of the economic and financial condiit had established in February for 1989 and tions prevailing then. The outlook for next year decided on tentative ranges for growth in those was uncertain, especially this far in advance. measures in 1990. The 1989 ranges included Nonetheless, the 1989 ranges were likely in this growth of 3 to 7 percent for M2 and 3!/2 to IVi view to encompass monetary growth that would percent for M3 for the period from the fourth foster desired economic expansion and moderaquarter of 1988 to the fourth quarter of 1989. A tion of price pressures in 1990. This outcome monitoring range of 6V2 to IOV2 percent had been could be associated with somewhat more rapid set for growth in total domestic nonfinancial debt growth of M2 in 1990 than appeared to be in train in 1989. For the year to June, the cumulative for 1989. Such a pickup in monetary growth expansion of M2 was at a rate about 1 percentage would be consistent with expansion of nominal point below the Committee's range, while that of GNP along the lines of the central tendency of M3 placed it at the lower bound of its range. The the members' forecasts and should be associated expansion in nonfinancial debt was near the with only minor changes in interest rates and middle of its range in the first half of the year. hence in velocity next year. Moreover, somewhat faster growth in M2 might be needed next In the Committee's review of the ranges for year to counter any potential weakening tenden- 1989, all of the members endorsed a proposal to cies that might develop in the economy. In these retain the ranges set in February. The Committee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

694 Federal Reserve Bulletin • October 1989 circumstances there existed a considerable risk for total domestic nonfinancial debt. Wider that a reduction in the range for M2 might have to ranges provided greater scope for achieving monbe reversed next year or growth in excess of the etary growth that was consistent with the Comrange tolerated. Either development might be mittee's objectives for the economy. In assessing viewed as inconsistent with the stability and appropriate rates of monetary expansion in the predictability of policy that tended to enhance its prevailing uncertain environment, the Commiteffectiveness over time. Especially in light of the tee would continue to evaluate a wide assortment foregoing considerations, a marginal reduction in of economic and financial indicators. the ranges, although it might be seen as more At the conclusion of this review, the Commitconsistent with the long-run objective of price tee approved for inclusion in the domestic policy stability, would seem to imply greater precision directive the following statement of its objectives than was warranted by the Committee's current for growth of the broader monetary aggregates ability to project next year's developments. If and nonfinancial debt for the year 1989: small adjustments were called for, they could be made early next year when a more firmly based The Committee reaffirmed at this meeting the ranges decision would be possible. it had established in February for growth of M2 and M3 of 3 to 7 percent and 3,/2 to IVi percent, respec- Members who preferred lower ranges for tively, measured from the fourth quarter of 1988 to the 1990 gave a good deal of emphasis to the fourth quarter of 1989. The monitoring range for desirability of continuing the Committee's pol- growth of total domestic nonfinancial debt also was icy of reducing the ranges from year to year in maintained at 6'/2 to IOV2 percent for the year. order to implement anti-inflationary objectives. In this view, a failure to reduce the ranges at Votes for this action: Messrs. Greenspan, Corrigan, Angell, Guffey, Johnson, Keehn, Kelley, least slightly in present circumstances might be LaWare, Melzer, Ms. Seger, and Mr. Syron. Votes read as an implicit acceptance of current rates against this action: None. Absent and not voting: of inflation. These members recognized the Mr. Heller. possibility that monetary growth next year might be at the upper end, or even above, the For the year 1990, the Committee approved for ranges that they favored, especially if interest inclusion in the domestic policy directive the rates were to decline further in the interim. If following statement regarding the ranges for economic and financial conditions early next growth of the monetary aggregates and nonfinanyear suggested a need, they would be prepared cial debt: to raise the ranges at that time. Such a decision would be made in the light of circumstances For 1990, on a tentative basis, the Committee that provided the rationale for it and need not agreed to use the same ranges as in 1989 for growth therefore have the adverse consequences for in each of the monetary aggregates and debt, measured from the fourth quarter of 1989 to the fourth inflationary expectations that some members quarter of 1990. The behavior of the monetary aggrefeared. Members who favored lower ranges also gates will continue to be evaluated in the light of did not want to rule out the possibility that movements in their velocities, developments in the inflation pressures next year might turn out to economy and financial markets, and progress toward be more intense than was currently anticipated price level stability. and that relatively limited monetary expansion therefore might remain appropriate. Votes for this action: Messrs. Greenspan, Corrigan, Angell, Guffey, Johnson, Kelley, LaWare, In light of the persisting uncertainties about the Melzer, Ms. Seger, and Mr. Syron. Vote against: relationship between monetary expansion and Mr. Keehn. Absent and not voting: Mr. Heller. ultimate policy objectives, the members were in favor of retaining relatively wide ranges of 4 Mr. Keehn dissented because he wanted to percentage points for M2 and M3. For many reduce the ranges for 1990. In his view, a reducyears prior to 1988, the Committee had set nar- tion of the ranges for next year would provide an rower ranges, almostmniformly of 3 percentage important signal of the System's continuing compoints, for the broader monetary aggregates and mitment to price stability. While the velocity of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 695 the monetary aggregates had been erratic re- case of M2. A moderate pickup in monetary cently, lower ranges for the aggregates would growth at this time would help assure continued encompass desirable rates of monetary growth expansion of the economy and possibly avoid a should more normal conditions prevail next year. situation in which a substantial weakening of the Given the uncertainty in the relationship between economy would be followed by rapid monetary the monetary aggregates and economic growth, growth and a marked rebound in activity—a he would, however, be prepared to adjust the pattern that would be unlikely to foster the ranges early next year on the basis of intervening Committee's objective of price stability over developments. time. In the Committee's discussion of policy imple- Turning to the question of possible intermeetmentation for the period until the next meeting, ing adjustments in the degree of reserve restraint, the members generally agreed that recent devel- a majority of the members indicated a preference opments suggested that some further easing of for retaining an unbiased instruction as in the reserve conditions would be appropriate. Nearly directive for the May meeting. This approach, in all endorsed a proposal to lessen the degree of the context of the indicated preference of the reserve pressure marginally at this time, but one members to move toward some immediate easmember favored somewhat greater easing and ing, was in keeping with the caution about future another saw merit in a phased lessening of re- policy moves favored by most members. This serve pressures in the weeks ahead. Many em- caution was dictated by current uncertainties phasized that current economic and financial regarding the economic outlook, the still rapid uncertainties called for caution in adjusting pol- rate of inflation, and the relatively sensitive conicy at this point. In this view, more than a slight ditions in financial markets. Others preferred an move to less restraint could have an undesirable intermeeting instruction that was tilted toward effect on inflationary expectations and, at least in ease partly to help underscore—in conjunction the absence of further indications of lagging with a decision to ease—their view that the risks economic growth, could lead eventually to up- were in the direction of a shortfall in economic ward pressure on long-term interest rates. More- growth from current expectations and therefore over, in the view of some members, there re- that any intermeeting adjustment would very mained some risk that inflationary pressures likely be in the direction of less restraint. Indeed, would intensify and that the easing might have to in this view a dramatic and unlikely turnaround be reversed later. Caution also was indicated in would be needed in the tenor of the incoming light of the prevailing sensitivity and volatility of economic information to warrant any firming in financial markets. the weeks ahead. Several members emphasized the need for In light of the easing of reserve conditions in faster monetary growth than had been experi- early June and the further slight easing contemenced in recent months. Some acceleration in the plated at this meeting, the members decided to rate of monetary expansion had occurred since lower the intermeeting range for the federal funds the middle of May, and a staff analysis suggested rate by 1 percentage point to 7 to 11 percent. that such growth was likely to continue as the full Such a reduction centered the range more closely effect of recent declines in market interest rates around the federal funds rate that was expected was felt. On the assumption of no further after this meeting. The range for the federal funds changes in interest rates, the staff projection rate provides one mechanism for initiating conanticipated that cumulative M2 growth would sultation of the Committee when its boundaries reach the bottom of the Committee's annual are persistently exceeded. range by late summer. However, given the un- At the conclusion of the Committee's discuscertainties that were involved, a number of mem- sion, all but one of the members indicated that bers felt that some further easing was desirable to they preferred or could accept a directive that improve the prospects that monetary growth called for some slight easing in the degree of would be within the Committee's ranges for the pressure on reserve positions. Some firming or year, if only in the lower part of the range in the some easing of reserve conditions would be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

696 Federal Reserve Bulletin • October 1989 acceptable during the intermeeting period de- to the fourth quarter of 1989. The monitoring range for pending on indications of inflationary pressures, growth of total domestic nonfinancial debt also was the strength of the business expansion, the be- maintained at 6V2 to IOV2 percent for the year. For 1990, on a tentative basis, the Committee agreed to use havior of the monetary aggregates, and developthe same ranges as in 1989 for growth in each of the ments in foreign exchange and domestic financial monetary aggregates and debt, measured from the markets. The reserve conditions contemplated fourth quarter of 1989 to the fourth quarter of 1990. by the Committee were expected to be consistent The behavior of the monetary aggregates will continue to be evaluated in the light of movements in their with some acceleration in the growth of M2 and velocities, developments in the economy and financial M3 to annual rates of around 7 percent over the markets, and progress toward price level stability. three-month period from June to September. In the implementation of policy for the immediate At the end of the meeting, the following do- future, the Committee seeks to decrease slightly the mestic policy directive was issued to the Federal existing degree of pressure on reserve positions. Taking account of indications of inflationary pressures, the Reserve Bank of New York: strength of the business expansion, the behavior of the monetary aggregates, and developments in foreign The information reviewed at this meeting tends to exchange and domestic financial markets, somewhat confirm earlier indications that economic growth has greater reserve restraint or somewhat lesser reserve slowed this year. Gains in total nonfarm payroll em- restraint would be acceptable in the intermeeting peployment have moderated substantially in recent riod. The contemplated reserve conditions are exmonths, but the civilian unemployment rate, at 5.2 pected to be consistent with growth of M2 and M3 percent in May, remained close to its average level in over the period from June through September at earlier months of the year. Industrial production in- annual rates of about 7 percent. The Chairman may creased on balance in April and May at about the call for Committee consultation if it appears to the reduced rate experienced earlier in the year. Growth in Manager for Domestic Operations that reserve condiconsumer spending has weakened considerably this tions during the period before the next meeting are year. Housing starts declined slightly further in May. likely to be associated with a federal funds rate per- Recent indicators of business capital spending suggest sistently outside a range of 7 to 11 percent. a substantial additional increase in the second quarter after a rebound in the first quarter. The nominal U.S. merchandise trade deficit narrowed in April from a Votes for the paragraph on short-term policy imsubstantially reduced average value in the first quar- plementation: Messrs. Greenspan, Corrigan, Anter. Broad measures of prices have risen more rapidly gell, Guffey, Johnson, Keehn, Kelley, LaWare, this year than in 1988, reflecting sharp increases in Melzer, and Syron. Vote against this action: Ms. energy and food prices. Seger. Absent and not voting: Mr. Heller. Interest rates have fallen since the Committee meeting on May 16, with the largest declines generally Ms. Seger dissented because she felt that occurring in long-term markets. In foreign exchange somewhat greater easing was warranted. In her markets, the trade-weighted value of the dollar in view, the expansion in business activity already terms of the other G-10 currencies rose sharply earlier had slowed substantially and recent developin the intermeeting period but subsequently more than ments pointed to further weakness. While a retraced that rise in often volatile trading. M2 and M3 declined in May, primarily because of change in monetary policy would have little sizable reductions in transaction and other liquid bal- effect on the economy over the remainder of this ances arising from the clearing of unusually large tax year, a more pronounced easing than the Compayments; data through mid-June point to a rebound in mittee currently contemplated was needed to these measures of money. Thus far this year expansion foster financial conditions that would support the of M2 has been at a rate below the Committee's annual range, while growth of M3 has been around the lower economy in 1990 and beyond. bound of the Committee's range. The Federal Open Market Committee seeks monetary and financial conditions that will foster price 2. Authorization for stability, promote growth in output on a sustainable Domestic Open Market Operations basis, and contribute to an improved pattern of international transactions. In furtherance of these objec- Effective July 7,1989, the Committee approved a tives, the Committee reaffirmed at this meeting the ranges it had established in February for growth of M2 temporary increase of $2 billion, to $8 billion, in and M3 of 3 to 7 percent and 3!/2 to IVi percent, the limit between Committee meetings on respectively, measured from the fourth quarter of 1988 changes in System Account holdings of U.S. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 697 government and federal agency securities speci- The increases were approved on the recomfied in paragraph 1(a) of the Authorization for mendation of the Manager for Domestic Opera- Domestic Open Market Operations. Subse- tions. The Manager had advised on July 5 that quently, effective July 31, 1989, the Committee the usual leeway of $6 billion for changes in approved a further increase of $2 billion, to $10 System account holdings probably would not be billion, in the intermeeting limit. Both increases sufficient over the intermeeting period, partly applied to the period ending with the close of because of expected sales of securities to offset business on August 22, 1989. large declines in balances held by the U.S. Treasury at the Federal Reserve Banks and because Votes for the action effective July 7: Messrs. of large foreign currency transactions. On July Greenspan, Corrigan, Angell, Gufifey, Johnson, 28, the Manager advised that the remaining lee- Keehn, Kelley, LaWare, Melzer, Ms. Seger and way under the $8 billion limit had been reduced Mr. Syron. Votes against this action: None. Absent to about $650 million, mainly as a result of declines and not voting: Mr. Heller. in Treasury balances at the Reserve Banks but also Votes for the action effective July 31: Messrs. owing to further official foreign currency transac- Greenspan, Angell, Boykin, Guffey, Johnson, tions and smaller-than-expected increases in cur- Keehn, Kelley, Oltman, Ms. Seger, and Mr. Syron. rency in circulation. The Manager anticipated that Votes against this action: None. Absent and not additional leeway might be necessary to meet convoting: Messrs. Heller and LaWare. (Messrs. Boykin and Oltman voted as alternates for Messrs. tinuing needs to absorb reserves in upcoming re- Melzer and Corrigan, respectively.) serve maintenance periods. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

698 Announcements DESIGNATIONS OF PRIMARY DEALERS Copies of a report on this matter are available CONTROLLED BY FIRMS from Publications Services, Board of Governors FROM THE UNITED KINGDOM of the Federal Reserve System, Washington, AND JAPAN D.C. 20551. The Federal Reserve Board and the Federal Reserve Bank of New York have determined PUBLICATION OF BROCHURE that the designations of primary dealers con- ON HOME EQUITY LINES trolled by firms from the United Kingdom and OF CREDIT Japan will be continued because U.S. firms are accorded "the same competitive opportuni- The Federal Reserve Board announced on Auties" as domestic firms in the government debt gust 1, 1989, the publication of its brochure on markets of those two countries. This determi- home equity lines of credit that fulfills the provination has been made under the terms of the sions of the Home Equity Loan Consumer Pro- Primary Dealers Act of 1988, which takes effect tection Act. on August 23, 1989. The new brochure is entitled, "When Your Under the act, the Federal Reserve may not Home Is on the Line: What You Should Know continue to designate or newly designate as a About Home Equity Lines of Credit." It proprimary dealer "any person of a foreign country vides consumers with basic information about . . . if such country does not accord to U.S. the features of a home equity line of credit and companies the same competitive opportunities in what to look for and to compare when shopping underwriting and distribution of government debt for credit. Under provisions of the act, this instruments" as the country accords to domestic brochure, or one similar to it, must be provided companies. to the consumer along with an application, al- The act currently applies only to the United though extra time is permitted in some cases. Kingdom and Japan, since they are the only Copies of the brochure are available from home countries of firms now owning primary Publications Services, Board of Governors of the dealers that are not otherwise grandfathered or Federal Reserve System, Washington, D.C. exempt from the terms of the act. 20551 or from the Federal Reserve Banks. Par- The Federal Reserve has undertaken compre- ties interested in mass reproduction of the brohensive studies of the characteristics of govern- chure may purchase negatives. For further informent securities markets in these two countries as mation, contact Publications Services (202) 452well as of markets in the Federal Republic of 3244. Germany and Switzerland, which are home countries of firms that have expressed interest in the possibility of becoming primary dealers in the future. CHANGE IN BOARD STAFF The Federal Reserve will monitor developments on an ongoing basis to ensure that re- Ms. Patricia A. Welch, Assistant Director in the quirements of the act continue to be met as Division of Applications Development and Staforeign government securities markets change tistical Services, will resign, effective January 15, over time. 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 699 SYSTEM MEMBERSHIP: Kentucky ADMISSION OF STATE BANKS Louisville Mid-America Bank of Louisville and Trust The following state banks were admitted to mem- Company bership in the Federal Reserve System during the Pennsylvania period August 1 through August 31, 1989. Blue Bell Madison Bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

701 Legal Developments FINAL RULE—AMENDMENT TO RULES OF ORDERS ISSUED UNDER BANK HOLDING PROCEDURE COMPANY ACT The Board of Governors is amending 12 C.F.R. Part Orders Issued Under Section 3 of the Bank 262, its Rules of Procedure, to update the citations to Holding Company Act statutory and regulatory provisions. Effective August 1, 1989, 12 C.F.R. Part 262 is ARSEBECO, Inc. amended as follows: Falls City, Nebraska Order Approving Acquisition of a Bank Part 262—Rules of Procedure ARSEBECO, Inc., Falls City, Nebraska ("ARSE- 1. The authority citation for Part 262 continues to read BECO"), a bank holding company registered pursuant as follows: to the Bank Holding Company Act ("BHC Act"), has applied for the Board's approval under section 3(a)(3) Authority. 5 U.S.C. 552. of the BHC Act (12 U.S.C. § 1843(a)(3)) to acquire State Bank of Stella, Stella, Nebraska ("Stella 2. Section 262.2(b) is amended by revising "section Bank"). 261.6(a)" to read "section 261.6(b)". Notice of the application, affording interested persons an opportunity to submit comments, has been 3. Section 262.3(a) is amended by revising "section published (54 Federal Register 21,667 (1989)). The 261.4(d)" to read "section 261.9(a)". time for filing comments has expired, and the Board has considered the application and all comments re- 4. Section 262.3(c) is amended by revising "in the case ceived in light of the factors set forth in section 3(c) of of a foreign bank holding company, as defined in the BHC Act. section 225.4(g) of this chapter," to read "in the case ARSEBECO controls one subsidiary bank, Richardof a foreign banking organization, as defined in section son County Bank and Trust Company, also of Falls 211.23(a)(2) of this chapter,". City, Nebraska ("Richardson Bank"), controlling deposits of $43.5 million, and is the 64th largest commer- 5. Section 262.3<j)(l)(ii) is amended by revising cial banking organization in Nebraska with less than "12 U.S.C. 1828(c)(l)(6)" to read "12 U.S.C. one percent of total deposits in commercial banks in 1828(c)(6)". the state. Bank is one of the smaller commercial banking organizations in the state, controlling deposits 6. Section 262.30) is further amended by deleting of $12.8 million, representing less than one percent of paragraphs (3) and (4) and by revising paragraph (2) to total deposits in commercial banks in the state.1 Acread as follows: cordingly, consummation of this proposal would not significantly increase the concentration of banking resources in Nebraska. Section 262.3—Applications Both Stella Bank and Richardson Bank compete directly in the Richardson County banking market.2 Richardson Bank is the second largest of five commercial banking organizations that operate in the market, (j) Special procedures for certain applications.* * * (2) For special rules governing procedures for sec- 1. Commercial banking data are as of December 31, 1988. Thrift data are as of June 30, 1988. tion 4 applications, refer to section 225.23 of this 2. The Richardson County banking market is approximated by chapter. Richardson County, Nebraska. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

702 Federal Reserve Bulletin • October 1989 controlling deposits of $43.5 million, representing Based upon size and market share of thrift institutions 32.0 percent of total deposits in commercial banking in the Richardson County banking market, the Board organizations in the market. Stella Bank is the fourth has concluded that thrift institutions exert a competilargest commercial banking organization in the tive influence that mitigates in part the anticompetitive market, controlling deposits of $12.8 million, repre- effects of this proposal.5 Accordingly, based on the senting 9.4 percent of total deposits in commercial facts of record in this case, the Board believes that banking organizations in the market. Upon con- consummation of the proposal would not have a summmation of this proposal, ARSEBECO would significantly adverse effect on competition in any become the largest commercial banking organization relevant market. in the market, controlling $56.3 million in deposits, The financial and managerial resources and future representing 41.4 percent of total deposits in the prospects of ARSEBECO and Richardson Bank are market. The market would be considered highly consistent with approval. In light of ARSEBECO's concentrated with the post-consummation Herfin- proposed immediate capital injection and commitment dahl-Hirschman Index ("HHI") increasing 602 of managerial resources to Stella Bank, its financial points to 3400.3 and managerial resources and future prospects will be Although consummation of this proposal would enhanced. Thus, considerations relating to banking eliminate some existing competition in the Richard- factors lend weight toward approval of this applicason County market, several factors mitigate the tion. potential anticompetitive effects of this proposal. The record of this application also indicates that The Board has considered as a significant factor this transaction would provide substantial benefits to Bank's financial condition and its ability to function the convenience and needs of the community by as a viable competitor in the market. Stella Bank has averting further deterioration of Stella Bank's finansuffered financial difficulties in recent years, and as a cial condition. In this context, the Board concludes result, has not been a strong competitor in the that the benefit of maintaining services to Bank's market. As a part of this proposal, ARSEBECO has customers that could be derived from this proposal committed to increase the capital of Stella Bank to a lends significant weight toward approval of this prolevel significantly above the Board's minimum capi- posal and outweighs any anticompetitive effects that tal adequacy guideline requirements. By restoring would result from consummation of the proposal. Stella Bank's capital, this acquisition should ensure Accordingly, based on the foregoing and other facts Stella Bank's ability to service the convenience and of record, the Board has determined that the applicaneeds of its community. In addition, the market is tion should be, and hereby is, approved. The acquisinot attractive for entry by an entity outside of the tion of Stella Bank shall not be consummated before market because of the market's small size and slow the thirtieth calendar day following the effective date rate of growth. of this Order, or later than three months after the In addition, the Board has considered the presence effective date of this Order, unless such period is of two thrift institutions in this market in its analysis of extended for good cause by the Board or by the this proposal. The Board has previously indicated that Federal Reserve Bank of Kansas City, acting pursuant thrift institutions have become, or have the potential to delegated authority. to become, major competitors of commercial banks.4 By order of the Board of Governors, effective August 14, 1989. This action was taken pursuant to the Board's Rules Regarding Delegation of Authority (12 C.F.R. 265.1a(c)) by a 3. Under the revised Department of Justice Merger Guidelines committee of Board members. Voting for this action: Chair- (49 Federal Register 26,823 (June 29, 1984)), a market in which the man Greenspan and Governors Kelley and LaWare. post-merger HHI is over 1800 is considered highly concentrated. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other JENNIFER J. JOHNSON factors indicating anticompetitive effects) unless the post-merger HHI Associate Secretary of the Board 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. 4. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743 (1984); The Chase Manhattan Corporation, 70 FEDERAL RESERVE 5. If 50 percent of the deposits held by thrift institutions were BULLETIN 529 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE included in the calculation of market concentration, Richardson Bank BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL would control 27.1 percent of the market's deposits and Stella Bank RESERVE BULLETIN 802 (1983); and First Tennessee National Corpo- would control 8.0 percent of the market deposits. The HHI would ration, 69 FEDERAL RESERVE BULLETIN 298 (1983). increase by 432 points to 2573. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 703 Banknorth Group, Inc. would not have a significant adverse effect upon the Burlington, Vermont concentration of commercial banking resources in any relevant market. Order Approving the Formation and Merger of Bank Old Banknorth and Howard compete directly in the Holding Companies and the Acquisition of Banking following three Vermont banking markets: Barre- Subsidiaries Montpelier, Burlington-St. Albans, and Rutland. The Board previously has indicated that thrift institutions Banknorth Group, Inc., Burlington, Vermont have become, or have the potential to become, impor- ("Banknorth"), has applied for the Board's approval tant competitors of commercial banks.4 In analyzing under section 3 of the Bank Holding Company Act the competitive factors in each of these markets, the (12 U.S.C. § 1842) ("BHC Act") to become a bank Board has considered the presence of a number of holding company and to acquire by merger Banknorth savings banks. Group, Inc., Burlington, Vermont ("Old Banknorth") In the Barre-Montpelier market, Old Banknorth is and Howard Bancorp, Burlington, Vermont ("How- the third largest of eight commercial banking organiard"), both bank holding companies within the mean- zations, controlling $72.3 million in deposits, repreing of the BHC Act (12 U.S.C. § 1841 et seq.).1 senting 15.4 percent of total deposits in commercial Banknorth also proposes to acquire indirectly the banks in that market.5 Howard is the largest commerbanking subsidiaries of Old Banknorth and Howard.2 cial banking organization in the Barre-Montpelier mar- Notice of the applications, affording an opportunity ket, controlling $150.4 million in deposits, representfor interested persons to submit comments, has been ing 32.1 percent of total deposits in commercial banks duly published (54 Federal Register 24,749 (1989)). in the market. Upon consummation of this proposal, The time for filing comments has expired and the Banknorth would become the largest commercial Board has considered the applications and all com- banking organization, controlling $222.7 million in ments received in light of the factors set forth in deposits, representing 47.5 percent of the market share section 3(c) of the BHC Act. of commercial banks. Following consummation, seven Banknorth is a non-operating company formed for commercial banks and two savings banks would rethe purpose of acquiring Old Banknorth and Howard. main in the market. The concentration ratio of the four Old Banknorth is the second largest of nineteen bank- largest commercial banking organizations in the Barreing organizations in Vermont, controlling total depos- Montpelier market would increase 13 percentage its of $745 million, representing 15.6 percent of the points to 93 percent and the Herfindahl-Hirschman total deposits in commercial banking organizations in the state.3 Howard is the third largest banking organization in Vermont, controlling $663 million in deposits, representing 13.9 percent of the total deposits in 4. Midwest Financial Group, 75 FEDERAL RESERVE BULLETIN 386 commercial banking organizations in the state. Upon (1989); CB&TBancshares, Inc., 75 FEDERAL RESERVE BULLETIN 381 (1989); National City Corporation, 70 FEDERAL RESERVE BULLETIN consummation of the proposal and all planned dives- 743 (1984). The Board previously has indicated that, when analyzing titures, Banknorth would become the largest banking the anticompetitive effects of a particular proposal, it may consider the competitiveness of thrift institutions at a level greater than 50 organization in Vermont. It would control deposits of percent of thrift deposits when appropriate. Fleet Financial Group, approximately $1.4 billion, representing 29.5 percent Inc., 74 FEDERAL RESERVE BULLETIN 62 (1988); Hartford National of the total deposits in commercial banking organiza- Corporation, 73 FEDERAL RESERVE BULLETIN 720 (1987). The consideration of thrift competition at such a level is appropriate to the tions in Vermont. Consummation of this proposal competitive analysis of this proposal with respect to all the relevant markets. All but one of the thrifts in these markets are state chartered savings banks, empowered under Vermont law to exercise virtually the same powers enjoyed by commercial banks. Vt. Stat. Ann. tit. 8, 1. Banknorth, a newly formed corporation, proposes to acquire all § 606 (1988). These savings banks provide a full array of commercial of the outstanding voting shares of Old Banknorth and Howard banking services in addition to offering traditional thrift products. For through an exchange of shares and a merger of each bank holding example, these savings banks maintain commercial lending departcompany with and into Banknorth. ments that employ several commercial lending officers, offer commer- 2. Old Banknorth has two bank subsidiaries: First Vermont Bank cial and industrial loans and commercial real estate loans, and offer and Trust Company, Brattleboro, Vermont, and Franklin-Lamoille commercial demand deposit accounts. Moreover, the commercial Bank, St. Albans, Vermont. Howard has three bank subsidiaries: The lending activities of savings banks in these markets are significant. For Howard Bank, National Association, Burlington, Vermont; Wood- savings banks in the relevant markets, the average ratio of commercial stock National Bank, Woodstock, Vermont; and Granite Savings and industrial loans (other than those secured by real estate) to total Bank and Trust Company, Barre, Vermont. Old Banknorth also assets is approximately 8.2 percent, well above the 2.5 percent indirectly controls a mortgage banking subsidiary. Banknorth has average for thrifts on a nationwide basis. chosen not to seek approval of that subsidiary's activity and will 5. The Barre-Montpelier market is approximated by Washington consequently forfeit its authority to conduct mortgage banking activ- County, excluding the towns of Fayston, Waitsfield and Warren; and ities through a nonbank subsidiary. with the addition of the towns of Groton, Hardwick, Stannard, and 3. State deposit data are as of March 31, 1989, and market deposit Walden in Caledonia County and the towns of Chelsea, Orange, data are as of June 30, 1987. Topsham, Washington and Williamstown in Orange County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

704 Federal Reserve Bulletin • October 1989 Index ("HHI") would increase by 991 points to 2964.6 relatively attractive for entry, as evidenced by the In order to mitigate the adverse competitive effects 1988 de novo establishment of a savings bank branch on competition in this market that would otherwise in the market by an outside competitor. Moreover, the result from consummation of this proposal, Old Rutland market has exhibited a trend toward Banknorth has committed to divest on or before con- deconcentration.9 In light of the facts of record, insummation of the merger two of its banking offices in cluding the number of competitors remaining in the Barre-Montpelier to a party that does not compete in market and the competition offered by savings banks this market.7 In light of the facts of record, including in this market, the Board concludes that consummathe divestiture plan, the number of competitors re- tion of this proposal would not have a significant maining in the market, and the competition offered by adverse effect on competition in the Rutland market. savings banks in this market, the Board has concluded In the Burlington-St. Albans market, Banknorth that consummation of this proposal would not have a would become the largest of seven commercial banksignificant adverse effect on competition in the Barre- ing organizations.10 Following consummation, six Montpelier market. commercial banks and two savings banks would re- In the Rutland banking market, Banknorth would main in the market. The Burlington-St. Albans market become the largest of seven commercial banking or- also exhibits an attractiveness of entry that mitigates ganizations upon consummation of proposal.8 Several possible anticompetitive effects of the proposal. The market characteristics mitigate the anticompetitive market encompasses Vermont's largest Metropolitan effects of the proposal. Seven commercial banks and Statistical Area and compares favorably to the rest of three savings banks would remain in the market fol- the state in terms of population growth, per capita lowing consummation. The Rutland market also is household income, and total deposits per branch.11 In addition, a de novo savings bank branch was established in the market in 1988. In light of the facts of 6. Under the revised Department of Justice Merger Guidelines, record, including the number of competitors remaining 49 Federal Register 26,823 (June 29, 1984), a market in which the in the market and the competition offered by savings post-merger HHI is above 1800 is considered highly concentrated. In such markets, the Department is likely to challenge a merger that banks in this market, the Board concludes that conincreases the HHI by more than 50 points. The Department has summation of this proposal would not have a signifiinformed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticom- cant adverse effect on competition in the Burlingtonpetitive effects) unless the post-merger HHI is at least 1800 and the St. Albans market. merger increases the HHI by 200 points. The Justice Department has The Board also has considered the effects of the stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects implicitly recognize the competi- proposal on probable future competition in markets in tive effect of limited-purpose lenders and other non-depository finan- which Old Banknorth and Howard do not compete. In cial entities. 7. The Board's policy regarding divestitures intended to remedy anticompetitive effects of a merger or acquisition proposal requires that such divestitures must occur on or before consummation. Fleet 9. The HHI for commercial banking organizations declined by 278 Financial Group, Inc., 74 FEDERAL RESERVE BULLETIN 62 (1988); points between 1983 and 1987. Barnett Banks of Florida, Inc., 68 FEDERAL RESERVE BULLETIN 190 10. Based on facts of the record, including a recent market survey, (1982). Upon consummation of this proposal with planned divestitures the former separate banking markets of Burlington and St. Albans of these offices, which control deposits of $55.8 million, Banknorth have been reconstituted into the new, combined market of Burlingtonwould become the largest commercial banking organization in the St. Albans. The Burlington-St. Albans banking market is approximarket, controlling deposits of $166.8 million, representing 35.6 mated by the Burlington Ranally Metropolitan Area, Franklin County, percent of the market. The four-firm concentration ratio would decline and the towns of Monkton and Starksboro in Addison County; Bolton, 3 points to 77 and the HHI would increase 225 points to 2116. Buel's Gore, Huntington, Underhill, and Westford in Chittenden Assuming the inclusion in pro forma market concentration calcula- County; Alburg, Grand Isle, and Isle La Motte in Grand Isle County; tions of 100 percent of Barre-Montpelier market savings banks depos- and Belvidere, Cambridge and Waterville in Lamoille County. Old its, Banknorth's market share would be 25.5 percent and the HHI Banknorth is the fourth largest of seven commercial banking organiwould increase by 116 points to 1720. zations in this market, controlling $129.3 million in deposits, which 8. The Rutland banking market is approximated by Rutland County, represents 11.5 percent of the total deposits in commercial banks. excluding the towns of Danby, Pawlet and Wells; and with the Howard is the second largest commercial banking organization, addition of the town of Goshen in Addison County. Old Banknorth is controlling $253.1 million in deposits, which represents 22.5 percent of the third largest of eight commercial banking organizations in this the total deposits in commercial banks. After consummation, the market, controlling $78.8 million in deposits, which represents 15.9 four-firm concentration ratio would increase 7 percentage points to 93 percent of the total deposits in commercial banks. Howard is the percent and the HHI would increase 519 points to 2680. Assuming the fourth largest commercial banking organization, controlling $76.3 inclusion in pro forma market concentration calculations of 100 million in deposits, which represents 15.4 percent of the total deposits percent of the deposits of Burlington-St. Albans market savings in commercial banks. Following consummation, the four-firm concen- banks, Banknorth would rank first, with a market share of 29.3 tration ratio would increase 11 percentage points to 90 percent and the percent. The four-firm concentration ratio would increase seven HHI would increase 489 points to 2294. Assuming the inclusion in pro points to 81 and the HHI would increase 216 points to 1880. forma market concentration calculations of 100 percent of the deposits 11. Between 1980 and 1986, population increased 7.8 percent in the held by Rutland market savings banks, Banknorth would rank second market compared to 5.8 percent in Vermont as a whole. In 1986, per in the market, with a market share 22.9 percent. The four-firm capita household income was $14,238 in the market versus $13,342 in concentration ratio would increase 11 percentage points to 82 percent Vermont. Total deposits per banking office were $24.5 million in the and the HHI would increase 266 points to 1835. market versus $23.6 million in Vermont. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 705 light of the market concentration and the number of (1989)). The time for filing comments has expired, and probable future entrants into those markets, the Board the Board has considered the application and all concludes that consummation of this proposal would comments received in light of the factors set forth in not have a significant adverse effect on probable future section 3(c) of the BHC Act (12 U.S.C. § 1842(c)). competition in any relevant market. Section 3(d) of the BHC Act (12 U.S.C. § 1842(d)), The financial and managerial resources of Old the Douglas Amendment, prohibits the Board from Banknorth and Howard and their subsidiaries are approving an application by a bank holding company consistent with approval. No additional debt will be to acquire a bank located outside of the bank holding incurred in connection with the proposal. Consider- company's home state, unless such acquisition is ations relating to the convenience and needs of the "specifically authorized by the statute laws of the state communities to be served by Banknorth's proposed in which such bank is located, by language to that subsidiary banks also are consistent with approval of effect and not merely by implication." 12 U.S.C. this application. § 1842(d). Accordingly, based on the foregoing and other facts In 1986, the Pennsylvania legislature authorized of the record, including Old Banknorth's divestiture reciprocal acquisitions of Pennsylvania banking insticommitments, the Board has determined that the tutions by out-of-state bank holding companies under applications should be, and hereby are, approved. The certain conditions.1 New Jersey's interstate banking proposal shall not be consummated before the thirtieth statute has been explicitly recognized by the Pennsylcalendar day following the effective date of this Order, vania legislature to be reciprocal with Pennsylvania's or later than three months after the effective date of laws as the New Jersey law existed on March 31, this Order, unless such period is extended for good 1986,2 and B.M.J. Financial's proposal appears to cause by the Board or by the Federal Reserve Bank of meet the conditions of Pennsylvania law. Boston, acting pursuant to delegated authority. B.M.J. Financial is the 15th largest commercial By order of the Board of Governors, effective banking organization in New Jersey, controlling de- August 14, 1989. posits of $641 million, which represents approximately .91 percent of the total deposits in commercial banking This action was taken pursuant to the Board's Rules organizations in the state.3 Regarding Delegation of Authority (12 C.F.R. 265.1a(c)) by a Bank, a de novo institution, is being organized as a committee of Board members. Voting for this action: Chair- state-chartered member bank. It will provide a broad man Greenspan and Governors Kelley and LaWare. range of commercial banking services in the Philadelphia/Trenton market.4 In view of the de novo status of JENNIFER J. JOHNSON Bank and based upon the facts of record, the Board Associate Secretary of the Board concludes that the proposed transaction would have no adverse effects on existing or future competition, B.M.J. Financial Corp. nor would it increase the concentration of resources in Bordentown, New Jersey any relevant market. In addition, the financial and Order Approving Acquisition of Bank and Membership in the Federal Reserve System B.M.J. Financial Corp., Bordentown, New Jersey 1. These conditions include: (i) reciprocal acquisition rights for Pennsylvania bank holding ("B.M.J. Financial"), a bank holding company within companies; the meaning of the Bank Holding Company Act (ii) for acquisitions before March 4, 1990, location within a defined ("BHC Act"), has applied for the Board's approval region (which includes New Jersey) and 75 percent of the acquiring bank holding company's deposits within the defined region; under section 3(a)(3) of the BHC Act (12 U.S.C. (iii) a limitation on the number of Pennsylvania institutions owned § 1842(a)(3)) to acquire all of the voting shares of Bank by an out-of-state bank holding company to the number of institutions permitted for a Pennsylvania bank holding company (currently of Delaware Valley, Fairless Hills, Pennsylvania four); and ("Bank"), a de novo commercial bank. Bank also has (iv) approval by the Pennsylvania Department of Banking. See, applied, pursuant to section 9 of the Federal Reserve 7 Penn. Stat. § 116(b). The Board's approval is conditional upon B.M.J. Financial obtaining approval from the appropriate state Act (12 U.S.C. § 321 et seq.), and section 208.4 of the regulatory authorities. Board's Regulation H (12 C.F.R. 208.4), to become a 2. 7 Penn. Stat. § 116(c)(iv). There have been no substantive member of the Federal Reserve System. amendments to New Jersey law that would affect this determination. 3. Deposit and asset data are as of December 31, 1988. Notice of the application under the BHC Act, af- 4. The Philadelphia/Trenton market is approximated by Bucks, fording interested persons an opportunity to submit Chester, Delaware, Montgomery, and Philadelphia Counties, Pennsylvania; and Burlington, Camden, Gloucester, and Mercer Counties, comments, has been given in accordance with section New Jersey. Bank's primary service area includes Falls Township, 3(b) of the BHC Act (54 Federal Register 24,593 Middletown, Lower Makefield, and Bristol Township, Pennsylvania. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

706 Federal Reserve Bulletin • October 1989 managerial resources of B.M.J. Financial and its sub- bank supervisors have examined the CRA Statements sidiaries are consistent with approval. of the banks and have determined the Statements are In considering the convenience and needs of the satisfactory. B.M.J. Financial's banks have estabcommunity to be served, the Board has taken into lished Advisory Boards to ascertain the credit needs of account the record of B.M.J. Financial's banks under their communities. the Community Reinvestment Act (12 U.S.C. § 2901 Mid-Jersey is an active participant in the New et seq.) ("CRA"). The CRA requires that federal bank Jersey Higher Education Assistance Agency in its supervisory agencies encourage financial institutions lending activities for student loans. Mid-Jersey also to help meet the credit needs of the local communities holds municipal security obligations, which provide in which they operate consistent with the safe and financial assistance to local communities in New sound operation of such institutions. To accomplish Jersey. Mid-Jersey has received an award for its this end, the CRA requires the appropriate federal participation in the Bordentown City-Farnsworth supervisory authority to "assess the institution's Avenue Revitalization Program, a neighborhood record of meeting the credit needs of its entire com- preservation program sponsored by the New Jersey munity, including low- and moderate-income neigh- Department of Community Affairs. This program borhoods, consistent with the safe and sound opera- provides interest-free loans and grants for the renotion of the institution." The Board is required to "take vation of business and residential real estate in the such record into account in its evaluation" of applica- City of Bordentown. tions under section 3 of the BHC Act. Mount Holly participates in loan programs spon- In this regard, the Board has received comments sored by the New Jersey Mortgage Finance Agency, from the Affordable Housing Coalition of Burling- Small Business Administration, and Guaranteed Stuton County, Inc., Mount Holly, New Jersey dent Loan Association. In addition, Mount Holly ("Coalition").5 Coalition is a group of individuals participates in a Burlington County sponsored small and organizations concerned about affordable hous- business loan guarantee program. Mount Holly also ing. Coalition has alleged that the CRA records of has provided construction loans to a builder of low- B.M.J. Financial's lead bank, Bank of Mid-Jersey, cost housing. Additionally, Mount Holly has extended Bordentown, New Jersey ("Mid-Jersey"), and one credit to churches, synagogues, and local community of its other subsidiary banks, Mount Holly State service organizations. Mount Holly's awareness of the Bank, Mount Holly, New Jersey ("Mount Holly"), credit needs of its community is maintained by direct are deficient, particularly with regard to the banks' involvement with civic organizations and personal participation in programs sponsored by the New contact between bank officers and government offi- Jersey Mortgage and Finance Agency, FHA, FMHA, cials. Mount Holly has advised appropriate commuand VA loan programs, support of community nity officials of its interest in participating in commureinvestment and community development, and ini- nity development programs in its community and is tiatives to ascertain the credit needs of their sur- involved in aspects of program planning and rounding communities. Coalition also has challenged implementation.6 the appropriateness of B.M.J. Financial's CRA In order to ensure B.M.J. Financial and its subsid- Statement and training programs. Finally, Coalition iary banks continue to comply with the policies of the claims B.M.J. Financial has participated in very CRA, an officer of B.M.J. Financial has been apfew isolated programs sponsored by non-profit pointed to coordinate the CRA efforts of the banks to groups. ensure that every effort is made to ascertain the needs The Board has reviewed the CRA record of the of their communities. This will be in addition to the banks in accordance with its practice and procedure. The Board notes that the three subsidiary banks of B.M.J. Financial have received satisfactory CRA assessments from their primary supervisory agencies. 6. The Board has previously recognized that participation in these There is no indication of any pattern of discrimination types of programs is an effective means for assuring that the services by B.M.J. Financial's bank subsidiaries. The primary of depository institutions reach low- and moderate-income segments of the communities served by these institutions (see, e.g., Bank of Ireland, 75 FEDERAL RESERVE BULLETIN 39, 41 (1989)), and recently affirmed this position in the Community Reinvestment Act Statement released jointly by the federal depository institutions regulatory 5. The League of Women Voters of the Moorestown Area, Moore- agencies on March 21, 1989. 54 Federal Register 13,742 (1989). As stown, New Jersey, has filed a statement supporting this protest. The noted in the Statement, federal agencies will continue to consider Fair Lending Coalition of New Jersey, Newark, New Jersey, also favorably financial-institution leadership in concerted efforts to imsubmitted a letter in support of this protest. In addition, the Fair prove low- and moderate-income areas in the community and partic- Lending Coalition submitted comments urging the Board to deny the ipation by financial institutions in public and private partnerships to application on the same grounds as those submitted by Coalition. promote economic and community development efforts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 707 Advisory Boards B.M.J. Financial already has in Equimark Corporation place. B.M.J. Financial also will take steps to better Pittsburgh, Pennsylvania inform all individuals of the services offered by its banks. Order Approving Acquisition of a Bank Holding Finally, B.M.J. Financial has committed to explore Company the possibility of lower than market mortgage and home improvement loans. Equimark Corporation ("Equimark") and EquiMan- On the basis of the record in this case, including the agement, Inc. ("EquiManagement"), both of Pittspast CRA performance of B.M.J. Financial and its burgh, Pennsylvania (collectively "Applicants"), subsidiary banks and its commitments and plans for bank holding companies within the meaning of the future action, the Board concludes that considerations Bank Holding Company Act (the "BHC Act"), have relating to the convenience and needs of the commu- applied for the Board's approval under section 3 of nity to be served are consistent with approval. the BHC Act (12 U.S.C. § 1842) to acquire up to 42.4 Bank has applied under section 9 of the Federal percent of National Bancshares Corporation of Reserve Act (12 U.S.C. § 321 et seq.), and section 208 Texas, San Antonio, Texas ("NBC"),1 and to conof the Board's Regulation H (12 C.F.R. 208.4), to trol NBC through a management agreement apbecome a member of the Federal Reserve System proved by the FDIC and NBC that provides upon consummation of the acquisition. The Board has Equimark and EquiManagement with certain general considered the factors it is required to consider when control over the daily operations of NBC. approving applications for membership pursuant to NBC, with total assets of approximately $2.2 section 9 of the Federal Reserve Act (12 U.S.C. § 322) billion,2 has 12 bank subsidiaries. The FDIC has and section 6 of the Federal Deposit Insurance Act determined that the bank subsidiaries of NBC are in (12 U.S.C. § 1816), and finds those factors to be danger of closing and is providing assistance to NBC consistent with approval. Bank appears to meet all of pursuant to section 13(c) of the Federal Deposit the criteria for admission to membership, including Insurance Act, as amended (12 U.S.C. § 1823(c)). capital requirements and considerations related to The FDIC solicited offers for the acquisition of NBC management, character and quality. Accordingly, from qualified bidders. On July 21, 1989, the FDIC Bank's application to become a member of the Federal selected Applicants' bid for NBC, and advised that Reserve System is approved. Applicants had been selected as the winning bidder. On the basis of the entire record, including the The FDIC recommended expeditious action on these commitments of B.M.J. Financial, the section 3 appli- applications by the Board. The OCC has also recomcation to acquire control of Bank and the section 9 mended approval of the transaction. application to become a member of the Federal Re- In view of this situation and the need for expeditious serve System are approved for the reasons summa- action to protect the interest of NBC's depositors, it rized above. This approval is conditional upon ap- has been determined, pursuant to section 3(b) of the proval from the appropriate state regulatory BHC Act (12 U.S.C. § 1842(b)), section 225.14(h) of authorities. The proposal shall not be consummated the Regulation Y (12 C.F.R. 225.14(h)), and section before the 30th calendar day following the effective 262.3(1) of the Board's Rules of Procedure (12 C.F.R. date of this Order, or later than three months after the 262.3(1)), to dispense with the notice provisions of the effective date of this Order, and Bank shall be open for BHC Act. business not later than six months after the effective Under section 3(d) of the BHC Act (12 U.S.C. date of this Order. The latter two periods may be § 1842(d)), the Douglas Amendment, a bank holding extended for good cause by the Board or the Federal company generally may not be allowed to acquire Reserve Bank of Philadelphia, pursuant to delegated control of any bank located outside of the holding authority. By order of the Board of Governors, effective August 14, 1989. This action was taken pursuant to the Board's Rules Regarding Delegation of Authority (12 C.F.R. 265.1a(c)) by a 1. In connection with these applications, LTL Acquisition Corporation, San committee of Board members. Voting for this action: Chair- Antonio, Texas, has applied to become a bank holding company through the man Greenspan and Governors Kelley and La Ware. acquisition of the twelve subsidiary banks of NBC. Equimaiic proposes to acquire 32.4 percent of the voting shares of LTL Acquisition Corporation and EquiManagement proposes to acquire 10 percent of the voting shares of LTL JENNIFER J. JOHNSON Acquisition Corporation. Associate Secretary of the Board 2. Asset data are as of March 31, 1989. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

708 Federal Reserve Bulletin • October 1989 company's principal state of operations.3 Applicants, tions under section 3 of the BHC Act should be, and with approximately $3.5 billion in total assets as of hereby are, approved. This action is limited to ap- March 31, 1989, are bank holding companies that proval of the transaction according to the terms and principally operate in Pennsylvania for purposes of the conditions of Applicants' bid as presented to the Douglas Amendment. As noted above, NBC is located Federal Reserve System, and any significant change in in Texas. those terms or conditions may require further review Effective January 1, 1987, Texas enacted an inter- by the Board. state banking statute that permits out-of-state bank The FDIC has informed the Board that expeditious holding companies to acquire established Texas banks action on Applicants' proposal is necessary in order and bank holding companies under certain conditions. to permit Applicants to assume control of NBC and Action on these applications is specifically conditioned continue to operate NBC as a viable competitor on Applicants' compliance with any and all applicable serving its communities. In light of these and all the laws of the State of Texas. Accordingly, the provisions facts of record in this case, the General Counsel and of section 3(d) of the BHC Act and of any relevant the Staff Director of the Division of Banking Superstate law will not bar approval of the proposed trans- vision and Regulation, acting pursuant to authority action. delegated by the Board, have determined, in accord- In evaluating an application under section 3 of the ance with section 11(b) of the BHC Act, that expe- BHC Act, the Board is required to consider the ditious action on these applications is necessary and financial and managerial resources and future pros- that Applicants may immediately acquire control of pects of the companies involved, the effect of the NBC and may consummate their proposed investproposal on competition, and the convenience and ment in NBC on or after the fifth calendar day needs of the communities to be served. Under the following the effective date of this Order. The transproposal, Applicants will provide NBC with new man- action shall not be consummated later than three agement officials. The agreement in principle between months after the effective date of this Order, unless Applicants and the FDIC will recapitalize NBC, and the period for consummation is extended for good permit NBC to continue to provide a full range of cause by the Board or the Federal Reserve Bank of services to its customers. Cleveland under delegated authority. Based on these and all of the other facts of record, By order, approved pursuant to authority delegated including the bid proposal made by Applicants and by the Board, effective August 23, 1989. accepted by the FDIC, and Applicants' stated intent to raise substantially more equity capital than the amount WILLIAM W. WILES of its investment in NBC, the financial and managerial Secretary of the Board resources and future prospects of Applicants, their subsidiaries, NBC and its subsidiaries are consistent First Interstate Bancorp with approval of these applications. The benefits to the Los Angeles, California convenience and needs of the communities in Texas of maintaining NBC as a viable competitor in Texas First Interstate Bank of California weigh in favor of approval of these applications. Los Angeles, California Applicants have no banking offices in Texas and have no nonbanking offices in any relevant market. Order Approving Acquisition of a Bank and Merger Accordingly, consummation of the proposal would not of Banks increase the concentration of banking resources or have any significant adverse effects on competition in Texas or any other relevant market. First Interstate Bancorp, Los Angeles, California, a Based on the foregoing and all of the facts of record, bank holding company within the meaning of the the General Counsel and the Staff Director of the Bank Holding Company Act ("BHC Act"), has Division of Banking Supervision and Regulation have applied for the Board's approval under section 3 of determined, acting pursuant to authority specifically the BHC Act (12 U.S.C. § 1842) to acquire all of the delegated by the Board in this case, that the applica- voting shares of Bank of Alex Brown, Sacramento, California, and Meridian National Bank, Concord, California. In addition, First Interstate Bank of California, Los Angeles, California ("First Interstate 3. A bank holding company's principal state of banking operations is the state in which the operations of the bank holding company's Bank"), a state member banking subsidiary of First banking subsidiaries were principally conducted on the later of July 1, Interstate Bancorp, has applied for the Board's ap- 1966, or the date on which the company became a bank holding company. proval under the Bank Merger Act (12 U.S.C. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 709 § 1828(c)) to merge with Bank of Alex Brown under in commercial banks in the market ("market deposthe charter and title of First Interstate Bank.1 its"). On a combined basis, Banks would be the Notice of the applications under the BHC Act and seventh largest commercial banking organization in the Bank Merger Act, affording interested persons an the Sacramento market, with deposits of $154 million, opportunity to submit comments, has been given in representing 2.8 percent of market deposits. Upon accordance with the BHC Act, the Bank Merger Act, consummation, Applicant would remain the third largand the Board's Rules of Procedure (12 C.F.R. est commercial banking organization in the market, 262.3(b)) (54 Federal Register 11,076 (1989) and 54 controlling $531 million in deposits, or 9.7 percent of Federal Register 24,751 (1989)). As required by the market deposits. The Sacramento market is consid- Bank Merger Act, reports of the competitive effects of ered concentrated, with a Herfindahl-Hirschman Inthe merger were requested from the United States dex ("HHI") of 1877, which would increase by 38 Attorney General, the Office of the Comptroller of the points to 1915 upon consummation of the proposal.4 Currency, and the Federal Deposit Insurance Corpo- Applicant is the third largest of 94 commercial ration. The time for filing comments has expired, and banking organizations in the San Francisco-Oakland the Board has considered the applications and all market, with deposits of $2.73 billion, representing 5.1 comments received in light of the factors and consid- percent of market deposits. On a combined basis, erations set forth in section 3(c) of the BHC Act and Banks would rank 31st in the San Francisco-Oakland the Bank Merger Act. market, with deposits of $100 million, representing 0.2 First Interstate Bancorp is the fourth largest of 420 percent of market deposits. Upon consummation, Apbanking organizations in California, controlling $16.4 plicant would remain the third largest commercial billion in deposits, which represents 8.33 percent of banking organization in the market, controlling $2.83 total deposits in commercial banks in the state.2 Bank billion in deposits, or 5.3 percent of market deposits. of Alex Brown and Meridian National Bank, com- The San Francisco-Oakland market is considered conbined, rank 37th in California, with $340 million in centrated, with an HHI of 2085, which would increase deposits, which represents 0.17 percent of total depos- by 2 points to 2087 upon consummation. its in commercial banks in the state. Upon consumma- Applicant ranks sixth out of seven commercial tion of the proposed merger, First Interstate Bancorp banking organizations in the Auburn banking market, would remain the fourth largest commercial banking with deposits of $16.6 million, representing 5.4 percent organization in California, controlling $16.7 billion in of market deposits. On a combined basis, Banks would deposits, representing 8.5 percent of total deposits in be the fourth largest commercial banking organization commercial banks in the state. Consummation of the in the Auburn market, with deposits of $22.8 million, proposal would not have any significant adverse effect representing 7.3 percent of market deposits. Upon on the concentration of banking resources in Califor- consummation, Applicant would become the fourth nia. largest commercial banking organization in the mar- Applicant competes with Bank of Alex Brown and ket, controlling $39.4 million in deposits, or 12.7 Meridian National Bank (together referred to as percent of market deposits. The Auburn market is "Banks") in the Sacramento, San Francisco-Oakland, considered concentrated, with an HHI of 2418, which and Auburn banking markets in California.3 Applicant would increase by 79 points to 2497 upon consummais the third largest of 31 commercial banking organi- tion. zations in the Sacramento market, with deposits of On the basis of the foregoing, the Board concludes $377 million, representing 6.9 percent of total deposits that consummation of the proposal would not have a significant adverse effect on competition in any of these markets or in any other relevant banking market. 1. First Interstate Bank proposes to effect the merger through a series of transactions. First, a wholly owned subsidiary of First Interstate Bank will merge into Alex Brown Financial Group, the parent bank holding company of Bank of Alex Brown and Meridian National Bank. Immediately after the merger, Alex Brown Financial 4. Under the revised Department of Justice Merger Guidelines Group will be dissolved and liquidated into First Interstate Bank, and (49 Federal Register 26,823 (June 29, 1984)), a market in which the First Interstate Bank will transfer all of the outstanding shares of post-merger HHI is above 1800 is considered highly concentrated. In Meridian National Bank to First Interstate Bancorp. Bank of Alex such markets, the Department of Justice is unlikely to challenge a Brown will then be merged into First Interstate Bank. merger or acquisition if the increase in the HHI is less than 50 points. 2. Deposit, state ranking, and market data are as of June 30, 1987. The Department of Justice has informed the Board that a bank merger 3. The Sacramento banking market is comprised of the Sacramento or acquisition generally will not be challenged (in the absence of other Rand McNally Metropolitan Area ("RMA"). The San Francisco- factors indicating anticompetitive effects) unless the post-merger HHI Oakland banking market is comprised of the San Francisco-Oakland is at least 1800 and the merger increases the HHI by at least 200 RMA. The Auburn banking market is comprised of the southwest points. The Department of Justice has stated that the higher than portion of Placer County around Auburn, which includes the cities of normal HHI thresholds for screening bank mergers for anticompeti- Auburn, Foresthill, Lincoln, Colfax, and Meadow Vista in southwest tive effects implicitly recognizes the competitive effect of limited Placer County. purpose lenders and other non-depository financial entities. 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710 Federal Reserve Bulletin • October 1989 The increase in concentration resulting from the pro- Act.6 The investments also are not permissible under posal in each market is minimal, and in each market, a section 225.22(d)(2) of Regulation Y (relating to activsignificant number of competitors would remain after ities conducted by nonbank subsidiaries of holding consummation. In addition, the presence of thrift company state banks), because the joint ventures are institutions in these markets further mitigates any not wholly owned by ABDC as required under that anticompetitive effects in the markets.5 The Board regulation.7 Accordingly, First Interstate Bank has also does not believe that the consummation of the committed to divest these investments within two proposal would have a significant adverse effect on years of the effective date of the merger. probable future competition in any relevant market. Based on the foregoing and other facts of record, the The Board has considered several factors that bear Board has determined that the applications under the on the assessment of financial factors in this case. Bank Merger Act and section 3 of the BHC Act should First, Applicant proposes to acquire Banks through a be, and hereby are, approved. The transactions shall cash purchase amounting to approximately $41 mil- not be consummated before the thirtieth calendar day lion, which will result in only a slight lessening of the following the effective date of this Order, or later than overall capital strength of Applicant. Following the three months after the effective date of this Order, acquisition of Banks, Applicant's capital ratios will unless such period is extended for good cause by the remain above the minimum levels specified in the Board or by the Federal Reserve Bank of San Fran- Board's Capital Adequacy Guidelines. Furthermore, cisco, acting pursuant to delegated authority. the Board notes that Applicant has issued $225 million By order of the Board of Governors, effective in perpetual preferred stock this year in order to August 1, 1989. strengthen its capital position. Finally, Applicant projects, and the Board expects Applicant to achieve, Voting for this action: Chairman Greenspan and Governors continued improvement in its equity capital position. Johnson, Seger, and Kelley. Voting against this action: Governor Angell. Absent and not voting: Governors Heller Accordingly, on the basis of the above considerand LaWare. ations, the Board concludes that financial factors are consistent with approval of this proposal. Managerial JENNIFER J. JOHNSON resources, convenience and needs considerations, and Associate Secretary of the Board future prospects of Applicant and Banks are also consistent with approval. Dissenting Statement of Governor Angell First Interstate Bank will acquire, as part of the merger, Alex Brown Development Corporation Applicant's proposal involves a cash acquisition that is ("ABDC"), a wholly owned subsidiary of Bank of not supported through the issuance of new common Alex Brown. ABDC engages, through two joint ven- equity capital. While the acquisition is small in relation tures, in real estate development activities authorized to the size of Applicant, the acquisition contemplated by state law. These investments represent more than is the last in a series of cash acquisitions that in the five percent of the outstanding voting shares of the aggregate may not be considered de minimis. I recogjoint ventures and involve the conduct of activities nize that Applicant has raised some capital to that are not permissible under section 4 of the BHC strengthen its overall capital position, and that Applicant has projected further strengthening of its capital position. I would not permit proposals such as this, 5. The Board has previously indicated that thrift institutions have however, unless the applicant has taken or will take become, or have the potential to become, major competitors of action before consummation to raise additional comcommercial banks. National City Corporation, 70 FEDERAL RESERVE mon equity to offset the purchase price of the acqui- BULLETIN 743 (1984); NCNB Bancorporation, 70 FEDERAL RESERVE BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL RESERVE BULLETIN 802 (1983); First Tennessee National Corporation, 69 FEDERAL RESERVE BULLETIN 298 (1983). If 50 percent of the deposits controlled by thrift institutions were 6. Security Pacific Corporation, 72 FEDERAL RESERVE BULLETIN included in the calculation of market concentration, Applicant and, on 800 (1986). a combined basis, Banks, would control 4.9 percent and 2.0 percent, 7. 12 C.F.R. 225.22(d)(2). The Board adopted this regulation in 1971 respectively, of market deposits in the Sacramento market. The HHI in the absence of evidence that acquisitions by holding company for the Sacramento market would increase by 20 points to 1071 upon banks were resulting in evasions of the purposes of the BHC Act. consummation of the proposal. In the San Francisco-Oakland banking Board Press Release dated May 13, 1971, 36 Federal Register 9292 market, Applicant would control 3.8 percent and Banks, on a com- (May 22, 1971). The Board, however, stated that it would review the bined basis, would control 0.14 percent of market deposits. The HHI continued merits of the regulation from time to time in light of for the San Francisco-Oakland market would increase by 1 point to experience in administering the BHC Act. Id. In December 1988, in 1204 upon consummation. In the Auburn banking market, Applicant light of a number of developments, the Board asked for comment on would control 3.3 percent and Banks, on a combined basis, would whether to retain or rescind this regulation. 53 Federal Register 48,915 control 4.5 percent of market deposits. The HHI for the Auburn (1988). The comment period on the proposal ended on April 28, 1989, market would increase by 30 points to 1201 upon consummation. and the matter is under review by the Board. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 711 sition. I therefore am unable to agree with the Board's support.4 In this regard, Bank's capital position is not decision to approve this application. consistent with capital adequacy quidelines after consideration of all relevant factors. In the Board's view, August 3, 1989 the record does not support a finding that FNBA has either the financial or managerial resources to support F.N.B.A. Holding Company, Inc. Bank, particularly given its need for additional capital. North Miami, Florida The proposal does not involve any addition to Bank's capital nor has FNBA submitted a plan to improve the Order Denying Formation of a Bank Holding condition of Bank. In addition, as noted above, FNBA Company is a non-operating holding company, and does not appear to have sufficient resources itself to provide F.N.B.A. Holding Company, Inc., North Miami, Flor- financial assistance to Bank. In its examination of the ida ("FNBA"), has applied for the Board's approval full record of this case, the Board has also reviewed pursuant to section 3(a)(1) of the Bank Holding Com- the financial resources of the principals of FNBA. This pany Act ("Act") (12 U.S.C. § 1841 et seq.), to be- review has not mitigated the Board's concerns regardcome a bank holding company by acquiring 100 per- ing FNBA's inability to act as a source of financial cent of the voting shares of First National Bank of strength. Arvada, Arvada, Colorado ("Bank"). The Board also notes that the principals of FNBA Notice of the application, affording interested per- are private investors who do not have relevant expesons an opportunity to submit comments, has been rience in managing a bank. This deficiency is of duly published (54 Federal Register 21,667 (1989)). significance when, as in this case, the subsidiary is in The time for filing comments has expired, and the a weakened financial condition. These facts raise Board has considered the application and all com- concerns regarding the future prospects of Bank if ments received in light of the factors set forth in acquired by FNBA under its current proposal.5 section 3(c) of the Act. Based on all of the facts of record in this case, the FNBA is a non-operating company formed for the Board finds that financial and managerial considerpurpose of acquiring Bank. Bank is the 108th largest ations are not consistent with approval of the applicacommercial banking organization in Colorado, con- tion. trolling deposits of $42 million, representing less than Considerations relating to competitive factors and one percent of the total deposits in commercial bank- the convenience and needs of the community to be ing organizations in the state.1 Bank is the 34th largest served are consistent with, but are not sufficient to commercial banking organization in the Denver/Boul- warrant, approval of the application. der banking market,2 controlling less than one percent On the basis of the facts of record, the Board of the total deposits in commercial banking organiza- concludes that the banking considerations involved in tions in the market. this proposal present adverse factors bearing upon the In evaluating this application, the Board is required, financial and managerial resources and future prosunder section 3 of the Act, to consider the financial pects of FNBA and Bank. Such adverse factors are and managerial resources of FNBA and Bank and the not outweighed by any pro-competitive effects or by effect of the proposed acquisition on the future pros- significant benefits that would better serve the convepects of Bank and applicant organization. The Board nience and needs of the community. Accordingly, it is previously has stated that a bank holding company the Board's judgment that approval of the application should serve as a source of financial and managerial would not be in the public interest and that the strength to its subsidiary banks, and that the Board application should be, and hereby is, denied. would closely examine the condition of an applicant and its subsidiaries in each case with this consideration in mind.3 4. In 1988, the shares of Bank were acquired by a bank subsidiary of a large bank holding company ("Company") in satisfaction of a The Board notes that Bank is in weakened financial debt previously contracted. Since Company acquired Bank, Company condition and is in need of financial and managerial has been involved in the implementation of various policies and procedures at Bank that have improved Bank's lending function, and has provided Bank with management guidance. Company has not provided Bank with capital, however. 5. The Board has stated that the requirement that a bank holding company act as a source of strength policy may be modified or delayed 1. State banking data and market data are as of December 31, 1987. in the case of a one bank holding company formation. However, no 2. The Denver/Boulder banking market includes the Denver RMA exception can be made when, as in this case, the bank to be acquired and the Boulder RMA. is in weakened condition. Policy Statement on the Assessment of 3. See St. Croix Valley Bancshares, Inc., 75 FEDERAL RESERVE Financial Factors in the Formation of One Bank Holding Companies, BULLETIN 575 (1989). 12 C.F.R. 225, appendix C. 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712 Federal Reserve Bulletin • October 1989 By order of the Board of Governors, effective Au- Board has also noted that the requirement in section gust 28, 1989. 3(a)(3) of the BHC Act that the Board's prior approval be obtained before a bank holding company acquires Voting for this action: Chairman Greenspan and Governors more than 5 percent of the voting shares of a bank also Johnson, Seger, Angell, Kelley, and La Ware. suggests that Congress contemplated the acquisition by bank holding companies of between 5 percent and JENNIFER J. JOHNSON 25 percent of the voting shares of banks. For these Associate Secretary of the Board reasons, the Board concludes that the purchase by Summit of less than a controlling interest in Central The Summit Bancorporation Jersey is not a factor that, by itself, justifies denial of Summit, New Jersey this application.3 Central Jersey also contends that approval of the Order Approving Acquisition of Shares of a Bank application would permit Summit to control Central Holding Company Jersey because no other shareholder owns more than 5 percent of the outstanding common stock of Central The Summit Bancorporation, Summit, New Jersey Jersey, and the ownership interest by Summit would ("Summit"), a bank holding company within the allow it to block or approve certain extraordinary meaning of the Bank Holding Company Act ("BHC transactions under the bylaws of Central Jersey.4 As Act"), has applied for the Board's approval under part of this proposal, Summit has made a number of section 3(a)(3) of the BHC Act, 12 U.S.C. commitments to address this concern. In particular, § 1842(a)(3), to acquire up to 9.9 percent of the voting Summit has committed that it will not, without the shares of Central Jersey Bancorp, Freehold, New Board's prior approval: Jersey ("Central Jersey"). (1) exercise or attempt to exercise a controlling Notice of the application, affording interested perinfluence over the management or policies of Censons an opportunity to submit comments, has been tral Jersey or its bank subsidiary; published (54 Federal Register 24,753 (1989)). The (2) have or seek to have any employees or repretime for filing comments has expired, and the Board sentative serve as an officer, agent or employee of has considered the application and all comments re- Central Jersey or its bank subsidiary; ceived, including comments submitted by Central Jer- (3) take any action causing Central Jersey or its bank sey in opposition to this proposal, in light of the factors subsidiary to become a subsidiary of applicant; set forth in section 3(c) of the BHC Act. (4) acquire or retain shares that would cause the Central Jersey argues that this application should be combined interest of applicant and its officers, didenied because it represents a minority investment by rectors and affiliates to equal or exceed 25 percent of a bank holding company in a bank or bank holding the outstanding voting shares of Central Jersey, company.1 The Board, however, has previously ap- (5) propose a director or slate of directors in oppoproved the acquisition by a bank holding company of sition to a nominee or slate of nominees proposed by less than a controlling interest in a bank, noting that "nothing in section 3(c) of the [BHC] Act requires denial of an application solely because a bank holding company proposes to acquire less than a controlling holding company). See, e.g., Comerica Inc., 69 FEDERAL RESERVE interest in a bank or bank holding company."2 The BULLETIN 911 (1983)(acquisition of 21.6 percent of the voting shares of a bank); State Street Boston Corporation, 67 FEDERAL RESERVE BULLETIN 862, 863 (1981)(acquisition of 16.6 percent of the voting shares of a bank holding company); Lincoln National Company, 63 1. Additionally, Central Jersey expresses concerns about the man- FEDERAL RESERVE BULLETIN 405 (1977)(acquisition of 9.9 percent of ner in which Summit has chosen to finance this acquisition and alleges the voting shares of a bank); and First Piedmont Corporation, 59 that this proposal may have an adverse effect on Summit's financial FEDERAL RESERVE BULLETIN 456 (1973)(acquisition of 9.5 percent of condition. Central Jersey also maintains that approval of this applica- the voting shares of a bank). tion may encourage large and speculative investments that may 3. The ability of Summit to purchase all of the voting shares of adversely affect the safety and soundness of other bank holding Central Jersey is not an issue at this time. Summit has applied to companies. In addition, Central Jersey points out that although the acquire up to a total of 9.9 percent of the voting shares of Central Board's past authorizations of minority investments by bank holding Jersey. Any further investment by Summit in the voting shares of companies may be justified as a prelude to potential full acquisition, Central Jersey would require Board approval. In addition, in the event Central Jersey contends that Summit appears to lack the financial that Summit proposes otherwise to acquire control of Central Jersey in resources necessary to acquire all of the voting shares of Central the future, it must obtain the Board's prior approval. If Summit makes Jersey. The Board has reviewed this application in light of these such a proposal, the Board will at that time reexamine the effects of comments and concludes that these comments do not warrant denial the proposal under the factors set forth in section 3(c) of the BHC Act. of this proposal, and that financial and managerial considerations 4. Based upon a review of Central Jersey's bylaws, it does not regarding Summit are consistent with approval. appear that, with 9.9 percent of Central Jersey's common shares, 2. Midlantic Banks, Inc., 70 FEDERAL RESERVE BULLETIN 776, Summit will be able to block or approve certain extraordinary 776-77 (1984)(acquisition of 24.9 percent of the voting shares of a bank transactions under Central Jersey's bylaws. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 713 the management or board of directors of Central be a strictly passive investment, and that Summit is Jersey; prohibited by the BHC Act and its commitments from (6) attempt to influence the dividend policies or acting in concert with any other entity for control of practices of Central Jersey or its bank subsidiary; Central Jersey. Moreover, as discussed below, even (7) solicit or participate in soliciting proxies with were the Board to conclude that Summit would control respect to any matter presented to the shareholders Central Jersey, the elimination of competition between of Central Jersey ; the two entities is not so substantial as to warrant (8) attempt to influence the loan and credit decisions denial of the application. The record shows that Sumor policies of Central Jersey and its bank subsidiary, mit and Central Jersey operate in a highly competitive the pricing of services, any personnel decision, the market and each controls less than one percent of the location of any offices, branching, the hours of market's deposits. operation, or similar activities of Central Jersey and Summit is the seventh largest banking organization its bank subsidiary; in New Jersey, controlling deposits of $3.0 billion, (9) dispose or threaten to dispose of shares of representing approximately 4.3 percent of the total Central Jersey in any manner as a condition of deposits in commercial banking organizations in the specific action or nonaction by Central Jersey; state.6 Central Jersey is the fourteenth largest com- (10) enter into any other banking or nonbanking mercial banking organization in New Jersey, controltransactions with Central Jersey, except that appli- ling deposits of $1.2 billion, representing approxicant may establish and maintain deposit accounts mately 1.7 percent of the total deposits in commercial with bank subsidiaries of Central Jersey, provided banking organizations in the state. that the aggregate balances of all such accounts do The subsidiary banks of Summit and Central Jersey not exceed $500,000 and that the accounts are compete directly in the Metropolitan New York-New maintained on substantially the same terms as those Jersey banking market.7 Summit and Central Jersey prevailing for comparable accounts of persons unaf- each control less than one percent of the total deposits filiated with Central Jersey ; or in commercial banks in this market.8 The Metropolitan (11) seek or accept representation on the board of New York-New Jersey banking market is unconcendirectors of Central Jersey. trated, with a four-firm concentration ratio of 46.8 percent and a Herfindahl-Hirschman Index ("HHI") Summit also has committed not to take other action to of 719, which would increase by 1 point to 720 upon cause Central Jersey to become a subsidiary of Sum- consummation of this proposal.9 mit without prior Board approval. The financial and managerial resources and future Based on the facts of record and Summit's commit- prospects of Summit and Central Jersey and their ments, the Board has concluded that Summit would subsidiaries are consistent with approval of this applinot acquire control or the ability to exercise a control- cation. The Board concludes, after carefully considerling influence over Central Jersey upon consummation ing the comments raised by Central Jersey and the of this proposal. entire record in this case, that consummation of the The Board's inquiry does not end, however, with its proposal would not have a material adverse effect on finding that Summit will not control Central Jersey. the financial and managerial resources or future pros- The Board notes that noncontrolling interests in di- pects of Summit, Central Jersey, or their bank subsidrectly competing banks or bank holding companies iaries. In reaching this conclusion, the Board notes may raise serious questions under the BHC Act. The that Central Jersey and its subsidiary are adequately Board has previously noted that one company need capitalized with satisfactory records of operations, not acquire control of another in order to substantially lessen competition between them, and that the specific facts of each case will determine whether the minority 6. Statewide data are for commercial banking organizations as of June 30, 1989. investment in a company will be anticompetitive.5 In 7. The Metropolitan New York-New Jersey banking market inthis case, it is the Board's judgment, based upon cludes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, careful analysis of the record, that no significant Sullivan, and Westchester Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, reduction in competition is likely to result from the Somerset, Sussex, Union, and Warren Counties in New Jersey; and acquisition. The record shows that there will be no parts of Fairfield County in Connecticut. officer or director interlocks between Summit and 8. Data for the Metropolitan New York-New Jersey banking market are for commercial banking organizations as of June 30, 1986. Central Jersey, that Summit intends the acquisition to 9. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)), a market in which the post-merger HHI is less than 1000 is considered to be unconcentrated. In such markets, the Department of Justice will not challenge a merger 5. See Sun Banks, Inc., 71 FEDERAL RESERVE BULLETIN 243 (1985). or acquisition except in extraordinary circumstances. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin • October 1989 and concludes that the record does not indicate that company.1 The Board, however, has previously apthe proposed acquisition by Summit would adversely proved the acquisition by a bank holding company of affect, in any material way, the capitalization or oper- less than a controlling interest in a bank, noting that ations of Central Jersey. "nothing in section 3(c) of the [BHC] Act requires Considerations relating to the convenience and denial of an application solely because a bank holding needs of the communities to be served by Summit's company proposes to acquire less than a controlling and Central Jersey's subsidiary banks are consistent interest in a bank or bank holding company."2 The with approval of this application. Board has also noted that the requirement in section Based on the foregoing and other facts of record, 3(a)(3) of the BHC Act that the Board's prior approval and in reliance upon commitments made by Summit, be obtained before a bank holding company acquires the Board has determined that the application should more than 5 percent of the voting shares of a bank also be, and hereby is, approved. The transaction shall not suggests that Congress contemplated the acquisition be consummated before the thirtieth calendar day by bank holding companies of between 5 percent and following the effective date of this Order, or later than 25 percent of the voting shares of banks. For these three months after the effective date of this Order, reasons, the Board concludes that the purchase by unless such period is extended for good cause by the United Counties of less than a controlling interest in Board or by the Federal Reserve Bank of New York, Central Jersey is not a factor that, by itself, justifies acting pursuant to delegated authority. denial of this application.3 By order of the Board of Governors, effective Central Jersey also contends that approval of the August 28, 1989. application would permit United Counties to control Central Jersey because no other shareholder owns Voting for this action: Chairman Greenspan and Governors more than 5 percent of the outstanding common stock Johnson, Seger, Angell, Kelley, and LaWare. of Central Jersey, and the ownership interest by United Counties would allow it to block or approve JENNIFER J. JOHNSON certain extraordinary transactions under the bylaws of Associate Secretary of the Board 1. Additionally, Central Jersey expresses concerns about the man- United Counties Bancorporation ner in which United Counties has chosen to finance this acquisition Cranford, New Jersey and alleges that this proposal may have an adverse effect on United Counties's financial condition. Central Jersey also maintains that approval of this application may encourage large and speculative investments that may adversely affect the safety and soundness of Order Approving Acquisition of Shares of a Bank other bank holding companies. In addition, Central Jersey points out Holding Company that although the Board's past authorizations of minority investments by bank holding companies may be justified as a prelude to potential full acquisition, Central Jersey contends that United Counties appears to lack the financial resources necessary to acquire all of the voting United Counties Bancorporation, Cranford, New Jer- shares of Central Jersey. The Board has reviewed this application in light of these comments and concludes that these comments do not sey ("United Counties"), a bank holding company warrant denial of this proposal, and that financial and managerial within the meaning of the Bank Holding Company Act considerations regarding United Counties are consistent with ap- ("BHC Act"), has applied for the Board's approval proval. 2. Midlantic Banks, Inc., 70 FEDERAL RESERVE BULLETIN 776, under section 3(a)(3) of the BHC Act, 12 U.S.C. 776-77 (1984)(acquisition of 24.9 percent of the voting shares of a bank § 1842(a)(3), to acquire up to 9.9 percent of the voting holding company). See, e.g., Comerica Inc., 69 FEDERAL RESERVE shares of Central Jersey Bancorp, Freehold, New BULLETIN 911 (1983)(acquisition of 21.6 percent of the voting shares of a bank); State Street Boston Corporation, 67 FEDERAL RESERVE Jersey ("Central Jersey"). BULLETIN 862, 863 (1981)(acquisition of 16.6 percent of the voting Notice of the application, affording interested per- shares of a bank holding company); Lincoln National Company, 63 FEDERAL RESERVE BULLETIN 405 (1977)(acquisition of 9.9 percent of sons an opportunity to submit comments, has been the voting shares of a bank); and First Piedmont Corporation, 59 published (54 Federal Register 20,921 (1989)). The FEDERAL RESERVE BULLETIN 456 (1973)(acquisition of 9.5 percent of time for filing comments has expired, and the Board the voting shares of a bank). 3. The ability of United Counties to purchase all of the voting shares has considered the application and all comments reof Central Jersey is not at issue at this time. United Counties has ceived, including comments submitted by Central Jer- applied to acquire up to a total of 9.9 percent of the voting shares of sey in opposition to this proposal, in light of the factors Central Jersey. Any further investment by United Counties in the voting shares of Central Jersey would require Board approval. In set forth in section 3(c) of the BHC Act. addition, in the event that United Counties proposes otherwise to Central Jersey argues that this application should be acquire control of Central Jersey in the future, it must obtain the Board's prior approval. If United Counties makes such a proposal, the denied because it represents a minority investment by Board will at that time reexamine the effects of the proposal under the a bank holding company in a bank or bank holding factors set forth in section 3(c) of the BHC Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 715 Central Jersey.4 As part of this proposal, United Based on the facts of record and United Counties's Counties has made a number of commitments to commitments, the Board has concluded that United address this concern. In particular, United Counties Counties would not acquire control or the ability to has committed that it will not, without the Board's exercise a controlling influence over Central Jersey prior approval: upon consummation of this proposal. (1) exercise or attempt to exercise a controlling The Board's inquiry does not end, however, with its influence over the management or policies of Cen- finding that United Counties will not control Central tral Jersey or its bank subsidiary; Jersey. The Board notes that noncontrolling interests (2) have or seek to have any employees or repre- in directly competing banks or bank holding compasentative serve as an officer, agent or employee of nies may raise serious questions under the BHC Act. Central Jersey or its bank subsidiary; The Board has previously noted that one company (3) take any action causing Central Jersey or its bank need not acquire control of another in order to subsubsidiary to become a subsidiary of applicant; stantially lessen competition between them, and that (4) acquire or retain shares that would cause the the specific facts of each case will determine whether combined interest of applicant and its officers, di- the minority investment in a company will be rectors and affiliates to equal or exceed 25 percent of anticompetitive.5 In this case, it is the Board's judgthe outstanding voting shares of Central Jersey; ment, based upon careful analysis of the record, that (5) propose a director or slate of directors in oppo- no significant reduction in competition is likely to sition to a nominee or slate of nominees proposed by result from the acquisition. The record shows that the management or board of directors of Central there will be no officer or director interlocks between Jersey; United Counties and Central Jersey, that United (6) attempt to influence the dividend policies or Counties intends the acquisition to be a strictly passive practices of Central Jersey or its bank subsidiary; investment, and that United Counties is prohibited by (7) solicit or participate in soliciting proxies with the BHC Act and its commitments from acting in respect to any matter presented to the shareholders concert with any other entity for control of Central of Central Jersey; Jersey. Moreover, as discussed below, even were the (8) attempt to influence the loan and credit decisions Board to conclude that United Counties would control or policies of Central Jersey and its bank subsidiary, Central Jersey, the elimination of competition between the pricing of services, any personnel decision, the the two entities is not so substantial as to warrant location of any offices, branching, the hours of denial of the application. The record shows that operation, or similar activities of Central Jersey and United Counties and Central Jersey operate in a highly its bank subsidiary; competitive market and each controls less than one (9) dispose or threaten to dispose of shares of percent of the market's deposits. Central Jersey in any manner as a condition of United Counties is the sixteenth largest banking specific action or nonaction by Central Jersey; organization in New Jersey, controlling deposits of (10) enter into any other banking or nonbanking $924.9 million, representing approximately 1.3 percent transactions with Central Jersey, except that appli- of the total deposits in commercial banking organizacant may establish and maintain deposit accounts tions in the state.6 Central Jersey is the fourteenth with bank subsidiaries of Central Jersey, provided largest commercial banking organization in New Jerthat the aggregate balances of all such accounts do sey, controlling deposits of $1.2 billion, representing not exceed $500,000 and that the accounts are approximately 1.7 percent of the total deposits in maintained on substantially the same terms as those commercial banking organizations in the state. prevailing for comparable accounts of persons unaf- The subsidiary banks of United Counties and Cenfiliated with Central Jersey; or tral Jersey compete directly in the Metropolitan New (11) seek or accept representation on the board of York-New Jersey banking market.7 United Counties directors of Central Jersey. and Central Jersey each control less than one percent United Counties also has committed not to take other action to cause Central Jersey to become a subsidiary 5. See Sun Banks, Inc., 71 FEDERAL RESERVE BULLETIN 243 (1985). of United Counties without prior Board approval. 6. Statewide data are for commercial banking organizations as of June 30, 1989. 7. The Metropolitan New York-New Jersey banking market includes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, 4. Based upon a review of Central Jersey's bylaws, it does not Sullivan, and Westchester Counties in New York; Bergen, Essex, appear that, with 9.9 percent of Central Jersey's common shares, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, United Counties will be able to block or approve certain extraordinary Somerset, Sussex, Union, and Warren Counties in New Jersey; and transactions under Central Jersey's bylaws. parts of Fairfield County in Connecticut. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin • October 1989 of the total deposits of commercial banks in this Orders Issued Under Section 4 of the Bank market.8 The Metropolitan New York-New Jersey Holding Company Act banking market is unconcentrated, with a four-firm concentration ratio of 46.8 and a Herfindahl- Citicorp Hirschman Index ("HHI") of 719, which would in- New York, New York crease by 1 point to 720 upon consummation of this proposal.9 Order Granting Relief from Certain Conditions The financial and managerial resources and future Relating to the Operation of Subsidiary Savings prospects of United Counties and Central Jersey and Associations their subsidiaries are consistent with approval of this application. The Board concludes, after carefully Citicorp, New York, New York ("Citicorp"), has considering the comments raised by Central Jersey petitioned the Board for relief from certain conditions and the entire record in this case, that consummation imposed by the Board by Order on the operation of of the proposal would not have a material adverse Citicorp's California, Florida and Illinois savings aseffect on the financial and managerial resources or sociation subsidiaries.1 The conditions from which future prospects of United Counties, Central Jersey, Citicorp has requested relief (the so-called "tandem or their bank subsidiaries. In reaching this conclu- operations conditions") provide that savings associasion, the Board notes that Central Jersey and its tions acquired by a bank holding company may not be subsidiary are adequately capitalized with satisfac- operated in tandem with any other subsidiary of the tory records of operations, and concludes that the bank holding company, and require approval by the record does not indicate that the proposed acquisi- appropriate Federal Reserve Bank before the savings tion by United Counties would adversely affect, in association engages in any transactions with the bank any material way, the capitalization or operations of holding company or its other subsidiaries.2 Central Jersey. Notice of the petition, affording interested persons Considerations relating to the convenience and an opportunity to submit comments, has been pubneeds of the communities to be served by United lished (54 Federal Register 15,806 (1989)). The time for Counties's and Central Jersey's subsidiary banks are filing comments has expired, and the Board has conconsistent with approval of this application. sidered the petition and all comments received in light Based on the foregoing and other facts of record, of all relevant statutory factors. and in reliance upon commitments made by United The provisions of the Financial Institutions Re- Counties, the Board has determined that the applica- form, Recovery, and Enforcement Act of 1989 tion should be, and hereby is, approved. The trans- ("FIRREA"), which became effective on August 9, action shall not be consummated before the thirtieth 1989, require the Board to remove the tandem opercalendar day following the effective date of this ations conditions as they apply to savings associa- Order, or later than three months after the effective tions that are currently owned by bank holding date of this Order, unless such period is extended for companies.3 good cause by the Board or by the Federal Reserve Based on the provisions of FIRREA, its review of Bank of New York, acting pursuant to delegated the record, and in light of changed economic and authority. regulatory circumstances, the Board hereby grants By order of the Board of Governors, effective Citicorp's request for relief from the tandem opera- August 28, 1989. tions conditions as they apply to Citicorp's savings association subsidiaries. Transactions between Citi- Voting for this action: Chairman Greenspan and Governors corp's savings association subsidiaries and its bank Johnson, Seger, Angell, Kelley, and La Ware. subsidiaries continue to be subject to the provisions of sections 23A and 23B of the Federal Reserve Act JENNIFER J. JOHNSON (12 U.S.C. §§ 371c and 371c-l), provisions of the Associate Secretary of the Board Bank Holding Company Act relating to tying arrange- 1. Citicorp (New Biscayne Federal Savings & Loan), 70 FEDERAL 8. Data for the Metropolitan New York-New Jersey banking market RESERVE BULLETIN 157 (1984); Citicorp (First Federal Savings & are for commercial banking organizations as of June 30, 1986. Loan Association), 70 FEDERAL RESERVE BULLETIN 149 (1984); 9. Under the revised Department of Justice Merger Guidelines Citicorp (Fidelity Federal Savings & Loan Association), 68 FEDERAL (49 Federal Register 26,823 (June 29, 1984)), a market in which the RESERVE BULLETIN 656 (1982). post-merger HHI is less than 1000 is considered to be unconcentrated. 2. The text of these conditions is set out in Appendix I to this Order. In such markets, the Department of Justice will not challenge a merger 3. Financial Institutions Reform, Recovery, and Enforcement Act or acquisition except in extraordinary circumstances. of 1989, Pub. L. No. 101-73, § 601, 103 Stat. 183, 408 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 61 ments (12 U.S.C. § 1971 et al.), as well as all other Management"), a general partnership interest in applicable statutory provisions. Daniel Breen & Company, L.P., Houston, Texas By order of the Board of Governors, effective ("Company"), which will be a registered investment August 21, 1989. adviser.1 Applicant seeks to engage indirectly through Company in the following activities which have been Voting for this action: Chairman Greenspan and Governors approved by the Board for bank holding companies: Johnson, Seger, Angell, Kelley, and LaWare. (1) providing portfolio investment advice and investment management services to institutions and JENNIFER J. JOHNSON individuals pursuant to 12 C.F.R. 225.25(b)(4)(iii); Associate Secretary of the Board and (2) serving as investment advisor to investment Appendix I companies pursuant to 12 C.F.R. 225.25(b)(4)(ii). (1) the savings associations be operated as separate, Notice of the application, affording interested perindependent, profit-oriented corporate entities and not sons an opportunity to submit comments, has been be operated in tandem with any other subsidiary of the duly published (54 Federal Register 18,597 (1989)). bank holding company. In order to carry out this The time for filing comments has expired, and the condition, the bank holding company and savings Board has considered the application and all comassociations would limit their operations so that: ments received in light of the public interest factors set (a) no banking or other subsidiary of the bank forth in section 4(c)(8) of the BHC Act. holding company would link its deposit-taking activ- Banque Indosuez, with total adjusted assets equivities to accounts at the savings associations in a alent to approximately $46.3 billion, is the 85th largest sweeping arrangement or similar arrangement; banking organization in the world and the 8th largest (b) the savings associations would not directly or banking organization in France.2 In the United States, indirectly solicit deposits or loans for any other Applicant maintains branches in New York and Chisubsidiary of the bank holding company and the cago, agencies in Los Angeles and Houston, and an bank holding company and its subsidiaries would Edge Corporation. Accordingly, Applicant is subject not solicit deposits or loans for the savings associa- to the nonbanking restrictions of section 4 of the BHC tions; Act as a bank holding company. (2) to the extent necessary to insure independent The Board has previously determined by regulation operation of the savings association and prevent the that the investment advisory services that Applicant improper diversion of funds, the savings associations proposes to conduct through IndoSuez Asset Managenot engage in any transactions with the bank holding ment are closely related to banking and permissible for company or its other subsidiaries without prior ap- bank holding companies. 12 C.F.R. 225.25(b)(4). Approval of the appropriate Federal Reserve Bank; plicant and IndoSuez Asset Management propose to conduct these activities pursuant to the requirements Compagnie Financiere de Suez of the Board's regulations. Paris, France Prior decisions of the Board indicate a concern that joint ventures could potentially lead to a matrix of Banque Indosuez relationships between co-venturers that could break Paris, France down the legally mandated separation of banking and commerce, create the possibility of conflicts of interest Order Approving Acquisition of a General and other adverse effects that the BHC Act was Partnership Interest in an Investment Adviser designed to prevent, or impair or give the appearance of impairing the ability of the banking organization to Compagnie Financiere de Suez and its wholly owned function effectively as an independent and impartial subsidiary, Banque Indosuez, both of Paris, France (collectively "Applicant"), foreign banking organizations subject to the Bank Holding Company Act ("BHC Act"), have applied for the Board's approval 1. IndoSuez Asset Management will acquire a 40 percent general under section 4(c)(8) of the BHC Act (12 U.S.C. partnership interest in Company. Company will assume the advisory contracts of Daniel Breen & Company, which will no longer engage in § 1843(c)(8)) and section 225.23 of the Board's Regu- any activity other than holding a general partnership interest in lation Y (12 C.F.R. 225.23), to acquire indirectly Company. IndoSuez Asset Management will have an option to purchase the remaining partnership interests in Company over the next through their de novo subsidiary, IndoSuez North six years. America Asset Management, Inc. ("IndoSuez Asset 2. Data are as of December 31, 1988. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • October 1989 provider of credit.3 Further, joint ventures must be tee on Banking Regulations and Supervisory Practices carefully analyzed for any possible adverse effects on and the other domestic federal banking agencies.6 The competition and on the financial condition of the Board considers the Basle Committee proposal an banking organization involved in the proposal. important step toward a more consistent and equitable Daniel Breen & Company has stated that it will international norm for assessing capital adequacy. engage only in holding its investment in Company. Until that framework becomes effective, however, the Further, Applicant has committed to notify the Board Board will continue to evaluate applications involving in the event that Daniel Breen & Company determines foreign banking organizations on a case-by-case basis to engage in any securities business that is impermis- consistent with its prior precedent. sible for a state member bank under the Glass-Steagall In this case, the Board notes that the primary capital Act, and to seek Board approval of Applicant's reten- ratio of Banque Indosuez is below the minimum caption of its interest in Company should the activities of ital guidelines for United States multinational bank Daniel Breen & Company be inconsistent with the holding companies. Banque Indosuez, however, meets Board's Order approving this application. the 1990 interim risk-based guidelines, and its core In applications under section 4(c)(8) of the BHC capital exceeds the 1992 minimum standard adopted Act, the Board considers the financial condition and by the Basle Committee. In addition, Banque Inresources of the applicant and its subsidiaries, and the dosuez proposes to raise additional equity capital by effects of the proposed transaction on those year-end 1989, at which time its capital is projected to resources.4 In accordance with the principles of na- meet primary and total capital guidelines. The Board tional treatment and competitive equality, the Board also notes that the application involves nonbanking has stated its expectation that a foreign bank meet the activities that generate fee income and that require a same general standards of financial strength as domes- small commitment of capital. In view of these and tic bank holding companies and be able to serve as a other facts of record, the Board has determined that source of strength to its United States banking financial factors are consistent with approval of the operations.5 In considering applications of foreign application. banking organizations, the Board has noted that for- To approve the application, the Board must find that eign banks operate outside the United States in ac- Applicant's performance of the activities in question cordance with different regulatory and supervisory "can reasonably be expected to produce benefits to requirements, accounting principles, asset-quality the public, such as greater convenience, increased standards, and banking practices and traditions, and competition, or gains in efficiency, that outweigh posthat these differences make it difficult to compare the sible adverse effects, such as undue concentration of capital positions of domestic and foreign banks. In the resources, decreased or unfair competition, conflicts past, the Board has addressed the complex issues of interests, or unsound banking practices." involved in balancing these concerns in the context of 12 U.S.C. § 1843(c)(8). Applicant does not currently individual applications on a case-by-case basis, makengage in investment advisory activities in the United ing adjustments as appropriate to an applicant's capital States. Accordingly, consummation of this proposal to reflect differences in accounting treatment and would not result in decreased competition. Moreover, regulatory practices. Applicant's proposal can be expected to result in an The Board recently has adopted a proposal to sup- increase in competition due to the financial support plement its consideration of capital adequacy with a provided by Applicant and the increased access of risk-based system that is simultaneously being pro- customers to foreign markets. posed by the member countries of the Basle Commit- In light of the facts of record and the commitments offered by Applicant, the Board finds that the proposal would not result in conflicts of interests or decreased 3. See, e.g., Independent Bankers Financial Corporation, 72 FED- or unfair competition. There is also no evidence in the ERAL RESERVE BULLETIN 664 (1986); and Amsterdam-Rotterdam record that indicates that Applicant's proposal would Bank, N.V., 70 FEDERAL RESERVE BULLETIN 835 (1984). 4. 12 C.F.R. 225.24; Bayerische Vereinsbank AG, 73 FEDERAL result in any undue concentration of resources, un- RESERVE BULLETIN 155, 156 (1987). sound banking practices or other adverse effects. 5. Nippon Credit Bank, Ltd., 75 FEDERAL RESERVE BULLETIN 308 Based on the foregoing and other facts of record, (1989); The Long-Term Credit Bank, 74 FEDERAL RESERVE BULLETIN 577 (1988); Sumitomo Trust & Banking Co., Ltd., 73 FEDERAL including the commitments made by Applicant, In- RESERVE BULLETIN 749 (1987); Ljubljanska Banka-Associated Bank, doSuez Asset Management and shareholders of Com- 72 FEDERAL RESERVE BULLETIN 489 (1986); The Mitsubishi Trust and pany, the Board has determined that the balance of Banking Corporation, 72 FEDERAL RESERVE BULLETIN 71 (1986); The Mitsubishi Bank Limited, 70 FEDERAL RESERVE BULLETIN 518 (1984). See also Policy Statement on Supervision and Regulation of Foreign Based Bank Holding Companies, Federal Reserve Regulatory Service 11 4-835 (1979). 6. 54 Federal Register 4186 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 719 public interest factors that it must consider under duly published (54 Federal Register 24,261 (1989)). section 4(c)(8) of the BHC Act is favorable. Accord- The time for filing comments has expired, and the ingly, the Board has determined that the application Board has considered the application and all comshould be, and hereby is, approved. This determina- ments received in light of the factors set forth in tion is subject to all of the conditions set forth in the section 4(c)(8) of the BHC Act. Board's Regulation Y, including sections 225.4(d) and Applicant is the twentieth largest banking organi- 225.23(b), and to the Board's authority to require such zation worldwide and the twelfth largest in Japan, modification or termination of the activities of a bank controlling total consolidated assets of approxiholding company or any of its subsidiaries as the mately U.S. $184.5 billion.1 Applicant is a registered Board finds necessary to assure compliance with the bank holding company by virtue of its ownership of provisions and purposes of the BHC Act and the LTCB Trust Company, New York, New York, a Board's regulations and orders issued thereunder, or state-chartered trust company the deposits of which to prevent evasion thereof. are insured by the Federal Deposit Insurance Corpo- This transaction shall not be consummated later ration. In addition, Applicant maintains a branch than three months after the effective date of this in New York, New York, a limited branch in Chi- Order, unless such period is extended for good cause cago, Illinois, and an agency in Los Angeles, Caliby the Board or by the Federal Reserve Bank of New fornia. York, pursuant to delegated authority. MAS is a limited partnership currently engaged in By order of the Board of Governors, effective providing discretionary money management services August 24, 1989. to corporate and governmental pension plans, endowment funds, foundations, and other tax-exempt institutional investors in the United States. Almost Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, Kelley, and LaWare. all of MAS's revenues are derived from providing investment advisory services that would be permissible for bank holding companies.2 JENNIFER J. JOHNSON Associate Secretary of the Board The Board has previously determined by regulation that the investment advisory services that Applicant proposes to conduct through Company are closely related to banking and permissible for bank The Long-Term Credit Bank of Japan, Limited holding companies. 12 C.F.R. 225.25(b)(4). Appli- Tokyo,Japan cant and Company propose to conduct these activities pursuant to the requirements of the Board's Order Approving Application to Conduct Investment regulations. The Board must also find that the pro- Advisory Activities posed acquisition "can reasonably be expected to produce benefits to the public . . . that outweigh the The Long-Term Credit Bank of Japan, Limited, possible adverse effects, such as undue concentra- Tokyo, Japan ("Applicant"), a foreign bank subject tion of resources, decreased or unfair competition, to the provisions of the Bank Holding Company Act conflicts of interests, or unsound banking practices." (the "BHC Act"), has applied, pursuant to section 12 U.S.C. § 1843(c)(8). 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and In prior decisions, the Board has expressed consection 225.21(a) of the Board's Regulation Y cern that joint ventures could potentially lead to a (12 C.F.R. 225.21(a)), for the Board's approval to matrix of relationships between co-venturers that acquire through its wholly owned subsidiary, LTCB could break down the legally mandated separation of Capital Markets, Inc., Wilmington, Delaware banking and commerce, create the possibility of ("LCM"), 60 percent of the voting equity of LTCB- conflicts of interest, and other adverse effects that MAS Investment Management, Inc., Bala-Cynwyd, the BHC Act was designed to prevent, or impair or Pennsylvania ("Company"), a de novo company that give the appearance of impairing the ability of the proposes to engage in investment advisory activities banking organization to function effectively as an that are permissible for bank holding companies under section 225.25(b)(4) of the Board's Regulation Y (12 C.F.R. 225.25(b)(4)). The remaining 40 percent of Company would be acquired by Miller, Anderson & Sherrerd, Bala-Cynwyd, Pennsylvania ("MAS"). 1. All banking data are as of March 31, 1989. 2. MAS also sponsors the MAS Pooled Trust Fund (the "Fund"), a Notice of the application, affording interested perdiversified investment company, which accounts for a small portion of sons an opportunity to submit comments, has been MAS's business and assets under management. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin • October 1989 independent and impartial provider of credit.3 Fur- In every case involving a nonbanking acquisition by ther, joint ventures must be carefully analyzed for a bank holding company under section 4 of the BHC any possible adverse effects on competition and on Act, the Board considers the financial condition and the financial condition of the banking organization resources of the applicant and its subsidiaries and the involved in the proposal. effect of the transaction on these resources.4 In ac- In prior cases involving joint ventures between bank cordance with the principles of national treatment and holding companies and firms generally engaged in competitive equity, the Board has stated that it exsecurities activities not authorized for bank holding pects a foreign bank to meet the same general stancompanies, the Board has relied upon a series of dards of financial strength as domestic bank holding commitments to address these potential adverse ef- companies and to be able to serve as a source of fects. These commitments are designed to separate the strength to its United States banking operations.5 In activities of the joint venture from those of the non- considering applications of foreign banking organizabanking co-venturer. See Amsterdam-Rotterdam tions, the Board has noted that foreign banks operate Bank, N.V., 70 FEDERAL RESERVE BULLETIN 835 outside the United States in accordance with different (1984). In this case, Applicant has made a number of regulatory and supervisory requirements, accounting commitments similar to those that the Board has relied principles, asset quality standards, and banking pracupon in other cases. The commitments are designed to tices and traditions, and that these differences have ensure a separation between the joint venture and made it difficult to compare the capital positions of MAS's activities related to the Fund. Applicant also domestic and foreign banks. The Board, however, has committed to apply for the Board's approval to recently adopted a proposal to supplement its considretain its interest in Company if MAS expands its eration of capital adequacy with a risk-based system activities beyond its current investment advisory ac- that is simultaneously being proposed by the member tivities. If required by the Board in such circum- countries of the Basle Committee on Banking Regulastances, Applicant will cause LCM to divest its inter- tions and Supervisory Practices and the other domesest in Company. Under the circumstances of this case, tic federal banking agencies.6 The Japanese Ministry and in view of the fact that most of the activities of of Finance in April of last year acted to implement for MAS are permissible for bank holding companies, the Japanese banking organizations the risk-based capital Board finds these commitments are sufficient to ad- framework developed by the Basle Committee. The dress its concerns with potential adverse effects asso- Board considers the Basle Committee proposal an ciated with the joint venture. important step toward a more consistent and equitable With regard to the competitive factors, two of international standard for assessing capital adequacy. Applicant's affiliates currently compete with MAS in In this case, the primary capital ratio of Applicant, the United States. LTCB Trust Company offers in- as publicly reported, is well below the minimum level vestment advisory services primarily to institutional specified in the Board's Capital Adequacy Guidelines. Japanese customers. Applicant anticipates that these After making adjustments to reflect Japanese banking accounts will be transferred to Company. Greenwich and accounting practices, however, including consid- Asset Management, Inc., Greenwich, Connecticut eration of a portion of the unrealized appreciation in ("GAM"), an indirect subsidiary of Applicant, en- Applicant's portfolio of equity securities consistent gages in investment advisory services primarily with with the principles in the Basle capital framework, respect to U.S. Treasury securities, and futures and options on financial instruments. Following consummation of the proposal, GAM would continue to provide these services. The portion of the market for 4. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 FEDERAL RESERVE BULLETIN 94 (1989); Bayerische Vereinsbank AG, 73 FEDERAL REinvestment and advisory services controlled by each SERVE BULLETIN 155, 156 (1987). of these companies is small, and the market for these 5. See Toyo Trust and Banking Co., Ltd., 74 FEDERAL RESERVE BULLETIN 623 (1988); Taiyo Kobe Bank, 74 FEDERAL RESERVE services is highly competitive and served by numerous BULLETIN 621 (1988); The Long-Term Credit Bank of Japan, Limited, competitors. In light of these facts, consummation of 14 FEDERAL RESERVE BULLETIN 573 (1988); The Sanwa Bank, Limthis proposal would not significantly reduce competi- ited, 74 FEDERAL RESERVE BULLETIN 578 (1988); Sumitomo Trust & Banking Co., Ltd., 11 FEDERAL RESERVE BULLETIN 749 (1987); tion or result in any other significantly adverse effects Ljubljanska Banka-Associated Bank, 12 FEDERAL RESERVE BULLEon competition in any relevant market. TIN 489 (1986); The Mitsubishi Trust and Banking Corporation, 72 FEDERAL RESERVE BULLETIN 256 (1986); The Industrial Bank of Japan, Ltd., 72 FEDERAL RESERVE BULLETIN 71 (1986); The Mitsubishi Bank, Limited, 70 FEDERAL RESERVE BULLETIN 518 (1984). See 3. See, e.g., Amsterdam-Rotterdam Bank, N.V., 70 FEDERAL also, Policy Statement on Supervision and Regulation of Foreign- RESERVE BULLETIN 835 (1984); The Fuji Bank, Ltd., 75 FEDERAL Based Holding Companies, Federal Reserve Regulatory Service RESERVE BULLETIN 577 (1989); and The Maybaco Company and f 4-835 (1979). Equitable Bancorpation, 60 FEDERAL RESERVE BULLETIN 375 (1983). 6. 54 Federal Register 4186 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 721 Applicant's capital ratio meets United States stan- Dissenting Statement of Governor Seger dards. The Board also has considered several additional I dissent from the Board's action in this case. I believe factors that mitigate its concern in this case. The that foreign banking organizations whose primary cap- Board notes that the application involves nonbanking ital, based on U.S. accounting principles, is below the activities that require a small commitment of capital Board's minimum capital guidelines for U.S. banking and that Applicant is in compliance with the capital organizations have an unfair competitive advantage in and other financial requirements of Japanese banking the United States over domestic banking organizaorganizations. Since Japan is a signatory to the Basle tions. In my view, such foreign organizations should Accord, it can be expected to ensure compliance by its be judged against the same financial and managerial banks with the risk-based capital standards by 1992. standards, including the Board's capital adequacy Based on these and other facts of record, the Board guidelines, as are applied to domestic banking organiconcludes that financial considerations are consistent zations. The majority concludes that Applicant's priwith approval of the application. mary capital meets United States standards. To do so, Consummation of Applicant's proposal may be ex- however, the majority makes adjustments that are not pected to provide increased convenience to Com- available for United States banks under guidelines that pany's customers and gains in efficiency. Accordingly, have not yet become effective for U.S. or foreign the Board has determined that performance of the banking organizations. proposed activities by Company can reasonably be expected to produce benefits to the public. August 28, 1989 For these reasons, and in reliance on the commitments offered in this case, the Board believes that the Michigan National Corporation proposal is not likely to result in decreased or unfair Farmington Hills, Michigan competition, conflicts of interests, unsound banking practices, concentration of resources or other adverse Order Granting Relief from Certain Conditions effects, and that the balance of public interest factors Relating to the Operation of a Subsidiary Savings that the Board is required to consider under section Association 4(c)(8) of the BHC Act is favorable. Accordingly, the Board has determined that the application should be, Michigan National Corporation, Farmington Hills, and hereby is, approved. In approving this application, Michigan ("Michigan National"), has petitioned the the Board has relied on all the commitments made by Board for relief from certain conditions imposed by Applicant, Company and MAS. This determination is the Board by Order on the operation of Michigan also subject to all the conditions set forth in the National's savings association subsidiary, Beverly Board's Regulation Y, including those in sections Hills Federal Savings Bank, Beverly Hills, California.1 225.4(d) and 225.23(b), and to the Board's authority to The conditions from which Michigan National has require such modification or termination of the activ- requested relief (the so-called "tandem operations ities of a bank holding company or any of its subsid- conditions") provide that savings associations aciaries as the Board finds necessary to assure compli- quired by a bank holding company may not be operance with the provisions and purposes of the BHC Act ated in tandem with any other subsidiary of the bank and the Board's regulations and orders issued there- holding company, and require approval by the approunder, or to prevent evasion thereof. priate Federal Reserve Bank before the savings asso- The proposed activity shall be commenced not later ciation engages in any transactions with the bank than three months after the effective date of this holding company or its other subsidiaries.2 Order, unless such period is extended for good cause The provisions of the Financial Institutions Reby the Board or by the Federal Reserve Bank of New form, Recovery, and Enforcement Act of 1989 York, acting pursuant to delegated authority. ("FIRREA"), which became effective on August 9, By order of the Board of Governors, effective 1989, require the Board to remove the tandem oper- August 28, 1989. ations conditions as they apply to savings associations that are currently owned by bank holding companies.3 Voting for this action: Chairman Greenspan, and Governors Johnson, Angell, Kelley, and LaWare. Voting against this action: Governor Seger. 1. See Michigan National Corporation, 75 FEDERAL RESERVE BULLETIN 88 (1989). 2. The text of these conditions is set out in Appendix I to this Order. JENNIFER J. JOHNSON 3. Financial Institutions Reform, Recovery, and Enforcement Act Associate Secretary of the Board of 1989, Pub. L. No. 101-73, § 601, 103 Stat. 183, 408 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • October 1989 Based on the provisions of FIRREA, its review of Appendix I the record, and in light of changed economic and regulatory circumstances, the Board hereby grants (1) the savings associations be operated as separate, Michigan National's request for relief from the tan- independent, profit-oriented corporate entities and dem operations conditions as they apply to its sav- not be operated in tandem with any other subsidiary ings association subsidiary. Transactions between of the bank holding company. In order to carry out Michigan National's savings association subsidiary this condition, the bank holding company and savand its bank subsidiaries continue to be subject ings associations would limit their operations so that: to the provisions of sections 23A and 23B of the (a) no banking or other subsidiary of the bank Federal Reserve Act (12 U.S.C. §§ 371c and 371c-l), holding company would link its deposit-taking acprovisions of the Bank Holding Company Act tivities to accounts at the savings associations in a relating to tying arrangements (12U.S.C. §1971 sweeping arrangement or similar arrangement; et al.), as well as all other applicable statutory (b) the savings associations would not directly or indiprovisions. rectly solicit deposits or loans for any other subsidiary By order of the Board of Governors, effective of the bank holding company and the bank holding August 21, 1989. company and its subsidiaries would not solicit deposits or loans for the savings associations; (2) to the extent necessary to insure independent Voting for this action: Chairman Greenspan and Governors operation of the savings association and prevent the Johnson, Seger, Angell, Kelley, and LaWare. improper diversion of funds, the savings associations not engage in any transactions with the bank holding JENNIFER J. JOHNSON company or its other subsidiaries without prior ap- Associate Secretary of the Board proval of the appropriate Federal Reserve Bank; APPLICATIONS APPROVED UNDER BANK MERGER 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. Effective Applicant Bank(s) ^ Sovran Bank/Central South, Sovran Bank/Hickman County, August 23, 1989 Nashville, Tennessee Centerville, Tennessee Sovran Bank/Eastern, Oak Ridge, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 723 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Abbott Bank Group, Inc., Bridgeport Banshares, Inc., Kansas City August 10, 1989 Alliance, Nebraska Bridgeport, Nebraska Hemingford Banshares, Inc., Hemingford, Nebraska Hyannis Banshares, Inc., Hyannis, Nebraska American Bancorp of Ponca American National Bank, Kansas City August 9, 1989 City, Inc., Ponca City, Oklahoma Ponca City, Oklahoma Bancpal, Inc., Bank of Palatine, Chicago August 9, 1989 Palatine, Illinois Palatine, Illinois Bank Maryland Corp., Heritage International Bank, Inc., Richmond August 18, 1989 Towson, Maryland Bethesda, Maryland Bryan Bancorp of Georgia, Inc., Bryan Bank & Trust, Atlanta August 11, 1989 Richmond Hill, Georgia Richmond Hill, Georgia CB&T Bancshares, Inc., Vanguard Banks, Inc., Atlanta August 8, 1989 Columbus, Georgia Valparaiso, Florida TB&C Bancshares, Inc., Columbus, Georgia FBC Holding Company, Inc., First Bank of Crestview, Atlanta August 4, 1989 Crestview, Florida Crestview, Florida First National Bank of Blue Great Lakes Financial Chicago August 11, 1989 Island Employee Stock Resources, Inc., Ownership Trust, Blue Island, Illinois Blue Island, Illinois Fourth Financial Corporation, Exchange Holding, Inc., Kansas City July 31, 1989 Wichita, Kansas El Dorado, Kansas F & P Bancshares Inc., First Bancorp of Springfield, Inc., St. Louis July 27, 1989 Lexington, Kentucky Springfield, Kentucky Gold Bancshares, Inc., Comanche Bancshares, Inc., Kansas City August 14, 1989 Seneca, Kansas Coldwater, Kansas Oketo Bancshares, Inc., Marysville, Kansas Horizon Bancorp, Inc., GOLDCrest Bank, Richmond August 14, 1989 Bethesda, Maryland Bethesda, Maryland Iowa Financial Bancorporation, First National Bank of Oelwein, Chicago July 31, 1989 Minneapolis, Minnesota Oelwein, Iowa BP Corporation, Minneapolis, Minnesota Litchville State Bank Holding Litchville State Bank, Minneapolis August 2, 1989 Company, Litchville, North Dakota Litchville, North Dakota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin • October 1989 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Mackinaw Valley Financial First Security Bank, Chicago August 11, 1989 Services, Inc., Mackinaw, Illinois Mackinaw, Illinois Marshall & Ilsley Corporation, First National Bank of Cudahy, Chicago August 4, 1989 Milwaukee, Wisconsin Cudahy, Wisconsin Mercantile Bancshares, Inc., North Arkansas Bancshares, Inc., St. Louis July 27, 1989 Jonesboro, Arkansas Jonesboro, Arkansas Mammoth Investment and Credit Corporation, Inc., Mammoth Spring, Arkansas Merchant Bank Corporation, The Merchant Bank of Atlanta, Atlanta August 21, 1989 Atlanta, Georgia Atlanta, Georgia Merchant House, PNB Financial Group, San Francisco August 10, 1989 ' Santa Ana, California Newport Beach, California Miami Corporation, Northwest Financial Corp., Chicago August 21, 1989 Chicago, Illinois Chicago, Illinois Minonk Bancshares, Inc., Citizens Group, Inc., Chicago July 27, 1989 Minonk, Illinois Toluca, Illinois North Linn Corporation, Linn County State Bank, Chicago July 31, 1989 Coggon, Iowa Coggon, Iowa Oelwein Bancorporation, Iowa Financial Bancorporation, Chicago July 31, 1989 Minneapolis, Minnesota Minneapolis, Minnesota Iowa State Savings Bank, Clinton, Iowa ONBANCorp, Inc., Onondaga Savings Bank, New York August 14, 1989 Syracuse, New York Syracuse, New York PINNACLE BANC GROUP, S B H Corp., Chicago July 31, 1989 Inc., Silvis, Illinois Oak Brook, Illinois Plain view Holding Company, Farmers National Bank, Kansas City August 1, 1989 Plain view, Nebraska Pilger, Nebraska Deshler State Company, Deshler, Nebraska Security Exchange Bancorp., American National Bank of Kansas City August 4, 1989 Inc., Duncan, Duncan, Oklahoma Duncan, Oklahoma South Banking Company, Georgia Peoples Bankshares, Atlanta August 18, 1989 Alma, Georgia Inc., Baxley, Georgia SouthTrust Corporation, Florida Community Banks, Inc., Atlanta August 14, 1989 Birmingham, Alabama Bonifay, Florida Florida Central Banks, Inc., Chipley, Florida Stone County National Stone County National Bank, St. Louis July 25, 1989 Bancshares, Inc., Crane, Missouri Crane, Missouri Teton Bancshares, Inc., Choteau Bancorporation, Inc., Minneapolis August 24, 1989 Fairfield, Montana Choteau, Montana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 725 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Wilkinson Banking Corporation, Farmers Bank, St. Louis July 28, 1989 Greenwood, Arkansas Greenwood, Arkansas Withee Bank Shares, Inc., State Bank of Withee, Chicago August 8, 1989 Withee, Wisconsin Withee, Wisconsin Section 4 Nonbanking Reserve Effective Applicant Activity/Company Bank date Barclays PLC, to engage in data processing and New York August 14, 1989 London, England related activities Barclays Bank PLC, London, England BayBanks, Inc., Boston, Massachusetts Chemical Banking Corporation, New York, New York Manufacturers Hanover Corporation, New York, New York National Westminster Bank PLC, London, England NatWest Holdings, Inc., New York, New York Northeast Bancorp, Inc., New Haven, Connecticut The Bank of New York Company, Inc., New York, New York The Chase Manhattan Corporation, New York, New York The Hongkong and Shanghai Banking Corporation, Hong Kong, B.C.C. Kellett NV, Curacao, Netherlands Antilles HSBC Holdings BV, Amsterdam, the Netherlands Marine Midland Banks, Inc., Buffalo, New York Comerica Incorporated, Bloomfield Mortgage Chicago July 31, 1989 Detroit, Michigan Corporation, Southfield, Michigan First Bank System, Inc., Swanson Insurance Associates, Minneapolis August 11, 1989 Minneapolis, Minnesota Billings, Montana Home Interstate Bancorp, Bancorp Capital Group, Inc., San Francisco August 11, 1989 Signal Hill, California Signal Hill, California Logansport Bancorp, Inc., Skyline Village, Chicago July 27, 1989 Indianapolis, Indiana Corunna, Indiana Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Federal Reserve Bulletin • October 1989 Section 3—Continued Nonbanking Reserve Effective Applicant Activity/Company Bank date Security Pacific Corporation, General Electric Capital San Francisco August 21, 1989 Los Angeles, California Corporation, Stamford, Connecticut Society for Savings Bancorp, Inc. CADRE, Inc., Boston August 15, 1989 Hartford, Connecticut Avon, Connecticut 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 BancFirst, The Liberty State Bank of Kansas City July 27, 1989 Oklahoma City, Oklahoma Tahlequah, Tahlequah, Oklahoma First Bank of Crestview, First Interim Bank, Atlanta August 4, 1989 Crestview, Florida Crestview, Florida First Community Bank, Inc., Cherry River National Bank, Richmond July 28, 1989 Princeton, West Virginia Rich wood, West Virginia 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. White v. Board of Governors, No. CU-S-88-623-RDF 89-1394 (D.C. Cir., filed June 21, 1989). (D. Nev., filed July 29, 1988). MCorp v. Board of Governors, No. 89-1677 (S.D. VanDyke v. Board of Governors, No. 88-5280 (8th Tex. filed May 2, 1989). Cir., filed July 13, 1988). Independent Insurance Agents of America, Inc. v. Baugh v. Board of Governors, No. C88-3037 (N.D. Board of Governors, No. 89-4030 (2d Cir., filed Iowa, filed April 8, 1988). March 9, 1989). Bonilla v. Board of Governors, No. 88-1464 (7th Cir., Securities Industry Association v. Board of Governors, filed March 11, 1988). No. 89-1127 (D.C. Cir. filed February 16, 1989). Cohen v. Board of Governors, No. 88-1061 (D.N.J., American Land Title Association v. Board of Gover- filed March 7, 1988). nors, No. 88-1872 (D.C. Cir., filed December 16, The Chase Manhattan Corporation v. Board of Gov- 1988). ernors, No. 87-1333 (D.C. Cir., filed July 20, 1987). MCorp v. Board of Governors, No. CA3-88-2693-F Lewis v. Board of Governors, Nos. 87-3455, 87-3545 (N.D. Tex., filed October 28, 1988). (11th Cir., filed June 25, Aug. 3, 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A1 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 ALL Major nondeposit funds A18 Assets and liabilities, last-Wednesday-of-month Domestic Financial Statistics series WEEKLY REPORTING COMMERCIAL BANKS MONEY STOCK AND BANK CREDIT Assets and liabilities A3 Reserves, money stock, liquid assets, and debt A19 All reporting banks measures A20 Banks in New York City A4 Reserves of depository institutions, Reserve A21 Branches and agencies of foreign banks Bank credit A22 Gross demand deposits—individuals, A5 Reserves and borrowings—Depository partnerships, and corporations institutions A6 Selected borrowings in immediately available 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 • October 1989 A32 U.S. government securities dealers—Positions A53 Gross national product and income and financing A54 Personal income and saving A3 3 Federal and federally sponsored credit agencies—Debt outstanding International Statistics SECURITIES MARKETS AND SUMMARY STATISTICS CORPORATE FINANCE A55 U.S. international transactions—Summary A34 New security issues—State and local A56 U.S. foreign trade governments and corporations A56 U.S. reserve assets A35 Open-end investment companies—Net sales A56 Foreign official assets held at Federal Reserve and asset position Banks A3 5 Corporate profits and their distribution A57 Foreign branches of U.S. banks—Balance A35 Total nonfarm business expenditures on new sheet data plant and equipment A59 Selected U.S. liabilities to foreign official A36 Domestic finance companies—Assets and institutions liabilities and business credit REPORTED BY BANKS IN THE UNITED STATES REAL ESTATE A59 Liabilities to and claims on foreigners A37 Mortgage markets A60 Liabilities to foreigners A3 8 Mortgage debt outstanding A62 Banks' own claims on foreigners A63 Banks' own and domestic customers' claims on foreigners CONSUMER INSTALLMENT CREDIT A63 Banks' own claims on unaffiliated foreigners A64 Claims on foreign countries—Combined A39 Total outstanding and net change domestic offices and foreign branches A40 Terms REPORTED BY NONBANKING BUSINESS FLOW OF FUNDS ENTERPRISES IN THE UNITED STATES A41 Funds raised in U.S. credit markets A65 Liabilities to unaffiliated foreigners A43 Direct and indirect sources of funds to credit A66 Claims on unaffiliated foreigners markets A44 Summary of credit market debt outstanding A45 Summary of credit market claims, by holder SECURITIES HOLDINGS AND TRANSACTIONS A67 Foreign transactions in securities Domestic Nonfinancial Statistics A68 Marketable U.S. Treasury bonds and notes—Foreign transactions SELECTED MEASURES A46 Nonfinancial business activity—Selected INTEREST AND EXCHANGE RATES measures A69 Discount rates of foreign central banks A47 Labor force, employment, and unemployment A69 Foreign short-term interest rates A48 Output, capacity, and capacity utilization A49 Industrial production—Indexes and gross value A70 Foreign exchange rates A51 Housing and construction A71 Guide to Tabular Presentation, A52 Consumer and producer prices Statistical Releases, and Special Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A3 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Annual rates of change, seasonally adjusted in percent1 1988 1989 1989 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaatteess Q3 Q4 Ql Q2' Mar. Apr.' May' June' July Reserves of depository institutions2 1 Total 3.1 -.8 -4.2 -8.7 -8.1 -7.8 -14.6 -8.0 7.2 2 Required 2.9 -1.5 -4.4 -7.6 -4.3 -4.3 -20.0 -5.5 6.0 3 Nonborrowed 1.3 5.3 .0 -10.2 -14.9 -17.9 -3.2 -3.4 24.2 4 Monetary base3 6.5 4.8 4.6 1.5 4.6 .3 -1.5 3.1 4.0 Concepts of money, liquid assets, and debt4 5 Ml 5.2 2.3 -.4 -5.6 -1.7 -4.8 -15.1 -4.7 11.0 6 M2 3.8 3.6 1.8' 1.0 3.5' .7 -3.6 6.0 12.5 7 M3 5.6 4.8 3.7 2.7 6.5' 2.2 -1.5 5.4 9.6 8 L 7.1 5.4 4.8 3.6 8.7' 4.5 -1.1 .4 n.a. 9 Debt 8.6 9.1 8.2 7.5 7.5 7.2 7.6 6.9 n.a. Nontrqnsaction components 10 In M25 3.3 4.1 2.6 3.3 5.3' 2.6 .3 9.5 13.0 11 In M3 only6 12.2 9.0 10.3r 8.9 7.6 5.9 3.4 -.7 Time and savings deposits Commercial banks 12 Savings 77..99 4.0 --33..77 --1144..22 -10.8 -19.1 -20.4 -6.6 3.4 13 Small-denomination time 11.6 18.0 22.5 29.0 28.6 34.3 28.3 12.0 7.5 14 Large-denomination time9'10 18.2 13.0 18.1 17.9 23.0 22.2 10.1 2.0 5.6 Thrift institutions 15 Savings 2.1 -2.5 -7.7 -19.0 -10.7 -25.6 -26.3 -9.1 -5.5 16 Small-denomination time 5.4 6.6 4.3 14.1 3.4' 17.4 22.5 15.4 9.0 17 Large-denomination time9 3.9 8.0r 1.3' 5.9 -.3 12.5 8.0 2.0 -8.3 Debt components4 18 Federal 7.1 7.8 7.7 6.6 12.5 5.1 2.9 3.2 n.a. 19 Nonfederal 9.1 9.5 8.4 7.8 5.9 7.9 9.1 8.0 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 added on a not seasonally adjusted basis. After CRR, the seasonally nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt adjusted series consists of seasonally adjusted total reserves, which include data are based on monthly averages. Growth rates for debt reflect adjustments for excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted discontinuities over time in the levels of debt presented in other tables. currency component of the money stock plus the remaining items seasonally 5. Sum of overnight RPs and Eurodollars, money market fund balances adjusted as a whole. (general purpose and broker-dealer), MMDAs, and savings and small time 4. Composition of the money stock measures and debt is as follows: deposits less the estimated amount of demand deposits and vault cash held by Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults thrift institutions to service their time and savings deposit liabilities. of depository institutions; (2) travelers checks of nonbank issuers; (3) demand 6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents, deposits at all commercial banks other than those due to depository institutions, money market fund balances (institution-only), less a consolidation adjustment the U.S. government, and foreign banks and official institutions less cash items in that represents the estimated amount of overnight RPs and Eurodollars held by the process of collection and Federal Reserve float; and (4) other checkable institution-only money market mutual funds. deposits (OCD) consisting of negotiable order of withdrawal (NOW) and auto- 7. Excludes MMDAs. matic transfer service (ATS) accounts at depository institutions, credit union 8. Small-denomination time deposits—including retail RPs—are those issued share draft accounts, and demand deposits at thrift institutions. in amounts of less than $100,000. All IRA and Keogh accounts at commercial M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) banks and thrifts are subtracted from small time deposits. issued by all commercial banks and overnight Eurodollars issued to U.S. residents 9. Large-denomination time deposits are those issued in amounts of $100,000 by foreign branches of U.S. banks worldwide, Money Market Deposit Accounts or more, excluding those booked at international banking facilities. (MMDAs), savings and small-denomination time deposits (time deposits—includ- 10. Large-denomination time deposits at commercial banks less those held by ing retail RPs—in amounts of less than $ 100,000), and balances in both taxable and money market mutual funds, depository institutions, and foreign banks and tax-exempt general purpose and broker-dealer money market mutual funds. official institutions. Excludes individual retirement accounts (IRA) and Keogh balances at depository Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Nonfinancial Statistics • October 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 Factors 1989 1989 May June' July June 14 June 21 June 28 July 5 July 12 July 19 July 26 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 267,629 263,924 262,0% 259,907 262,225 271,098 267,270 266,156 260,162 2 U.S. government securities1 234,995 227,688 222,972 225,637 224,643 231,898 229,392 227,176 221,426 3 Bought outright 230,783 227,291 222,812 225,637 224,643 230,621 228,967 226,467 221,426 4 Held under repurchase agreements 4,212 397 160 0 0 1,277 425 709 0 5 Federal agency obligations 8,387 6,754 6,674 6,654 6,654 6,987 6,750 6,816 6,654 6 Bought outright 6,654 6,654 6,637 6,654 6,654 6,654 6,654 6,654 6,654 7 8 Ac H ce e p ld t a u n n c d es e r repurchase agreements 1,73 0 3 10 0 0 3 0 7 0 0 0 0 33 0 3 9 0 6 1602 0 0 9 Loans 1,717 1,495 685 2,255 939 992 773 661 687 10 Float 801 1,279 742 1,266 1,611 1,564 314 1,163 522 11 Other Federal Reserve assets 21,729 26,709 31,024 24,094 28,378 29,657 30,041 30,340 30,873 12 Gold stock2 11,061 11,061 11,066 11,060 11,061 11,061 11,064 11,067 11,066 13 Special drawing rights certificate account.. 6,703 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 14 Treasury currency outstanding 19,049 19,188 19,245 19,181 19,191 19,201 19,211 19,221 19,239 ABSORBING RESERVE FUNDS 15 Currency in circulation 245,574 247,860 249,824 248,280 247,710 247,298 249,619 251,361 250,131 16 Treasury cash holdings2 486 466 490 488 486 475 473 464 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 14,126 10,072 6,067 5,397 9,274 18,343 11,214 6,308 5,155 18 Foreign 227 251 229 253 242 215 249 236 210 19 Service-related balances and adjustments 1,855 1,924 1,970 1,778 1,929 1,957 2,302 2,102 1,673 20 Other 528 303 262 253 298 328 239 226 228 21 Other Federal Reserve liabilities and capital 8,480 8,101 8,029 8,261 8,170 8,217 8,166 8,331 7,915 22 Reserve balances with Federal Reserve Banks 33,166 33,692 34,085 33,953 32,885 33,033 33,798 35,923 33,207 End-of-month figures Wednesday figures 1989 1989 May June' July June 14 June 28 July 5 July 12 July 19 July 26 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 256,669 269,037 259,145 262,688 268,271 271,518 263,390 273,579 258,897 24 U.S. government securities' 223,535 231,767 218,676 227,654 230,162 231,062 224,359 233,198 219,810 25 Bought outright 223,535 231,767 218,676 227,654 230,162 231,062 224,359 228,237 219,810 26 Held under repurchase agreements 0 0 0 0 0 0 0 4,961 0 27 Federal agency obligations 6,654 6,654 6,609 6,654 6,654 6,654 6,654 7,791 6,654 28 Bought outright 6,654 6,654 6,609 6,654 6,654 6,654 6,654 6,654 6,654 29 Held under repurchase agreements 0 0 0 0 0 0 0 1,137 0 30 Acceptances 0 0 0 0 0 0 0 0 0 31 Loans 2,033 841 594 2,384 832 1,759 665 687 632 32 Float 2,064 -203 351 1,701 1,640 1,338 1,322 1,060 1,233 33 Other Federal Reserve assets 22,383 29,978 32,915 24,295 28,983 30,705 30,390 30,843 30,569 34 Gold stock2 11,060 11,063 11,066 11,060 11,061 11,062 11,066 11,066 11,067 35 Special drawing rights certificate account... 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 36 Treasury currency outstanding 19,073 19,211 19,309 19,181 19,191 19,201 19,211 19,221 19,239 ABSORBING RESERVE FUNDS 37 Currency in circulation 247,525 249,139 248,637 248,164 247,489 247,936 250,933 251,209 249,646 38 Treasury cash holdings2 488 474 451 490 487 481 475 464 464 Deposits, other than reserve balances, with Federal Reserve Banks 39 Treasury 12,153 5,312 5,281 19,822 19,244 6,751 5,431 4,984 40 Foreign 429 275 371 293 203 287 215 184 242 41 Service-related balances and adjustments 1,616 1,616 1,592 1,616 1,598 1,598 1,600 1,591 1,588 42 Other 524 229 236 242 267 327 228 206 254 43 Other Federal Reserve liabilities and capital 7,513 8,178 8,693 8,078 7,984 7,962 7,898 8,071 7,655 44 Reserve balances with Federal Reserve Banks' 33,553 35,765 32,747 37,280 29,190 32,463 34,085 45,227 32,887 1. Includes securities loaned—fully guaranteed by U.S. government securities Research and Statistics, Banking Section. pledged with Federal Reserve Banks—and excludes any securities sold and 3. Excludes required clearing balances and adjustments to compensate for scheduled to be bought back under matched sale-purchase transactions. float. 2. Revised for periods between October 1986 and April 1987. At times during NOTE. For amounts of currency and coin held as reserves, see table 1.12. this interval, outstanding gold certificates were inadvertently in excess of the gold Components may not add to totals because of rounding. stock. Revised data not included in this table are available from the Division of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A5 1.12 RESERVES AND BORROWINGS Depository Institutions1 Millions of dollars Monthly averages9 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1986 1987 1988 1989 Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June July 1 Reserve balances with Reserve Banks2 37,360 37,673 37,830 36,475 32,834 34,623 35,841 33,199 33,852 33,904 2 Total vault cash 24,077 26,185 27,197 28,376 29,776 27,059 26,746 27,166 27,151 27,851 3 Vault4 22,199 24,449 25,909 26,993 27,859 25,589 25,456 25,712 25,735 26,352 4 Surplus 1,878 1,736 1,288 1,383 1,917 1,470 1,290 1,454 1,416 1,500 5 Total reserves6 59,560 62,123 63,739 63,468 60,693 60,212 61,288 58,911 59,587 60,255 6 Required reserves 1 58,191 61,094 62,699 62,323 59,539 59,255 60,511 57,881 58,682 59,290 7 Excess reserve balances at Reserve Banks 1,369 1,029 1,040 1,145 1,154 957 776 1,031 905 966 8 Total borrowings at Reserve Banks 827 777 1,716 1,662 1,487 1,813 2,289 1,720 1,490 694 9 Seasonal borrowings at Reserve Banks 38 93 130 76 97 139 213 345 431 497 10 Extended credit at Reserve Banks 303 483 1,244 1,046 1,050 1,334 1,707 1,197 917 106 Biweekly averages of daily figures for weeks ending 1989 Apr. 19 May 3 May 17 May 31 June 14 June 28 July 12r July 26 Aug. 9 Aug. 23 11 Reserve balances with Reserve Banks2 36,239 35,863 33,864 31,964 34,608 32,950 34,866 33,410 32,977 32,627 12 Total vault cash 26,339 27,106 26,644 27,701 26,607 27,630 27,607 27,948 28,166 28,852 13 Vault4 25,174 25,723 25,352 26,071 25,301 26,104 26,191 26,432 26,514 27,213 14 Surplus 1,166 1,383 1,292 1,631 1,306 1,526 1,416 1,517 1,653 1,639 15 Total reserves6 61,413 61,586 59,216 58,034 59,909 59,054 61,057 59,842 59,491 59,840 16 Required reserves 61,190 60,345 58,357 56,877 59,012 58,154 60,067 58,807 58,778 58,737 17 Excess reserve balances at Reserve Banks 223 1,241 859 1,158 897 901 990 1,035 713 1,104 18 Total borrowings at Reserve Banks 2,582 1,968 1,739 1,649 2,126 965 717 681 676 753 19 Seasonal borrowings at Reserve Banks 190 265 336 373 388 467 483 509 497 489 20 Extended credit at Reserve Banks 1,970 1,387 1,206 1,148 1,657 287 146 90 55 44 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 • October 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. 22 Aug. 29 Sept. 5 Sept. 12 Sept. 19 Sept. 26 Oct. 3 Oct. 10 Oct. 17 Federal funds purchased, repurchase agreements, and other selected borrowing in immediately available funds From commercial banks in the United States 1 For one day or under continuing contract 66,871 64,904 69,394 69,451 65,767 62,866 66,221 71,087 68,324 2 For all other maturities 10,102 10,187 10,001 9,714 9,443 99,,445500 8,919 9,090 8,970 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 26,570 26,952 27,114 29,922 26,636 27,000 25,144 28,535 29,991 4 For all other maturities 6,700 6,579 6,629 6,581 6,895 6,273 6,081 6,340 6,386 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 16,304 15,212 15,337 15,072 14,5% 13,683 12,927 13,238 13,880 6 For all other maturities 12,587 13,177 12,365 11,524 13,136 13,293 12,723 12,699 12,221 All other customers 7 For one day or under continuing contract 27,452 28,070 27,866 27,761 27,123 27,616 27,876 26,825 28,236 8 For all other maturities 10,559 10,701 10,279 9,691 10,429 10,341 9,629 10,089 9,594 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 35,147 34,797 39,559 34,356 37,066 37,013 39,869 37,509 38,388 10 To all other specified customers2 14,952 14,010 14,263 13,677 14,421 13,079 13,513 14,007 15,296 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. 2. Brokers and nonbank dealers in securities; other depository institutions; These data also appear in the Board's H.5 (507) release. For address, see inside foreign banks and official institutions; and United States government agencies, front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels AAddjjuussttmmeenntt ccrreeddiitt Extended credit2 aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee SSeeaassoonnaall ccrreeddiitt11 First 30 days of borrowing After 30 days of borrowing3 BBBaaannnkkk 8/2 O 4 n / 89 Eff d e a c te ti ve Pre r v at i e o us 8/2 O 4 n / 89 Ef d fe a c te ti ve Pre ra v t i e o us 8/2 O 4 n / 89 Eff d e a c te ti ve Pre r v at i e o us Effective date Boston 7 2/24/89 6V1 7 2/24/89 6 Vi 9.35 8/24/89 9.20 8/10/89 New York 2/24/89 2/24/89 8/24/89 8/10/89 Philadelphia 2/24/89 2/24/89 8/24/89 8/10/89 Cleveland 2/24/89 2/24/89 8/24/89 8/10/89 Richmond 2/24/89 2/24/89 8/24/89 8/10/89 Atlanta 2/24/89 2/24/89 8/24/89 8/10/89 Chicago 2/24/89 2/24/89 8/24/89 8/10/89 St. Louis 2/24/89 2/24/89 8/24/89 8/10/89 Minneapolis 2/24/89 2/24/89 8/24/89 8/10/89 Kansas City 2/24/89 2/24/89 8/24/89 8/10/89 Dallas 2/27/89 6V1 2/27/89 Vl 8/24/89 8/10/89 San Francisco ... 7 2/24/89 7 2/24/89 6 9.35 8/24/89 9.20 8/10/89 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. B o a f n k Effective date A le l v l e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. Ba of n k Banks N.Y. Banks N.Y. Banks N.Y. I 1 n 9 7 e 8 ff — ec M J t a D a n y . e c. 2 1 9 1 0 3 1 , 1977 6 k - 6 6 V 6 V V i l l - l 6 6 6 7 V V i i 1980— N S Ju e o l p y v t . . 2 2 1 2 8 9 7 6 10 1 1 1 - 2 1 0 1 1 1 1 1 1 2 1 0 0 11998844—— N AA o pp v rr.. . 2 2 1 9 1 6 3 S m V m - 9 9 i - 9 8 8 9 9 V V l l 12 7 I7 V* Dec. 5 12-13 13 Dec. 24 8 8 July 1 3 0 7m-7'A 7V4 1981—May 5 13-14 14 11998855——MMaayy 20 lVi-% 7 Vi Aug. 21 73/4 73/4 8 14 14 24 IVi IVi O N Se c o p t v . t . . 2 2 1 2 6 0 1 3 8 8 V - 9 S i- 8 8 V9 V V V i ii i 9 9 8 8% V V V V i i i i 1982—J D N u e o ly c v . . 2 4 2 0 6 11 1 3 V 1 1 - i 3 2 1 — 4 1 2 1 1 1 1 3 3 2 I Vi 1986— J A M u p l a y r r . . 2 1 1 1 7 1 0 6 1- W l 1 6 V - i 7 7 7 6 6 Vl 23 UVi im AAuugg.. 21 5Vi-6 5 Vl 1979— A Ju u ly g . 2 2 1 0 7 0 10I- 1 1O 0 0 WV 2 1 1 0 0 Vl Aug. 1 2 3 6 11 lO - 1 l V 1 l i t o 1 1 1 1 11998877——SSeepptt.. 2 4 2 5 5 ^ V -6 i 6 5 Vl Sept. 19 lOVi-11 11 27 10-10Vt> 10 11 6 6 21 11 11 30 10 10 Oct. 8 11-12 12 Oct. 12 9Vi-10 9 Vi 11998888——AAuugg.. 9 6-6 Vi 6 Vl 10 12 12 13 9 Vi 9 Vi 11 6 Vl 6 Vi Nov. 22 9-9V2 9 1980—Feb. 15 12-13 13 26 9 9 1989—Feb. 24 6Vl-7 7 19 13 13 Dec. 14 SVl-9 9 27 1 7 May 29 12-13 13 15 ZVl-9 &Vi 30 12 12 17 8 Vl m In effect Aug. 24, 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 DomesticN onfinancial Statistics • October 1989 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Monetary Control Act Type of deposit, and deposit interval Percent of deposits Effective date Net transaction accounts • $0 million-$41.5 million 12/20/88 More than $41.5 million ... 12/20/88 Nonpersonal time deposits5 By original maturity Less than 11/2 years 3 10/6/83 1 Vl years or more 0 10/6/83 Eurocurrency liabilities All types 3 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 Dec. Jan. Feb. Mar. Apr. May June U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 22,604 18,983 8,223 1,125 0 0 0 3,077 311 0 2 Gross sales 2,502 6,051 587 0 154 3,688 0 0 321 571 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 1,000 9,029 2,200 0 600 1,600 0 0 1,200 1,200 Others within 1 year 5 Gross purchases 190 3,659 2,176 1,084 0 0 0 172 0 0 6 Gross sales 0 300 0 0 0 0 0 0 0 0 7 Maturity shift 18,674 21,504 23,854 1,750 620 5,418 2,646 1,657 2,863 1,828 8 Exchange -20,180 -20,388 -24,588 -1,703 -2,703 -2,308 -2,322 -110 -3,628 -1,434 9 Redemptions 0 70 0 0 0 0 0 0 0 0 1 to 5 years 10 Gross purchases 893 10,231 5,485 1,824 0 0 0 1,436 0 0 11 Gross sales 0 452 800 0 3 225 0 0 75 0 12 Maturity shift -17,058 -17,975 -17,720 -1,750 -541 -5,319 -2,646 -1,532 -2,036 -1,828 13 Exchange 16,985 18,938 22,515 1,703 2,492 2,008 2,322 0 3,328 1,434 5 to 10 years 14 Gross purchases 236 2,441 1,579 562 0 0 0 287 0 0 15 Gross sales 0 0 175 0 20 0 0 0 0 0 16 Maturity shift -1,620 -3,529 -5,946 0 -79 -100 0 -125 258 0 17 Exchange 2,050 950 1,797 0 212 200 0 110 200 0 Over 10 years 18 Gross purchases 158 1,858 1,398 432 0 0 0 284 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift 0 0 -188 0 0 0 0 0 -1,086 0 21 Exchange 1,150 500 275 0 0 100 0 0 100 0 All maturities 22 Gross purchases 24,081 37,170 18,863 5,028 0 0 0 5,255 311 0 23 Gross sales 2,502 6,803 1,562 0 177 3,913 0 0 3% 571 24 Redemptions 1,000 9,099 2,200 0 600 1,600 0 0 1,200 1,200 Matched transactions 25 Gross sales 927,999 950,923 1,168,484 93,650 94,204 110,393 83,677 77,349 123,029 128,139 26 Gross purchases 927,247 950,935 1,168,142 93,584 94,252 112,472 82,821 78,259 113,041 138,141 Repurchase agreements2 27 Gross purchases 170,431 314,621 152,613 15,575 17,208 0 0 22,244 31,419 6,203 28 Gross sales 160,268 324,666 151,497 14,815 21,969 0 0 12,547 41,117 6,203 29 Net change in U.S. government securities 29,988 11,234 15,872 5,721 -5,489 -3,434 -856 15,863 -20,971 8,232 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 398 276 587 135 148 40 0 125 0 0 Repurchase agreements2 33 Gross purchases 31,142 80,353 57,259 7,672 8,980 0 0 7,207 12,732 1,666 34 Gross sales 30,521 81,350 56,471 6,853 11,081 0 0 3,366 16,573 1,666 35 Net change in federal agency obligations 222 -1,274 198 683 -2,249 -40 0 3,716 -3,841 0 36 Total net change in System Open Market Account 30,212 9,961 16,070 6,404 -7,738 -3,474 -856 19,579 -24,812 8,232 1. Sales, redemptions, and negative figures reduce holdings of the System Open 2. In July 1984 the Open Market Trading Desk discontinued accepting bankers Market Account; all other figures increase such holdings. Details may not add to acceptances in repurchase agreements, totals because of rounding. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A10 Domestic Nonfinancial Statistics • October 1989 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1989 1989 June 28 July 5 July 12 July 19 July 26 May June July Consolidated condition statement ASSETS 1 Gold certificate account 11,062 11,066 11,066 11,067 11,067 11,060 11,063 11,066 2 Special drawing rights certificate account 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 i 449 428 423 429 443 432 444455 445500 Loans 4 To depository institutions 1,759 665 687 632 622 2,033 840 594 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 6,609 6,654 6,655 6,609 8 Held under repurchase agreements 0 0 11,,113377 0 0 0 0 0 U.S. Treasury securities Bought outright 9 Bills 108,326 101,632 105,511 97,0% 97,184 100,799 109,031 95,962 10 Notes 92,322 92,313 92,313 92,300 92,300 92,322 92,322 92,300 11 Bonds 30,414 30,414 30,414 30,414 30,414 30,414 30,414 30,414 12 Total bought outright' 231,062 224,359 228,237 219,810 219,897 223,535 231,767 218,676 13 Held under repurchase agreements 0 0 4,961 0 0 0 0 0 14 Total U.S. Treasury securities 231,062 224,359 233,198 219,810 219,897 223,535 231,767 218,676 15 Total loans and securities 239,475 231,678 241,676 227,095 227,128 232,222 239,263 225,879 16 Items in process of collection 6,740 6,297 6,990 7,374 6,234 10,442 6,550 4,409 17 Bank premises 767 766 767 767 767 761 767 768 Other assets 18 Denominated in foreign currencies3 18,956 19,460 19,486 19,580 20,618 13,656 19,213 21,529 19 All other4 10,982 10,164 10,590 10,221 10,709 7,966 10,001 10,618 20 Total assets 296,949 288,377 299,516 285,051 285,483 285,057 295,816 283,237 LIABILITIES 21 Federal Reserve notes 229,666 232,625 223322,,887766 223311,,330011 223300,,330000 222299,,337722 223300,,884477 223300,,222299 Deposits 22 To depository institutions 34,061 35,685 -46,818 34,475 36,555 33,553 37,381 34,339 23 U.S. Treasury—General account 19,244 6,751 5,431 4,984 4,925 5,288 12,153 5,312 24 Foreign—Official accounts 287 215 184 242 200 429 275 371 25 Other 327 228 206 254 483 524 228 236 26 Total deposits 53,919 42,879 52,638 39,954 42,164 39,794 50,040 40,258 27 Deferred credit items 5,402 4,975 5,930 6,141 5,429 8,378 6,751 4,057 28 Other liabilities and accrued dividends 3,258 3,102 3,355 2,925 2,881 3,212 3,272 2,841 29 Total liabilities 292,245 283,581 294,800 280,321 280,774 280,756 290,911 277,384 CAPITAL ACCOUNTS 30 Capital paid in 2,145 2,151 2,158 2,162 2,154 2,142 2,146 2,156 31 Surplus 2,112 2,112 2,112 2,112 2,112 2,081 2,117 2,112 32 Other capital accounts 447 533 446 456 443 78 649 1,585 33 Total liabilities and capital accounts 296,949 288,377 299,516 285,051 285,483 285,057 295,816 283,237 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 233,119 231,321 232,347 234,831 237,112 234,667 362,000 236,847 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 273,315 272,972 273,666 274,195 274,225 271,562 272,983 274,736 36 LESS: Held by bank 43,649 40,348 40,790 42,895 43,925 42,190 42,135 44,507 37 Federal Reserve notes, net 229,666 232,625 232,876 231,301 230,300 229,372 230,847 230,229 Collateral held against notes net: 38 Gold certificate account 11,062 11,066 11,066 11,067 11,067 11,060 11,063 11,066 39 Special drawing rights certificate account 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 40 Other eligible assets 0 0 0 0 0 0 0 0 41 U.S. Treasury and agency securities 210,086 213,041 213,292 211,716 210,716 209,794 211,266 210,645 42 Total collateral 229,666 232,625 232,876 231,301 230,300 229,372 230,847 230,229 1. Some of these data also appear in the Board's H.4.1 (503) release. For 3. Valued monthly at market exchange rates. address, see inside front cover. Components may not add to totals because of 4. Includes special investment account at the Federal Reserve Bank of Chicago rounding. 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. 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 June 28 July 5 July 12 July 19 July 26 May 31 June 30 July 31 1 Loans—Total 991 665 687 632 622 2,033 1,495 594 2 Within 15 days 926 348 356 553 545 1,940 1,339 415 3 16 days to 90 days 65 317 331 77 77 93 156 179 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 231,062 224,359 233,198 219,810 219,897 223,535 231,767 218,676 10 Within 15 days2 12,757 10,953 11,914 6,880 8,743 4,691 8,812 9,144 11 16 days to 90 days 50,726 48,226 53,626 49,651 47,967 49,365 56,198 48,395 12 91 days to 1 year 74,975 72,978 75,457 71,076 70,984 76,876 74,546 69,625 13 Over 1 year to 5 years 52,786 52,393 52,393 52,274 52,274 52,786 52,393 51,583 14 Over 5 years to 10 years 13,511 13,502 13,502 13,623 13,623 13,511 13,512 13,623 15 Over 10 years 26,306 26,306 26,306 26,306 26,306 26,306 26,306 26,306 16 Federal agency obligations—Total 6,654 6,654 7,791 6,654 6,609 6,654 6,654 6,609 17 Within 15 days2 152 75 1,242 206 101 347 152 101 18 16 days to 90 days 642 744 728 627 657 473 642 721 19 91 days to 1 year 1,289 1,314 1.310 1.310 1,396 1,324 1,289 1,332 20 Over 1 year to 5 years 3,386 3,336 3.311 3.311 3,249 3,352 3,386 3,249 21 Over 5 years to 10 years 996 996 1,011 1,011 1,016 969 996 1,016 22 Over 10 years 189 189 189 189 189 189 189 189 1. Holdings under repurchase agreements are classified as maturing within 15 NOTE: Components may not add to totals because of rounding, days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 DomesticN onfinancial Statistics • October 1989 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1988 1989 IItteemm D 19 e 8 c 5 . D 19 e 8 c 6 . D 19 e 8 c 7 . D 19 e 8 c 8 . Dec. Jam. Feb. Mar. Apr. May June July Seasonally adjusted ADJUSTED FOR CHANGES 'N RESERVE REQUIREMENTS2 1 Total reserves3 48.49 58.14 58.69 60.71 60.71 60.37 60.26 59.85 59.46 58.74 58.35 58.70 2 Nonborrowed reserves 47.17 57.31 57.92 58.99 58.99 58.71 58.77 58.04 57.17 57.02 56.86 58.01 3 Nonborrowed reserves plus extended credit 47.67 57.62 58.40 60.23 60.23 59.75 59.82 59.38 58.88 58.22 57.78 58.11 4 Required reserves 47.44 56.77 57.66 59.67 59.67 59.23 59.11 58.90 58.69 57.71 57.44 57.73 5 Monetary base 219.51 241.45 257.99 275.50 275.50 276.78 277.55 278.61 278.67 278.33 279.06 279.98 Not seasonally adjusted 6 Total reserves3 49.59 59.46 60.06 62.21 62.21 62.07 59.37 58.94 60.01 57.72 58.41 58.96 7 Nonborrowed reserves 48.27 58.64 59.28 60.50 60.50 60.40 57.88 57.13 57.72 56.00 56.92 58.26 8 Nonborrowed reserves plus extended credit 48.77 58.94 59.76 61.74 61.74 61.45 58.93 58.46 59.43 57.20 57.84 58.37 9 Required reserves 48.53 58.09 59.03 61.17 61.17 60.92 58.22 57.98 59.23 56.69 57.51 57.99 10 Monetary base 222.73 245.25 262.08 279.71 279.71 277.92 274.36 275.62 278.11 277.49 280.18 282.07 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 11 Total reserves3 48.14 59.56 62.12 63.74 63.74 63.47 60.69 60.21 61.29 58.91 59.59 60.26 12 Nonborrowed reserves 46.82 58.73 61.35 62.02 62.02 61.81 59.21 58.40 59.00 57.19 58.10 59.56 13 Nonborrowed reserves plus extended credit4 47.32 59.04 61.83 63.27 63.27 62.85 60.26 59.73 60.71 58.39 59.01 59.67 14 Required reserves 47.08 58.19 61.09 62.70 62.70 62.32 59.54 59.25 60.51 57.88 58.68 59.29 15 Monetary base 223.53 247.71 266.16 283.18 283.18 281.31 277.66 278.94 281.52 280.54 283.27 285.36 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' 2 1985 1986 1987 1988 Dec. Dec. Dec. Dec. Apr. May June July Seasonally adjusted 1 Ml 620.5 725.9 752.3 790.3 783.1 773.3 770.3 777.3 2 M2 2,567.4 2,811.2 2,909.9 3,069.4 3,080.0 3,070.7 3,086.0 3,118.1 3 M3 3,201.7 3,494.9 3,677.6 3,914.3r 3,956.2 3,951.2 3,969.0 4,000.6 4 L 3,830.6 4,137.1 4,340.2 4,675.0' 4,742.1 4,737.6 4,739.2 n.a. 5 Debt 6,733.3 7,596.9 8,310.7 9,052.1 9,285.1 9,344.0 9,397.4 n.a. Ml components 6 Currency 167.8 180.5 196.4 211.8 215.9 216.4 217.4 218.0 7 Travelers checks 5.9 6.5 7.1 7.6 7.3 7.3 7.2 7.1 8 Demand deposits 267.3 303.2 288.3 288.6 281.4 278.2 275.0 279.0 9 Other checkable deposits 179.5 235.8 260.4 282.3 278.5 271.3 270.7 273.2 Nontransactions components 10 In M2 1,946.9 2,085.3 2,157.7 2,279.2 2,296.9 2,297.4 2,315.7 2,340.8 11 In M3 only8 634.3 683.7 767.6 844.9r 876.2 880.5 883.1 882.5 Savings deposits9 12 Commercial Banks 125.0 155.8 178.5 192.5 185.6 182.4 181.4 181.9 13 Thrift institutions 176.6 215.2 237.8 238.8 227.3 222.3 220.6 219.6 Small-denomination time deposits10 14 Commercial Banks 383.3 364.6 385.3 443.1 485.5 496.9 501.9 505.0 15 Thrift institutions 499.2 489.3 528.8 582.2 597.6 608.8 616.6 621.3 Money market mutual funds 16 General purpose and broker-dealer 176.5 208.0 221.1 239.4 259.1 258.9 265.1 274.6 17 Institution-only 64.5 84.4 89.6 87.6 87.7 91.6 95.1 98.2 Large-denomination time deposits11 18 Commercial Banks12 285.1 288.8 325.4 364.9 392.6 395.9 396.6 398.4 19 Thrift institutions 151.5 150.1 162.0 172.9 175.2 176.4 176.7 175.4 Debt components 20 Federal debt 1,585.3 1,805.8 1,957.5 2,114.0 2,171.8 2,177.0 2,182.7 n.a. 21 Nonfederal debt 5,147.9 5,791.1 6,353.1 6,938.1 7,113.3 7,167.1 7,214.7 n.a. Not seasonally adjusted 22 Ml 633.5 740.4 766.4 804.4 791.3 767.1 773.8 781.8 23 M2 2,576.2 2,821.1 2,918.7 3,077.1 3,091.6 3,061.2 3,088.8 3,125.9 24 M3 3,213.3 3,507.4 3,688.5 3,924. lr 3,961.8 3,941.1 3,969.6 4,002.3 25 L 3,843.7 4,152.0 4,354.5 4,688.5 4,743.8 4,726.2 4,740.2 n.a. 26 Debt 6,723.5 7,581.1 8,292.8 9,037.5 9,248.6 9,310.7 9,369.5 n.a. Ml components 27 Currency 170.2 183.0 199.3 214.9 215.1 216.6 218.5 219.7 28 Travelers checks4 5.5 6.0 6.5 6.9 7.0 7.1 7.5 8.1 29 Demand deposits 276.9 314.0 298.6 298.8 283.2 273.3 276.4 281.6 30 Other checkable deposits 180.9 237.4 262.0 283.7 286.0 270.1 271.4 272.5 Nontransactions components 31 M2r. 1,942.7 2,080.7 2,152.3 2,272.8 2,300.3 2,294.2 2,315.0 2,344.1 32 M3 only8 637.1 686.3 769.8 847.0' 870.2 879.9 880.8 876.4 Money market deposit accounts 33?? Commercial Banks 332.8 379.6 358.8 352.5 336.2 327.0 328.1 330.9 34 Thrift institutions 180.7 192.9 167.5 150.3 135.0 130.0 128.8 129.0 Savings deposits9 35 Commercial Banks 123.7 154.2 176.6 190.3 186.2 183.6 183.2 184.3 36 Thrift institutions 174.8 212.7 234.8 235.6 227.9 223.7 223.3 223.2 Small-denomination time deposits10 37 Commercial Banks 384.0 365.3 386.1 444.1 483.5 493.2 499.6 504.4 38 Thrift institutions 499.9 489.8 529.1 582.4 598.5 605.7 612.8 619.7 Money market mutual funds 39 General purpose and broker-dealer 176.5 208.0 221.1 239.4 259.1 258.9 265.1 274.6 40 Institution-only 64.5 84.4 89.6 87.6 87.7 91.6 95.1 98.2 Large-denomination time deposits11 41 Commercial Banks12 285.4 289.1 325.8 365.6 390.5 394.7 395.1 395.7 42 Thrift institutions 151.8 150.7 163.0 174. V 173.7 175.2 174.8 173.3 Debt components 43 Federal debt 1,583.7 1,803.9 1,955.6 2,111.8 2,155.1 2,159.5 2,165.2 n.a. 44 Nonfederal debt 5,139.8 5,777.2 6,337.2 6,925.7 7,093.5 7,151.2 7,204.3 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • October 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 Dec. Jan. Feb. Mar. Apr. May DEBITS TO Seasonally adjusted Demand deposits 1 All insured banks 188,346.0 217,116.2 226,888.4 245,617.5 252,226.7 255,774.3 249,088.3 245,230.1 266,468.1 2 Major New York City banks 91,397.3 104,496.3 107,547.3 111,115.5 109,875.9 121,770.1 111,387.4 107,808.9 120,984.1 3 Other banks 96,948.8 112,619.8 119,341.2 134,502.0 142,350.8 134,004.2 137,700.9 137,421.3 145,483.9 4 ATS-NOW accounts4 2,182.5 2,402.7 2,757.7 3,020.8 2,976.2 3,054.9 3,264.9 2,986.4 3,406.5 5 Savings deposits 403.5 526.5 583.0 640.7 647.4 649.2 675.2 585.5 647.2 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 556.5 612.1 641.2 698.5 716.3 734.4 721.0 697.5 767.1 7 Major New York City banks 2,498.2 2,670.6 2,903.5 3,140.7 3,113.7 3,618.0 3,393.0 3,092.2 3,342.1 8 Other banks 321.2 357.0 376.8 425.3 449.3 425.9 440.4 433.9 467.5 9 ATS-NOW accounts4 15.6 13.8 14.7 15.8 15.6 16.0 17.1 15.7 18.2 10 Savings deposits 3.0 3.1 3.1 3.4 3.5 3.5 3.6 3.2 3.6 DEBITS TO Not seasonally adjusted Demand deposits 11 All insured banks 188,506.7 217,125.1 227,010.7 258,119.4 257,649.6 231,347.8 264,581.6 238,265.6 274,861.8 12 Major New York City banks 91,500.1 104,518.8 107,565.0 117,470.7 112,480.2 110,047.2 120,202.2 105,461.7 121,507.2 13 Other banks 97,006.7 112,606.2 119,445.7 140,648.8 145,169.4 121,300.6 144,379.4 132,803.9 153,354.6 14 ATS-NOW accounts4 2,184.6 2,404.8 2,754.7 3,163.8 3,245.1 2,762.1 3,228.6 3,205.2 3,325.2 15 MMDA 1,609.4 1,954.2 2,430.1 2,940.5 3,072.5 2,622.4 2,636.7 2,700.2 2,910.5 16 Savings deposits 404.1 526.8 578.0 655.6 668.7 573.3 649.6 649.6 637.9 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 556.7 612.3 641.7 699.1 713.7 683.1 782.3 676.6 805.9 18 Major New York City banks 2,499.1 2,674.9 2,901.4 3,058.1 2,998.6 3,255.7 3,603.3 3,017.6 3,482.5 19 Other banks 321.2 356.9 377.1 425.2 448.7 397.8 473.6 418.7 500.9 20 ATS-NOW accounts4 15.6 13.8 14.7 16.3 16.7 14.5 16.9 16.3 18.0 21 MMDA 4.5 5.3 6.9 8.4 8.9 7.8 7.8 8.1 9.0 22 Savings deposits 3.0 3.1 3.1 3.5 3.6 3.1 3.5 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 • October 1989 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1988 1989 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted 1 Total loans and securities2 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 2,518.1 2 U.S. government securities 350.9 353.1 355.6 358.8 361.4 360.4 361.8 368.8 370.7 373.5 373.8 374.4 i Other securities 196.5 195.2 196.8 195.9 194.0 189.6 190.4 189.7 187.2 186.4 185.7 184.6 4 Total loans and leases2 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 1,959.1 5 Commercial and industrial ..... 597.4 598.1 601.6 601.8 601.9 606.6 619.0 617.8 620.6 626.3 624.9 632.2 6 Bankers acceptances held ... 4.3 4.1 4.1 4.3 4.1 4.4 4.2 4.0 44..11 44..22 44..22 44..11 7 Other commercial and 8 U i . n S d . u a s d t d ri r a e l ssees4 5 5 8 9 6 3 . . 5 2 5 5 8 9 7 4 . . 2 0 5 5 9 9 0 7. . 5 9 5 5 9 9 1 7 . . 3 4 5 5 9 9 1 7 . . 8 8 6 5 0 9 2 6 . . 2 6 ' 6 60 1 9 4 . . 9 8 6 6 0 1 8 3 . . 3 7 6 6 1 1 1 6 . . 7 6 6 6 1 2 6 2 . . 6 1 6 6 1 2 5 0 . . 2 7 6 6 2 2 2 8 . . 2 1 9 Non-U.S. addressees 6.7 6.9 6.5 6.1 5.9 5.7 4.9 5.4 4.8' 5.4' 5.5 5.9 10 Real estate 643.0 650.3 659.8 665.3 672.0 678.9 685.6 691.8 699.5 705.5 712.0 719.8 11 Individual 347.7 350.2 351.6 353.0 355.5 357.9 358.9 360.6 362.9 365.4 366.0 367.0 12 Security 39.6 36.5 38.5 38.2 38.5 37.7 44.7 43.6 4400..00 3388..00 4411..11 4400..33 13 Nonbank financial institutions 31.1 30.7 30.4 30.2 30.0 30.3 30.6 29.7 29.2 29.0 30.6' 31.7 1144 Agricultural 29.6 29.6 29.8 30.3 30.7 30.7 30.7 30.7 3300..44 3300..33 3300..33'' 3300..44 15 State and political subdivisions 48.2 48.0 48.5 47.7 46.8 44.4 44.5 44.6 44.6 44.6 44.5 44.3 lb Foreign banks 8.0 7.2 7.6 8.1 7.6 7.8 8.5 8.2' 8.3 9.4' 9.3' 8.9 17 Foreign official institutions 5.1 5.0 4.9r 4.9 4.9 4.8 4.8 4.8 4.9' 4.9' 4.7 4.5 18 Lease financing receivables 28.1 28.5 28.9 29.1 29.2 29.4 29.6 29.6 29.8 30.0 29.9 30.3 19 All other loans 52.2 49.1 47.5 47.0r 44.8' 44.4 42.7' 45.2' 42^ 43.1' 43.8' 49.7 Not seasonally adjusted 20 Total loans and securities2 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 2,511.7 21 U.S. government securities 351.2 352.9 352.6 357.5 361.6 362.2 366.3 370.2 370.9 372.6 372.6 373.1 22 Other securities 196.8 195.0 195.6 196.0 193.7 191.7 190.1 188.9 187.2 186.8 186.0 184.1 23 Total loans and leases2 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 1,942.3' 1,954.6 24 Commercial and industrial ..... 593.1 593.3 597.0 599.3 605.0 605.8 618.3 621.1 625.2 630.0 629.0 631.0 25 Bankers acceptances held ... 4.3 4.2 4.2 4.3 4.1 4.1 4.1 4.0 44..00 44..33 44..44 44..22 26 Other commercial and 2277 U.S. i n a d d u d s r t e ri s a s l e es4. 5 5 8 8 2 8 . . 2 8 5 5 8 8 2 9 . . 5 1 5 5 8 9 6 2 . . 6 8 5 5 8 9 8 5 . . 9 0 5 6 9 0 4 0 . . 8 9 5 60 9 1 6 . . 7 4 6 61 0 4 8 . . 2 9 6 61 1 7 1 . . 1 8 ' 6 62 1 1 6 . . 3 0 ' 6 6 2 2 0 5 . . 2 8 6 6 1 2 9 4 . . 0 6 6 6 2 2 1 6 . . 2 8 28 Non-U.S. addressees 6.6 6.6 6.2 6.1 6.1 5.3 5.3 5.3 5.3 5.5' 5.6 5.6 29 Real estate 644.2 651.9 660.7 667.2 673.3 678.9 683.6 689.2 697.4 704.1 712.1 720.5 30 Individual 347.8 351.8 352.6 354.1 359.4 360.7 358.2 357.7 360.3 363.2 364.5 365.9 31 Security 38.3 35.1 36.9 37.6 38.9 38.2 43.8 44.1 4422..00 3388..99 4422..88'' 3399..99 32 Nonbank financial institutions 31.0 30.7 30.1 30.3 31.1 30.7 30.0 29.1 29.0' 29.2' 30.8' 31.7 3333 Agricultural 30.4 30.5 30.6 30.5 30.5 30.1 29.8 29.6 2299..66 3300..11 3300..77'' 3311..11 34 State and political subdivisions 47.7 47.3 48.0 47.1 46.6 45.8 45.5 45.1 44.8 44.5 44.2 43.7 3355 Foreign banks 7.9 7.4 7.6 8.2 7.9 8.1' 8.5 8.0 8.0 9.0 9.1 9.0 36 Foreign official institutions 5.1 5.0 4.9r 4.9 4.9 4.8 4.8 4.8 4^ 4.9" 4.7 4.5 37 Lease financing receivables 28.0 28.4 28.7 28.9 29.4 29.7 29.7 29.7 29.8 30.0 30.0 30.2 38 All other loans 48.9 49.6 47.3 47.5r 47.3 44.0' 45.0 45.4' 44.7' 44.2' 44.5' 47.1 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 1988 1989 SSoouurrccee Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July Seasonally adjusted 1 Total nondeposit funds — 219.4 210.0 210.9 217.3 214.6 207.4 210.6' 211.2 204.3 207.1 223.0 226.8 2 Net balances due to related foreign offices .... 19.2 8.2 5.6 9.3 6.7 8.0 10.7 s.or 2.9 -.1 7.9' 11.1 3 Borrowings from other than commercial banks in United States4 200.3 201.8 205.3 208.0 207.9 199.4 199.9 203.1 201.5' 207.2 215.1r 215.7 4 Domestically chartered banks 165.8 165.8 167.1 168.7 168.9 162.4 160.7 165.1 162.8 166.5 175.0 173.9 5 Foreign-related banks 34.5 36.0 38.2 39.3 39.0 37.0 39.2 38. V 38.7' 40.7 40.0 41.8 Not seasonally adjusted 6 Total nondeposit funds — 218.3 206.6 204.9 214.1 209.0 206.6r 215.4r 216.8 207.0 214.7 226. 1' 222.6 7 Net balances due to related foreign offices 18.7 9.2 5.2 10.3 9.2 7.7 10.4 7.0 .8 2.6 8.1 8.1 8 Domestically chartered banks -7.3 -15.7 -20.5 -19.2 -20.7 -20.5 -17.9 -19.8 -23.0 -22.1 -18.5 -16.6 9 Foreign-related banks 26.0 24.9 25.7 29.5 29.9 28.2 28.3 26.8r 23.8' 24.6 26.6 24.7 10 Borrowings from other than commercial banks in United States4 199.6 197.3 199.7 203.7 199.8 198.9 204.9 209.8' 206.2 212.2' 218.0' 214.4 11 Domestically chartered banks 165.3 162.1 162.9 167.4 162.9 160.8 164.4 170.2 166.7 171.0 176.4' 172.1 12 Federal funds and security RP borrowings 160.3 157.6 158.8 162.8 159.3 157.4 161.2 166.7 162.4 167.3 172.9 169.4 13 Other6 5.0 4.4 4.1 4.6 3.5 3.4 3.2 3.5 4.3 3.7 3.4 2.7 14 Foreign-related banks 34.2 35.3 36.8 36.3 37.0 38.1 40.5 39.6r 39.5 41.1 41.6 42.4 MEMO Gross large time deposits 15 Seasonally adjusted 414.6 419.7 423.2 424.5 429.2 434.9 440.3 446.7R 452.7 456.8r 458.8' 461.6 16 Not seasonally adjusted 415.1 421.7 424.7 425.6 429.8 434.5 440.2 448.2 450.6 455.5 457.3' 458.9 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 17.1 23.5 27.2 23.0 24.9 20.3 20.3 20.3 20.9 27.1 27.4' 22.7 18 Not seasonally adjusted 11.9 24.6 27.7 16.3 22.9 25.0 25.9 18.1 20.2 34.3 26.2 23.0 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 • October 1989 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1988 1989 AAccccoouunntt Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June July ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 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 2,677.1 2 Investment securities 526.8 524.8 532.9 533.5 533.5 535.8 539.1 538.3 541.1 541.6 538.3 3 U.S. government securities 336.4 334.1 341.5 345.3 347.3 351.3 355.5 356.6 359.1 362.2 360.3 4 Other 190.4 190.7 191.4 188.2 186.2 184.5 183.6 181.7 182.0 179.4 178.1 5 Trading account assets 21.2 24.9 24.8 19.2 21.5 20.1 21.8 17.8 19.2 18.2 19.8 6 Total loans 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 2,119.0 7 Interbank loans 154.9 161.3 170.3 165.7 159.9 173.2 154.9 150.7 160.5 155.0 162.4 8 Loans excluding interbank 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 1,956.6 9 Commercial and industrial 593.3 595.0 601.3 608.8 604.6 617.6 622.9 627.3 631.1 628.3 635.3 10 Real estate 654.7 661.8 669.6 676.3 679.7 684.1 692.6 699.4 706.7 715.1 722.8 11 Individual 352.7 353.3 355.3 361.4 360.8 358.3 358.1 361.8 363.8 366.0 366.2 12 All other 232.0 230.6 237.5 236.6 227.0 234.8 237.7 227.7 237.4 236.6 232.3 13 Total cash assets 216.6 209.9 237.5 246.3 216.1 227.4 211.5 215.8 248.3 214.2 211.7 14 Reserves with Federal Reserve Banks. 31.1 31.7 33.8 34.5 31.5 27.7 30.9 33.4 27.8 27.9 30.6 15 Cash in vault 26.2 26.3 28.7 30.3 27.5 26.6 26.8 26.9 27.9 27.6 27.4 16 Cash items in process of collection ... 76.3 72.9 89.8 92.3 76.4 89.1 75.9 78.8 107.6 78.7 75.2 17 Demand balances at U.S. depository institutions 29.8 29.4 32.4 34.4 28.7 33.3 28.8 28.5 34.9 29.6 28.8 18 Other cash assets 53.2 49.6 52.8 54.8 52.0 50.7 49.0 48.3 50.2 50.5 49.7 19 Other assets 194.5 200.3 200.7 200.0 194.6 191.4 194.1 200.7 206.8 198.7 201.1 20 Total assets/total liabilities and capital 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 3,090.0 21 Deposits 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 2,152.0 22 Transaction deposits 588.3 587.8 628.6 642.7 586.6 602.6 583.2 594.5 628.5 580.5 579.4 23 Savings deposits 536.6 537.8 541.1 535.6 528.8 527.3 523.2 512.0 509.7 507.4 514.0 24 Time deposits 937.9 946.7 956.1 967.5 981.7 995.3 1,017.3 1,027.6 1,044.3 1,050.2 1,058.6 25 Borrowings 471.8 482.6 479.0 473.1 493.6 502.9 483.6 486.7 510.6 512.7 510.2 26 Other liabilities 220.8 214.5 229.0 233.7 209.1 216.5 223.9 217.4 218.6 218.4 223.1 27 Residual (assets less liabilities) 191.4 192.5 195.9 195.3 198.0 198.2 201.4 201.2 203.2 204.4 204.7 MEMO 28 U.S. government securities (including trading account) 352.6 354.0 361.0 359.4 364.4 366.2 372.1 369.5 372.3 374.4 373.5 29 Other securities (including trading account) 195.4 195.7 196.7 193.4 190.5 189.7 188.8 186.6 188.0 185.4 184.6 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 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 2,452.1 31 Investment securities 501.7 499.3 507.1 507.2 507.0 509.0 513.1 513.8 516.1 517.3 514.2 32 U.S. government securities 325.0 322.8 329.9 333.2 334.5 338.1 342.7 344.1 345.9 349.5 347.8 33 Other 176.7 176.5 177.1 174.0 172.6 171.0 170.4 169.7 170.2 167.8 166.5 34 Trading account assets 21.2 24.9 24.8 19.2 21.5 20.1 21.8 17.8 19.2 18.2 19.8 35 Total loans 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 1,918.1 36 Interbank loans 126.2 131.3 139.7 133.1 131.4 138.9 122.3 120.2 131.5 119.3 126.4 37 Loans excluding interbank 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 1,791.7 38 Commercial and industrial 490.2 492.7 498.7 500.6 498.9 503.4 506.1 511.3 515.5 511.6 515.6 39 Real estate 634.8 641.3 647.7 654.3 657.7 661.7 669.8 676.0 683.2 691.6 698.2 40 Individual 352.3 353.0 354.9 361.1 360.5 358.0 357.7 361.4 363.5 365.6 365.8 41 All other 213.3 211.6 217.0 216.3 208.1 214.7 216.9 207.3 217.0 216.3 212.0 42 Total cash assets 194.1 190.2 216.6 223.1 193.5 206.4 191.4 195.3 227.0 192.3 190.1 43 Reserves with Federal Reserve Banks. 29.0 29.9 32.6 33.1 30.1 26.6 29.5 30.7 26.7 26.6 29.6 44 Cash in vault 26.1 26.2 28.6 30.3 27.4 26.6 26.8 26.8 27.9 27.6 27.4 45 Cash items in process of collection ... 75.9 72.2 89.0 91.4 75.6 88.1 75.1 77.9 106.6 77.7 74.4 46 Demand balances at U.S. depository institutions 27.7 27.4 30.5 32.4 26.8 31.2 26.6 26.8 32.9 27.5 27.0 47 Other cash assets 35.3 34.4 35.8 35.9 33.6 33.9 33.4 33.1 33.0 32.9 31.7 48 Other assets 127.3 130.4 132.2 135.6 128.1 129.6 130.6 134.6 133.6 131.6 128.4 49 Total assets/liabilities and capital 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 2,770.6 50 Deposits 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 2,071.3 51 Transaction deposits 579.5 578.2 618.7 632.9 577.4 593.5 574.1 584.8 618.7 571.2 570.2 52 Savings deposits 534.1 535.2 538.6 533.1 526.4 524.8 520.7 509.4 507.1 504.8 511.3 53 Time deposits 882.1 890.7 899.0 907.0 922.3 934.4 952.6 961.9 977.2 982.9 989.9 54 Borrowings 359.5 365.2 366.1 363.7 377.1 378.7 362.8 368.2 383.0 387.3 380.2 55 Other liabilities 118.2 116.3 123.8 122.0 109.0 115.8 121.7 115.6 120.9 116.9 117.8 56 Residual (assets less liabilities) 187.8 189.0 192.4 191.8 194.5 194.6 197.9 197.7 199.7 200.8 201.2 MEMO 57 Real estate loans, revolving 37.5 38.5 39.7 40.1 40.7 41.7 42.5 43.4 44.3 45.3 45.7 58 Real estate loans, other 597.3 602.7 608.0 614.2 617.0 620.0 627.3 632.6 638.9 646.2 652.5 1. Back data are available from the Banking and Monetary Statistics section, the last Wednesday of the month based on a weekly reporting sample of Board of Governors of the Federal Reserve System, Washington, D.C., 20551. foreign-related institutions and quarter-end condition reports. These data also appear in the Board's weekly H.8 (510) release. 2. Commercial banking institutions include insured domestically chartered Figures are partly estimated. They include all bank-premises subsidiaries and commercial banks, branches and agencies of foreign banks, Edge Act and other significant majority-owned domestic subsidiaries. Loan and securities data Agreement corporations, and New York State foreign investment corporations. for domestically chartered commercial banks are estimates for the last Wednes- 3. Insured domestically chartered commercial banks include all member banks day of the month based on a sample of weekly reporting banks and quarter-end and insured nonmember banks. condition report data. Data for other banking institutions are estimates made for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A19 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS1 Millions of dollars, Wednesday figures 1989 AAccccoouunntt May 31 June 7 June 14 June 21 June 28 July 5 July 12 July 19 July 26 1 Cash and balances due from depository institutions 126,047R 103,021' 112,907 103,146' 105,727 121,904 116,706 105,662 105,395 2 Total loans, leases, and securities, net 1,213,512 1,201,589 1,203,738 1,208,875 1,208,607 1,224,771 1,217,310 1,207,891 1,216,173 3 U.S. Treasury and government agency 137,220 137,634 137,626 140,272 140,742 141,500 140,479 140,334 142,712 4 Trading account 13,216 13,548 13,823 14,427 12,168 13,152 13,389 12,688 13,224 5 Investment account 124,003 124,086 123,803 125,845 128,575 128,348 127,090 127,646 129,488 6 Mortgage-backed securities3 53,356' 53,508' 53,518 55,368' 57,264 57,534 57,684 58,591 60,455 All other maturing in 7 One year or less 21,415' 21,592' 21,340 21,347' 21,950 21,053 20,894 20,718 20,472 8 Over one through five years 41,192' 41,052' 40,934 40,772' 40,734 40,694 39,733 39,624 39,545 9 Over five years 8,041' 7,934' 8,011 8,358' 8,626 9,068 8,778 8,713 9,017 10 Other securities 72,670 72,054 72,010 72,176 71,651 71,156 71,083 71,242 71,457 11 Trading account 1,138 842 1,027 1,045 1,113 1,151 1,033 1,075 1,232 12 Investment account 71,533 71,211 70,982 71,131 70,538 70,004 70,050 70,166 70,225 N States and political subdivisions, by maturity 44,473 44,216 44,153 44,069 43,847 43,132 43,172 43,286 43,243 14 One year or less 5,051 4,981 4,971 4,915 4,783 4,525 4,666 4,740 4,830 15 Over one year 39,422 39,235 39,181 39,154 39,063 38,607 38,505 38,546 38,412 16 Other bonds, corporate stocks, and securities 27,060 26,996 26,830 27,062 26,691 26,872 26,878 26,880 26,982 17 Other trading account assets 4,829 5,232 4,810 4,634 4,870 5,243 4,964 5,434 5,328 18 Federal funds sold4 77,178 68,424 69,935 70,210 72,860 78,924 72,247 61,897 63,820 19 To commercial banks 51,929 42,728 44,934 45,070 48,091 53,455 49,264 41,507 44,919 70 To nonbank brokers and dealers in securities 18,223 18,593 19,299 18,841 18,409 19,174 16,261 14,695 12,721 71 To others 7,026 7,102 5,702 6,299 6,360 6,295 6,721 5,695 6,179 27. Other loans and leases, gross 959,975' 956,741' 957,766 959,963' 956,660 965,448 965,618 966,206 969,881 73 Other loans, gross 935,367' 932,164' 933,176 935,318' 931,988 940,668 940,858 941,367 945,022 24 Commercial and industrial 317,331' 316,467' 315,680 315,19C 313,384 316,172 315,152 315,626 319,013 25 Bankers acceptances and commercial paper 1,978 1,840 1,879 1,803 1,781 1,892 1,667 1,755 1,761 76 All other 315,353' 314,627' 313,801 313,388' 311,603 314,280 313,485 313,870 317,252 27 U.S. addressees 313,424' 312,723' 311,965 311,517' 309,696 312,405 311,767 312,107 315,636 28 Non-U.S. addressees 1,929' 1,904' 1,836 1,871' 1,907 1,875 1,719 1,763 1,616 79 Real estate loans 327,480' 328,051' 329,624 330,800' 331,538 332,033 333,123 334,097 335,181 30 Revolving, home equity 24,422' 24,533' 24,746 24,872' 24,541 24,496 24,561 24,679 24,750 31 All other 303,058' 303,518' 304,878 305,929' 306,997 307,537 308,561 309,418 310,432 32 To individuals for personal expenditures 169,495' 168,929' 169,414 168,990' 169,469 169,618 169,946 169,992 170,007 33 To depository and financial institutions 47,914' 47,207' 45,839 46,148' 43,406 46,614 46,829 47,758 47,218 34 Commercial banks in the United States 21,679' 21,044' 20,253 19,632' 17,619 19,398 20,088 20,869 21,212 35 Banks in foreign countries 4,809' 4,775' 3,950 4,412' 3,976 5,006 4,452 4,414 4,192 36 Nonbank depository and other financial institutions .. 21,426' 21,387' 21,636 22,104' 21,810 22,209 22,289 22,474 21,813 37 For purchasing and carrying securities 15,640' 14,288' 15,695 16,135' 17,028 16,382 17,449 15,962 16,360 38 To finance agricultural production 5,696' 5,731' 5,726 5,748' 5,805 5,869 5,972 5,975 5,937 39 To states and political subdivisions 27,143' 27,119 27,037 27,067' 26,996 26,812 26,699 26,718 26,735 40 To foreign governments and official institutions 1,853' 1,993' 1,922 1,879' 1,823 1,845 2,000 1,888 1,640 41 All other 22,814' 22,378' 22,239 23,361' 22,539 25,323 23,688 23,352 22,932 42 Lease financing receivables 24,608 24,576' 24,590 24,645 24,672 24,780 24,760 24,839 24,858 43 LESS: Unearned income 4,895' 4,907' 4,919 4,937' 4,948 4,836 4,849 4,935 4,944 44 Loan and lease reserve 33,465 33,589' 33,490 33,443' 33,228 32,663 32,232 32,285 32,081 45 Other loans and leases, net 921,615 918,245 919,356 921,583 918,484 927,949 928,537 928,985 932,855 46 All other assets 131,085' 132,019' 130,697 131,785' 128,227 135,575 128,694 128,502 124,465 47 Total assets 1,470,644' 1,436,629' 1,447,342 1,443,806' 1,442,562 1,482,250 1,462,710 1,442,055 1,446,033 48 Demand deposits 244,114 219,785 226,181 219,160 219,187 255,695 224,157 222,146 215,863 49 Individuals, partnerships, and corporations 189,983 175,662 180,957 174,885 173,820 203,404 180,033 177,274 172,225 50 States and political subdivisions 5,894 5,420 5,890 6,616 6,078 7,340 5,725 5,724 5,862 51 U.S. government 2,678 3,373 4,547 1,888 2,516 2,058 3,071 4,410 3,046 52 Depository institutions in the United States 25,996 19,292 19,817 19,736 20,081 22,729 19,998 19,117 19,246 53 Banks in foreign countries 8,515 7,206 6,020 7,030 6,707 7,857 6,622 6,966 6,410 54 Foreign governments and official institutions 669 954 891 866 1,022 835 955 832 809 55 Certified and officers' checks 10,378 7,879 8,059 8,138 8,963 11,471 7,753 7,822 8,265 56 Transaction balances other than demand deposits 74,271 75,696 74,883 72,702 71,824 76,580 74,576 73,877 72,951 57 Nontransaction balances 673,096 677,506 676,569 675,376 674,735 682,277 682,662 681,581 681,918 58 Individuals, partnerships, and corporations 631,697' 636,172' 635,473 634,831' 634,492 642,978 643,189 642,373 642,564 59 States and political subdivisions 32,401' 32,17c 32,069 31,482' 31,154 30,082 30,349 30,010 30,110 60 U.S. government 922 916 882 882 898 917 933 925 928 61 Depository institutions in the United States 7,420 7,537' 7,466 7,484 7,494 7,681 7,562 7,638 7,679 62 Foreign governments, official institutions, and banks .. 657 711 679 696 696 620 629 634 637 63 Liabilities for borrowed money 289,130 277,162 282,707 289,438 291,896 280,388 293,606 276,542 286,563 64 Borrowings from Federal Reserve Banks 1,349 1,520 1,720 0 960 0 0 25 0 65 Treasury tax-and-loan notes 21,700 8,003 7,165 25,165 25,191 11,939 13,430 13,493 16,136 66 All other liabilities for borrowed money6 266,081 267,639 273,822 264,273 265,746 268,448 280,176 263,023 270,427 67 Other liabilities and subordinated notes and debentures .. 89,654' 85,728' 86,028 86,365' 84,046 86,143 86,225 86,583 87,679 68 Total liabilities 1,370,266' 1,335,878' 1,346,368 1,343,041' 1,341,689 1,381,083 1,361,226 1,340,729 1,344,975 69 Residual (total assets minus total liabilities)7 100,378' 100,751' 100,973 100,765' 100,873 101,167 101,484 101,326 101,058 MEMO 70 Total loans and leases (gross) and investments adjusted8 . 1,178,264' 1,176,313' 1,176,960 1,182,553' 1,181,074 1,189,418 1,185,038 1,182,735 1,187,067 71 Total loans and leases (gross) adjusted 963,545' 961,392' 962,514 965,471' 963,811 971,519 968,512 965,726 967,569 72 Time deposits in amounts of $100,000 or more 215,426' 217,253' 217,440 216,782 216,742 217,229 218,934 218,144 217,940 73 U.S. Treasury securities maturing in one year or less 19,418' 19,896' 18,892 18,898' 18,603 18,455 18,765 18,906 18,367 74 Loans sold outright to affiliates—total 1,775 1,854 1,859 1,863 1,800 1,625 1,639 1,686 1,670 75 Commercial and industrial 1,466 1,542 1,548 1,544 1,479 1,306 1,308 1,347 1,332 76 Other 309 312 312 319 320 319 330 338 338 77 Nontransaction savings deposits (including MMDAs) 246,395 248,402 246,968 246,010 245,348 251,750 250,068 249,928 250,100 1. Beginning Jan. 6, 1988, the "Large bank" reporting group was revised 6. Includes federal funds purchased and securities sold under agreements to somewhat, eliminating some former reporters with less than $2 billion of assets repurchase; for information on these liabilities at banks with assets of $1 billionor and adding some new reporters with assets greater than $3 billion. more on Dec. 31, 1977, see table 1.13. 2. For adjustment bank data see this table in the March 1989 Bulletin. The 7. This is not a measure of equity capital for use in capital-adequacy analysis or adjustment data for 1988 should be added to the reported data for 1988 to establish for other analytic uses. comparability with data reported for 1989. 8. Exclusive of loans and federal funds transactions with domestic commercial 3. Includes U.S. government-issued or guaranteed certificates of participation banks. in pools of residential mortgages. 9. Loans sold are those sold outright to a bank's own foreign branches, 4. Includes securities purchased under agreements to resell. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if 5. Includes allocated transfer risk reserve. not a bank), and nonconsolidated nonbank subsidiaries of the holding company. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • October 1989 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1989 Account May 31 June 7 June 14 June 21 June 28 July 5 July 12 July 19 July 26 1 Cash balances due from depository institutions 28,490 20,524 25,136 21,314 24,700 27,588 27,373 22,860 24,436 2 Total loans, leases, and securities, net2 222,681 216,247 217,152 216,649 215,410 215,920 219,167 212,997 213,080 Securities 3 U.S. Treasury and government agency3 0 0 0 0 0 0 0 0 0 4 Trading account 0 0 0 0 0 0 0 0 0 5 Investment account 15,244 15,042 15,030 15,095 15,461 15,326 15,024 15,642 15,658 6 Mortgage-backed securities4 7,237 7,250 7,260 7,288 7,414 7,422 7,444 7,971 8,112 All other maturing in 7 One year or less 2,804 2,791 2,781 2,855 2,930 2,818 2,808 2,984 2,871 8 Over one through five years 3,500 3,409 3,412 3,295 3,517 3,514 3,203 3,130 3,109 9 Over five years 1,703 1,592 1,576 1,657 1,601 1,572 1,569 1,558 1,565 10 Other securities3 0 0 0 0 0 0 0 0 0 11 Trading account3 0 0 0 0 0 0 0 0 0 12 Investment account 17,777 17,772 17,927 18,224 17,761 17,292 17,359 17,508 17,518 13 States and political subdivisions, by maturity 11,990 11,964 11,932 11,904 11,707 11,269 11,331 11,408 11,364 14 One year or less 1,161 1,175 1,178 1,181 1,079 806 905 974 1,055 15 Over one year 10,828 10,788 10,755 10,723 10,628 10,463 10,426 10,433 10,309 16 Other bonds, corporate stocks, and securities 5,787 5,808 5,995 6,320 6,054 6,023 6,028 6,100 6,154 17 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold5 27,529 22,727 24,721 23,950 25,085 23,518 25,070 19,114 17,313 19 To commercial banks 13,687 8,086 10,582 9,875 11,277 10,330 12,986 9,491 9,478 20 To nonbank brokers and dealers in securities 9,708 10,335 10,956 10,384 9,994 9,606 7,909 6,926 4,474 21 To others 4,134 4,307 3,182 3,690 3,814 3,583 4,175 2,6% 3,361 22 Other loans and leases, gross 176,814 175,424 174,171 174,092 171,809 173,840 175,515 174,636 176,522 23 Other loans, gross 171,076 169,696 168,469 168,363 166,097 168,134 169,819 168,910 170,806 24 Commercial and industrial 59,915' 59,431' 58,842' 57,513' 56,436' 56,214 56,581 57,339 59,348 25 Bankers acceptances and commercial paper 422 384 489 404 394 353 380 416 376 26 All other 59,493' 59,047' 58,354' 57,109' 56,043' 55,861 56,201 56,924 58,972 27 U.S. addressees 58,864' 58,418' 57,752' 56,506' 55,340' 55,172 55,625 56,336 58,458 28 Non-U.S. addressees 629 628 602 603 703 689 576 588 514 29 Real estate loans 53,608' 53,641' 53,701' 53,90c 54,084' 54,292 54,741 55,101 55,590 30 Revolving, home equity 3,479 3,481 3,495 3,508 3,524 3,540 3,553 3,563 3,577 31 All other 50,129' 50,160' 50,206' 50,392' 50,561' 50,751 51,188 51,538 52,013 32 To individuals for personal expenditures 19,347 19,430 19,528 19,498 19,630 19,650 19,623 19,741 19,607 33 To depository and financial institutions 20,462' 19,772' 18,975' 19,335' 17,431' 19,920 19,695 19,555 18,882 34 Commercial banks in the United States 9,541' 8,872' 8,442' 8,344' 7,097' 8,425 8,750 8,480 8,314 35 Banks in foreign countries 3,323 3,215 2,537 2,932 2,529 3,499 2,945 2,881 2,713 36 Nonbank depository and other financial institutions 7,598 7,685 7,9% 8,059 7,804 7,996 8,000 8,194 7,855 37 For purchasing and carrying securities 6,165 5,606 5,971 6,374 7,146 6,3% 7,210 5,738 5,964 38 To finance agricultural production 158 163 155 148 150 155 162 163 156 39 To states and political subdivisions 5,982 5,945 5,898 5,974 5,917 5,976 5,881 5,879 5,855 40 To foreign governments and official institutions 480 625 504 508 476 506 664 561 485 41 Allother 4,957' 5,081' 4,893' 5,113' 4,826' 5,025 5,261 4,833 4,918 42 Lease financing receivables 5,737 5,728 5,701 5,729 5,712 5,707 5,6% 5,725 5,717 43 LESS: Unearned income 1,641 1,646 1,655 1,675 1,686 1,657 1,663 1,754 1,787 44 Loan and lease reserve 13,041 13,072 13,041 13,037 13,020 12,399 12,138 12,149 12,145 45 Other loans and leases, net6 162,131 160,706 159,474 159,380 157,103 159,784 161,714 160,733 162,591 46 All other assets7 57,284 59,032 54,848 59,411 56,451 62,477 55,016 55,649 53,357 47 Total assets 308,455 295,803 297,137 297,373 296,562 305,985 301,557 291,506 290,873 Deposits 48 Demand deposits 58,706 50,054 50,818 52,866 52,046 61,690 51,370 52,175 49,420 49 Individuals, partnerships, and corporations 38,911 35,302 36,199 36,539 35,773 42,822 36,560 36,974 34,630 50 States and political subdivisions 625 571 1,057 938 850 1,742 705 717 552 51 U.S. government 478 577 693 193 493 242 606 771 581 52 Depository institutions in the United States 6,745 4,183 4,787 5,642 5,120 4,847 4,827 4,669 4,767 53 Banks in foreign countries 7,040 5,972 4,590 5,710 5,240 6,352 5,325 5,559 5,120 54 Foreign governments and official institutions 530 785 749 628 863 683 798 689 653 55 Certified and officers' checks 4,376 2,663 2,743 3,216 3,706 5,002 2,549 2,795 3,116 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,236 8,412 8,446 8,178 8,109 8,467 8,352 8,215 8,164 57 Nontransaction balances 113,778 114,776 113,479 112,939 112,693 115,221 114,540 113,768 113,469 58 Individuals, partnerships, and corporations 103,405 104,455 103,007 102,616 102,309 105,074 104,126 103,441 103,095 59 States and political subdivisions 8,095 8,013 8,186 8,039 8,106 7,745 7,986 7,805 7,840 60 U.S. government 29 30 30 29 28 32 31 32 30 61 Depository institutions in the United States 2,000 1,997 2,004 2,004 1,998 2,123 2,142 2,243 2,254 62 Foreign governments, official institutions, and banks ... 249 281 253 250 251 247 254 247 250 63 Liabilities for borrowed money 65,776 64,382 66,456 65,433 68,297 62,795 67,984 58,638 61,644 64 Borrowings from Federal Reserve Banks 0 0 0 0 960 0 0 0 0 65 Treasury tax-and-loan notes 5,381 1,772 1,485 6,086 5,969 2,588 3,130 3,045 3,926 66 All other liabilities for borrowed money 60,395 62,610 64,971 59,348 61,368 60,207 64,854 55,592 57,718 67 Other liabilities and subordinated notes and debentures ... 33,420 29,387 29,100 29,314 26,802 29,262 30,673 30,216 29,707 68 Total liabilities 279,916 267,011 268,299 268,730 267,947 277,435 272,920 263,013 262,404 69 Residual (total assets minus total liabilities)9 28,539 28,792 28,837 28,643 28,615 28,550 28,637 28,494 28,469 MEMO 70 Total loans and leases (gross) and investments adjusted2,10 214,135' 214,008' 212,824' 213,142' 211,742' 211,222 211,231 208,929 209,219 71 Total loans and leases (gross) adjusted1 181,115' 181,194' 179,867' 179,822' 178,520' 178,604 178,848 175,778 176,043 72 Time deposits in amounts of $100,000 or more 43,084 43,323 42,891 42,576 42,356 43,737 43,612 42,952 42,351 73 U.S. Treasury securities maturing in one year or less 2,950 2,829 2,956 2,978 2,872 3,103 2,821 3,183 2,758 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 FRA5. SIEncRlu 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 31 June 7 June 14 June 21 June 28 July 5 July 12 July 19 July 26 1 Cash and due from depository institutions ... 11,420 10,617 11,621 11,396 11,606 10,701 11,647 11,120 11,809 2 Total loans and securities 130,214' 131,486' 133,136' 133,187' 134,216 131,647 131,510 132,164 137,745 3 U.S. Treasury and government agency securities 8,863 8,659 8,132 8,5% 88,,555577 88,,665522 88,,554455 88,,665544 88,,441166 4 Other securities. 6,137 6,138 6,014 6,006 5,988 5,944 5,930 5,922 6,018 5 Federal funds sold2 5,500 7,267 9,030 7,955 7,286 3,928 6,525 4,555 7,868 6 To commercial banks in the United States. 4,489 6,215 8,002 6,915 6,079 2,711 5,392 3,512 6,685 7 1,011 1,052 1,028 1,040 1,207 1,217 1,133 1,043 1,183 8 Other loans, gross 109,711' 109,422' 109,960' 110,630' 112,385 113,123 110,510 113,033 115,440 9 Commercial and industrial 71,148' 70,601' 70,554r 71,225' 71,220' 71,640 69,889 71,292 73,416 10 Bankers acceptances and commercial paper 1,648 1,789 1,888 1,892 1,863 1,761 1,664 11,,773333 11,,771122 11 All other 69,500' 68,812' 68,666' 69,333' 69,357' 69,879 68,225 69,559 71,704 1? U.S. addressees 67,784' 67,056' 66,914' 67,645' 67,603' 67,998 66,288 67,634 69,829 n Non-U.S. addressees 1,716' 1,756' 1,752' 1,688' 1,754' 1,881 1,937 1,925 1,875 14 Loans secured by real estate 14,691 14,736 14,664 15,173 14,912 15,240 15,309 15,517 15,584 15 To financial institutions 19,985' 19,997' 20,470' 20,480' 22,089' 21,792 21,241 21,922 22,250 16 Commercial banks in the United States.. 14,515' 14,674' 15,171' 15,536' 17,060' 16,638 16,350 16,932 17,102 17 Banks in foreign countries 1,944 1,758 1,783 1,438 1,490 1,513 1,224 1,267 1,408 18 Nonbank financial institutions 3,526' 3,565' 3,516' 3,506' 3,539' 3,641 3,667 3,723 3,740 19 To foreign governments and official institutions 692 686 649 622 716 629 630 662299 663333 20 For purchasing and carrying securities 1,563 1,484 2,157 1,642 1,757 2,160 1,799 1,901 1,830 71 All other3 1,632 1,918 1,466 1,488 1,691 1,662 1,642 1,772 1,727 2n2 O N t e h t e d r u a e s s fr e o ts m ( c re la l i a m te s d o i n n s n ti o tu n t r i e o la n t s e d parties) .. 3 1 2 8 , , 6 2 6 9 9 3 3 1 2 5 , , 1 7 4 8 6 9 3 1 2 4 , , 6 4 6 5 3 0 3 1 2 5 , , 6 5 3 2 8 0 3 1 2 4 , , 5 0 0 % 8 3 1 1 7 , , 6 0 6 4 4 0 3 1 2 4 , , 6 8 1 6 3 9 3 1 2 6 , , 3 4 3 7 6 0 3 1 3 5 , , 8 8 6 2 9 5 24 Total assets 192,596 190,038 191,869 192,741 192,426 191,053 190,640 192,090 199,248 75 Deposits or credit balances due to other than directly related institutions 48,500' 48,854' 47,970 48,570' 48,753' 48,584 48,631 49,578 4499,,880055 26 Transaction accounts and credit balances . 3,609 3,477 3,014 3,450 4,101 3,332 3,234 3,212 3,274 27 Individuals, partnerships, and corporations 2,107 2,080 1,905 1,934 2,423 2,076 11,,995566 11,,998877 11,,998866 78 Other 1,502 1,397 1,109 1,516 1,678 1,256 1,278 1,225 1,288 29 Nontransaction accounts 44,891' 45,377' 44,956 45,120' 44,652' 45,252 45,397 46,366 46,531 30 Individuals, partnerships, and corporations 37,829' 38,187' 37,748 37,732' 37,607' 37,888 3377,,776688 3388,,000077 3388,,666677 31 Other 7,062 7,190 7,208 7,388 7,045 7,364 7,629 8,359 7,864 32 Borrowings from other than directly related institutions 83,6I9r 82,778' 81,428' 86,349' 81,787' 86,254 81,000 8844,,226666 8855,,004411 33 Federal funds purchased6 38,550 38,762 37,212 41,660 34,949 41,867 36,134 38,285 38,982 34 From commercial banks in the United States 21,099 20,561 21,260 21,367 17,653 23,142 21,327 18,653 1199,,555577 35 From others 17,451 18,201 15,952 20,293 17,2% 18,725 14,807 19,632 19,425 36 Other liabilities for borrowed money 45,069' 44,016' 44,216' 44,689' 46,838' 44,387 44,866 45,981 46,059 37 To commercial banks in the United States 29,437 28,777 28,940 29,058 31,098 29,767 29,059 2299,,997755 2299,,779900 38 To others 15,632' 15,239' 15,276' 15,631' 15,740' 14,620 15,807 16,006 16,269 39 Other liabilities to nonrelated parties 33,782 33,141 33,333 32,472 32,829 32,124 32,944 33,535 34,953 40 Net due to related institutions 26,694 25,266 29,141' 25,350 29,056 24,091 28,065 24,713 29,449 41 Total liabilities 192,596 190,038 191,869 192,741 192,426 191,053 190,640 192,090 199,248 MEMO 4? Total loans (gross) and securities adjusted7 .. 111,207' 1.10,597' 109,963' 110,736' 111,077' 112,298 109,768 111,720 113,955 43 Total loans (gross) adjusted7 96,207' 95,800' 95,817' 96,134' %,532' 97,702 95,293 97,144 99,521 1. Effective Jan. 4,1989, the reporting panel includes a new group of large U.S. separate component of Other loans, gross. Formerly, these loans were included in branches and agencies of foreign banks. Earlier data included 65 U.S. branches "All other", line 21. and agencies of foreign banks that included those branches and agencies with 4. Includes credit balances, demand deposits, and other checkable deposits. assets of $750 million or more on June 30, 1980, plus those branches and agencies 5. Includes savings deposits, money market deposit accounts, and time that had reached the $750 million asset level on Dec. 31, 1984. These data also deposits. appear in the Board's H.4.2 (504) release. For address, see inside front cover. 6. Includes securities sold under agreements to repurchase. 2. Includes securities purchased under agreements to resell. 7. Exclusive of loans to and federal funds sold to commercial banks in the 3. Effective Jan. 4, 1989, loans secured by real estate are being reported as a United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • October 1989 1.31 GROSS DEMAND DEPOSITS Individuals, Partnerships, and Corporations1 Billions of dollars, estimated daily-average balances, not seasonally adjusted Commercial banks TTyyppee ooff hhoollddeerr 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 1989 IInnssttrruummeenntt D 19 e 8 c 4 . D 19 e 8 c 5 . D 19 e 8 c 6 . D 19 e 8 c 7 . D 19 e 8 c 8 . Jan. Feb. Mar. Apr. May June Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 237,586 298,779 329,991 357,129 455,017 471,066 487,771 492,821 494,292 497,369 503,445 Financial companies1 Dealer-placed paper 2 Total 56,485 78,443 101,072 101,958 159,947 162,884 173,944 172,950 170,549 167,795 167,681 3 Bank-related (not seasonally adjusted) 2,035 1,602 2,265 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper4 4 Total 110,543 113355,,332200 151,820 173,939 192,442 199,828 201,997 205,374 207,231 206,497 211,020 5 Bank-related (not seasonally adjusted)3 42,105 44,778 40,860 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies5 70,558 85,016 77,099 81,232 102,628 108,354 111,830 114,497 116,512 123,077 124,744 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 78,364 68,413 64,974 70,565 66,631 62,212 62,812 62,458 64,357 62,396 64,182 Holder 8 Accepting banks 9,811 11,197 13,423 10,943 9,086 9,009 9,401 8,336 9,616 8,908 9,333 9 Own bills 8,621 9,471 11,707 9,464 8,022 7,927 8,497 7,642 8,107 8,115 8,399 10 Bills bought 1,191 1,726 1,716 1,479 1,064 1,082 904 693 1,509 794 934 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 1,596 1,579 1,544 1,400 1,374 1,177 13 Others 67,881 56,279 50,234 58,658 56,052 51,608 51,832 52,579 53,340 52,113 53,672 Basis 14 Imports into United States 17,845 15,147 14,670 16,483 14,984 14,917 15,588 14,755 15,234 14,900 15,477 15 Exports from United States 16,305 13,204 12,960 15,227 14,410 13,813 13,927 13,581 14,371 14,452 15,040 16 All other 44,214 40,062 37,344 38,855 37,237 33,482 33,297 34,122 34,752 33,044 33,666 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 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 Aug. 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 Financial Statistics • October 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 Apr. May June July June 30 July 7 July 14 July 21 July 28 MONEY MARKET RATES 1 Federal funds1'2 , 6.80 6.66 7.57 9.84 9.81 9.53 9.24 9.58 9.58 9.31 9.24 9.14 2 Discount window borrowing1'2'3 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 paper ' 3 1-month 6.61 6.74 7.58 9.77 9.58 9.34 8.95 9.35 9.19 8.91 8.93 8.86 4 3-month 6.49 6.82 7.66 9.81 9.47 9.11 8.68 9.10 8.95 8.63 8.65 8.59 5 6-month 6.39 6.85 7.68 9.78 9.29 8.80 8.35 8.73 8.56 8.31 8.36 8.27 Finance paper, directly placed4' 6 1-month 6.57 6.61 7.44 9.70 9.48 9.24 8.80 9.27 9.03 8.75 8.80 8.75 7 3-month 6.38 6.54 7.38 9.70 9.27 8.77 8.32 8.77 8.60 8.30 8.29 8.19 8 6-month 6.31 6.37 7.14 9.29 8.97 8.22 7.80 8.15 8.04 7.82 7.75 7.70 Bankers acceptances • 9 3-month 6.38 6.75 7.56 9.68 9.35 8.97 8.54 8.94 8.74 8.52 8.55 8.46 10 6-month 6.28 6.78 7.60 9.63 9.15 8.66 8.19 8.55 8.34 8.18 8.22 88..0099 Certificates of deposit, secondary market 11 1-month 6.61 6.75 7.59 9.81 9.61 9.35 8.96 9.35 9.19 8.93 8.95 8.89 12 3-month 6.51 6.87 7.73 9.94 9.59 9.20 8.76 9.16 9.00 8.71 8.75 8.69 13 6-month 6.50 7.01 7.91 10.13 9.60 9.09 8.59 8.98 8.79 8.53 8.61 8.52 14 Eurodollar deposits. 3-month8 6.7<r 1.0T 7.85 10.04 9.66 9.28 8.85 9.31 9.16 8.91 8.81 8.84 U.S. Treasury bills5 Secondary market 15 3-month 5.97 5.78 6.67 8.65 8.43 8.15 7.88 8.03 7.81 7.77 7.97 7.98 16 6-month 6.02 6.03 6.91 8.65 8.41 7.93 7.61 7.79 7.58 7.52 7.73 7.62 17 1-year 6.07 6.33 7.13 8.64 8.31 7.84 7.36 7.71 7.42 7.32 7.43 7.35 Auction average10 18 3-month 5.98 5.82 6.68 8.70 8.40 8.22 7.92 8.07 7.96 7.76 7.87 8.09 19 6-month 6.03 6.05 6.92 8.73 8.39 8.00 7.63 7.78 7.63 7.50 7.67 7.73 20 1-year 6.18 6.33 7.17 8.75 8.44 8.18 7.58 n.a. 7.58 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 9.36 8.98 8.44 7.89 8.28 7.97 7.85 7.96 7.86 22 2-year 6.86 7.42 8.10 9.45 9.02 8.41 7.82 8.23 7.95 7.79 7.88 7.75 23 3-year 7.06 7.68 8.26 9.40 8.98 8.37 7.83 8.20 7.94 7.80 7.89 7.77 24 5-year 7.30 7.94 8.47 9.30 8.91 8.29 7.83 8.13 7.93 7.81 7.88 7.75 25 7-year 7.54 8.23 8.71 9.24 8.88 8.31 7.94 8.16 8.07 7.92 7.98 7.86 26 10-year 7.67 8.39 8.85 9.18 8.86 8.28 8.02 8.14 8.08 8.01 8.07 7.97 '2V 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.% 9.03 8.83 8.27 8.08 8.10 8.09 8.05 8.14 8.08 Composite 29 Over 10 years (long-term) 8.14 8.64 8.98 9.18 8.95 8.40 8.19 8.25 8.22 8.17 8.25 88..1177 State and local notes and bonds Moody's series14 30 Aaa 6.95 7.14 7.36 7.37 7.22 6.79 6.69 6.75 6.73 6.68 6.73 6.60 31 Baa 7.76 8.17 7.83 7.82 7.66 7.27 7.17 7.15 7.15 7.15 7.17 7.20 32 Bond Buyer series 7.32 7.63 7.68 7.49 7.25 7.02 6.96 7.02 77..0000 6.92 66..9955 66..9955 Corporate bonds Seasoned issues16 33 All industries 9.71 9.91 10.18 10.14 9.97 9.50 9.34 9.42 9.38 9.34 9.35 9.32 34 Aaa 9.02 9.38 9.71 9.79 9.59 9.10 8.93 9.02 8.97 8.94 8.93 8.91 35 Aa 9.47 9.68 9.94 9.94 9.77 9.29 9.14 9.21 9.20 9.15 9.14 9.10 36 A 9.95 9.99 10.24 10.20 10.01 9.59 9.42 9.49 9.46 9.40 9.43 9.41 37 Baa 10.39 10.58 10.83 10.61 10.48 10.03 9.87 9.96 9.91 9.85 99..9911 99..8866 38 A-rated, recently offered utility bonds" 9.61 9.95 10.20 10.33 10.09 9.66 9.54 9.49 9.54 9.57 9.60 9.45 MEMO: Dividend/price ratio18 39 Preferred stocks 8.76 8.37 9.23 9.50 9.32 8.96 8.81 8.% 8.92 8.85 8.76 8.69 40 Common stocks 3.48 3.08 3.64 3.59 3.52 3.44 3.38 3.43 3.49 3.39 3.33 3.31 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 five dealers (in the 13. Averages (to maturity or call) for all outstanding bonds neither due nor case of commercial paper), or finance companies (in the case of finance paper). callable in less than 10 years, including one very low yielding "flower" bond. Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. General obligations based on Thursday figures; Moody's Investors Service. and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 15. General obligations only, with 20 years to maturity, issued by 20 state and 150-179 days for finance paper. local governmental units of mixed quality. Based on figures for Thursday. 5. Yields are quoted on a bank-discount basis, rather than in an investment 16. Daily figures from Moody's Investors Service. Based on yields to maturity yield basis (which would give a higher figure). on selected long-term bonds. 6. Dealer closing offered rates for top-rated banks. Most representative rate 17. Compilation of the Federal Reserve. This series is an estimate of the yield (which may be, but need not be, the average of the rates quoted by the dealers). on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 7. Unweighted average of offered rates quoted by at least five dealers early in call protection. Weekly data are based on Friday quotations. the day. 18. Standard and Poor's corporate series. Preferred stock ratio based on a 8. Calendar week average. For indication purposes only. sample of ten issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H.15 (519) and G.13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.36 STOCK MARKET Selected Statistics 1988 1989 IInnddiiccaattoorr 11998866 11998877 11998888 Nov. Dec. Jan. Feb. Mar. Apr. May June July Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 136.03 161.78 149.97 152.67 155.35 160.35 165.08 164.56 169.38 175.30 180.76 185.15 155.85 195.31 180.83 182.25 187.75 194.62 200.00 197.58 204.81 211.81 216.75 221.74 119.87 140.39 134.01 137.51 144.06 153.09 162.66 153.85 164.32 169.05 173.47 179.32 71.36 74.29 72.22 79.28 74.81 75.87 77.84 87.16 79.69 84.21 87.95 90.40 147.19 146.48 127.41 130.05 128.83 132.26 137.19 146.14 143.26 146.82 154.08 157.78 6 Standard & Poor's Corporation (1941-43 = 10)' 236.39' 287.(xy 265.88 271.02 276.51 285.41 294.01 292.71 302.25 313.93 323.73 331.92 7 American Stock Exchange (Aug. 31, 1973 = 50? 264.91 316.78 295.08 292.11 298.59 316.14 323.97 327.47 336.82 349.50 362.73 368.52 Volume of trading (thousands of shares) 141,020 188,922 161,386 134,420 135,233 168,204 169,223 159,024 161,863 171,495 180,680 162,501 1111,,884466 1133,,883322 99,,995555 88,,449977 1111,,222277 1100,,779977 1111,,778800 1111,,339955 1111,,552299 1111,,669999 1133,,551199 1111,,770077 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 36,840 31,990 32,740 33,640 32,740 32,530 31,480 32,130 32,610 33,140 34,730 34,360 Free credit balances at brokers4 11 Margin-account 4,880 4,750 5,660 4,920 5,660 5,790 5,605 5,345 5,450 5,250 6,900 5,420 12 Cash-account 19,000 15,640 16,595 15,185 16,595 15,705 16,195 16,045 16,125 15,965 19,080 16,345 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance "margin securities" (as defined in the regulations) when such credit is 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 • October 1989 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1988 1989 Account 11998866 11998877 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May FSLIC-insured institutions 1 Assets 1,163,851 1,250,855 1,311,668 1,323,840 1,332,878 1,332,905' 1,350,500' 1,337,426' 1,339,157' 1,340,732' 1,345,538' 1,346,714 2 Mortgages 697,451 772211,,559933 751,421 754,389 760,79c 776633,,000011'' 776644,,551133'' 776677,,119977'' 776677,,553311'' 776699,,332288'' 777733,,334411'' 777744,,332288 3 Mortgage-backed securities 158,193 201,828 210,573 211,195 211,833' 221122,,551122'' 221144,,558877'' 211,337' 221133,,111199'' 221155,,1177CC 221166,,114499'' 221166,,228822 4 Contra-assets to mortgage assets1 . 41,799 42,344 39,078 38,500 38,297' 37,739' 37,95c 37,188' 37,036' 37,747' 37,769' 37,489 5 Commercial loans 23,683 23,163 25,099 24,782 25,413 25,513 33,889' 33,191' 33,193' 33,067' 32,847' 33,050 6 Consumer loans 51,622 57,902 62,417 61,558 61,053 61,504 61,922' 62,111' 62,085' 6611,,446688'' 6611,,669911'' 6611,,886666 7 Contra-assets to nonmortgage loans .. .. 3,041 3,467 3,118 3,074 2,932 2,959 3,056' 2,938' 3,014' 3,135' 22,,885511'' 22,,992233 8 Cash and investment securities 164,844 169,717 175,793 183,178 184,637'" 179,830 186,986' 178,813' 177,154' 177,172' 175,99C 174,361 9 Other3 112,898 122,462 128,561 130,313 130,388 131,243' 129,61C 124,903' 126,125' 125,478' 126,14C 127,239 10 Liabilities and net worth . 1,163,851 1,250,855 1,311,668 1,323,840 1,332,878 1,332,905' 1,350,50C 1,337,426' 1,339,157' 1,340,732' 1,345,538' 1,346,714 11 Savings capital 890,664 932,616 968,294 973,742 976,163 971,497' 971.70C 963,83C 957,361' 956,662' 954,496' 955,565 12 Borrowed money 196,929 249,917 266,787 273,665 278,301 281,088' 299,399' 299,408' 305,667' 312,972' 318,647' 318,367 13 FHLBB 100,025 116,363 120,677 123,436 124,368 127,548 134,168 135,712 140,089 146,007' 147,993' 146,513 14 Other 96,904 133,554 146,110 150,229 153,933 153,54C 165,231' 163,696' 165,578' 166,965' 170,654' 171,854 15 Other 23,975 21,941 28,903 26,021 27,558 29,178' 24,216' 29,743' 31,764' 29,592' 31,679' 33,628 16 Net worth 52,282 46,382 47,684 50,412 50,855' 51,143 55,185' 58,864' 58,916' 57,393' 56,208' 54,685 FSLIC-insured federal savings banks 17 Assets 210,562 284,270 357,897 367,928 369,682 374,930 425,983 423,895 432,690 443,196 455,195 469,973 18 Mortgages 113,638 161,926 204,351 207,952 207,207 210,732 222277,,886699 231,664 223355,,339911 224411,,331133 224466,,771166 225533,,884422 19 Mortgage-backed securities 29,766 45,826 55,688 56,399 56,630 57,815 6644,,995577 62,770 6655,,889966 6688,,005533 6699,,993355 7733,,993300 20 Contra-assets to mortgage assets' . n.a. 9,100 10,893 10,982 10,894 10,901 13,140 12,266 12,672 13,168 13,027 13,237 21 Commercial loans n.a. 6,504 8,568 8,694 8,880 9,041 16,731 16,171 16,320 16,319 16,508 16,943 22 Consumer loans 13,180 17,696 22,526 22,420 22,421 22,679 2244,,222222 25,050 2255,,999911 2266,,114488 2266,,772255 2277,,999955 23 Contra-assets to nonmortgage loans .. .. n.a. 678 734 785 789 803 889 812 856 935 828 901 24 Finance leases plus interest n.a. 591 791 804 804 831 880 905 946 965 998 1,072 25 Cash and investment ... n.a. 35,347 44,859 48,984 48,818 48,028 61,029 57,454 57,989 59,042 61,330 62,083 26 Other 19,034 24,069 32,740 34,442 29,178 29,942 35,428 33,974 34,646 36,313 37,367 38,052 27 Liabilities and net worth . 210,562 284,270 357,897 367,928 369,682 374,930 425,983 423,895 432,690 443,196 455,195 469,973 28 Savings capital 157,872 203,196 256,223 261,862 262,922 263,984 298,197 298,530 301,778 307,588 315,725 324,372 29 Borrowed money 37,329 60,716 75,859 80,674 80,779 83,628 99,286 98,304 102,902 107,179 109,997 114,847 30 FHLBB 19,897 29,617 35,357 37,245 37,510 39,630 46,265 46,470 48,951 51,531 53,513 55,457 31 Other 17,432 31,099 40,502 43,429 43,269 43,998 53,021 51,834 53,951 55,648 56,484 59,390 32 Other 4,263 5,324 8,052 7,374 7,667 8,319 8,075 8,275 8,885 8,608 9,311 10,185 33 Net worth 11,098 15,034 17,661 17,886 18,194 18,882 20,235 21,633 22,142 23,218 23,340 23,896 Savings banks 34 Assets 236,866 259,643 253,453 255,510 257,127 258,537 261,361 254,319 254,165 255,226 255,006 257,531 Loans 35 Mortgage 118,323 138,494 141,316 143,626 145,398 146,501 147,597 144,998 145,426 145,174 145,699 144,687 36 Other 35,167 33,871 32,799 32,879 33,234 3333,,779911 3311,,226699 3322,,445500 3322,,336699 3333,,119944 3322,,332299 3344,,446644 Securities 37 U.S. government 14,209 13,510 11,353 11,182 10,896 10,804 11,457 10,485 1100,,331155 1100,,331188 1100,,339911 1100,,115544 38 Mortgage-backed securities 25,836 32,772 30,006 29,190 29,893 2299,,337722 2299,,775511 2299,,225588 2299,,008855 2299,,337733 2299,,557722 3300,,227755 39 State and local government 2,185 2,003 1,901 1,878 1,872 1,887 1,848 1,835 1,829 1,814 1,798 1,984 40 Corporate and other . 20,459 18,772 17,301 17,234 16,886 16,773 17,822 15,964 15,812 15,984 15,588 15,763 41 Cash 6,894 5,864 4,950 5,463 4,825 5,093 7,050 5,532 5,465 5,972 6,068 5,591 42 Other assets 13,793 14,357 13,827 14,058 14,123 14,316 14,567 13,797 13,864 13,397 13,561 14,613 43 Liabilities 236,866 259,643 253,453 255,510 257,127 258,537 261,361 254,319 254,165 255,226 255,006 257,531 44 Deposits 192,194 201,497 195,907 197,665 197,925 199,092 202,058 195,452 195,308 199,399 199,538 199,790 45 Regular4 186,345 196,037 190,716 192,228 192,663 194,095 196,407 190,378 190,422 194,276 194,059 194,636 46 Ordinary savings .. 37,717 41,959 39,738 39,618 39,375 39,482 39,750 38,221 38,049 38,070 36,801 36,661 47 Time 100,809 112,429 114,255 116,387 117,712 119,026 121,148 118,612 119,109 123,162 125,378 126,185 48 Other 5,849 5,460 5,191 5,427 5,262 4,997 5,651 5,074 4,886 7,206 5,479 5,154 49 Other liabilities 25,274 35,720 34,776 35,001 3355,,999977 3366,,001122 3366,,116699 3333,,778822 3333,,664422 3300,,550000 3300,,002200 3333,,008844 50 General reserve accounts 18,105 20,633 20,018 20,151 20,324 20,462 20,337 20,138 20,336 20,338 20,254 19,874 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A23 1.37—Continued 1988 1989 AAccccoouunntt 11998866 11998877 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Credit unions5 51 Total assets/liabilities and capital 147,726 f 173,044 174,649 174,722 174,406 174,593 175,027 176,270 178,175 177,417 178,812 52 Federal 95,483 | 112,686 113,383 113,474 113,717 114,566 114,909 115,543 117,555 115,416 116,705 53 State 52,243 60,358 61,266 61,248 61,135 60,027 60,118 60,727 60,620 62,001 62,107 54 Loans outstanding.. 86,137 n.a. 108,974 110,939 111,624 112,452 113,191 114,012 113,880 114,572 115,249 116,947 55 Federal 55,304 1 70,944 72,200 72,551 73,100 73,766 74,083 73,917 74,395 75,003 76,052 56 State 30,833 38,030 38,739 39,073 39,352 39,425 39,927 39,963 40,177 40,246 40,895 57 Savings 134,327 I 158,731 157,944 160,174 159,021 159,010 159,106 161,073 164,322 161,388 162,134 58 Federal 87,954 T 103,657 103,698 104,184 103,223 104,431 104,629 105,262 107,368 105,208 105,787 59 State 46,373 55,074 54,246 55,990 55,798 54,579 54,477 55,811 56,954 56,180 56,347 Life insurance companies 60 Assets 937,551 1,044,459 1,121,337 1,131,179 1,139,490 1,144,854 1,157,140 1,167,184 1,173,325 1,184,963 Securities 61 Government 84,640 84,426 88,362 87,588 88,883 89,510 88,167 88,747 88,168 88,941 62 United States6.. 59,033 57,078 60,407 59,874 60,621 61,108 60,685 61,042 60,800 61,175 63 State and local . 11,659 10,681 11,190 11,054 11,069 11,189 11,126 11,036 10,736 10,848 64 Foreign 13,948 16,667 16,765 16,660 17,193 17,213 16,356 16,669 16,632 16,918 65 Business 492,807 569,199 624,917 630,086 633,390 638,350 644,894 655,149 659,826 665,843 n.a. n.a. 66 Bonds 401,943 472,684 520,7% 525,336 527,419 532,197 538,053 545,970 550,630 556,3% 67 Stocks 90,864 96,515 104,121 104,750 105,971 106,153 106,841 109,179 109,1% 109,447 68 Mortgages 193,842 203,545 233,438 225,627 227,342 229,234 232,639 233,334 233,827 234,910 69 Real estate 31,615 34,172 35,920 35,892 36,892 36,673 37,972 38,112 38,690 38,942 70 Policy loans 54,055 53,626 53,194 53,149 53,157 53,148 53,020 53,210 53,265 53,364 71 Other assets 80,592 89,586 95,505 98,837 99,826 94,116 95,518 98,632 99,550 102,%3 1. Contra-assets are credit-balance accounts that must be subtracted from the NOTE. FSLlC-insured institutions: Estimates by the FHLBB for all institutions corresponding gross asset categories to yield net asset levels. Contra-assets to insured by the FSLIC and based on the FHLBB thrift Financial Report. mortgage loans, contracts, and pass-through securities include loans in process, FSLIC-insured federal savings banks: Estimates by the FHLBB for federal unearned discounts and deferred loan fees, valuation allowances for mortgages savings banks insured by the FSLIC and based on the FHLBB thrift Financial "held for sale," and specific reserves and other valuation allowances. Report. 2. Contra-assets are credit-balance accounts that must be subtracted from the Savings banks: Estimates by the National Council of Savings Institutions for all corresponding gross asset categories to yield net asset levels. Contra-assets to savings banks in the United States and for FDIC-insured savings banks that have nonmortgage loans include loans in process, unearned discounts and deferred loan converted to federal savings banks. fees, and specific reserves and valuation allowances. Credit unions: Estimates by the National Credit Union Administration for 3. Holding of stock in Federal Home Loan Bank and Finance leases plus federally chartered and federally insured state-chartered credit unions serving interest are included in "Other" (line 9). natural persons. 4. Excludes checking, club, and school accounts. Life insurance companies: Estimates of the American Council of Life Insurance 5. Data include all federally insured credit unions, both federal and state for all life insurance companies in the United States. Annual figures are annualchartered, serving natural persons. statement asset values, with bonds carried on an amortized basis and stocks at 6. Direct and guaranteed obligations. Excludes federal agency issues not year-end market value. Adjustments for interest due and accrued and for guaranteed, which are shown in the table under "Business" securities. differences between market and book values are not made on each item separately 7. Issues of foreign governments and their subdivisions and bonds of the but are included, in total, in "other assets." International Bank for Reconstruction and Development. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics • October 1989 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1989 111999888666 111999888777 111999888888 Feb. Mar. Apr. May June July U.S. budget1 1 Receipts, total 769,091 854,143 908,953 61,978 68,276 128,952 71,115 108,317 66,255 2 On-budget 568,862 640,741 667,462 38,473 44,677 99,679 49,493 84,110 45,737 3 Off-budget 200,228 213,402 241,491 23,505 23,598 29,273 21,622 24,206 20,518 4 Outlays, total 990,258 1,003,830 1,064,044 89,850 104,055 88,381 96,581 100,528 84,494 5 On-budget 806,760 809,998 861,352 71,324 85,191 71,798 77,851 83,994 66,688 6 Off-budget 183,498 193,832 202,691 18,526 18,864 16,582 18,730 16,534 17,806 7 Surplus, or deficit (-), total -221,167 -149,687 -155,090 -27,871 -35,779 40,572 -25,466 7,789 -18,239 8 On-budget -237,898 -169,257 -193,890 -32,851 -40,513 27,881 -28,358 116 -20,951 9 Off-budget 16,731 19,570 38,800 4,979 4,735 12,691 2,891 7,673 2,712 Source of financing (total) 10 Borrowing from the public 236,187 150,070 162,062 17,190 13,405 -1,291 1100,,221144 11,,009988 --33,,996622 11 Operating cash (decrease, or increase (-)h -14,324 -5,052 -7,963 17,009 10,154 -38,788 21,396 -11,649 21,564 12 Other 2 -696 4,669 991 -6,328 12,221 -493 -6,144 2,762 636 MEMO 13 Treasury operating balance (level, end of period) 31,384 36,436 44,398 24,826 14,672 53,461 32,065 43,713 22,149 14 Federal Reserve Banks 7,514 9,120 13,024 6,298 4,462 22,952 5,289 12,154 5,312 15 Tax and loan accounts 23,870 27,316 31,375 18,528 10,211 30,508 26,776 31,560 16,837 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 A3 3 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 May June July RECEIPTS 1 All sources 854,143 908,954 421,712 476,115 449,821 528,007 71,115 108,317 66,255 2 Individual income taxes, net 392,557 401,181 192,575 207,659 200,299 233,568 25,336 49,876 29,377 3 Withheld 322,463 341,435 170,203 169,300 179,600 174,230 29,085 33,338 2288,,334433 4 Presidential Election Campaign Fund 33 33 4 28 4 28 8 4 11 5 Nonwithheld 142,957 132,199 31,223 101,614 29,880 121,563 14,842 18,509 2,424 6 Refunds 72,8% 72,487 8,853 63,283 99,,118877 62,255 18,599 1,975 1,392 Corporation income taxes 7 Gross receipts 102,859 109,683 52,821 58,002 56,409 61,585 2,994 21,418 2,921 8 Refunds 18,933 15,487 7,119 88,,770066 77,,338844 7,812 1,068 849 880 9 Social insurance taxes and contributions, net 303,318 334,335 143,755 118811,,005588 115577,,660033 200,127 35,349 31,276 27,941 10 Employment taxes and contributions 273,028 305,093 130,388 116644,,441122 114444,,998833 184,569 27,281 30,572 25,979 11 Self-employment taxes and contributions 13,987 17,691 1,889 14,839 3,032 16,371 1,281 2,389 0 12 Unemployment insurance 25,575 24,584 10,977 14,363 10,359 13,279 7,661 294 1,614 13 Other net receipts 4,715 4,659 2,390 2,284 2,262 2,277 407 410 348 14 Excise taxes 32,457 35,540 17,680 16,440 19,434 17,371 3,640 2,987 2,779 15 Customs deposits 15,085 16,198 7,993 7,913 8,535 8,350 1,466 1,482 1,495 16 Estate and gift taxes 7,493 7,594 3,610 3,863 4,054 4,583 793 736 689 17 Miscellaneous receipts5 19,307 19,909 10,399 9,950 10,873 10,235 2,605 1,389 1,933 OUTLAYS 18 Ail types 1,003,830 1,064,055 532,839 513,210 553,217 565,958 %,581 100,528 84,494 19 National defense 281,999 290,361 146,995 143,080 150,4% 148,098 25,012 29,037 21,220 20 International affairs 11,649 10,471 4,487 7,150 2,636 6,605 1,398 867 347 21 General science, space, and technology .... 9,216 10,841 5,469 5,361 5,852 6,238 1,128 1,171 1,000 22 Energy 4,115 2,297 1,468 555 1,966 2,221 267 509 106 23 Natural resources and environment 13,363 14,606 7,590 6,776 8,330 7,022 1,396 1,419 1,164 24 Agriculture 26,606 17,210 14,640 7,872 7,725 9,619 1,470 504 499 25 Commerce and housing credit 6,182 18,808 3,852 5,951 20,274 4,129 558 973 1,494 26 Transportation 26,222 27,272 14,0% 12,700 14,922 13,023 2,668 2,397 2,294 27 Community and regional development 5,051 5,294 2,075 2,765 2,690 1,833 -25 563 535 28 Education, training, employment, and social services 29,724 31,938 15,592 15,451 16,152 18,0% 3,039 2,654 2,637 29 Health 39,%8 44,490 20,750 22,643 23,360 24,078 4,454 4,270 4,124 30 Social security and medicare 282,472 297,828 158,469 135,322 149,508 162,195 27,067 30,430 26,142 31 Income security 123,250 129,332 61,201 65,555 64,978 70,937 12,106 9,826 10,264 32 Veterans benefits and services 26,782 29,428 14,956 13,241 15,797 14,891 2,809 3,590 1,196 33 Administration of justice 7,548 9,223 4,291 4,761 4,778 5,233 1,066 851 847 34 General government 5,948 7,658 3,560 4,337 5,137 3,858 872 1,140 -53 35 General-purpose fiscal assistance 1,621 1,816 1,175 448 0 0 n.a. n.a. n.a. 36 Net interest8 1 138,570 151,748 71,933 76,098 78,317 86,009 14,605 13,376 14,003 37 Undistributed offsetting receipts -36,455 -36,%7 -17,684 -17,766 -18,771 -18,131 -3,309 -3,050 -3,325 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 Financial Statistics • October 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 22,,441166..33 2,472.1 22,,553322..11 22,,558866..77 2,668.9 2,725.5 10 Other debt1 1.3 1.3 1.3 11..11 .5 ..11 ..11 .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 1989 Type and holder 1985 1986 1987 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 international5 212.5 251.6 287.3 349.5 332.8 333.3 349.5 363.1 26 Other miscellaneous investors 462.4 518.9 581.2 n.a. 551.4 579.4 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 A3 3 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Par value; averages of daily figures, in millions of dollars 1989 1989 IItteemm 11998866 11998877 11998888 May June July June 21 June 28 July 5 July 12 July 19 July 26 Immediate delivery2 1 U.S. Treasury securities 95,444 110,050 101,623 120,937 129,260 114,100 116,830 122,744 117,383 125,731 108,902 104,347 By maturity 2 Bills 34,247 37,924 29,387 29,376 30,761 29,002 28,083 29,920 33,014 29,843 27,034 27,649 3 Other within 1 year 2,115 3,271 3,426 3,594 3,388 2,697 2,719 3,400 4,050 2,914 2,507 1,747 4 1-5 years 24,667 27,918 27,777 38,126 34,861 31,596 27,850 35,386 35,505 35,278 29,118 29,682 5 5-10 years 20,455 24,014 24,939 30,673 35,666 33,578 33,791 31,912 29,011 39,470 33,330 29,775 6 Over 10 years 13,961 16,923 16,093 19,167 24,585 17,227 24,388 22,125 15,802 18,226 16,914 15,494 By type of customer '/ U.S. government securities dealers 3,669 2,936 2,761 2,966 3,200 3,093 3,674 2,986 2,729 2,952 2,437 3,369 8 U.S. government securities brokers 49,558 61,539 59,844 72,410 78,131 66,757 72,166 73,008 67,472 73,876 65,234 61,919 9 All others3 42,217 45,575 39,019 45,560 47,929 44,249 40,990 46,750 47,181 48,902 41,231 39,058 10 Federal agency securities 16,747 18,084 15,903 16,303 19,904 20,857 19,594 17,908 16,474 23,668 24,917 17,906 11 Certificates of deposit 4,355 4,112 3,369 2,650 2,940 3,020 2,678 2,870 2,870 3,725 2,714 2,334 12 Bankers acceptances 3,272 2,965 2,316 2,113 2,508 2,592 2,306 2,377 2,824 3,055 2,268 2,280 13 Commercial paper 16,660 17,135 22,927 29,109 32,185 33,548 32,839 34,595 33,571 36,668 33,540 29,607 Futures contracts 14 Treasury bills 3,311 3,233 2,627 2,501 1,845 1,600 1,695 1,794 2,000 1,165 1,663 2,299 15 Treasury coupons 7,175 8,963 9,695 10,280 12,844 9,020 12,824 11,578 9,250 9,213 10,082 7,377 16 Federal agency securities 16 5 1 0 3 21 6 6 4 4 29 28 Forward transactions 17 U.S. Treasury securities 1,876 2,029 2,095 2,752 1,526 1,652 1,001 2,489 1,385 1,478 1,733 1,837 18 Federal agency securities 7,830 9,290 8,008 9,976 9,820 10,258 10,454 7,451 5,410 13,303 13,282 8,445 1. Transactions are market purchases and sales of securities as reported to the securities, nondealer departments of commercial banks, foreign banking agencies, Federal Reserve Bank of New York by the U.S. government securities dealers on and the Federal Reserve System. its published list of primary dealers. 4. Futures contracts are standardized agreements arranged on an organized Averages for transactions are based on the number of trading days in the period. exchange in which parties commit to purchase or sell securities for delivery at a The figures exclude allotments of, and exchanges for, new U.S. Treasury future date. securities, redemptions of called or matured securities, purchases or sales of 5. Forward transactions are agreements arranged in the over-the-counter securities under repurchase agreement, reverse repurchase (resale), or similar market in which securities are purchased (sold) for delivery after 5 business days contracts. from the date of the transaction for Treasury securities (Treasury bills, notes, and 2. Data for immediate transactions do not include forward transactions. bonds) or after 30 days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • October 1989 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1989 1989 IItteemm 11998866 11998877 11998888 May June July June 28 July 5 July 12 July 19 July 26 Positions Net immediate2 1 U.S. Treasury securities 12,912 -6,216 -22,765 -14,757 -6,279 -44 -6,088 2,219 787 1,883 -4,092 2 Bills 12,761 4,317 2,238 1,162 378 1,415 1,236 1,347 2,179 2,343 -56 3 Other within 1 year 3,705 1,557 -2,236 -1,727 -435 -852 -1,035 -2,042 -892 -120 -782 4 1-5 years 9,146 649 -3,020 -2,115 4,651 11,687 5,210 13,841 12,051 11,126 9,923 5 5-10 years -9,505 -6,564 -9,663 -6,055 -5,050 -7,693 -6,187 -5,893 -6,796 -6,155 -9,313 6 Over 10 years -3,197 -6,174 -10,084 -6,024 -5,822 -4,601 -5,313 -5,034 -5,754 -5,311 -3,864 7 Federal agency securities 32,984 31,911 28,230 27,121 29,491 31,278 29,217 26,862 28,709 33,130 32,001 8 Certificates of deposit 10,485 8,188 7,300 5,778 6,037 7,028 6,241 6,379 6,782 7,446 7,393 9 Bankers acceptances 5,526 3,660 2,486 1,948 2,357 2,122 2,462 1,989 1,990 2,031 2,397 10 Commercial paper 8,089 7,496 6,152 8,600 8,830 9,894 7,177 7,516 9,428 9,216 10,905 Futures positions 11 Treasury bills -18,059 -3,373 -2,210 -5,729 -4,764' -5,802 -4,413' -4,896 -5,866 -6,667 -5,587 12 Treasury coupons 3,473 5,988 6,224 -290 -2,288' -3,254 -3,096' -4,725 -3,260 -2,298 -2,525 13 Federal agency securities -153 -95 0 0 14 45 35 22 13 70 45 Forward positions 14 U.S. Treasury securities -2,144 -1,211 346 -1,378 -1,885 -1,389 -2,164 -2,212 -1,759 -1,925 -568 15 Federal agency securities -11,840 -18,817 -16,348 -16,748 -20,200 -19,523 -18,169 -16,565 -19,585 -21,807 -18,443 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 98,913 126,709 136,327 155,365 166,152' 139,858 160,216 162,238 168,320 162,846 158,895 17 Term 108,607 148,288 177,477 229,265 243,026' 197,148 250,821 222,065 235,363 229,433 229,989 Repurchase agreements IX Overnight and continuing 141,823 170,763 172,695 202,739 229,554' 194,571 226,812 232,959 231,896 227,464 218,063 19 Term 102,397 121,270 137,056 185,554 189,841' 165,284 204,167 173,757 193,025 192,360 204,552 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 A3 3 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1989 AAggeennccyy 11998855 11998866 11998877 11998888 Feb. Mar. Apr. May June 1 Federal and federally sponsored agencies 293,905 307,361 341,386 381,498 390,803 397,318 402,764r 407,323 403,748 2 Federal agencies 36,390 36,958 37,981 35,668 35,768 36,348 36,402 36,275 36,403 3 Defense Department 71 33 13 8 8 8 7 7 7 4 Export-Import Bank2' 15,678 14,211 11,978 11,033 11,033 11,007 11,007 11,007 11,013 5 Federal Housing Administration 115 138 183 150 165 172 182 196 218 6 Government National Mortgage Association participation certificates5 2,165 2,165 1,615 0 0 0 0 00 0 7 Postal Service6 1,940 3,104 6,103 6,142 6,142 6,742 6,742 6,445 6,445 8 Tennessee Valley Authority 16,347 17,222 18,089 18,335 18,420 18,419 18,464 18,620 18,720 9 United States Railway Association 74 85 0 0 0 0 0 0 0 10 Federally sponsored agencies7 257,515 270,553 303,405 345,830 355,035 360,970 366,362' 371,048 367,345 11 Federal Home Loan Banks 74,447 88,752 115,725 135,834 144,343 149,950 154,146 156,354 153,892 12 Federal Home Loan Mortgage Corporation 11,926 13,589 17,645 22,797 21,320 23,392 22,676 21,620 22,156 13 Federal National Mortgage Association 93,8% 93,563 97,057 105,459 105,201 104,666 104,675 105,404 106,308 14 Farm Credit Banks8 68,851 62,478 55,275 53,127 52,441 52,069 51,678 53,375 52,387 15 Student Loan Marketing Association 8,395 12,171 16,503 22,073 25,190 23,753 25,361 26,469 24,256 16 Financing Corporation n.a. n.a. 1,200 5,850 5,850 6,450 6,98(K 6,980' 7,500 17 Farm Credit Financial Assistance Corporation" n.a. n.a. n.a. 690 690 690 846 846 846 MEMO 18 Federal Financing Bank debt12 153,373 157,510 152,417 142,850 142,123 141,864 141,162r 140,220 139,568 Lending to federal and federally sponsored agencies 19 Export-Import Bank3 15,670 14,205 11,972 11,027 11,027 11,001 1111,,000011 1111,,000011 1111,,000077 20 Postal Service6 1,690 2,854 5,853 5,892 5,892 6,492 6,492 6,195 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 17,040 17,039 17,084 17,240 17,340 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 58,496 58,4% 57,841 5577,,008866 5566,,331111 5555,,558866 25 Rural Electrification Administration 20,654 21,680 21,191 19,246 19,245 19,195 19,230 19,236 19,236 26 Other 31,429 32,545 32,078 26,324 25,513 25,386 25,359 25,327 25,294 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 • October 1989 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1988 1989 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11998866 11998877 11998888rr Dec/ Jan. Feb. Mar. Apr. May Juner July 1 All issues, new and refunding1 147,011 102,407 114,522 11,948 6,640 8,054 8,626 7,464 7,435 13,775 7,950 Type of issue 2 General obligation 46,346 30,589 30,312 2,617 1,784 3,955 2,185 2,301 2,342 4,960 3,703 3 Revenue 100,664 71,818 84,210 9,331 4,856 4,099 6,441 5,163 5,093 8,815 4,247 Type of issuer 4 State , 14,474 10,102 8,830 1,031 280 1,896 256 1,407 392 1,989 967 5 Special district and statutory authority2 89,997 65,460 74,409 7,930 4,882 3,832 5,962 4,238 4,979 8,033 4,323 6 Municipalities, counties, and townships 42,541 26,845 31,193 2,897 1,478 2,326 2,408 1,819 2,064 3,753 2,660 7 Issues for new capital, total 83,492 56,789 79,665 9,188 4,141 5,222 6,486 6,061 5,938 10,078 6,418 Use of proceeds 8 Education 12,307 9,524 15,021 2,697 827 826 1,055 1,225 1,024 2,678 984 9 Transportation 7,246 3,677 6,825 574 344 382 445 743 748 576 268 10 Utilities and conservation 14,594 7,912 8,496 559 1,335 847 901 759 467 1,058 518 11 Social welfare 11,353 11,106 19,027 2,103 509 743 1,329 1,048 1,376 1,509 1,572 12 Industrial aid 6,190 7,474 5,624 1,064 293 250 253 374 361 329 312 13 Other purposes 31,802 18,020 24,672 2,191 834 2,174 2,503 1,912 1,962 3,928 2,764 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 Nov. Dec. Jan. Feb. Mar. Apr. May' June 1 All issues1 423,726 392,156 408,903r 24,531 12,389 17,404' 14,693' 26,499' 14,384 20,004 23,841 2 Bonds2 355,293 325,648 351,102r 21,096 10,338 14,243' 12,158' 25,577' 13,3% 19,403 21,036 Type of offering 3 Public, domestic 231,936 209,279 200,224r 16,798 10,203 11,383' 9,964' 22,995' 11,471 17,497 18,128 4 Private placement, domestic3 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 42,5% 24,299 23,178 4,298 135 2,860 2,194 2,582 1,925 1,906 2,908 Industry group 6 Manufacturing 91,548 61,666 69,708' 2,890 1,485 1,660 1,319 7,456 1,457 7,716 3,273 7 Commercial and miscellaneous 40,124 49,327 61,91r 3,260 748 2,047 1,118 882 843 2,162 1,628 8 Transportation 9,971 11,974 9,975 45 0 0 102 0 100 150 480 9 Public utility 31,426 23,004 19,318 672 264 665' 67C 153 1,695 385 2,936 10 Communication 16,659 7,340 5,901 289 158 0 230 63 453 122 4 11 Real estate and financial 165,564 172,343 184,286 13,940 7,683 9,871 8,718' 17,023' 8,848' 8,869 12,647 12 Stocks3 68,433 66,508 57,802 3,435 2,051 1,251' 2,535 611 988 1,601 2,820 Type 13 Preferred 11,514 10,123 6,544 478 495 275 975 0 495 325 335 14 Common 50,316 43,225 35,911 2,957 1,556 976' 1,560 611 493 1,276 2,485 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 7,608 430 425 33 832 127 135 330 626 17 Commercial and miscellaneous 10,617 12,888 8,449 52 89 32 270 26 280 115 508 18 Transportation 2,427 2,439 1,535 20 0 220 0 53 169 39 0 19 Public utility 4,020 4,322 1,898 70 20 50' 11 108 0 192 125 20 Communication 1,825 1,458 515 20 59 5 19 0 93 224 25 21 Real estate and financial 34,517 31,521 37,798 2,843 1,459 911 1,402 297 310 702 1,536 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 Nov. Dec. Jan. Feb. Mar. Apr. May June INVESTMENT COMPANIES1 1 Sales of own shares2 381,260 271,237 20,327 25,780 29,014 22,741 23,149 25,496 24,661 25,817 2 Redemptions of own shares3 314,252 267,451 20,599 25,976 24,494 22,252 24,135 26,183 22,483 22,563 3 Net sales 67,008 3,786 -272 -1% 4,520 489 -986 -687 2,178 3,254 4 Assets4 453,842 472,297 470,660 472,297 487,204 482,697 483,067 497,329 509,781 515,071 5 Cash position5 38,006 45,090 43,488 45,090 49,661 47,908 46,262 48,788 49,177 48,428 6 Other 415,836 427,207 427,172 427,207 437,543 434,789 436,805 448,541 460,604 466,643 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 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 1 Corporate profits with inventory valuation and capital consumption adjustment 282.1 298.7 328.6 313.0 308.2 318.1 325.3 330.9 340.2 316.3 309.1 2 Profits before tax 221.6 266.7 306.8 281.0 276.2 288.8 305.3 314.4 318.8 318.0 297.6 3 Profits tax liability 106.3 124.7 137.9 132.7 127.3 129.0 138.4 141.2 143.2 144.4 133.3 4 Profits after tax 115.3 142.0 168.9 148.3 148.9 159.9 166.9 173.2 175.6 173.6 164.3 5 Dividends 91.3 98.7 110.4 100.0 102.8 105.7 108.6 112.2 115.2 118.5 120.9 6 Undistributed profits 24.0 43.3 58.5 48.3 46.1 54.2 58.3 61.1 60.4 55.1 43.4 7 Inventory valuation 6.7 -18.9 -25.0 -19.4 -20.4 -20.7 -28.8 -30.4 -20.1 -38.3 -20.7 8 Capital consumption adjustment 53.8 50.9 46.8 51.5 52.4 49.9 48.9 46.9 41.5 36.6 32.3 •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 • 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 Q3! 1 Total nonfarm business 389.67 429.67 472.08 406.82 412.02 426.94 436.01 443.71 457.64 467.50 478.79 Manufacturing 2 Durable goods industries 71.01 78.12 82.13 72.28 75.70 76.87 79.48 80.42 81.71 80.21 84.08 3 Nondurable goods industries 74.88 87.58 97.22 79.92 82.90 84.82 89.43 93.18 94.12 96.89 98.61 Nonmanufacturing 4 Mining 11.39 12.67 12.00 12.32 12.59 13.26 12.47 12.35 12.12 13.08 12.21 Transportation 5 Railroad 5.92 7.06 7.61 66..1122 66..9922 7.01 6.84 7.48 7.97 7.10 7.13 6 Air 6.53 7.25 9.57 6.94 6.43 6.66 8.06 7.85 7.18 8.60 10.94 7 Other 6.40 7.04 7.68 6.28 7.08 7.05 7.26 6.77 8.09 7.42 7.78 Public utilities 8 Electric 31.63 31.90 34.61 32.28 30.31 30.95 32.20 34.14 33.08 35.71 34.39 9 Gas and other 13.25 14.60 16.16 14.11 14.30 14.48 14.50 15.13 17.18 15.71 15.79 10 Commercial and other2 168.65 183.44 205.09 176.56 175.79 185.83 185.76 186.38 196.20 202.79 207.86 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 • October 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 Debt 12 Other short-term 11.1 12.9 12.7 15.8 16.4 17.5 21.8 24.8 26.9 28.0 13 Long-term 67.7 77.2 94.4 106.9 111.7 117.5 118.7 121.8 128.2 137.1 14 All other liabilities 31.2 34.5 41.5 40.9 45.0 44.1 46.5 49.1 48.6 52.8 15 Capital, surplus, and undivided profits 28.9 31.5 32.8 35.4 35.6 36.4 36.6 36.3 39.5 31.5 16 Total liabilities and capital 217.6 249.2 298.6 323.7 338.2 351.9 359.9 369.6 383.4 394.3 1. NOTE. Components may not add to totals because of rounding. 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 1989 TTyyppee 11998866 11998877 11998888 Feb. Mar. Apr. May June 1 Total 172,060 205,810 234,529 237,378 240,186 244,882 245,861 249,322 Retail financing of installment sales ? Automotive 26,015 35,782 36,548 37,301 37,696 38,415 38,816 39,042 3 Equipment 23,112 25,170 28,298 28,385 28,207 28,790 27,638 27,773 4 Pools of securitized assets n.a. n.a. n.a. 682 855 817 846 807 Wholesale 5 Automotive 23,010 30,507 33,300 34,386 33,528 34,383 34,534 34,021 6 Equipment 5,348 5,600 5,983 6,193 6,088 6,153 6,0% 6,165 7 All other 7,033 8,342 9,341 9,569 9,682 9,852 9,929 9,862 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 24,847 25,584 25,544 26,011 26,515 10 Equipment 38,179 43,335 57,455 58,045 59,484 60,246 61,022 63,370 11 Pools of securitized assets n.a. n.a. n.a. 699 756 733 824 7% 1? Loans on commercial accounts receivable and factored commercial accounts receivable 15,978 18,078 17,7% 17,404 17,794 18,677 18,772 19,302 13 All other business credit 13,557 17,043 21,134 19,867 20,512 21,272 21,371 21,669 Net change 14 15,763 33,750 28,719 1,409 2,808 4,6% 978 3,462 Retail financing of installment sales 15 Automotive 5,355 9,767 766 260 394 720 401 226 16 Equipment 629 2,058 3,128 -43 -178 583 -1,152 135 17 Pools of securitized assets n.a. n.a. n.a. -42 173 -38 29 -39 Wholesale 18 Automotive -978 7,497 2,793 722 -858 856 151 -513 19 Equipment 780 252 383 10 -105 65 -56 69 20 All other 224 1,309 999 76 114 170 78 -68 21 Pools of securitized assets n.a. n.a. a .a. 0 0 0 0 0 Leasing 22 Automotive 3,552 2,125 2,721 289 736 -40 467 504 23 Equipment 3,411 5,156 14,120 -310 1,439 762 776 2,348 24 Pools of securitized assets2 n.a. n.a. n.a. -22 57 -23 91 -28 25 Loans on commercial accounts receivable and factored commercial accounts receivable 213 2,100 -282 716 390 883 95 530 26 All other business credit 2,576 3,486 4,091 -247 645 760 100 298 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. 1989 IItteemm 11998866 11998877 11998888 Jan. Feb. Mar. Apr. May June July Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 118.1 137.0 150.0 165.2 153.7 159.7 169.2 151.8 150.5 2 Amount of loan (thousands of dollars) 86.2 100.5 110.5 121.3 111.8 117.7 124.5 112.3 111.0 3 Loan/price ratio (percent) 75.2 75.2 75.5 75.2 73.5 74.4 75.0 75.3 75.2 4 Maturity (years) 26.6 27.8 28.0 28.8 28.3 27.7 28.4 28.3 27.8 5 Fees and charges (percent of loan amount) . 2.48 2.26 2.19 1.90 2.14 2.11 1.70 2.12 1.91 6 Contract rate (percent per year) 9.82 8.94 8.81 9.20 9.46 9.63 9.88 9.82 10.09 Yield (percent per year) 7 FHLBB series3 10.26 9.31 9.18 9.52 9.82 9.99 10.17 10.18 10.42 8 HUD series 10.07 10.17 10.30 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 10.69 10.88 11.16 10.88 10.55 10.08 10 GNMA securities6 9.30 9.43 9.83 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 95,030 101,329 102,370 101,922 101,991 102,191 102,564 103,309 104,421 12 FHA/VA-insured 29,683 21,660 19,762 19,354 19,275 19,337 19,607 19,612 19,586 19,630 13 Conventional 68,365 73,370 81,567 83,016 82,647 82,654 82,584 82,952 83,723 84,791 Mortgage transactions (during period) 14 Purchases 30,826 20,531 23,110 1,037 905 1,469 1,163 1,419 1,862 2,091 Mortgage commitments7 15 Contracted (during period) 32,987 25,415 23,435 1,087 3,557 1,771 1,118 1,626 2,573 2,513 16 Outstanding (end of period) 3,386 4,886 2,148 2,081 4,520 4,807 4,661 4,673 5,236 5,648 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 13,517 12,802 15,105 18,378 18,473 18,714 18,918 19,443 n.a. n.a. 18 FHA/VA 746 686 620 594 594 593 599 586 n.a. n.a. 19 Conventional 12,771 12,116 14,485 17,785 17,880 16,135 18,320 18,857 n.a. n.a. Mortgage transactions (during period) 20 Purchases 103,474 76,845 44,077 3,586 5,088 6,373 5,861 5,141 n.a. n.a. 21 Sales 100,236 75,082 39,780 3,408 4,385 6,037 5,554 4,474 6,331 n.a. Mortgage commitments9 22 Contracted (during period) 110,855 71,467 66,026 5,206 8,411 11,227 4,196 5,186 n.a. n.a. 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associmajor institutional lender groups; compiled by the Federal Home Loan Bank ation guaranteed, mortgage-backed, fully modified pass-through securities, as- Board in cooperation with the Federal Deposit Insurance Corporation. suming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying 2. Includes all fees, commissions, discounts, and "points" paid (by the the prevailing ceiling rate. Monthly figures are averages of Friday figures from the borrower or the seller) to obtain a loan. Wall Street Journal. 3. Average effective interest rates on loans closed, assuming prepayment at the 7. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. Based on transactions on first day of subsequent month. Large securities swap programs, while the corresponding data for FNMA exclude swap monthly movements in average yields may reflect market adjustments to changes activity. in maximum permissable contract rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A38 Domestic Nonfinancial Statistics • October 1989 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1987 1988 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998866 11998877 11998888 Q4 Q1 Q2 Q3 Q4 1 All holders 2,597,175 2,943,222 3,200,411 2,943,222 2,984,027 3,058,006 3,132,353 3,200,411 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 2,115,184 3 Multifamily 247,831 273,899 287,611 273,899 278,144 278,919 281,468 287,611 4 Commercial 555,039 655,266 711,093 655,266 666,461 679,037 695,774 711,093 5 95,781 88,868 86,523 88,868 88,022 87,780 87,182 86,523 6 Selected financial institutions 1,507,289 1,700,820 1,852,593 1,700,820 1,723,937 1,764,221 1,813,470 1,852,593 7 Commercial banks2 502,534 591,151 665,458 591,151 604,468 628,383 649,135 665,458 8 1- to 4-family 235,814 275,761 313,897 275,761 280,757 295,425 306,118 313,897 9 Multifamily 31,173 33,296 34,715 33,296 33,728 34,184 33,855 34,715 10 Commercial 222,799 267,663 301,236 267,663 275,360 283,598 293,772 301,236 11 Farm 12,748 14,431 15,610 14,431 14,623 15,176 15,390 15,610 12 Savings institutions3 777,312 856,945 908,355 856,945 863,245 872,450 895,230 908,355 13 1- to 4-family 558,412 598,886 648,275 598,886 603,516 615,795 636,794 648,275 14 Multifamily 97,059 106,359 108,319 106,359 107,722 106,367 106,377 108,319 15 Commercial 121,236 150,943 151,016 115500,,994433 115511,,225511 114499,,553366 115511,,330077 115511,,001166 16 605 17 Life insurance companies 193,842 212,375 233,814 212,375 214,815 220,870 225,627 233,814 18 1- to 4-family 12,827 13,226 15,361 13,226 13,653 14,172 14,917 15,361 19 Multifamily 20,952 22,524 23,681 22,524 22,723 23,021 23,139 23,681 20 Commercial 149,111 166,722 185,592 166,722 168,774 174,086 178,166 185,592 21 Farm 10,952 9,903 9,180 9,903 9,665 9,591 9,405 9,180 22 Finance companies4 33,601 40,349 44,966 40,349 41,409 42,518 43,478 44,966 23 Federal and related agencies 203,800 192,721 198,549 192,721 196,909 199,474 198,027 198,549 24 Government National Mortgage Association 889 444 67 444 434 42 64 67 25 1- to 4-family 47 25 53 25 25 24 51 53 26 Multifamily , 842 419 14 419 409 18 13 14 27 Farmers Home Administration 48,421 43,051 42,018 43,051 43,076 42,767 41,836 42,018 28 1- to 4-family 21,625 18,169 18,347 18,169 18,185 18,248 18,268 18,347 29 Multifamily 7,608 8,044 8,513 8,044 8,115 8,213 8,349 8,513 30 Commercial 8,446 6,603 5,343 6,603 6,640 6,288 5,300 5,343 31 Farm 10,742 10,235 9,815 10,235 10,136 10,018 9,919 9,815 32 Federal Housing and Veterans Administration 5,047 5,574 5,975 5,574 5,660 5,673 5,666 5,975 33 1- to 4-family 2,386 2,557 2,649 2,557 2,608 2,564 2,432 2,649 34 Multifamily 2,661 3,017 3,326 3,017 3,052 3,109 3,234 3,326 35 Federal National Mortgage Association 97,895 96,649 103,013 96,649 99,787 102,368 102,453 103,013 36 1- to 4-family 90,718 89,666 95,833 89,666 92,828 95,404 95,417 95,833 37 Multifamily 7,177 6,983 7,180 6,983 6,959 6,964 7,036 7,180 38 Federal Land Banks 39,984 34,131 32,115 34,131 33,566 33,048 32,566 32,115 39 1- to 4-family 2,353 2,008 1,890 2,008 1,975 1,945 1,917 1,890 40 Farm 37,631 32,123 30,225 32,123 31,591 31,103 30,649 30,225 41 Federal Home Loan Mortgage Corporation 11,564 12,872 15,361 12,872 14,386 15,576 15,442 15,361 42 1- to 4-family 10,010 11,430 13,058 11,430 12,749 13,631 13,322 13,058 43 Multifamily 1,554 1,442 2,303 1,442 1,637 1,945 2,120 2,303 44 Mortgage pools or trusts6 565,428 718,297 809,448 718,297 732,071 754,045 782,802 809,448 45 Government National Mortgage Association 262,697 317,555 340,527 317,555 318,703 322,616 333,177 340,527 46 1- to 4-family 256,920 309,806 331,257 309,806 310,473 314,728 324,573 331,257 47 Multifamily 5,777 7,749 9,270 7,749 8,230 7,888 8,604 9,270 48 Federal Home Loan Mortgage Corporation 171,372 212,634 224,967 212,634 214,724 216,155 220,684 224,967 49 1- to 4-family 166,667 205,977 218,513 205,977 208,138 209,702 214,195 218,513 50 Multifamily 4,705 6,657 6,454 6,657 6,586 6,453 6,489 6,454 51 Federal National Mortgage Association 97,174 139,960 178,250 139,960 145,242 157,438 167,170 178,250 52 1- to 4-family 95,791 137,988 172,331 137,988 142,330 153,253 162,228 172,331 53 Multifamily 1,383 1,972 5,919 1,972 2,912 4,185 4,942 5,919 54 Farmers Home Administration 348 245 104 245 172 106 106 104 55 1- to 4-family 142 121 26 121 65 23 27 26 56 57 Commercial 132 63 38 63 58 41 38 38 58 Farm 74 61 40 61 49 42 41 40 59 Individuals and others7 320,658 331,384 339,821 331,384 331,110 340,266 338,054 339,821 60 1- to 4-family 177,374 171,317 173,128 171,317 169,459 177,108 172,527 173,128 61 Multifamily 66,940 75,437 77,917 75,437 76,071 76,572 77,310 77,917 62 Commercial 53,315 63,272 67,868 63,272 64,378 65,488 67,191 67,868 63 Farm 23,029 21,358 20,908 21,358 21,202 21,098 21,026 20,908 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June Amounts outstanding (end of period) 1 Total 607,721 659,507 649,132 654,413 659,507 682,020 687,397 691,162 693,911r 698,132 701,118 By major holder 2 Commercial banks 282,910 318,925 312,588 316,683 318,925 316,797 318,423 318,242 320,458 323,363 332244,,227722 3 Finance companies 140,281 145,180 143,012 143,488 145,180 141,795 143,419 143,070 144,378 145,523 146,055 4 Credit unions 80,087 86,118 85,338 85,740 86,118 87,093 87,813 88,514 89,330' 89,890 90,511 5 Retailers 40,975 43,498 42,614 42,910 43,498 40,986 41,052 41,300 41,301 41,323 41,649 6 Savings institutions 59,851 62,099 61,926 61,922 62,099 62,867 63,109 62,735 61,919 61,311 59,937 7 Gasoline companies 3,618 3,687 3,654 3,671 3,687 3,655 3,677 3,682 3,787 3,897 4,017 8 Pools of securitized assets4 n.a. n.a. n.a. n.a. n.a. 28,827 29,903 33,487 32,737 32,826 34,677 By major type of credit 9 Automobile 265,976 281,174 278,902 279,926 281,174 286,382 288,767 288,850 289,654' 290,741 229900,,447744 10 Commercial banks 109,201 123,259 120,939 122,392 123,259 122,160 122,983 123,062 123,878 125,118 125,661 11 Credit unions 40,351 41,326 41,293 41,316 41,326 41,707 41,964 42,211 42,510r 42,687 42,892 12 Finance companies 98,195 97,204 96,877 96,657 97,204 87,968 88,789 89,567 90,268 90,976 91,184 13 Savings institutions 18,228 19,385 19,793 19,561 19,385 19,506 19,464 19,231 18,866 18,566 18,038 14 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. 15,042 15,568 14,779 14,132 13,395 12,700 15 Revolving 153,884 174,792 170,131 173,030 174,792 176,716 178,570 182,831 184,500' 186,502 189,609 16 Commercial banks 99,119 117,572 114,180 116,593 117,572 111,133 111,706 112,553 114,130 115,407 115,539 17 Retailers 36,389 38,692 37,919 38,170 38,692 36,176 36,257 36,489 36,497 36,504 36,814 18 Gasoline companies 3,618 3,687 3,654 3,671 3,687 3,655 3,677 3,682 3,787 3,897 4,017 19 Savings institutions 10,367 10,151 9,724 9,923 10,151 10,479 10,722 10,860 10,918 11,008 10,954 20 Credit unions 4,391 4,691 4,653 4,673 4,691 4,785 4,866 4,947 5,035' 5,109 5,187 21 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. 10,489 11,342 14,172 14,134 14,578 17,098 22 Mobile home 26,387 25,744 26,033 26,005 25,744 26,036 25,992 24,168 23,993 23,952 23,695 23 Commercial banks 9,220 8,974 9,225 9,224 8,974 8,974 8,974 8,844 8,836 8,878 8,854 24 Finance companies 7,762 7,186 7,194 7,197 7,186 7,376 7,308 5,687 5,659 5,684 5,674 25 Savings institutions 9,406 9,583 9,614 9,584 9,583 9,687 9,710 9,637 9,498 9,390 9,166 76 Other 161,475 177,798 174,066 175,452 177,798 192,886 194,068 195,314 195,763' 196,936 197,340 77 Commercial banks 65,370 69,120 68,244 68,474 69,120 74,532 74,760 73,783 73,614 73,960 74,217 28 Finance companies 34,324 40,790 38,941 39,633 40,790 46,451 47,322 47,816 48,451 48,863 49,197 7.9 Credit unions 35,344 40,102 39,392 39,752 40,102 40,601 40,983 41,357 41,785' 42,094 42,433 30 Retailers 4,586 4,807 4,694 4,739 4,807 4,809 4,795 4,811 4,804 4,819 4,834 31 Savings institutions 21,850 22,981 22,794 22,854 22,981 23,196 23,214 23,006 22,638 22,347 21,780 32 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. 3,296 2,993 4,536 4,471 4,853 4,879 Net change (during period) 33 Total 35,674 51,786 2,576 5,281 5,094 22,513 5,377 3,765 2,749r 4,221 2,986 By major holder 34 Commercial banks 19,884 36,015 2,456 4,095 2,242 -2,128 1,626 -181 2,216 2,905 909 35 Finance companies 5,349 4,899 -7 476 1,692 -3,385 1,624 -349 1,308 1,145 532 36 Credit unions 3,853 6,031 438 402 378 975 720 701 816' 560 621 37 Retailers3 1,568 2,523 265 296 588 -2,512 66 248 1 22 326 38 Savings institutions 3,689 2,248 -576 -4 177 768 242 -374 -816 -608 -1,374 39 Gasoline companies 332 69 -1 17 16 -32 22 5 105 110 120 40 Pools of securitized assets4 n.a. n.a. n.a. n.a. n.a. n.a. 1,076 3,584 -750 89 1,851 By major type of credit 41 Automobile 18,663 15,198 -341 1,024 1,248 5,208 2,385 83 804' 1,087 -267 42 Commercial banks 7,919 14,058 414 1,453 867 -1,099 823 79 816 1,240 543 43 Credit unions 1,916 975 43 23 10 381 257 247 299r 177 205 44 Finance companies 5,639 -991 -380 -220 547 -9,236 821 778 701 708 208 45 Savings institutions 3,188 1,157 -418 -232 -176 121 -42 -233 -365 -300 -528 46 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. n.a. 526 -789 -647 -737 -695 47 Revolving 16,871 20,908 1,858 2,899 1,762 1,924 1,854 4,261 1,669' 2,002 3,107 48 Commercial banks 12,188 18,453 1,489 2,413 979 -6,439 573 847 1,577 1,277 132 49 Retailers 1,866 2,303 237 251 522 -2,516 81 232 8 7 310 50 Gasoline companies 332 69 -1 17 16 -32 22 5 105 110 120 51 Savings institutions 1,771 -216 110 199 228 328 243 138 58 90 -54 52 Credit unions 715 300 21 20 18 94 81 81 88' 74 78 53 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. n.a. 853 2,830 -38 444 2,520 54 Mobile home -968 -643 -152 -28 -261 292 -44 -1,824 -175 -41 -257 55 Commercial banks 192 -246 106 -1 -250 0 0 -130 -8 42 -24 56 Finance companies -1,052 -576 -140 3 -11 190 -68 -1,621 -28 25 -10 57 Savings institutions -107 177 -118 -30 -1 104 23 -73 -139 -108 -224 58 Other 1,108 16,323 1,211 1,386 2,346 15,088 1,182 1,246 449' 1,173 404 59 Commercial banks -415 3,750 446 230 646 5,412 228 -977 -169 346 257 60 Finance companies 1,761 6,466 513 692 1,157 5,661 871 494 635 412 334 61 Credit unions 1,221 4,758 374 360 350 499 382 374 428' 309 339 62 Retailers -297 221 27 45 68 2 -14 16 -7 15 15 63 Savings institutions -1,162 1,131 -151 60 127 215 18 -208 -368 -291 -567 64 Pools of securitized assets n.a. n.a. n.a. n.a. n.a. n.a. -303 1,543 -65 382 26 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 • October 1989 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1988 1989 IItteemm 11998866 11998877 11998888 Dec. Jan. Feb. Mar. Apr. May June INTEREST RATES Commercial banks2 1 48-month new car 11.33 10.45 10.85 n.a. n.a. 11.76 n.a. n.a. 12.44 n.a. 2 24-month personal 14.82 14.22 14.68 n.a. n.a. 15.22 n.a. n.a. 15.65 n.a. 3 120-month mobile home 13.99 13.38 13.54 n.a. n.a. 14.00 n.a. n.a. 14.35 n.a. 4 Credit card 18.26 17.92 17.78 n.a. n.a. 17.83 n.a. n.a. 18.11 n.a. Auto finance companies 5 New car 9.44 10.73 12.60 13.25 13.27 13.07 13.07 12.10 11.80 11.96 6 Used car 15.95 14.60 15.11 15.80 15.57 15.90 16.12 16.39 16.45 16.45 OTHER TERMS4 Maturity (months) 7 New car 50.0 53.5 56.2 56.3 56.2 55.7 55.4 53.4 52.7 53.0 8 Used car 42.6 45.2 46.7 46.0 47.8 47.4 47.1 47.8 46.6 46.5 Loan-to-value ratio 9 New car 91 93 94 94 94 92 92 91 91 91 10 Used car 97 98 98 98 97 98 97 97 97 97 Amount financed (dollars) 11 New car 10,665 11,203 11,663 12,068 11,956 11,819 11,867 11,886 11,973 12,065 12 Used car 6,555 7,420 7,824 8,022 8,006 8,022 7,958 7,855 7,908 7,921 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 Q3 Q4 Qi 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 43 148.7 198.3 307.0 303.3 254.9 306.4 250.2 193.3 263.3 227.2 335.7 358.1 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 • October 1989 1.57—Continued 1987 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 11998888 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 nonflnancial 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 7 Total net advances 157.6 193.1 314.0 256.7 223399..11 221111..11 226655..44 226622..55 116666..11 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 77..33 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 115500..66 117777..22 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 13 Total net advances 676.4 756.0 721.0 622.5 645.7 646.4 696.3 580.6 651.3 700.3 665500..88 660044..22 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 558866..99 71 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 77 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 73 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 ?5 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 76 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 77 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 78 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 79 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 nonflnancial investors 33 Direct lending in credit markets 169.2 282.9 93.1 173.3 175.5 123.6 225.1 -4.4 221199..55 330033..77 118833..33 116699..77 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 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 4? 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 57 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 • October 1989 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1987 1988 1989 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 1 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 15 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 4/ 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 2 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 22 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 23 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 26 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 • October 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 Nov. Dec. Jan. Feb. Mar. Apr/ Mayr Juner July 1 Industrial production 125.1 129.8 137.2 139.9 140.4 140.8 140.5 140.7 m.r 140.1 144.3 139.9 Market groupings 2 Products, total 133.3 81.1 145.9 148.4 149.4 150.1 150.0 150.5 149.6R 149.6 155.6 151.6 3 Final, total 132.5 136.8 144.3 146.8 147.7 148.2 148.6 148.9 148.2' 148.4 154.1 149.5 4 Consumer goods 124.0 127.7 133.9 136.8 138.2 138.5 138.7 138.4 137.5' 137.0 143.6 137.9 5 Equipment 143.6 148.8 158.2 159.9 160.4 161.1 161.6 162.8 162.2R 163.4 168.1 164.9 6 Intermediate 136.2 143.5 151.5 154.2 155.0 156.6 155.1 156.1 154.7R 153.7 160.7 158.7 7 Materials 113.8 118.2 125.3 128.3 128.3 128.1 127.4 127.3 128.9R 127.1 128.9 124.0 Industry groupings 8 Manufacturing 129.1 134.6 142.8 145.8 146.3 147.2 146.8 147.0 148.0' 148.0 148.1 148.3 Capacity utilization (percent)* 9 Manufacturing 79.7 81.1 83.5 84.4 84.4 84.7 84.3 84.1 84.5' 84.2 84.0 83.9 10 Industrial materials industries 78.6 80.5 83.7 85.1 84.9 84.6 84.0 83.7 84.2r 83.9 83.2 83.4 11 Construction contracts (1982 = 100)3 158.0 164.0 161.0 158.0 163.0 155.0 148.0 150.0 163.0 159.0 157.0 163.0 12 Nonagricultural employment, total4 120.7 124.1 128.6 129.5 129.9 130.3 130.6 130.8 131.1 131.3 131.7 131.9 13 Goods-producing, total 100.9 101.8 105.0 104.6 104.8 105.3 105.3 105.4 105.5 105.5 105.4 105.5 14 Manufacturing, total 96.3 96.8 99.2 99.3 99.5 99.8 99.8 100.0 99.9 99.9 99.8 99.9 15 Manufacturing, production-worker.... 91.1 91.9 94.3 94.5 94.7 94.9 95.0 95.1 95.0 95.0 94.8 94.9 16 Service-producing 129.0 133.4 138.5 140.0 140.4 140.8 141.2 141.5 141.8 142.2 142.7 143.0 17 Personal income, total 219.4 235.0 252.8 259.3 261.7 265.8 268.7 271.3 272.9 273.4 274.7 276.8 18 Wages and salary disbursements 210.8 226.3 244.4 251.7 253.2 256.1 257.3 259.5 261.7 261.9 263.7 266.3 19 Manufacturing 177.4 183.8 196.5 201.4 201.1 203.0 204.0 207.5 205.7 205.8 206.9 207.5 20 Disposable personal income5 218.5 232.4 252.1 259.0 261.4 264.0 268.1 270.3 269.6 271.6 273.8 275.8 21 Retail sales6 199.3 210.8 225.1 232.4 231.8 233.2 232.2 232.4 235.5 237.4 237.2 239.4 Prices7 22 Consumer (1982-84 = 100) 109.6 113.6 118.3 120.3 120.5 121.1 121.6 122.3 123.1 123.8 124.1 124.4 23 Producer finished goods (1982 = 100) ... 103.2 105.4 108.0 109.8 110.0 111.1 111.7 112.1 113.0 114.2 114.1 114.0 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 Dec. Jan. Feb. Mar. Apr. May June July HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 182,822 185,010 186,837 187,618 187,859 187,979 188,102 188,228 188,377 188,518 188,672 2 Labor force (including Armed Forces)1 120,078 122,122 123,893 124,779 125,643 125,383 125,469 125,863 125,806 126,291 126,145 3 Civilian labor force 117,834 119,865 121,669 122,563 123,428 123,181 112233,,226644 123,659 112233,,661100 112244,,110022 112233,,995566 Employment 4 Nonagricultural industries 106,434 109,232 111,800 112,816 113,411 113,630 113,930 114,009 114,102 114,445 114,240 5 Agriculture 3,163 3,208 3,169 3,193 3,300 3,223 3,206 3,104 3,112 3,096 3,219 Unemployment 6 Number 8,237 7,425 6,701 6,554 6,716 6,328 6,128 6,546 6,395 6,561 6,497 7 Rate (percent of civilian labor force) .... 7.0 6.2 5.5 5.3 5.4 5.1 5.0 5.3 5.2 5.3 5.2 8 Not in labor force 62,744 62,888 62,944 62,839 62,216 62,596 62,633 62,365 62,571 62,227 62,527 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 99,525 102,310 106,039 107,097 107,442 107,711 107,888 108,101 108,31Or 108,560' 108,729 10 Manufacturing 18,965 19,065 19,536 19,589 19,648 19,648 19,680 19,672 19,667' 19,655' 19,658 11 Mining 777 721 733 711 711 711 714 720 722 715' 704 12 Contract construction 4,816 4,998 5,294 5,213 5,267 5,270 5,252 5,279 5,283' 5,281' 5,318 13 Transportation and public utilities 5,255 5,385 5,584 5,634 5,654 5,667 5,666 5,682 5,700 5,716' 5,739 14 Trade 23,683 24,381 25,362 25,453 25,553 25,631 25,685 25,695 25,750' 25,777' 25,834 15 Finance 6,283 6,549 6,679 6,744 6,746 6,763 6,774 6,776 6,790 6,801 6,812 16 Service 23,053 24,196 25,464 26,230 26,318 26,434 26,520 26,651 26,71 r 26,923' 26,997 17 Government 16,693 17,015 17,387 17,523 17,545 17,587 17,597 17,626 17,687' 17,692' 17,667 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 Nonflnancial Statistics • October 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 Q2r Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 138.4 139.9 140.7 141.4 165.2 166.3 167.5 168.7 83.8 84.1 84.0 83.9 2 Mining 103.9 104.2 101.8 102.2 126.3 125.7 125.1 124.7 82.3 82.9 81.3 81.3 3 Utilities 115.1 114.3 116.0 116.7 140.4 140.7 141.0 141.4 81.9 81.3 82.3 82.1 4 Manufacturing 144.0 145.8 147.0 147.7 171.5 172.8 174.3 175.7 84.0 84.4 84.4 84.2 5 Primary processing 125.9 127.7 127.8 127.3 143.9 145.2 146.5 147.8 87.5 87.9 87.3 86.2 6 Advanced processing. , 154.9 156.7 158.6 160.1 188.1 189.5 191.0 192.6 82.4 82.7 83.0 83.3 7 Materials 126.5 128.0 127.6 127.7 150.1 150.8 151.7 152.6 84.3 84.9 84.1 83.7 8 Durable goods 137.1 139.2 138.6 138.5 I67.Y 169.0 170.1 171.3 81.6 82.4 81.5 80.8 9 Metal materials 92.7 94.8 92.3 89.9 109.5 109.8 110.2 110.6 84.8 86.3 83.8 81.3 10 Nondurable goods 132.8 135.4 136.3 137.2 149.8 151.2 152.7 154.2 88.6 89.5 89.3 89.0 11 Textile, paper, and chemical .. 135.3 138.1 139.2 140.2 150.2 151.8 153.5 155.3 90.0 91.0 90.7 90.3 12 Paper 148.9 148.6 148.4 145.4 150.7 152.3 154.0 155.8' 98.8 97.6 96.4 93.3 13 Chemical 139.4 144.1 145.4 146.3 157.4 159.3 161.4 163.7'" 88.6 90.5 90.1 89.4 14 Energy materials 102.5 102.0 100.7 100.5 119.0 118.7 118.4 118.3 86.0 86.0 85.0 84.9 Previous cycle2 Latest cycle3 1988 1988 1989 High Low High Low July Nov. Dec. Jan. Feb. Mar. Apr.' May' June' July Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 83.7 84.1 84.3 84.3 83.9 83.8 84.2 83.9 83.6 83.6 16 Mining 92.8 87.8 95.2 76.9 82.5 83.3 83.6 82.2 80.6 81.2 82.0 81.4 80.6 80.9 17 Utilities 95.6 82.9 88.5 78.0 81.5 80.8 82.0 80.9 82.6 83.3 82.9 82.3 81.2 81.8 18 Manufacturing 87.7 69.9 86.5 68.0 84.0 84.4 84.4 84.7 84.3 84.1 84.5 84.2 84.0 83.9 19 Primary processing.... 91.9 68.3 89.1 65.0 87.8 88.1 87.9 88.4 87.0 86.4 86.8 86.1 85.9 86.3 20 Advanced processing.. 86.0 71.1 85.1 69.5 82.2 82.6 82.8 83.1 83.0 83.0 83.5 83.4 83.1 82.8 21 Materials 92.0 70.5 89.1 68.5 84.4 85.1 84.9 84.6 84.0 83.7' 84.2 83.7 83.2 83.4 22 Durable goods 91.8 64.4 89.8 60.9 81.7 82.7 82.1 82.1 81.5 80.9 81.3 80.8 80.5 80.7 23 Metal materials 99.2 67.1 93.6 45.7 84.9 86.9 84.6 86.1 83.8 81.5 83.6 79.5 80.7 82.2 24 Nondurable goods .... 91.1 66.7 88.1 70.7 88.9 89.4 89.8 90.1 89.0 88.8 89.2 88.9 88.8 89.1 25 Textile, paper, and chemical 92.8 64.8 89.4 68.8 90.4 90.9 91.3r 91.5 90.3 90.2 90.7 89.9 90.2 90.5 76 98.4 70.6 97.3 79.9 110000..00 96.7 98.4 98.1 95.8 95.3 94.5 93 2 9922..33 77 92.5 64.4 87.9 63.5 8888..88 90.5 90.7 90.7 89.8 89.7 90.1 88.9 8899 11 28 Energy materials 94.6 86.9 94.0 82.3 86.2 86.2 86.5 84.9 84.9 85.4 86.0 85.2 83.7 83.9 1. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly high 1973; monthly low 1975. inside front cover. 3. Monthly highs 1978 through 1980; monthly lows 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1977 1989 pro- 1988 Groups por- avg. tion July Aug. Sept. Oct. Nov Dec. Jan Feb. Mar. Apr/ May June*" July' Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 137.2 138.0 138.5 138.6 139.4 139.9 140.4 140.8 140.5 140.7 141.7 141.6 141.4 141.7 2 Products 57.72 145.9 146.5 147.3 147.4 148.1 148.4 149.4 150.1 150.0 150.5 151.6 151.7 151.9 151.9 6 3 4 5 I F n in t C E e a o q r l m u n p i s e p r u d o m m i d a e e u t n e r c t t g s p o ro o d ds u cts 2 4 1 1 5 4 2 9 . . . . 5 7 9 2 2 7 4 5 1 1 1 1 5 5 4 3 1 8 4 3 . . . . 2 5 3 9 1 1 1 1 3 5 4 5 4 9 5 1 . . . . 2 4 0 6 1 1 1 1 5 6 4 3 2 0 5 5 . . . . 3 1 8 0 1 1 1 1 6 3 4 5 0 4 5 2 . . . . 4 8 8 9 1 1 1 1 5 3 4 5 9 6 6 4 . . . . 7 4 4 0 1 1 1 1 5 4 3 5 4 6 6 9 . . . . 2 8 8 9 1 1 1 1 5 6 3 4 5 0 8 7 . . . . 4 2 0 7 1 1 1 1 5 6 3 4 6 1 8 8 . . . . 1 6 5 2 1 1 1 1 3 5 6 4 8 5 1 8 . . . . 7 1 6 6 1 1 1 1 3 5 4 6 8 6 8 2 . . . . 4 1 9 8 1 1 1 1 3 5 5 6 9 6 0 4 . . . . 5 5 2 3 1 1 1 1 5 3 6 5 6 9 5 0 . . . . 2 3 3 5 1 1 1 1 6 3 5 5 5 9 6 0 . . . . 5 4 1 7 1 1 1 1 5 6 3 5 6 6 8 0 . . . . 4 0 9 6 7 Materials 42.28 125.2 126.4 126.5 126.5 127.5 128.3 128.3 128.1 127.4 127.3 128.2 127.7 127.2 127.8 Consumer goods 8 Durable consumer goods 6.89 125.3 125.3 125.7 126.3 129.3 129.2 131.9 131.5 131.6 130.1 132.2 131.2 130.5 127.2 9 Automotive products 2.98 124.9 124.4 124.2 126.4 128.9 129.5 134.5 132.5 131.6 128.9 131.7 128.8 126.3 120.7 10 Autos and trucks 1.79 122.7 120.8 123.1 124.8 128.3 129.5 138.0 135.6 133.1 128.3 131.7 127.4 123.6 114.5 11 Autos, consumer 1.16 93.4 93.8 93.0 97.7 101.3 101.0 105.1 99.6 96.0 95.0 98.8 96.0 91.4 81.2 12 Trucks, consumer .63 177.0 170.8 179.0 175.3 178.4 182.4 199.1 202.3 201.9 190.0 192.8 185.5 183.3 176.3 13 Auto parts and allied goods 1.19 128.1 129.9 125.9 128.8 129.8 129.5 129.3 127.9 129.4 129.8 131.7 131.0 130.5 130.0 14 Home goods 3.91 125.6 125.9 126.8 126.2 129.7 128.9 130.0 130.7 131.6 131.1 132.6 133.0 133.7 132.2 15 Appliances, A/C and TV 1.24 144.1 143.3 146.5 144.9 154.4 150.4 151.0 151.0 153.9 151.6 151.7 151.3 155.1 151.0 16 Appliances and TV 1.19 143.6 143.8 146.1 143.7 151.9 148.9 150.0 149.5 153.0 152.3 152.5 151.4 154.5 17 Carpeting and furniture .96 136.2 136.6 137.2 137.1 138.8 139.8 140.5 141.1 141.3 140.7 142.8 143.6 141.5 18 Miscellaneous home goods 1.71 106.3 107.4 106.8 106.6 106.7 107.3 108.9 110.1 110.1 110.9 113.0 113.9 113.8 19 Nondurable consumer goods 18.63 137.1 137.5 138.5 138.0 139.0 139.7 140.5 141.1 141.4 141.4 142.2 142.2 142.7 143.3 20 Consumer staples 15.29 144.9 145.3 146.6 145.8 147.0 147.9 148.9 149.4 149.7 149.9 150.7 150.7 151.2 151.7 21 Consumer foods and tobacco 7.80 140.9 141.1 141.3 141.1 142.4 143.7 144.5 144.8 144.3 143.3 144.7 145.2 145.5 22 Nonfood staples 7.49 149.1 149.6 152.1 150.7 151.8 152.2 153.6 154.2 155.4 156.9 156.9 156.4 157.1 157.9 23 Consumer chemical products .. 22..7755 180.0 181.8 183.8 185.0 186.1 185.7 186.8 187.6 187.8 188.9 187.3 188.1 188.9 24 Consumer paper products 11..8888 163.4 164.0 165.3 166.3 167.1 167.8 169.0 174.2 177.0 180.4 180.9 180.6 181.4 25 Consumer energy 2.86 110.0 109.3 113.0 107.6 108.9 109.8 111.6 109.1 110.1 110.7 112.0 110.1 110.7 11L9 26 Consumer fuel 1.44 95.4 94.6 95.5 92.7 95.3 94.1 96.3 96.7 95.0 95.6 97.3 93.6 96.2 27 Residential utilities 1.42 124.8 124.4 130.9 122.8 122.7 125.8 127.1 121.7 125.4 126.1 127.0 127.0 Equipment 28 Business and defense equipment 18.01 163.3 164.6 165.2 165.6 165.1 165.5 166.2 167.1 167.9 168.9 170.3 171.3 171.4 171.8 29 Business equipment 14.34 157.6 159.3 160.2 160.8 160.2 161.2 162.6 163.8 165.0 166.3 167.8 168.9 168.9 169.3 30 Construction, mining, and farm ., 2.08 71.9 73.6 73.1 74.3 74.2 74.5 74.6 74.3 75.6 76.9 77.6 76.4 76.2 76.1 31 Manufacturing 3.27 131.3 132.4 134.0 135.8 136.2 136.2 137.0 136.3 137.8 138.6 139.7 140.2 141.5 142.4 32 Power 1.27 89.4 89.8 90.9 92.2 91.5 92.1 91.8 92.8 92.7 93.0 93.6 93.1 92.6 92.9 33 Commercial 5.22 245.2 248.2 249.8 248.7 245.4 247.0 248.9 252.4 254.3 257.6 260.1 263.2 262.8 264.3 34 Transit 2.49 114.9 115.9 115.2 116.8 120.3 122.3 124.9 125.7 125.2 123.9 124.8 125.3 124.8 122.6 35 Defense and space equipment 3.67 185.9 184.9 184.9 184.5 184.0 182.2 180.5 180.0 179.3 178.7 179.9 180.7 181.1 181.7 Intermediate products 36 Construction supplies 5.95 138.6 138.4 138.1 138.4 140.0 140.7 141.4 142.3 139.5 139.3 140.2 139.3 139.8 139.3 37 Business supplies 6.99 162.5 162.8 164.4 165.2 165.9 165.7 166.7 168.8 168.4 170.4 170.4 170.6 170.0 38 General business supplies 5.67 168.5 168.6 170.6 171.8 172.3 172.9 173.8 175.9 175.4 177.4 177.9 178.1 177.2 39 Commercial energy products 1.31 136.3 137.6 137.7 136.7 138.2 134.3 135.8 138.2 138.3 140.3 138.0 138.2 138.8 Materials 40 Durable goods materials 20.50 135.4 136.8 136.6 137.8 138.9 139.8 139.0 139.4 138.6 137.9 139.0 138.4 138.2 138.9 41 Durable consumer parts 4.92 108.9 110.1 109.8 111.0 111.4 113.9 112.5 111.7 112.1 110.7 110.8 111.9 110.1 109.2 42 Equipment parts 5.94 171.7 174.1 173.5 174.0 174.9 175.0 174.1 175.2 175.2 175.3 176.9 177.2 177.2 178.8 43 Durable materials n.e.c 9.64 126.7 127.5 127.6 129.2 130.8 131.3 130.9 131.5 129.7 128.8 130.0 128.0 128.6 129.5 44 Basic metal materials 4.64 95.9 98.4 97.3 100.3 101.1 101.4 99.8 100.8 98.4 95.9 98.0 94.0 95.5 97.3 45 Nondurable goods materials 10.09 132.0 132.8 133.1 132.6 134.7 135.1 136.3 137.1 135.9 136.0 137.1 137.1 137.5 138.3 46 Textile, paper, and chemical materials 7.53 134.4 135.3 135.7 134.9 137.4 137.9 139.1 139.9 138.6 139.0 140.3 139.6 140.6 141.6 47 Textile materials 1.52 109.9 108.5 110.1 109.2 109.5 110.1 110.0 112.1 110.7 111.8 114.6 116.8 119.4 48 Pulp and paper materials 1.55 147.3 150.3 148.3 148.1 148.4 147.2 150.3 150.4 147.5 147.3 146.7 145.2 144.3 49 Chemical materials 4.46 138.3 139.2 140.0 139.0 143.1 144.2 145.1 145.7 145.0 145.4 146.8 145.5 146.5 50 Miscellaneous nondurable materials 2.57 124.9 125.6 125.6 125.9 126.6 127.0 128.0 129.1 128.0 127.2 127.8 129.6 51 Energy materials 11.69 101.5 102.7 103.2 101.5 101.3 102.3 102.6 100.5 100.5 101.0 101.7 100.8 98.9 99.1 52 Primary energy 7.57 106.3 106.8 106.2 106.8 106.0 108.6 107.6 105.2 104.4 103.7 104.1 103.5 101.6 53 Converted fuel materials 4.12 92.8 95.3 97.7 91.8 92.6 90.7 93.3 92.0 93.3 96.1 97.4 95.7 94.0 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • October 1989 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1989 1977 Groups c S o I d C e propor- a 1 v 98 g 8 . July Aug. Sept. Oct. Nov. Dec Jan. Feb. Mar. Apr/ May Junep July Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities 15.79 107.5 108.1 109.0 107.2 107.2 108.1 108.9 107.2 106.8 107.5 107.9 107.1 105.9 106.4 2 Mining 9.83 103.4 104.3 103.8 103.7 103.1 104.7 104.9 103.0 100.9 101.5 102.4 101.6 100.4 100.7 3 Utilities 5.96 114.3 114.4 117.8 113.0 113.9 113.7 115.4 114.0 116.5 117.5 117.1 116.3 114.9 115.8 4 Manufacturing 84.21 142.7 143.6 144.0 144.4 145.3 145.8 146.3 147.2 146.8 147.0 148.0 148.0 148.1 148.3 5 Nondurable 35.11 143.9 144.6 145.1 145.3 146.3 146.7 147.1 148.5 148.1 148.6 149.6 149.6 149.9 150.6 6 Durable 49.10 141.9 142.9 143.2 143.8 144.6 145.2 145.7 146.2 145.9 145.8 146.9 146.9 146.8 146.7 Mining 7 Metal 10 .50 93.2 94.0 96.6 99.1 101.6 104.6 111.9 106.9 98.6 98.1 96.8 94.0 8 Coal 11.12 1.60 137.9 141.5 137.2 142.2 138.5 149.7 155.1 144.7 134.7 137.7 145.5 137.1 129.2 128.5 9 Oil and gas extraction 13 7.07 92.9 93.3 93.2 92.0 91.5 90.8 88.9 88.9 89.5 89.6 89.1 90.0 98.7 10 Stone and earth minerals 14 .66 139.9 140.2 141.3 139.7 142.8 144.0 149.4 150.8 142.5 143.5 144.5 145.0 148.1 Nondurable manufactures 11 Foods 20 7.96 142.7 143.3 143.3 143.2 144.0 145.7 145.8 146.6 146.3 145.4 146.6 147.4 147.6 12 Tobacco products 21 .62 105.2 100.6 105.1 105.0 105.4 102.4 107.0 105.0 104.7 101.5 109.2 13 Textile mill products 22 2.29 116.2 117.1 116.4 116.2 117.0 117.2 117.9 120.2 119.4 119.7 122.5 123.6 124.6 14 Apparel products 23 2.79 109.1 109.4 108.9 109.9 109.5 110.1 108.8 110.2 110.2 109.9 111.3 111.6 15 Paper and products 26 3.15 150.3 152.3 151.0 150.9 151.8 150.7 151.7 153.8 151.7 151.7 150.7 150.1 148.4 16 Printing and publishing 27 4.54 184.2 184.9 186.7 188.0 188.1 188.5 188.0 193.0 194.6 198.5 200.1 199.4 199.5 200.2 17 Chemicals and products 28 8.05 151.9 153.4 154.8 155.3 156.7 157.5 158.1 159.0 158.5 159.2 159.3 158.4 159.1 18 Petroleum products 29 2.40 96.0 95.0 96.0 93.7 96.3 95.0 98.0 98.0 96.3 97.0 97.3 96.7 98.4 99.9 19 Rubber and plastic products 30 2.80 174.4 175.4 175.3 175.3 176.9 177.5 177.5 175.9 175.0 176.4 178.0 180.1 180.5 20 Leather and products 31 .53 59.5 59.1 59.4 59.9 61.0 61.5 60.2 62.9 62.9 61.2 61.4 60.3 60.3 Durable manufactures 21 Lumber and products 24 2.30 137.3 136.6 133.8 133.5 137.5 139.4 143.0 139.9 132.8 133.4 135.1 134.7 135.6 22 Furniture and fixtures 25 1.27 162.1 162.9 164.9 164.9 164.5 165.4 165.4 166.3 164.8 165.8 168.0 169.5 169.5 23 Clay, glass, and stone products... 32 2.72 122.6 122.2 122.6 122.6 123.3 124.7 125.1 126.6 125.4 125.5 124.7 122.7 123.4 24 Primary metals 33 5.33 89.2 91.5 90.8 93.1 94.2 92.7 90.0 93.2 91.1 88.4 90.1 86.9 87.3 88.8 25 Iron and steel 331.2 3.49 78.1 80.2 78.9 81.4 83.1 80.8 77.6 82.2 79.1 75.9 77.0 73.2 73.4 26 Fabricated metal products 34 6.46 120.9 121.7 122.1 122.5 122.6 124.6 125.1 124.5 124.5 123.8 123.1 124.7 124.6 124.9 27 Nonelectrical machinery 35 9.54 170.8 173.1 174.1 174.8 173.8 175.4 177.8 178.7 180.8 183.0 184.7 186.5 186.6 187.6 28 Electrical machinery 36 7.15 180.1 181.5 182.2 181.8 183.0 182.2 180.9 180.9 181.7 181.6 182.2 181.1 181.1 180.9 29 Transportation equipment 37 9.13 132.1 131.9 131.8 132.7 134.8 135.2 136.8 136.7 136.4 134.8 136.4 135.5 134.3 132.0 30 Motor vehicles and parts 371 5.25 117.2 116.6 117.5 118.5 121.7 122.9 125.5 124.9 123.4 120.4 122.0 119.7 116.5 110.8 31 Aerospace and miscellaneous transportation equipment .. 72-6.9 3.87 152.4 152.7 151.3 151.9 152.7 151.9 152.2 152.7 154.0 154.4 155.9 157.1 158.5 160.8 32 Instruments 38 2.66 154.3 156.4 156.8 157.8 159.9 160.4 159.1 161.0 161.3 161.8 163.0 164.6 164.4 166.1 33 Miscellaneous manufactures 39 1.46 107.1 107.8 108.3 108.5 107.7 109.0 110.9 112.2 110.0 112.5 115.3 116.8 116.4 Utilities 34 Electric 4.17 132.0 134.6 138.8 132.2 132.8 131.6 132.9 131.0 135.3 137.0 137.1 135.8 133.7 135.5 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total. 517.5 1,824.5 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 1,893.9 1,885.9 1,883.6 1,864.9 36 Final 405.7 1,401.2 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 1,460.4 1,450.4 1,449.8 1,429.9 37 Consumer goods. 272.7 902.4 895.6 900.4 897.2 915.0 918.4 934.4 935.6 934.3 928.0 939.4 929.5 929.3 919.9 38 Equipment 133.0 498.8 503.2 503.8 507.1 508.4 507.9 507.7 511.9 515.2 514.8 521.1 520.9 520.5 510.0 39 Intermediate 111.9 423.3 423.4 424.3 424.5 430.0 429.3 433.2 437.7 429.6 435.3 433.5 435.5 433.8 435.0 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 Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ Mayr June Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,750 1,535 1,456 1,432 1,526 1,508 1,518 1,486 1,403 1,230 1,334 1,347 1,308 2 1-family 1,071 1,024 994 980 1,029 1,027 1,058 1,052 989 870 954 905 874 3 2-or-more-family 679 511 462 452 497 481 460 434 414 360 380 442 434 4 Started 1,805 1,621 1,488 1,463 1,532 1,567 1,577 1,678 1,465 1,409 1,343 1,308 1,419 1-family 1,180 1,146 1,081 1,039 1,136 1,138 1,141 1,199 1,029 981 1,029 977 979 6 2-or-more-family 626 474 407 424 396 429 436 479 436 428 314 331 440 7 Under construction, end of period1 . 1,074 987 919 955 951 959 956 957 951 942 924 910 915 8 1-family 583 591 570 596 597 603 603 602 594 586 579 572 573 9 2-or-more-family 490 397 350 359 354 356 353 355 357 356 345 338 342 10 Completed 1,756 1,669 1,530 1,536 1,516 1,429 1,539 1,537 1,610 1,459 1,552 1,441 1,332 11 1-family 1,120 1,123 1,085 1,092 1,088 1,037 1,108 1,141 1,189 1,050 1,115 1,045 946 12 2-or-more-family 636 546 445 444 428 392 431 396 421 409 437 396 386 13 Mobile homes shipped 244 233 218 224 216 227 225 232 212 207 198 205 202 Merchant builder activity in 1-family units 14 Number sold 748 672 675 691 718 650 669 700 621 555 607 646 646 15 Number for sale, end of period 357 365 366 361 353 364 366 369 375 377 377 381 379 Price (thousands of dollars)2 Median 16 Units sold 92.2 104.7 113.3 116.6 112.9 110.4 121.0 113.0 118.0 123.0 116.7 118.9 123.4 17 Units sold 112.2 127.9 139.0 142.7 137.3 137.3 147.7 138.6 145.3 149.0 144.7 144.0 155.5 EXISTING UNITS (1-family) 18 Number sold 3,566 3,530 3,594 3,650 3,680 3,710 3,920 3,550 3,480 3,400 3,400 3,210 3,400 Price of units sold (thousands of dollars) 19 Median 80.3 85.6 89.2 88.5 88.9 88.5 88.7 89.7 91.9 92.0 9922..99 9922..66 9933..22 20 Average 98.3 106.2 112.5 112.6 112.3 112.4 112.0 113.0 117.8 116.1 118.0 118.0 118.7 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 387,043 397,721 409,663 411,525 411,074 415,442 425,035 424,791 418,465 419,152 415,783 418,184 414,691 72 Private 315,313 320,108 328,738 329,848 331,374 332,798 336,254 339,481 335,037 340,438 335,363 333,492 334,043 23 Residential 187,147 194,656 198,101 198,322 200,780 202,048 202,480 204,707 202,322 204,456 203,952 200,179 197,939 24 Nonresidential, total 128,166 125,452 130,637 131,526 130,594 130,750 133,774 134,774 132,715 135,982 131,411 133,313 136,104 Buildings 75 Industrial 13,747 13,707 14,931 14,872 15,515 15,413 15,045 15,890 15,098 15,698 1166,,226633 16,089 1166,,881188 ?6 Commercial 56,762 55,448 58,104 58,805 57,284 56,676 58,659 59,350 58,749 60,653 55,611 56,852 57,994 77 Other 13,216 15,464 17,278 17,700 17,340 17,328 17,744 17,976 17,484 17,634 16,944 17,324 17,555 28 Public utilities and other 44,441 40,833 40,324 40,149 40,455 41,333 42,326 41,558 41,384 41,997 42,593 43,048 43,737 29 Public 71,727 77,612 80,922 81,677 79,700 82,644 88,781 85,310 83,428 78,714 80,420 84,692 80,648 30 Military 3,868 4,327 3,579 4,373 2,617 3,420 3,905 3,440 3,433 3,740 3,133 3,386 3,378 31 Highway 22,971 25,343 28,524 26,274 28,707 28,992 33,674 30,792 27,936 26,091 27,772 27,382 26,405 32 Conservation and development... 4,646 5,162 4,474 4,995 4,343 4,134 4,412 4,121 4,742 4,210 3,077 6,071 4,729 33 Other 40,242 42,780 44,345 46,035 44,033 46,098 46,790 46,957 47,317 44,673 46,438 47,853 46,136 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 • October 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 JJJuuulllyyy 11998888 11998899 111999888999''' JJuullyy JJuullyy Sept. Dec. Mar/ Juner Mar/ Apr/ May June July CONSUMER PRICES2 (1982-84=100) 1 All items 4.1 5.0 4.8 4.1 6.1 5.7 .5 .7 .6 .2 .2 124.4 2 Food 4.5 5.6 8.8 3.0 8.2 5.6 .8 .5 .6 .2 .3 125.5 3 Energy items .3 7.8 2.7 -.4 10.2 24.8 1.1 5.1 1.6 -1.0 -.7 98.5 4 All items less food and energy 4.5 4.6 4.3 4.9 5.2 3.8 .4 .2 .5 .2 .4 129.0 5 Commodities 3.6 3.1 3.1 4.2 4.1 2.0 .3 .2 .4 -.1 .1 118.8 6 Services 4.9 5.3 4.8 5.4 5.9 4.3 .5 .2 .5 .4 .6 134.8 PRODUCER PRICES (1982=100) '/ Finished goods 2.5 5.0 5.7 3.0 10.2 5.1 .4 .4 .9 -.1 -.4 114.0 8 Consumer foods 2.4 4.8 9.2 2.1 13.1 -2.0 .8 -.5 .8 -.8 .1 119.0 9 Consumer energy -3.3 11.6 -2.7 1.4 41.0 31.0 1.4 6.8 3.3 -3.1 -3.0 68.4 10 Other consumer goods 4.0 4.3 5.9 4.4 5.4 5.3 .2 .1 .5 .7 -.3 123.9 11 Capital equipment 2.3 3.9 6.1 1.7 4.6 4.1 .1 -.1 .4 .7 .0 118.6 12 Intermediate materials3 5.5 4.4 4.6 4.5 8.7 2.5 .5 .5 .3 -.2 -.3 112.5 13 Excluding energy 7.2 4.0 7.2 6.7 5.5 .3 .3 .2 .2 -.2 -.2 120.3 Crude materials 14 Foods 11.9 -.4 29.1 -7.9 16.9 -18.7 3.1 -2.9 .4 -2.6 -1.1 109.7 15 Energy -13.5 17.2 -27.0 12.3 48.3 22.3 2.1 4.8 2.2 -1.8 2.1 78.9 16 Other 14.9 1.5 8.5 12.5 10.3 -9.8 .4 -.9 -.4 -1.3 -1.5 134.9 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 11998866 11998877 11998888 Q2 Q3 Q4 Ql Q2' GROSS NATIONAL PRODUCT 1 Total 4,231.6 4,524.3 4,880.6 4,838.5 4,926.9 5,017.3 5,113.1 5,203.8 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 3,446.8 3 Durable goods 406.0 421.0 455.2 454.6 452.5 467.4 466.4 471.0 4 Nondurable goods 942.0 998.1 1,052.3 1,042.4 1,066.2 1,078.4 1,098.3 1,122.0 5 Services 1,449.5 1,591.7 1,727.6 1,707.9 1,744.7 1,778.2 1,816.7 1,853.8 6 Gross private domestic investment 659.4 699.9 750.3 748.4 771.1 752.8 769.6 774.7 7 Fixed investment 652.5 670.6 719.6 719.1 726.5 734.1 742.0 747.4 8 Nonresidential 435.2 444.3 487.2 487.1 493.2 495.8 503.1 512.6 9 Structures 139.0 133.8 140.3 139.9 142.0 142.5 144.7 142.8 10 Producers' durable equipment 296.2 310.5 346.8 347.2 351.3 353.3 358.5 369.8 11 Residential structures 217.3 226.4 232.4 232.1 233.2 238.4 238.8 234.8 12 Change in business inventories 6.9 29.3 30.6 29.3 44.6 18.7 27.7 27.3 13 Nonfarm 8.6 30.5 34.2 30.4 41.5 40.8 19.1 23.8 14 Net exports of goods and services -97.4 -112.6 -73.7 -74.9 -66.2 -70.8 -54.0 -52.7 15 Exports 396.5 448.6 547.7 532.5 556.8 579.7 605.6 623.2 16 Imports 493.8 561.2 621.3 607.5 623.0 650.5 659.6 675.9 17 Government purchases of goods and services 872.2 926.1 968.9 960.1 958.6 1,011.4 1,016.0 1,034.9 18 Federal 366.5 381.6 381.3 377.1 367.5 406.4 399.0 407.8 19 State and local 505.7 544.5 587.6 583.0 591.0 604.9 617.0 627.1 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 55,,117766..55 21 Goods 1,686.7 1,785.2 1,931.9 1,917.4 1,955.8 1,987.4 2,030.9 2,079.8 22 Durable 724.2 777.6 863.6 857.2 884.0 888.5 894.7 904.5 23 Nondurable 962.5 1,007.6 1,068.3 1,060.2 1,071.8 1,098.9 1,136.2 1,175.3 24 Services 2,119.3 2,304.5 2,499.2 2,472.3 2,520.3 2,570.0 2,620.8 2,668.9 25 Structures 425.6 434.6 449.5 448.8 450.8 459.9 461.3 455.0 26 Change in business inventories 6.9 29.3 30.6 29.3 44.6 18.7 27.7 27.3 27 Durable goods 1.2 22.0 25.0 17.0 41.4 32.0 22.0 5.7 28 Nondurable goods 5.6 7.2 5.6 12.3 3.2 -13.3 5.7 21.7 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 4,134.0 NATIONAL INCOME 30 3,412.6 3,665.4 3,972.6 3,933.6 4,005.7 4,097.4 4,185.2 4,249.9 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 3,118.0 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 2,608.6 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 2,135.1 35 Supplement to wages and salaries 416.6 440.7 478.6 473.5 482.9 492.0 501.0 509.4 36 Employer contributions for social insurance 217.3 227.8 249.7 247.7 251.8 255.6 259.7 263.4 37 Other labor income 199.3 212.8 228.9 225.9 231.1 236.5 241.3 246.0 38 Proprietors' income1 282.0 311.6 327.8 331.8 327.0 328.3 359.3 355.0 39 Business and professional 247.2 270.0 288.0 286.5 289.3 296.3 300.3 304.2 40 Farm1 34.7 41.6 39.8 45.4 37.7 32.0 59.0 50.7 41 Rental income of persons2 11.6 13.4 15.7 14.6 16.3 16.1 11.8 9.7 42 Corporate profits' 282.1 298.7 328.6 325.3 330.9 340.2 316.3 309.1 43 Profits before tax3 221.6 266.7 306.8 305.3 314.4 318.8 318.0 297.6 44 Inventory valuation adjustment 6.7 -18.9 -25.0 -28.8 -30.4 -20.1 -38.3 -20.7 45 Capital consumption adjustment 53.8 50.9 46.8 48.9 46.9 41.5 36.6 32.3 46 Net interest 325.5' 351.7' 392.9' 383.0 396.4 415.7 436.1 458.1 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 • October 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 4,399.6 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 2,608.6 3 Commodity-producing industries 625.6 649.9 696.3 690.8 701.6 714.7 726.6 733.7 4 Manufacturing 473.2 490.3 524.0 519.2 527.2 538.1 546.3 549.9 5 Distributive industries 498.8 531.9 571.9 568.0 578.0 587.5 598.8 610.6 6 Service industries 576.7 648.3 714.4 703.5 723.0 746.7 768.4 790.8 7 Government and government enterprises 393.7 419.2 446.5 443.1 449.6 456.3 466.9 473.5 8 Other labor income 199.3 212.8 228.9 225.9 231.1 236.5 241.3 246.0 9 Proprietors' income 282.0 311.6 327.8 331.8 327.0 328.3 359.3 355.0 10 Business and professional1 247.2 270.0 288.0 286.5 289.3 296.3 300.3 304.2 11 Farm1 34.7 41.6 39.8 45.4 37.7 32.0 59.0 50.7 12 Rental income of persons 11.6 13.4 15.7 14.6 16.3 16.1 11.8 9.7 13 Dividends 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 521.5 548.2 584.7 581.8 587.4 593.8 616.4 626.8 16 Old-age survivors, disability, and health insurance benefits ... 269.2 282.9 300.5 299.2 301.4 304.0 316.9 322.9 17 LESS: Personal contributions for social insurance 161.9 172.9 194.9 193.4 196.4 199.6 210.0 213.0 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 4,399.6 19 LESS: Personal tax and nontax payments 512.9 571.7 586.6 590.7 585.9 597.8 628.3 652.6 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 3,747.0 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 3,549.9 22 EQUALS: Personal saving 124.9 101.8 144.7 134.0 149.6 163.4 205.7 197.2 MEMO Per capita (1982 dollars) 23 Gross national product 15,385.5 15,793.9' 16,332.8' 16,303.7' 1166,,338877..llrr 1166,,445555..33rr 1166,,556666..44'' 1166,,663355..88 24 Personal consumption expenditures 10,123.7 10,302.0' 10,545.5' 10,515.4' 10,572.0r 10,625.6'' 10,653.5' 10,685.3 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 11,618.0 26 Saving rate (percent) 4.1 3.2 4.2 3.9 4.3 4.6 5.6 5.3 GROSS SAVING 27 Gross saving 525.3 553.8 642.4 633.4 669.8 647.4 693.5 691.7 28 Gross private saving 669.5 663.8 738.6 722.5 742.4 769.3 792.1 793.2 29 Personal saving 124.9 101.8 144.7 134.0 149.6 163.4 205.7 197.2 30 Undistributed corporate profits1 84.5 75.3 80.3 78.3 77.6 81.7 53.4 55.0 31 Corporate inventory valuation adjustment 6.7 -18.9 -25.0 -28.8 -30.4 -20.1 -38.3 -20.7 Capital consumption allowances 32 Corporate 285.9 303.1 321.7 319.0 332233..11 329.7 333355..22 333399..77 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 --110011..66 -206.9 -161.4 -145.8 -141.5 -122.5 -167.6 -147.5 -148.4 36 State and local 62.8 51.3 49.7 52.4 49.8 45.7 48.8 46.8 37 Gross investment 523.6 549.0 632.8 633.4 661.2 630.8 669.3 675.5 38 Gross private domestic 659.4 699.9 750.3 748.4 771.1 752.8 769.6 774.7 39 Net foreign -135.8 -150.9 -117.5 -115.0 -109.9 -122.0 -100.3 -99.2 40 Statistical discrepancy -1.8 -4.7 -9.6 -0.1 -8.6 -16.6 -24.1 -16.1 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 Q1 Q2 Q3 Q4 Qlp 1 Balance on current account --113333,,224499 --114433,,770000 -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 liabilities 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 liabilitiesJ 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 11,308 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) % 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 • October 1989 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1988 1989 IItteemm 11998866 11998877 11998888 Dec. Jan. Feb. Mar. Apr. May June" 1 EXPORTS of domestic and foreign ( merchandise excluding grant-aid shipments, f.a.s. value 227,159 254,122 322,426 28,864 28,980 28,839 30,065 30,759 30,455 30,914 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 365,438 406,241 440,952 39,668 37,877 38,220 39,549 39,045 40,534 39,085 Trade balance 3 Customs value -138,279 -152,119 -118,526 -10,805 -8,897 -9,381 -9,484 -8,286 -10,079 -8,170 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 1989 TTyyppee 11998866 11998877 11998888 Jan. Feb. Mar. Apr. May June July" 1 Total 48,511 45,798 47,802 48,190 49,373 49,854 50,303 54,941 60,502 63,462 2 Gold stock, including Exchange Stabilization Fund 11,064 11,078 11,057 11,056 11,061 11,061 11,061 11,060 11,063 11,066 3 Special drawing rights2'3 8,395 10,283 9,637 9,388 9,653 9,443 9,379 9,134 9,034 9,340 4 Reserve position in International Monetary Fund 11,730 11,349 9,745 9,422 9,353 9,052 9,132 8,513 8,888 9,055 5 Foreign currencies4 17,322 13,088 17,363 18,324 19,306 20,298 20,731 26,234 31,517 34,001 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 1989 AAsssseettss 11998866 11998877 11998888 Jan. Feb. Mar. Apr. May June July" 1 Deposits 287 244 347 279 325 351 352 428 275 371 Assets held in custody 2 U.S. Treasury securities2 155,835 195,126 232,547 228,399 230,860 234,075 235,145 232,004 229,914 233,170 3 Earmarked gold 14,048 13,919 13,636 13,635 13,609 13,602 13,576 13,612 13,545 13,530 1. Excludes deposits and U.S. Treasury securities held for international and 3. Earmarked gold and the gold stock are valued at $42.22 per fine troy ounce, regional organizations. Earmarked gold is gold held for foreign and international accounts and is not 2. Marketable U.S. Treasury bills, notes, and bonds; and nonmarketable U.S. included in the gold stock of the United States. Treasury securities payable in dollars and in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Summary Statistics A57 3.14 FOREIGN BRANCHES OF U.S. BANKS Balance Sheet Data1 Millions of dollars, end of period 1988 1989 AAsssseett aaccccoouunntt 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr. May June All foreign countries 1 Total, all currencies 458,012 456,628 518,618 506,062 4%,755 501,682 519,740 517,276 521,436 523,665 2 Claims on United States 119,706 114,563 138,034 169,111 167,143 168,558 177,902 170,126r 177,987 177,445 3 Parent bank 87,201 83,492 105,845 129,856 127,403 128,115 134,002 127,557' 134,026 132,380 4 Other banks in United States 13,057 13,685 16,416 14,918 14,559 13,506 14,697 13,459 13,040 14,218 5 Nonbanks 19,448 17,386 15,773 24,337 25,181 26,937 29,203 29,110 30,921 30,847 6 Claims on foreigners 315,676 312,955 342,520 299,728 291,892 296,240 303,906 306,493 302,808 303,713 7 Other branches of parent bank 91,399 96,281 122,155 107,179 102,482 103,962 110,434 114,834 116,506 115,911 8 Banks 102,960 105,237 108,859 96,932 93,663 95,6% 97,723 %,830 94,042 94,898 9 Public borrowers 23,478 23,706 21,832 17,163 16,931 16,682 17,020 16,101 16,095 16,709 10 Nonbank foreigners 97,839 87,731 89,674 78,454 78,816 79,900 78,729 78,728 76,165 76,195 11 Other assets 22,630 29,110 38,064 37,223 37,720 36,884 37,932 40,657r 40,641 42,507 12 Total payable in U.S. dollars 336,520 317,487 350,107 358,040 345,523 346,990 366,403 359,841 366,315 367,562 n Claims on United States 116,638 110,620 132,023 163,456 160,520 161,336 170,091 162,954 169,796 169,520 14 Parent bank 85,971 82,082 103,251 126,929 124,4% 124,288 129,431 123,258 128,771 127,352 15 Other banks in United States 12,454 12,830 14,657 14,167 12,908 12,025 13,259 12,539 11,909 13,207 16 Nonbanks 18,213 15,708 14,115 22,360 23,116 25,023 27,401 27,157 29,116 28,961 17 Claims on foreigners 210,129 195,063 202,428 177,685 167,288 168,293 178,134 179,308 177,308 180,013 18 Other branches of parent bank 72,727 72,197 88,284 80,736 76,221 76,565 82,797 87,777 86,625 88,874 19 Banks 71,868 66,421 63,707 54,884 49,391 50,013 53,893 50,815 49,793 50,627 20 Public borrowers 17,260 16,708 14,730 12,131 11,749 11,781 11,831 11,467 11,282 11,815 21 Nonbank foreigners 48,274 39,737 35,707 29,934 29,927 29,934 29,613 29,249 29,608 28,697 22 Other assets 9,753 11,804 15,656 16,899 17,715 17,361 18,178 17,579 19,211 18,029 United Kingdom 23 Total, all currencies 148,599 140,917 158,695 156,835 156,529 154,879 154,856 153,146 155,532 153,968 24 Claims on United States 33,157 24,599 32,518 40,089 40,954 40,547 40,715 39,475' 39,599 38,014 25 Parent bank 26,970 19,085 27,350 34,243 34,928 34,449 35,315 34,741r 35,642 33,763 26 Other banks in United States 1,106 1,612 1,259 1,123 1,128 1,268 1,380 1,227 1,243 1,125 27 Nonbanks 5,081 3,902 3,909 4,723 4,898 4,830 4,020 3,507 2,714 3,126 28 Claims on foreigners 110,217 109,508 115,700 106,388 104,668 103,806 103,443 102,438 104,504 103,773 29 Other branches of parent bank 31,576 33,422 39,903 35,625 35,322 33,650 35,305 32,954 35,537 34,948 30 Banks 39,250 39,468 36,735 36,765 34,907 36,159 35,382 37,079 37,412 37,357 31 Public borrowers 5,644 4,990 4,752 4,019 4,090 3,808 3,757 3,471 3,627 3,599 32 Nonbank foreigners 33,747 31,628 34,310 29,979 30,349 30,189 28,999 28,934 27,928 27,869 33 Other assets 5,225 6,810 10,477 10,358 10,907 10,526 10,698 ll,233r 11,429 12,181 34 Total payable in U.S. dollars 108,626 95,028 100,574 103,503 102,873 100,863 103,211 98,463 101,612 99,028 35 Claims on United States 32,092 23,193 30,439 38,012 38,591 37,707 38,265 36,772 36,675 34,990 36 Parent bank 26,568 18,526 26,304 33,252 33,925 33,106 34,320 33,499 34,119 32,059 37 Other banks in United States 1,005 1,475 1,044 964 678 816 937 872 862 844 38 Nonbanks 4,519 3,192 3,091 3,7% 3,988 3,785 3,008 2,401 1,694 2,087 39 Claims on foreigners 73,475 68,138 64,560 60,472 58,798 57,567 59,201 56,227 58,395 58,746 40 Other branches of parent bank 26,011 26,361 28,635 28,474 27,939 26,475 28,145 25,389 26,036 26,541 41 Banks 26,139 23,251 19,188 18,494 16,778 17,246 17,715 17,680 18,458 18,745 42 Public borrowers 3,999 3,677 3,313 2,840 2,869 2,774 2,786 2,696 2,737 2,606 43 Nonbank foreigners 17,326 14,849 13,424 10,664 11,212 11,072 10,555 10,462 11,164 10,854 44 Other assets 3,059 3,697 5,575 5,019 5,484 5,589 5,745 5,464 6,542 5,292 Bahamas and Caymans 45 Total, all currencies 142,055 142,592 160,321 170,639 162,352 165,862 179,185 172,324 173,137 171,780 46 Claims on United States 74,864 78,048 85,318 105,320 103,016 103,989 111,951 105,273 111,823 109,800 47 Parent bank 50,553 54,575 60,048 73,409 71,065 71,100 75,234 68,%9 73,627 70,735 48 Other banks in United States 11,204 11,156 14,277 13,145 12,742 11,563 12,275 11,563 10,807 12,116 49 Nonbanks 13,107 12,317 10,993 18,766 19,209 21,326 24,442 24,741 27,389 26,949 50 Claims on foreigners 63,882 60,005 70,162 58,393 52,503 54,732 59,615 60,103 53,984 54,537 51 Other branches of parent bank 19,042 17,296 21,277 17,954 15,982 18,454 20,048 26,261 21,962 22,324 5? 28,192 27,476 33,751 28,268 24,755 24,514 27,727 22,641 21,184 21,202 53 Public borrowers 6,458 7,051 7,428 5,830 5,422 5,513 5,480 5,374 5,280 5,540 54 Nonbank foreigners 10,190 8,182 7,706 6,341 6,344 6,251 6,360 5,827 5,558 5,471 55 Other assets 3,309 4,539 4,841 6,926 6,833 7,141 7,619 6,948 7,330 7,443 56 Total payable in U.S. dollars 136,794 136,813 151,434 163,518 154,981 158,011 172,148 166,389 166,869 165,676 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 • October 1989 3.14—Continued 1988 1989 LLiiaabbiilliittyy aaccccoouunntt Dec. Jan. Feb. Mar. Apr. May June All foreign countries 57 Total, all currencies 458,012 456,628 518,618 506,062 496,755 501,682 519,740 517,276 521,436 523,665 58 Negotiable CDs 34,607 31,629 30,929 28,511 28,538 30,013 30,768 30,278 29,425 28,116 59 To United States 156,281 152,465 161,390 185,577 172,055 174,956 185,831 177,583 178,796' 179,858 60 Parent bank 84,657 83,394 87,606 114,720 102,521 105,687 113,779 107,455 110,579r 113,027 61 Other banks in United States 16,894 15,646 20,559 14,897 13,539 12,989 14,659 14,307 13,389' 12,951 62 Nonbanks 54,730 53,425 53,225 55,960 55,995 56,280 57,393 55,821 54,828' 53,880 63 To foreigners 245,939 253,775 304,803 270,923 274,015 274,898 280,859 284,629 288,316' 289,594 64 Other branches of parent bank 89,529 95,146 124,601 111,267 109,125 111,582 116,148 117,089 121,135' 118,950 65 Banks 76,814 77,809 87,274 72,842 72,185 70,484 71,447 72,155 72,903' 74,213 66 Official institutions 19,520 17,835 19,564 15,183 18,867 17,323 17,911 17,933 17,795 17,559 67 Nonbank foreigners 60,076 62,985 73,364 71,631 73,838 75,509 75,353 77,452 76,483 78,872 68 Other liabilities 21,185 18,759 21,496 21,051 22,147 21,815 22,282 24,786 24,899 26,097 69 Total payable in U.S. dollars 353,712 336,406 361,438 367,090 353,678 356,597 378,460 371,237 374,839' 378,331 70 Negotiable CDs 31,063 28,466 26,768 24,045 23,696 25,452 26,287 25,970 25,411 24,129 71 To United States 150,905 144,483 148,442 173,190 159,650 161,449 173,471 164,957 166,109' 167,217 7? Parent bank 81,631 79,305 81,783 107,150 94,531 96,714 105,534 99,188 102,643' 104,706 73 Other banks in United States 16,264 14,609 19,155 13,628 12,413 11,535 13,355 12,781 11,769' 11,537 74 Nonbanks 53,010 50,569 47,504 52,412 52,706 53,200 54,582 52,988 51,697' 50,974 75 To foreigners 163,583 156,806 177,711 160,373 160,632 159,542 168,257 169,916 171,618' 175,393 76 Other branches of parent bank 71,078 71,181 90,469 84,021 82,149 83,253 88,298 89,425 90,123' 90,850 77 Banks 37,365 33,850 35,065 28,493 27,231 27,060 28,949 28,445 29,567' 29,686 78 Official institutions 14,359 12,371 12,409 8,224 10,880 8,740 9,953 9,591 9,255 9,852 79 Nonbank foreigners 40,781 39,404 39,768 39,635 40,372 40,489 41,057 42,455 42,673 45,005 80 Other liabilities 8,161 6,651 8,517 9,482 9,700 10,154 10,445 10,394 11,701 11,592 United Kingdom 81 Total, all currencies 148,599 140,917 158,695 156,835 156,529 154,879 154,856 153,146 155,532 153,968 82 Negotiable CDs 31,260 27,781 26,988 24,528 24,253 25,942 26,625 26,157 25,539 24,396 83 To United States 29,422 24,657 23,470 36,784 34,535 35,393 32,757 29,715 30,867' 30,013 84 Parent bank 19,330 14,469 13,223 27,849 24,130 25,562 25,098 20,455 20,329 21,669 85 Other banks in United States 2,974 2,649 1,740 2,197 2,568 1,915 1,984 1,551 1,720 1,648 86 Nonbanks 7,118 7,539 8,507 6,738 7,837 7,916 5,675 7,709 8,818' 6,696 87 To foreigners 78,525 79,498 98,689 86,026 87,519 83,774 85,863 87,478 88,985' 88,381 88 Other branches of parent bank 23,389 25,036 33,078 26,812 26,815 24,553 25,781 25,800 26,867 24,974 89 Banks 28,581 30,877 34,290 30,609 29,329 28,508 29,094 30,714 30,925' 31,066 90 Official institutions 9,676 6,836 11,015 7,873 10,010 8,627 9,429 8,637 8,946 8,650 91 Nonbank foreigners 16,879 16,749 20,306 20,732 21,365 22,086 21,559 22,327 22,247 23,691 92 Other liabilities 9,392 8,981 9,548 9,497 10,222 9,770 9,611 9,796 10,141 11,178 93 Total payable in U.S. dollars 112,697 99,707 102,550 105,514 104,462 103,302 105,942 100,514 102,721' 101,742 94 Negotiable CDs 29,337 26,169 24,926 22,063 21,500 23,419 24,302 24,073 23,568 22,324 95 To United States 27,756 22,075 17,752 32,588 30,032 30,442 29,578 25,493 26,554' 25,401 96 Parent bank 18,956 14,021 12,026 26,404 22,069 22,998 24,013 18,524 18,545 19,188 97 Other banks in United States 2,826 2,325 1,512 1,912 2,362 1,600 1,719 1,227 1,368 1,393 98 Nonbanks 5,974 5,729 4,214 4,272 5,601 5,844 3,846 5,742 6,641' 4,820 99 To foreigners 51,980 48,138 55,919 46,690 48,421 44,934 47,071 46,230 47,371 48,491 100 Other branches of parent bank 18,493 17,951 22,334 18,561 18,936 17,139 18,335 17,755 18,030 16,467 101 Banks 14,344 15,203 15,580 13,407 13,090 13,106 12,907 13,439 13,930 13,545 102. Official institutions 7,661 4,934 7,530 4,348 5,897 4,116 5,467 4,365 4,796 5,579 103 Nonbank foreigners 11,482 10,050 10,475 10,374 10,498 10,573 10,362 10,671 10,615 12,900 104 Other liabilities 3,624 3,325 3,953 4,173 4,509 4,507 4,991 4,718 5,228 5,526 Bahamas and Caymans 105 Total, all currencies 142,055 142,592 160,321 170,639 162,352 165,862 179,185 172,324 173,137 171,780 106 Negotiable CDs 610 847 885 953 1,118 1,138 1,073 1,025 872 696 107 To United States 104,556 106,081 113,950 122,332 113,562 114,729 124,736 118,164 120,175' 117,737 108 Parent bank 45,554 49,481 53,239 62,894 56,643 57,684 62,689 59,762 64,908 61,642 109 Other banks in United States 12,778 11,715 17,224 11,494 9,890 9,743 11,464 11,346 10,223' 10,034 110 Nonbanks 46,224 44,885 43,487 47,944 47,029 47,302 50,583 47,056 45,044 46,061 111 To foreigners 35,053 34,400 43,815 45,161 45,602 47,534 50,855 50,606 48,989' 50,477 112 Other branches of parent bank 14,075 12,631 19,185 23,686 24,973 25,988 28,010 27,655 26,478 27,763 113 Banks 10,669 8,617 10,769 8,336 7,179 7,795 8,495 8,203 8,233' 8,322 114 Official institutions 1,776 2,719 1,504 1,074 1,337 1,379 1,234 1,722 1,164 1,102 115 Nonbank foreigners 8,533 10,433 12,357 12,065 12,113 12,372 13,116 13,026 13,114 13,290 116 Other liabilities 1,836 1,264 1,671 2,193 2,070 2,461 2,521 2,529 3,101 2,870 117 Total payable in U.S. dollars 138,322 138,774 152,927 162,950 154,663 157,890 172,213 166,489 166,954 165,593 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 Dec. Jan. Feb. Mar. Apr. May Junep 1 Total1 211,834 259,556 299,716 301,756 304,185 307,497 313,680r 306,304 302,149 By type 2 Liabilities reported by banks in the United States 27,920 31,838 31,443 36,735 34,641 33,417 39,147r 37,914 37,341 3 U.S. Treasury bills and certificates3 75,650 88,829 103,722 98,457 98,192 95,478 %,109 91,798 87,170 U.S. Treasury bonds and notes 4 Marketable 91,368 122,432 149,056 151,075 155,374 161,923 161,081 160,013 160,457 5 Nonmarketable 1,300 300 523 527 531 534 538 542 545 6 U.S. securities other than U.S. Treasury securities 15,5% 16,157 14,972 14,962 15,447 16,145 16,805 16,037 16,636 By area 7 Western Europe 88,629 124,620 125,097 126,040 124,806 125,352 129,254' 126,164 122,799 8 Canada 2,004 4,961 9,584 9,668 9,856 10,156 9,994 9,938 9,604 9 Latin America and Caribbean 8,417 8,328 10,094 9,943 8,875 7,533 7,198r 6,091 5,947 10 Asia 105,868 116,098 145,548 147,316 152,236 156,317 158,577' 156,016 155,317 11 Africa 1,503 1,402 1,369 1,093 1,143 1,119 1,065 1,182 1,271 12 Other countries 5,412 4,147 7,501 7,169 6,738 6,485 7,053 6,372 6,665 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 76,164 2 Banks' own claims 16,294 26,180 51,271 52,914 63,465 68,988 72,659 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 47,014 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 2. Assets owned by customers of the reporting bank located in the United authorities. 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 • October 1989 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1988 1989 Holder and type of liability 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr/ May Junep 1 AU foreigners 435,726 540,9% 618,874 683,950 660,256 677,624 690,900 683,055 677,983 670,760 2 Banks' own liabilities 341,070 406,485 470,070 513,573 493,030 507,557 523,606 516,319 512,614 509,611 3 Demand deposits 21,107 23,789 22,383 21,894 20,602 21,733 22,483 22,333 21,928 21,313 4 Time deposits 117,278 130,891 148,374 152,194 145,481 151,137 157,978 157,137 154,693 152,884 5 Other. 29,305 42,705 51,677 51,506 52,322 51,005 54,177 56,549 58,950 60,821 6 Own foreign offices4 173,381 209,100 247,635 287,979 274,625 283,682 288,968 280,299 277,042 274,592 7 Banks' custody liabilities5 94,656 134,511 148,804 170,377 167,226 170,067 167,295 166,736 165,370 161,149 8 U.S. Treasury bills and certificates6 69,133 90,398 101,743 114,976 111,141 110,992 108,048 106,827 102,661 98,743 9 Other negotiable and readily transferable instruments 17,964 15,417 16,776 16,367 16,763 17,071 16,957 17,278 18,541 17,078 10 Other 7,558 28,6% 30,285 39,033 39,321 42,004 42,289 42,631 44,168 45,329 11 Nonmonetary international and regional organizations 5,821 5,807 4,464 3,224 2,704 3,252 3,764 4,141 3,423 3,390 12 Banks' own liabilities 2,621 3,958 2,702 2,527 1,910 2,679 2,956 3,354 2,988 2,472 13 Demand deposits 85 199 124 71 67 74 88 163 76 32 14 Time deposits 2,067 2,065 1,538 1,183 565 1,126 1,385 1,502 1,210 1,084 15 Other. 469 1,693 1,040 1,272 1,278 1,479 1,482 1,689 1,702 1,356 16 Banks' custody liabilities5 3,200 1,849 1,761 698 795 574 808 786 435 918 17 U.S. Treasury bills and certificates6 1,736 259 265 57 69 59 74 77 95 177 18 Other negotiable and readily transferable instruments 1,464 1,590 1,497 641 711 463 734 693 305 731 19 Other 0 0 0 0 15 52 0 16 35 10 20 Official institutions9 79,985 103,569 120,667 135,165 135,191 132,833 128,895 135,256 129,712 124,511 21 Banks' own liabilities 20,835 25,427 28,703 27,033 32,013 29,321 27,800 33,067 31,680 31,998 22 Demand deposits 2,077 2,267 1,757 1,915 1,627 1,792 1,605 1,783 1,762 1,820 23 Time deposits 10,949 10,497 12,843 9,686 13,428 12,661 11,006 12,559 11,086 10,136 24 Other1 7,809 12,663 14,103 15,432 16,959 14,867 15,189 18,725 18,833 20,042 2 2 5 6 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 5 53 9 , , 2 1 5 5 2 0 7 7 5 8 , , 6 14 5 2 0 9 88 1 , , 8 % 2 5 9 1 1 0 0 8 3 , , 1 7 3 2 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 9 87 2 , , 1 5 7 1 0 3 27 Other negotiable and readily transferable instruments 5,824 2,347 2,990 4,130 4,598 5,076 5,466 5,875 6,049 5,080 28 Other 75 145 146 280 124 244 152 205 185 264 29 Banks10 275,589 351,745 414,280 458,248 435,464 452,338 469,562 453,662 454,476 450,467 30 Banks' own liabilities 252,723 310,166 371,665 408,576 384,974 399,833 417,332 401,754 400,140 395,013 31 Unaffiliated foreign banks 79,341 101,066 124,030 120,597 110,350 116,152 128,364 121,455 123,097 120,421 32 Demand deposits 10,271 10,303 10,898 9,980 9,459 9,584 11,012 10,559 11,161 9,6% 33 Time deposits 49,510 64,232 79,717 80,303 71,838 76,679 84,112 80,826 78,872 77,537 34 Other. 19,561 26,531 33,415 30,314 29,053 29,889 33,240 30,070 33,064 33,188 35 Own foreign offices4 173,381 209,100 247,635 287,979 274,625 283,682 288,968 280,299 277,042 274,592 36 Banks' custody liabilities5 22,866 41,579 42,615 49,671 50,489 52,505 52,231 51,908 54,337 55,454 37 U.S. Treasury bills and certificates6 9,832 9,984 9,134 7,602 7,819 7,491 7,310 6,921 7,114 7,767 38 Other negotiable and readily transferable instruments 6,040 5,165 5,392 5,666 5,870 5,894 5,254 5,051 5,686 5,314 39 Other 6,994 26,431 28,089 36,403 36,800 39,120 39,667 39,936 41,536 42,374 40 Other foreigners 74,331 79,875 79,463 87,313 86,896 89,200 88,679 89,997 90,371 92,393 41 Banks' own liabilities 64,892 66,934 67,000 75,438 74,132 75,724 75,518 78,144 77,805 80,129 42 Demand deposits 8,673 11,019 9,604 9,928 9,450 10,282 9,777 9,828 8,929 9,766 43 Time deposits 54,752 54,097 54,277 61,022 59,651 60,671 61,475 62,250 63,525 64,127 44 Other 1,467 1,818 3,119 4,487 5,032 4,771 4,265 6,066 5,351 6,236 45 Banks' custody liabilities5 9,439 12,941 12,463 11,876 12,764 13,476 13,161 11,853 12,566 12,264 46 U.S. Treasury bills and certificates6 4,314 4,506 3,515 3,595 4,797 5,250 5,188 3,720 3,653 3,629 47 Other negotiable and readily transferable instruments 4,636 6,315 6,898 5,929 5,584 5,638 5,503 5,658 6,501 5,954 48 Other 489 2,120 2,050 2,351 2,382 2,589 2,471 2,474 2,412 2,681 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 9,845 7,4% 7,314 6,366 6,286 6,064 5,809 5,554 5,625 5,339 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 Dec. Jan. Feb. Mar. Apr. May Junep 1 Total 435,726 540,9% 618,874 683,950 660,256 677,624 690,900 683,055' 677,983 670,760 2 Foreign countries 429,905 535,189 614,411 680,726 657,551 674,371 687,136 678,914' 674,560 667,370 3 Europe 164,114 180,556 234,641 235,979 223,869 228,393 231,905 230,794' 227,937 225,322 4 Austria 693 1,181 920 1,155 1,129 1,777 1,436 1,608 1,387 1,531 5 Belgium-Luxembourg 5,243 6,729 9,347 10,028 8,991 10,508 9,316 10,115' 8,819 8,584 6 Denmark 513 482 760 2,180 1,833 2,082 1,639 1,615 1,642 1,177 7 Finland 496 580 377 284 375 560 527 397 432 450 8 France 15,541 22,862 29,835 24,762 22,264 24,260 26,824 25,634' 24,199 23,799 9 Germany 4,835 5,762 7,022 6,777 5,794 5,263 5,514 6,968 7,791 9,183 10 Greece 666 700 689 672 919 933 760 927 1,172 889 11 Italy 9,667 10,875 12,073 14,602 11,312 11,073 13,480 12,964 12,532 13,951 12 Netherlands 4,212 5,600 5,014 5,316 5,248 6,011 5,600 5,611' 5,872 4,877 13 Norway 948 735 1,362 1,559 1,502 1,367 1,547 1,783 1,479 1,485 14 Portugal 652 699 801 903 870 813 831 824 985 1,089 15 Spain 2,114 2,407 2,621 5,494 5,750 5,174 4,902 5,795' 5,415 5,077 16 Sweden 1,422 884 1,379 1,274 1,299 1,319 1,416 1,730 1,556 1,483 17 Switzerland 29,020 30,534 33,766 34,183 32,519 31,659 29,815 29,249' 28,653 29,264 18 Turkey 429 454 703 1,012 939 1,246 1,023 1,051' 785 926 19 United Kingdom 76,728 85,334 116,852 115,926 110,878 113,419 115,325 111,492' 112,456 106,755 20 Yugoslavia 673 630 710 529 489 434 440 465 478 558 21 Other Western Europe1 9,635 3,326 9,798 8,598 10,906 9,929 10,730 11,519^ 11,650 13,477 22 U.S.S.R 105 80 32 138 155 108 102 91' 193 164 23 Other Eastern Europe2 523 702 582 589 697 458 677 958 440 602 24 Canada 17,427 26,345 30,095 21,040 19,277 20,732 25,694 23,024' 18,332 17,492 25 Latin America and Caribbean 167,856 210,318 220,372 266,295 257,809 263,344 264,598 266,440' 270,562 265,940 26 Argentina 6,032 4,757 5,006 7,804 7,629 6,836 6,415 6,280 6,487 6,316 27 Bahamas 57,657 73,619 74,767 86,606 82,009 83,455 85,586 86,053 90,951 82,054 28 Bermuda 2,765 2,922 2,344 2,621 2,381 2,545 2,513 2,377' 2,451 2,397 29 Brazil 5,373 4,325 4,005 5,304 4,675 4,829 4,925 5,554 5,302 5,025 30 British West Indies 42,674 72,263 81,494 109,335 107,026 110,989 110,809 111,968' 111,451 116,365 31 Chile 2,049 2,054 2,210 2,936 2,%9 2,975 3,063 2,933 2,988 2,705 32 Colombia 3,104 4,285 4,204 4,374 4,317 4,470 4,166 4,173' 4,033 4,091 33 Cuba 11 7 12 10 10 10 10 10 15 10 34 Ecuador 1,239 1,236 1,082 1,379 1,365 1,403 1,422 1,376 1,285 1,307 35 Guatemala 1,071 1,123 1,082 1,195 1,236 1,259 1,271 1,272 1,232 1,219 36 Jamaica 122 136 160 269 180 170 223 222 188 400 37 Mexico 14,060 13,745 14,480 15,106 15,273 14,867 14,625 14,278' 13,988 13,963 38 Netherlands Antilles 4,875 4,970 4,975 6,420 5,763 5,641 5,666 5,768' 6,071 6,311 39 Panama 7,514 6,886 7,414 4,353 4,284 4,497 4,388 4,355' 4,454 4,255 40 Peru 1,167 1,163 1,275 1,671 1,716 1,728 1,707 1,763 1,724 1,750 41 Uruguay 1,552 1,537 1,582 1,898 2,011 2,142 2,243 2,263' 2,344 2,429 42 Venezuela 11,922 10,171 9,048 9,146 9,159 9,532 9,489 9,565' 9,433 9,421 43 Other 4,668 5,119 5,234 5,868 5,806 5,997 6,076 6,228' 6,164 5,921 44 72,280 108,831 121,288 147,246 146,594 151,237 154,900 148,724' 147,357 148,320 China 45 Mainland 1,607 1,476 1,162 1,892 1,566 1,602 1,588 1,809 1,652 1,421 46 Taiwan 7,786 18,902 21,503 26,058 26,178 26,001 26,143 28,265 26,923 27,045 47 Hong Kong 8,067 9,393 10,180 11,727 10,891 11,387 10,761 11,422 12,207 12,150 48 India 712 674 582 696 689 838 900 1,787 1,009 811 49 Indonesia 1,466 1,547 1,404 1,189 1,189 1,198 1,611 1,168 1,319 1,248 50 Israel 1,601 1,892 1,292 1,471 1,217 1,366 1,156 973 1,103 1,087 51 Japan 23,077 47,410 54,322 73,989 75,337 77,407 83,020 72,715 70,451 70,833 52 Korea 1,665 1,141 1,637 2,541 2,454 2,502 2,827 3,023 3,194 3,142 53 Philippines 1,140 1,866 1,085 1,163 976 1,014 977 973' 991 984 54 Thailand 1,358 1,119 1,345 1,236 1,373 1,615 1,151 1,165 1,162 1,274 55 Middle-East oil-exporting countries 14,523 12,352 13,988 12,060 12,426 12,372 12,029 12,098 13,476 13,797 56 Other 9,276 11,058 12,788 13,225 12,298 13,935 12,737 13,326' 13,872 14,528 57 Africa 4,883 4,021 3,945 3,991 3,690 3,793 3,717 3,665 3,807 3,929 58 Egypt 1,363 706 1,151 913 771 819 756 721 702 748 59 Morocco 163 92 194 68 90 69 60 82 68 67 60 South Africa 388 270 202 437 250 212 226 256 324 188 61 Zaire 163 74 67 85 74 75 77 73 92 98 62 Oil-exporting countries4 1,494 1,519 1,014 1,017 1,024 1,121 1,062 1,017 879 1,084 63 Other 1,312 1,360 1,316 1,472 1,480 1,4% 1,536 1,516 1,742 1,744 64 Other countries 3,347 5,118 4,070 6,175 6,312 6,872 6,322 6,267 6,565 6,366 65 Australia 2,779 4,1% 3,327 5,303 5,485 6,037 5,490 5,471 5,702 5,279 66 All other 568 922 744 872 827 836 832 7% 863 1,086 67 Nonmonetary international and regional organizations 5,821 5,807 4,464 3,224 2,704 3,252 3,764 4,141' 3,423 3,390 68 International 4,806 4,620 2,830 2,503 1,725 2,106 2,546 2,682 2,456 2,628 69 Latin American regional 894 1,033 1,272 589 747 732 995 981' 564 613 70 Other regional 121 154 362 133 232 414 223 477' 403 148 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 • October 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 Area and country 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr. May June" 1 Total 401,608 444,745 459,877 491,083 481,711 493,175 503,875 494,869' 490,976 488,541 2 Foreign countries 400,577 441,724 456,472 489,012 479,132 491,270 501,836 493,173' 487,280 485,527 3 Europe 106,413 107,823 102,348 117,053 107,477 113,814 116,279 111,156'" 112,990 112,162 4 Austria 598 728 793 485 544 646 809 805 764 785 5 Belgium-Luxembourg 5,772 7,498 9,397 8,517 8,301 7,871 7,834 8,102 8,435 7,754 6 Denmark 706 688 717 480 410 790 548 770 470 774 7 Finland 823 987 1,010 1,065 911 1,114 909 1,214 1,280 1,199 8 France 9,124 11,356 13,548 13,243 13,315 14,920 15,729 16,510' 16,078 15,561 9 Germany 1,267 1,816 2,039 2,327 2,398 1,695 3,110 3,529' 3,959 3,689 10 Greece 991 648 462 433 448 517 586 561 595 574 11 Italy 8,848 9,043 7,460 7,946 5,526 5,581 5,866 4,803' 5,627 6,763 12 Netherlands 1,258 3,296 2,619 2,547 2,514 2,475 2,808 2,735' 3,183 1,988 13 Norway 706 672 934 455 472 601 432 551 567 667 14 Portugal 1,058 739 477 374 339 331 367 281 371 328 15 Spain 1,908 1,492 1,853 1,823 2,182 2,153 2,133 2,624' 2,209 2,190 16 Sweden 2,219 1,964 2,254 1,977 2,619 2,622 2,613 2,164 2,158 1,945 17 Switzerland 3,171 3,352 2,718 3,895 3,510 3,780 3,822 4,540' 3,975 55,,448822 18 Turkey 1,200 1,543 1,680 1,233 1,152 1,108 1,039 1,005 910 888866 19 United Kingdom 62,566 58,335 50,823 65,702 58,065 62,469 62,877 56,057' 58,105 56,931 20 Yugoslavia 1,964 1,835 1,700 1,390 1,371 1,348 1,455 1,369 1,366 1,359 21 Other Western Europe2 998 539 619 1,152 1,275 1,560 1,262 1,415' 966 1,231 22 U.S.S.R 130 345 389 1,255 1,286 1,389 1,298 1,346 1,155 1,212 23 Other Eastern Europe 1,107 948 852 754 838 845 780 775 820 844 24 Canada 16,482 21,006 25,368 18,889 16,733 18,079 19,042 19,150' 16,072 16,076 25 Latin America and Caribbean 202,674 208,825 214,789 214,074 210,439 210,538 220,767 219,894' 218,143 218,259 26 Argentina 11,462 12,091 11,996 11,826 11,880 11,802 11,616 11,516 11,381 10,840 27 Bahamas 58,258 59,342 64,587 67,006 68,836 69,607 72,804 75,665' 70,552 66,453 28 Bermuda 499 418 471 483 475 535 707 361 449 473 29 Brazil 25,283 25,716 25,897 25,735 25,835 25,369 25,615 25,944' 25,785 25,672 30 British West Indies 38,881 46,284 50,042 55,640 50,542 50,542 57,570 54,382' 58,142 63,858 31 Chile 6,603 6,558 6,308 5,217 5,156 5,141 5,335 5,224 5,266 4,893 3 3 2 3 C C u ol b o a m bia 3,249Q 2,821 o 2,740 2,944J 2,867 2,813 2,746 2,661 2,600 2,581 34 Ecuador 2,390 2,439 2,286 2,075 2,048 2,026 2,032 2,025' 1,944 1,894 35 Guatemala4 194 140 144 198 185 188 199 210 207 200 36 Jamaica4 224 198 188 212 214 202 251 266 265 286 37 Mexico 31,799 30,698 29,532 24,636 24,445 24,387 24,187 24,077' 24,036 23,645 38 Netherlands Antilles 1,340 1,041 980 1,312 1,222 1,150 1,005 1,009' 1,000 1,220 39 Panama 6,645 5,436 4,744 2,535 2,535 2,535 2,460 2,425' 2,475 2,449 40 Peru 1,947 1,661 1,329 1,013 1,011 952 947 947 938 862 41 Uruguay 960 940 963 910 880 856 875 876 832 8% 42 Venezuela 10,871 11,108 10,843 10,733 10,748 10,957 10,761 10,635 10,600 10,398 43 Other Latin America and Caribbean 2,067 1,936 1,738 1,5% 1,560 1,475 1,658 1,668 1,670 1,637 44 Asia 66,212 96,126 106,096 130,867 135,839 140,041 137,055 134,477' 131,633 130,279 China Mainland 639 787 968 762 830 881 993 816 952 890 46 Taiwan 1,535 2,681 4,592 4,184 3,902 3,960 4,179 3,952 3,715 4,033 47 Hong Kong 6,797 8,307 8,218 10,136 8,727 8,004 7,884 8,293' 8,855 8,527 48 India 450 321 510 560 645 628 563 425 411 532 49 Indonesia 698 723 580 674 669 735 649 726 682 677 50 Israel 1,991 1,634 1,363 1,137 1,0% 1,043 1,050 1,052' 1,045 1,020 51 Japan 31,249 59,674 68,658 90,161 99,056 104,831 101,471 97,703' 93,447 91,032 52 Korea 9,226 7,182 5,148 5,219 4,%1 4,891 5,183 5,198 5,338 5,386 53 Philippines 2,224 2,217 2,071 1,876 1,847 1,900 1,913 1,839 1,810 1,763 54 Thailand 845 578 496 850 887 931 986 1,018' 975 1,058 55 Middle East oil-exporting countries 4,298 4,122 4,858 6,182 5,371 4,681 5,409 5,237' 5,522 6,602 56 Other Asia 6,260 7,901 8,635 9,126 7,847 7,556 6,776 8,217' 8,881 8,759 57 Africa 5,407 4,650 4,742 5,718 5,924 6,072 5,973 6,087' 6,084 6,074 58 Egypt 721 567 521 507 495 567 543 541 541 534 59 Morocco 575 598 542 511 524 532 541 532 538 531 60 South Africa 1,942 1,550 1,507 1,681 1,688 1,718 1,702 1,742 1,753 1,746 61 Zaire 20 28 15 17 16 16 17 19 19 17 62 Oil-exporting countries 630 694 1,003 1,523 1,534 1,522 1,481 1,474 1,504 1,503 63 Other 1,520 1,213 1,153 1,479 1,666 1,717 1,690 1,778 1,729 1,743 64 Other countries 3,390 3,294 3,129 2,410 2,720 2,726 2,720 2,409' 2,359 2,677 65 Australia 2,413 1,949 2,100 1,517 1,711 1,686 1,685 1,505 1,167 1,307 66 All other 978 1,345 1,029 894 1,009 1,040 1,034 905' 1,192 1,371 67 Nonmonetary international and regional organizations 1,030 3,021 3,404 2,071 2,579 1,905 2,039 1,6%' 3,695 3,014 1. Reporting banks include all kinds of depository institutions besides commer- 4. Included in "Other Latin America and Caribbean" through March 1978. cial banks, as well as some brokers and dealers. 5. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 2. Includes the Bank for International Settlements. Beginning April 1978, also United Arab Emirates (Trucial States). includes Eastern European countries not listed in line 23. 6. Comprises Algeria, Gabon, Libya, and Nigeria. 3. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German 7. Excludes the Bank for International Settlements, which is included in Democratic Republic, Hungary, Poland, and Romania. "Other Western Europe." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A63 3.19 BANKS' OWN AND DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the United States1 Payable in U.S. Dollars Millions of dollars, end of period 1988 1989 TTyyppee ooff ccllaaiimm 11998855 11998866 11998877 Dec. Jan. Feb. Mar. Apr. May June'' 1 Total 444444433333330000000,,,,,,,444444488888889999999 444444477777778888888,,,,,,,666666655555550000000 444444499999997777777,,,,,,,666666633333335555555 555555533333338888888,,,,,,,666666600000007777777 555555555555557777777,,,,,,,000000055555554444444 448888,,554411 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444400000001111111,,,,,,,666666600000008888888 444444444444444444444,,,,,,,777777744444445555555 444444455555559999999,,,,,,,888888877777777777777 444444499999991111111,,,,,,,000000088888883333333 481,711 493,175 555555500000003333333,,,,,,,888888877777775555555 494,869 490,976 448888,,554411 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666660000000,,,,,,,555555500000007777777 66666664444444,,,,,,,000000099999995555555 66666664444444,,,,,,,666666600000005555555 66666662222222,,,,,,,444444433333338888888 63,974 63,245 66666662222222,,,,,,,666666699999996666666 62,768 63,701 6622,,004411 44 OOwwnn ffoorreeiiggnn ooffffiicceess 111111177777774444444,,,,,,,222222266666661111111 222222211111111111111,,,,,,,555555533333333333333 222222222222224444444,,,,,,,777777722222227777777 222222255555557777777,,,,,,,333333344444445555555 256,848 262,810 222222277777771111111,,,,,,,999999911111115555555 259,664 257,470 225588,,660000 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111111111116666666,,,,,,,666666655555554444444 111111122222222222222,,,,,,,999999944444446666666 111111122222227777777,,,,,,,666666600000009999999 111111122222229999999,,,,,,,444444411111113333333 119,040 124,495 111111133333330000000,,,,,,,000000077777775555555 131,228 130,536 112266,,551100 66 DDeeppoossiittss 44444448888888,,,,,,,333333377777772222222 55555557777777,,,,,,,444444488888884444444 66666660000000,,,,,,,666666688888887777777 66666665555555,,,,,,,888888811111119999999 58,389 62,616 66666666666666,,,,,,,555555555555553333333 69,445 67,569 6666,,776699 77 OOtthheerr 66666668888888,,,,,,,222222288888882222222 66666665555555,,,,,,,444444466666662222222 66666666666666,,,,,,,999999922222222222222 66666663333333,,,,,,,555555599999994444444 60,650 61,879 66666663333333,,,,,,,555555522222222222222 61,783 62,967 5599,,774411 88 AAllll ootthheerr ffoorreeiiggnneerrss 55555550000000,,,,,,,111111188888885555555 44444446666666,,,,,,,111111177777771111111 44444442222222,,,,,,,999999933333336666666 44444441111111,,,,,,,888888888888886666666 41,850 42,626 33333339999999,,,,,,,111111188888889999999 41,209 39,269 4411,,339900 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 States 38,102 43,984 40,587 43,360 46,294 47,775 47,237r 47,918 49,587 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 227,903 232,295 235,130 228,219 230,401 233,152 231,325 By borrower 2 Maturity of 1 year or less 160,824 160,555 163,997 163,762 167,956 172,571 168,312 3 Foreign public borrowers 26,302 24,842 25,889 27,551 29,389 26,581 24,134 4 All other foreigners 134,522 135,714 138,108 136,211 138,567 145,990 144,178 5 Maturity over 1 year 67,078 71,740 71,133 64,456 62,444 60,581 63,013 6 Foreign public borrowers 34,512 39,103 38,625 35,792 35,156 35,067 37,958 7 All other foreigners 32,567 32,637 32,507 28,664 27,288 25,514 25,056 By area Maturity of 1 year or less 8 Europe 56,585 61,784 59,027 55,971 54,283 56,037 57,940 9 Canada 6,401 5,895 5,680 6,664 6,410 6,283 5,115 10 Latin America and Caribbean 63,328 56,271 56,535 56,219 55,552 57,867 53,184 11 27,966 29,457 35,919 38,902 42,375 46,160 45,632 1? 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 2,831 Maturity of over 1 year 14 Europe 7,634 6,737 6,6% 5,315 5,306 4,682 4,471 15 Canada 1,805 1,925 2,661 2,333 2,051 1,922 2,303 16 Latin America and Caribbean 50,674 56,719 53,817 49,755 48,274 47,572 49,778 17 4,502 4,043 3,830 3,622 3,933 3,603 3,689 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 • October 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 yii.y SSl^ 355. r 350.0'' 352. r 2 G-10 countries and Switzerland 146.0 156.6 162.7 158.1 155.2 160.0 157.7r 151.r 149.9r 154.7'' 150. lr 3 Belgium-Luxembourg 9.2 8.3 9.1 8.3 8.2 10.1 9.4r 9.2r 9.6r 9.0 8.6 4 France 12.1 13.7 13.3 12.5 13.7 13.8 11.8r ll.C 1100..44rr 10.7 11.2 5 Germany 10.5 11.6 12.7 11.2 10.5 12.6 11.8 10.6 88..88rr 9.9 10. r 6 Italy 9.6 9.0 8.7 7.5 6.6 7.3 7.4 6.2r 5.4r 6.6' 5.1' 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 2.2' 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 72. lr 70.6r 68.(r 66.7 66.4r 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 29.9 27.9' 32.4r 35.9 33.6 13 Other developed countries 29.9 25.7 25.7 25.2 25.9 26.2 26.3r 23.8r 22.8r 20.9 20.8 14 Austria 1.5 1.7 1.9 1.8 1.9 1.9 1.6 1.6 11..66 1.6 1.4 15 Denmark 2.3 1.7 1.7 1.5 1.6 1.7 1.4 1.0 11..11 l.C 1.0 16 Finland 1.6 1.4 1.4 1.4 1.4 1.3 i.r 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 11..99 2.2 18 Norway 2.9 2.4 2.2 2.1 2.0 2.3 2.0 2.0 2.0 11..88 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 2.0r 1.7r 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 17.4r 16.7'' 1177..88rr 16.5 16.3 26 Ecuador 2.1 2.2 2.1 2.1 2.1 11..99 1.9 1.8 11..88 1.7 1 7 27 Venezuela 8.9 8.6 8.5 8.4 8.3 88..11 8.0 8.0 7.9 77..99 88..00 28 Indonesia 3.0 2.5 2.4 2.2 2.0 1.9 1.9 1.9 1.9 11..88 11 88 29 Middle East countries 5.3 4.3 5.4 4.4 5.0 3.6 3.8r 3.4r 4.5r 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 91.4r 87. lr 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 3.7r 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 4.7 44..55 4.3 46 Thailand 1.4 .9 .9 .8 .7 .7 1.0 1.1 11..22 11..11 11..00 47 Other Asia 1.0 .7 .6 .7 .7 .7 .7 .8 ..88 .9 ..88 Africa 48 Egypt 1.0 .7 .6 .6 .6 .5 .5 .6 ..55 .4 .5 49 Morocco .9 .9 .9 ..99 .8 .9 .9 ..99 ..88 .9 9 5 5 1 0 Z O a th ir e e r Africa4 1 . . 1 9 1 . . 1 6 1 . . 1 4 1 .. . 11 3 1 . . 1 3 1 . . 0 3 1 . . 1 2 1 .. . 11 2 1 . . 0 2 11 .. .. 00 11 11 .. .. 00 11 52 Eastern Europe 4.1 3.2 3.0 3.3 3.3 3.0 2.9 3.1 3.0 3.6r 3.4r 53 U.S.S.R .1 .1 .1 .3 .5 .4 .3 .4 .4 7 7 54 Yugoslavia 2.2 1.7 1.6 1.7 1.7 1.6 1.7 1.7 1.7 11..77rr 11..77 55 Other 1.8 1.4 1.3 1.3 1.2 1.0 .9 1.0 1.0 ii..rr ii..rr 56 Offshore banking centers 62.9 61.3 63.1 60.7 64.3 54.3 51.7r 43.0 41.4' 45.8r 50.9 57 Bahamas 21.2 22.0 23.9 19.9 25.5 17.1 1155..77rr 8.6 12.6r 1100..88rr 15.6 58 Bermuda .7 .7 .8 .6 .6 .6 ..88 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 60 Netherlands Antilles 2.2 1.8 1.7 1.3 1.2 1.2 1.3 1.2 1.2 1.0 .9 6 6 2 1 L Pa e n b a a m no a n 6. . 0 1 4 . . 1 0 4. . 3 1 3. . 9 1 3. . 7 1 33 .. .. 11 77 33..33 II 33 .. .. 11 00 22..77 11 22..66 11 22..33]] 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 4 5 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 26.7r 22.6' 24.5r 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 36,492 2 Payable in dollars 26,389 24,2% 21,749 22,785 24,339 25,131 27,215 27,817 31,052 3 Payable in foreign currencies 2,968 3,529 3,838 5,518 5,453 5,152 5,029 5,1% 5,441 By type 4 Financial liabilities 14,509 13,600 12,133 12,424 14,139 14,070 14,953 14,753 16,862 5 Payable in dollars 12,553 11,257 9,609 8,643 10,472 10,560 11,558 11,266 13,124 6 Payable in foreign currencies 1,955 2,343 2,524 3,781 3,667 3,510 3,395 3,487 3,739 7 Commercial liabilities 14,849 14,225 13,454 15,878 15,653 16,213 17,291 18,260 19,630 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 12,870 10 Payable in dollars 13,836 13,039 12,140 14,142 13,867 14,571 15,657 16,551 17,928 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 11,855 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 8,901 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 23 Brazil 35 29 32 25 0 0 0 0 0 24 British West Indies 2,103 1,843 1,146 778 1,099 1,154 812 645 471 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 32 All other4 41 50 67 100 75 74 3 2 2 Commercial liabilities 4,001 4,074 4,446 5,505 5,619 5,722 6,687 7,274 7,692 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 1,344 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 countries • 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 • October 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. 1 Total 29,901 28,876 36,265 30,942 31,067 37,633 37,415 31,882 31,175 2 Payable in dollars 27,304 26,574 33,867 28,469 28,993 35,593 34,984 29,622 28,978 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 19,472 5 Deposits 14,621 15,526 19,916 14,953 12,693 19,551 19,127 14,556 14,736 6 Payable in dollars 14,202 14,911 19,331 13,813 12,105 18,822 18,180 13,525 13,886 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 11,196 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 9,037 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 95 169 123 138 173 20 Netherlands 66 161 151 351 335 336 359 345 384 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 7,758 23 Canada 3,988 3,260 4,808 2,844 2,669 2,913 3,612 2,338 2,176 24 Latin America and Caribbean 8,216 7,846 9,291 6,994 6,451 10,842 11,130 6,951 7,188 25 Bahamas 3,306 2,698 2,628 1,994 2,329 4,176 4,074 1,781 2,168 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 4,524 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 countries 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 1,208 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 2% 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 1,054 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 countries 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 J J a u n n . e - Dec. Jan. Feb. Mar. Apr. May June p U.S. corporate securities STOCKS 1 Foreign purchases 249,122 181,048 102,318 11,224 11,923 18,384 15,811 14,079 17,902 24,220 2 Foreign sales 232,849 183,039 97,426 12,467 11,789 18,495 15,442 14,235 16,838 20,627 3 Net purchases, or sales (-) 16,272 -1,991 4,892 -1,243 134 -111 370 -157 1,063 3,593 4 Foreign countries 16,321 -1,816 5,118 -1,198 167 -81 507 -150 1,065 3,611 5 Europe 1,932 -3,353 176 -771 -99 -126 71 182 -286 434 6 France 905 -281 297 -64 38 159 70 168 -123 -15 7 Germany -70 218 -206 -53 30 59 59 16r -215 -155 8 Netherlands 892 -535 21 -1 128 -64 4 -125 -69 147 9 Switzerland -1,123 -2,242 -1,982 -273 -345 -1,181 91 -141 -292 -114 10 United Kingdom 631 -954 1,879 -424 74 800 -107 288 495 329 11 Canada 1,048 1,087 116 274 320 -361 130 -66 -75 168 12 Latin America and Caribbean 1,318 1,249 2,470 -21 599 575 636 104 389 167 13 Middle East1 -1,360 -2,473 1,924 -132 -100 265 220 -345 206 1,679 14 Other Asia 12,896 1,365 180 -567 -603 -544 -536 -28 784 1,108 15 Japan 11,365 1,922 361 -407 -563 -487 -458 -16 763 1,122 16 Africa 123 188 63 -1 29 4 5 10 -1 16 17 Other countries 365 121 190 19 21 106 -19 -7 50 40 18 Nonmonetary international and regional organizations -48 -176 -227 -45 -33 -30 -137 -6 -2 -18 BONDS2 19 Foreign purchases 105,856 86,362 55,083 8,423 6,137 9,610 10,423 9,736 8,329 10,848 20 Foreign sales 78,312 58,301 39,580 4,441 4,757 4,736 7,025 5,270' 8,776 9,016 21 Net purchases, or sales (-) 27,544 28,062 15,503 3,982 1,380 4,874 3,398 4,466' -447 1,832 22 Foreign countries 26,804 28,604 15,230 3,978 1,360 4,908 3,358 4,465' -570 1,709 23 Europe 21,989 17,338 10,527 2,560 499 2,055 2,794 3,102' -55 2,133 24 France 194 143 257 -130 107 41 -16 27 93 6 25 Germany 33 1,344 5 75 15 38 148 135 -170 -162 26 Netherlands 269 1,514 525 17 30 -21 69 51 9 386 27 Switzerland 1,587 513 131 273 130 131 4 90 -114 -110 28 United Kingdom 19,770 13,088 9,258 2,468 149 1,751 2,578 2,252' 665 1,862 29 Canada 1,296 711 509 178 180 129 213 115 59 -188 30 Latin America and Caribbean 2,857 1,930 1,813 240 229 651 301 219 136 277 31 Middle East1 -1,314 -178 -589 159 -128 160 87 3 -100 -611 32 Other Asia 2,021 8,900 2,862 840 552 1,893 -50 990 -615 93 33 Japan 1,622 7,686 1,504 746 392 1,567 -285 608 -722 -57 34 Africa 16 -8 15 0 3 2 5 4 0 1 35 Other countries -61 -89 93 2 24 18 8 33 5 4 36 Nonmonetary international and regional organizations 740 -542 273 3 20 -34 41 1 122 123 Foreign securities 37 Stocks, net purchases, or sales (-) 1,081 -1,901 -6,091 -1,102 -891 -629 -147 -962' -1,332 -2,130 38 Foreign purchases 95,458 75,203 47,980 7,472 6,856 8,070 9,477 6,724' 7,795 9,058 39 Foreign sales 94,377 77,104 54,072 8,573 7,748 8,698 9,624 7,687' 9,127 11,188 40 Bonds, net purchases, or sales (-) -7,946 -9,869 -3,201 -1,720 -247 -484 -653 -176' -111 1,530 41 Foreign purchases 199,089 217,648 111,325 20,510 14,835 18,711 23,395 15,951' 17,519 20,914 42 Foreign sales 207,035 227,517 114,526 22,230 15,083 19,195 24,047 16,127 17,630 22,444 43 Net purchases, or sales (—), of stocks and bonds .... -6,865 -11,770 -9,292 -2,822 -1,139 -1,112 -800 -I.WS' -1,443 -3,660 44 Foreign countries -6,757 -12,251 -9,748 -2,916 -1,115 -1,190 -992 -1,331' -1,660 -3,460 45 Europe -12,101 -10,205 -9,449 -1,543 -80 -797 -1,399 -1,734 -1,542 -3,897 46 Canada -4,072 -3,799 -2,542 -658 -378 -530 -584 191 -558 -683 47 Latin America and Caribbean 828 1,386 436 -32 68 79 161 195 -94 27 48 Asia 9,299 987 1,889 -189 -872 -34 885 7C 701 1,138 49 Africa 89 -54 10 -33 6 -9 -16 11 14 3 50 Other countries -800 -567 -93 -461 139 100 -40 -65 -181 -47 51 Nonmonetary international and regional organizations -108 481 456 94 -23 78 192 193 216 -200 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 • October 1989 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1989 1988 1989 Country or area 1987 1988 Jan.- Dec. Jan. Feb. Mar. Apr. May Junep June Transactions, net purchases or sales (-) during period 1 Estimated total2 25,587 48,884 21,619 384 2,828 8,783 8,640 29 7,012 -5,672 2 Foreign countries2 30,889 48,187 20,266 2,384 2,040 9,907 8,297 291 5,494 -5,762 3 Europe2 23,716 14,343 9,384 330 2,141 3,775 2,143 -1,814 4,472 -1,333 4 Belgium-Luxembourg 653 923 126 -90 9 127 -23 -87 88 13 5 Germany2 13,330 -5,268 -1,252 -374 938 -31 -181 -693 -179 -1,106 6 Netherlands -913 -356 -1,328 -114 268 135 242 -643 -638 -692 7 Sweden 210 -323 650 118 -115 297 -508 398 -69 647 8 Switzerland2 1,917 -1,074 3,155 -18 214 438 1,768 440 -83 378 9 United Kingdom 3,975 9,674 4,803 -232 -348 1,533 1,207 -1,298 3,847 -137 10 Other Western Europe 4,563 10,776 3,246 1,054 1,175 1,277 -363 74 1,511 -428 11 Eastern Europe -19 -10 -16 -15 0 0 0 -5 -5 -6 12 Canada 4,526 3,761 -236 788 54 17 -55 114 157 -523 13 Latin America and Caribbean -2,192 703 863 -104 -104 525 113 -132 -179 641 14 Venezuela 150 -109 -107 0 -37 1 -53 -18 0 1 15 Other Latin America and Caribbean -1,142 1,120 -108 140 -163 247 132 -231 -78 -16 16 Netherlands Antilles -1,200 -308 1,078 -244 96 276 34 117 -101 656 17 Asia 4,488 27,606 10,120 1,021 626 5,955 5,659 1,743 1,734 -5,595 18 Japan 868 21,752 943 -157 116 2,503 1,855 2,624 1,646 -7,800 19 Africa -56 -13 107 -7 -1 15 -2 32 -3 66 20 All other 407 1,786 28 358 -676 -379 439 350 -687 982 21 Nonmonetary international and regional organizations -5,300 700 1,355 -2,000 788 -1,124 344 -262 1,519 90 22 International -4,387 1,142 959 -2,019 777 -1,072 424 -252 1,335 -253 23 Latin America regional 3 -31 222 10 0 -10 -8 -21 70 191 Memo 24 Foreign countries 30,889 48,187 20,266 2,384 2,040 9,907 8,297 291 5,494 -5,762 25 Official institutions 31,064 26,624 11,401 2,243 2,019 4,299 6,549 -842 -1,068 444 26 Other foreign2 -181 21,560 8,865 141 21 5,609 1,747 1,133 6,561 -6,206 Oil-exporting countries 27 Middle East3 -3,142 1,963 6,199 1,090 129 3,560 2,607 -471 -299 672 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 Aug. 31, 1989 Rate on Aug. 31, 1989 Rate on Aug. 31, 1989 Country Country Country Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 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 , 5.5 July 1989 Brazil ... 49.0 Mar. 1981 Italy 13.5 Mar. 1989 United Kingdom' Canada.. 12.40 Aug. 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 Feb. Mar. Apr. May June July Aug. 1 Eurodollars 6.70 7.07 7.86 9.61 10.18 10.01 9.66 9.28 8.86 8.71 2 United Kingdom 10.87 9.65 10.28 12.97 13.00 13.09 13.08 14.17 13.91 13.86 3 Canada 9.18 8.38 9.63 11.69 12.22 12.58 12.44 12.35 12.24 12.30 4 Germany 4.58 3.97 4.28 6.36 6.57 6.42 6.96 6.93 7.00 6.99 5 Switzerland 4.19 3.67 2.94 5.69 5.75 6.05 7.26 7.09 6.92 7.01 6 Netherlands 5.56 5.24 4.72 6.75 6.88 6.70 7.30 7.11 7.07 7.15 7 France 7.68 8.14 7.80 9.11 9.07 8.61 8.81 8.89 9.05 8.95 8 Italy 12.60 11.15 11.04 12.26 12.88 12.21 12.27 12.35 12.46 12.48 9 Belgium 8.04 7.01 6.69 8.04 8.28 8.17 8.45 8.51 8.46 8.44 10 Japan 4.96 3.87 3.96 4.21 4.21 4.20 4.25 4.46 4.71 4.80 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 • October 1989 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1989 CCoouunnttrryy//ccuurrrreennccyy 11998866 11998877 11998888 Mar. Apr. May June July Aug. 1 Australia/dollar^ 67.093 70.136 78.408 81.69 80.35 77.36 75.61 75.66 76.26 2 Austria/schilling 15.260 12.649 12.357 13.148 13.161 13.691 13.912 13.308 13.571 3 Belgium/franc 44.662 37.357 36.783 39.136 39.148 40.723 41.414 39.559 40.313 4 Canada/dollar 1.38% 1.3259 1.2306 1.1954 1.1888 1.1925 1.1986 1.1891 1.1756 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 7.2912 7.2803 7.5820 7.7087 7.3527 7.4942 7 Finland/markka 5.0721 4.4036 4.1933 4.2994 4.1961 4.3409 4.4302 4.2699 4.3508 8 France/franc 6.9256 6.0121 5.9594 6.3321 6.3223 6.5815 6.7135 6.4105 6.5089 9 Germany/deutsche mark 2.1704 1.7981 1.7569 1.8686 1.8697 1.9461 1.9789 1.8901 1.9271 10 Greece/drachma 139.93 135.47 142.00 157.34 159.23 165.41 170.42 163.84 166.18 11 Hong Kong/dollar 7.8037 7.7985 7.8071 7.7%9 7.7828 7.7799 7.7934 7.8040 7.8077 12 India/rupee 12.597 12.943 13.899 15.467 15.718 16.102 16.420 16.416 16.603 13 Ireland/punt2 134.14 148.79 152.49 142.84 142.67 137.39 134.92 141.26 138.43 14 Italyflira 1491.16 1297.03 1302.39 1372.50 1371.80 1415.83 1434.40 1367.39 1384.22 15 Japan/yen 168.35 144.60 128.17 130.55 132.04 137.86 143.98 140.42 141.35 16 Malay sia/ringgit 2.5830 2.5185 2.6189 2.7535 2.7211 2.6%7 2.7086 2.6809 2.6820 17 Netherlands/guilder 2.4484 2.0263 1.9778 2.1085 2.1098 2.1938 2.2292 2.1318 2.1728 18 New Zealand/dollar 52.456 59.327 65.558 61.547 61.167 60.718 57.376 57.537 59.201 19 Norway/krone 7.3984 6.7408 6.5242 6.8059 6.7964 7.0337 7.1852 6.9480 7.0485 20 Portugal/escudo 149.80 141.20 144.26 154.05 154.54 160.71 164.92 158.31 161.15 21 Singapore/dollar 2.1782 2.1059 2.0132 1.9407 1.9497 1.9575 1.9572 1.9589 1.9595 22 South Africa/rand 2.2918 2.0385 2.1900 2.5393 2.5480 2.6710 2.7828 2.6909 2.7220 23 South Korea/won 884.61 825.93 734.51 675.68 672.10 669.25 669.43 669.83 671.06 24 Spain/peseta 140.04 123.54 116.52 116.40 116.146 121.39 126.55 118.73 120.64 25 Sri Lanka/rupee 27.933 29.471 31.847 33.416 34.021 34.145 33.475 34.764 34.256 26 Sweden/krona 7.1272 6.3468 6.1369 6.3933 6.3689 6.5756 6.6872 6.4653 6.5490 27 Switzerland/franc 1.7979 1.4918 1.4642 1.6110 1.6469 1.7290 1.7089 1.6281 1.6606 28 Taiwan/dollar 37.837 31.756 28.636 27.591 26.998 25.788 26.023 25.816 25.679 29 Thailand/baht 26.314 25.774 25.312 25.542 25.524 25.757 25.909 25.771 25.910 30 United Kingdom/pound 146.77 163.98 178.13 171.34 170.08 163.07 155.30 162.68 159.46 MEMO 31 United States/dollar3 112.22 %.94 92.72 %.99 97.24 100.81 103.09 99.12 100.44 1. Averages of certified noon buying rates in New York for cable transfers. currencies of 10 industrial countries. The weight for each of the 10 countries is the Data in this table also appear in the Board's G.5 (405) release. For address, see 1972-76 average world trade of that country divided by the average world trade of inside front cover. all 10 countries combined. Series revised as of August 1978 (see FEDERAL 2. Value in U.S. cents. RESERVE BULLETIN, vol. 64, August 1978, p. 700). 3. Index of weighted-average exchange value of U.S. dollar against the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) . . . Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other po- "U.S. government securities" may include guaranteed litical subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables, details do not add to totals because also include not fully guaranteed issues) as well as direct of rounding. STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases 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 A72 June 30, 1988 June 1989 A78 September 30, 1988 August 1989 A72 December 31, 1988 August 1989 A78 Terms of lending at commercial banks May 1988 September 1988 A70 August 1988 January 1989 A72 November 1988 April 1989 A72 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 A72 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 1989 A72 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 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 DONALD B. ADAMS, Assistant Director LEGAL DIVISION PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel RALPH W. SMITH, JR., Assistant Director RICHARD M. ASHTON, Associate General Counsel 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 PETER A. TINSLEY, Deputy Associate Director WILLIAM W. WILES, Secretary MYRON L. KWAST, Assistant Director JENNIFER J. JOHNSON, Associate Secretary SUSAN J. LEPPER, Assistant Director BARBARA R. LOWREY, Associate Secretary PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director DAVID J. STOCKTON, Assistant Director DIVISION OF CONSUMER JOYCE K. ZICKLER, Assistant Director LEVON H. GARABEDIAN, Assistant Director AND COMMUNITY AFFAIRS (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 OFFICE OF THE INSPECTOR GENERAL DON E. KLINE, Associate Director 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

A73 and Official Staff EDWARD W. KELLEY, JR. JOHN P. LAWARE OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESER VE 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 LOUISE L. ROSEMAN, Assistant Director OFFICE OF THE CONTROLLER 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

74 Federal Reserve Bulletin • October 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

A75 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

A76 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SER- THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A VICES, MS-138, Board of Governors of the Federal Reserve MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. System, Washington, D.C. 20551 or telephone (202) 452- WELCOME TO THE FEDERAL RESERVE. MARCH 1989. 14 PP. 3244. When a charge is indicated, payment should accom- PROCESSING AN APPLICATION THROUGH THE FEDERAL REpany request and be made payable to the Board of Governors SERVE SYSTEM. August 1985. 30 pp. of the Federal Reserve System. Payment from foreign resi- INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. dents should be drawn on a 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. FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or CONSUMER EDUCATION PAMPHLETS $2.50 each in the United States, its possessions, Canada, Short pamphlets suitable for classroom use. Multiple copies and Mexico. Elsewhere, $35.00 per year or $3.00 each. are available without charge. BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint of Part I only) 1976. 682 pp. $5.00. Consumer Handbook on Adjustable Rate Mortgages ANNUAL STATISTICAL DIGEST Consumer Handbook to Credit Protection Laws 1974-78. 1980. 305 pp. $10.00 per copy. Federal Reserve Glossary 1981. 1982. 239 pp. $ 6.50 per copy. A Guide to Business Credit and the Equal Credit Opportunity 1982. 1983. 266 pp. $ 7.50 per copy. Act 1983. 1984. 264 pp. $11.50 per copy. A Guide to Federal Reserve Regulations 1984. 1985. 254 pp. $12.50 per copy. How to File A Consumer Credit Complaint 1985. 1986. 231 pp. $15.00 per copy. If You Use A Credit Card 1986. 1987. 288 pp. $15.00 per copy. Series on the Structure of the Federal Reserve System 1987. 1988. 272 pp. $15.00 per copy. The Board of Governors of the Federal Reserve System SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- The Federal Open Market Committee RIES OF CHARTS. Weekly. $30.00 per year or $.70 each in Federal Reserve Bank Board of Directors the United States, its possessions, Canada, and Mexico. Federal Reserve Banks Elsewhere, $35.00 per year or $.80 each. Organization and Advisory Committees THE FEDERAL RESERVE ACT and other statutory provisions A Consumer's Guide to Mortgage Lock-Ins affecting the Federal Reserve System, as amended A Consumer's Guide to Mortgage Closings through August 1988. 608 pp. $10.00 A Consumer's Guide to Mortgage Refinancing 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. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— About Home Equity Lines of Credit 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 Rethree Handbooks plus substantial additional material.) serve $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

All 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. 158. THE ADEQUACY AND CONSISTENCY OF MARGIN RE- STAFF STUDIES: Summaries Only Printed in the QUIREMENTS IN THE MARKETS FOR STOCKS AND DERIV- Bulletin ATIVE PRODUCTS, by Mark J. Warshawsky with the assistance of Dietrich Earnhart. September 1989. 23 pp. Studies and papers on economic and financial subjects that are of general interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series may be sent to Publications Services. REPRINTS OF BULLETIN ARTICLES Most of the articles reprinted do not exceed 12 pages. Staff Studies 114-145 are out of print. Limit of 10 copies 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by Foreign Experience with Targets for Money Growth. 10/83. Thomas F. Brady. November 1985. 25 pp. Intervention in Foreign Exchange Markets: A Summary of 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) Ten Staff Studies. 11/83. INDEXES OF THE MONETARY AGGREGATES, by Helen A Financial Perspective on Agriculture. 1/84. T. Farr and Deborah Johnson. December 1985. Survey of Consumer Finances, 1983. 9/84. 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

A78 Index to Statistical Tables References are to pages A3-A70 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 EMPLOYMENT, 47 BANKERS acceptances, 9, 23, 24 Eurodollars, 24 Bankers balances, 18-20. (See also Foreigners) Bonds (See also U.S. government securities) FARM mortgage loans, 38 New issues, 34 Federal agency obligations, 4, 9, 10, 11, 31, 32 Rates, 24 Federal credit agencies, 33 Branch banks, 21, 57 Federal finance Business activity, nonfinancial, 46 Debt subject to statutory limitation, and types and own- Business expenditures on new plant and equipment, 35 ership of gross debt, 30 Business loans (See Commercial and industrial loans) Receipts and outlays, 28, 29 Treasury financing of surplus, or deficit, 28 CAPACITY utilization, 48 Treasury operating balance, 28 Capital accounts Federal Financing Bank, 28, 33 Banks, by classes, 18 Federal funds, 6, 17, 19, 20, 21, 24, 28 Federal Reserve Banks, 10 Federal Home Loan Banks, 33 Central banks, discount rates, 69 Federal Home Loan Mortgage Corporation, 33, 37, 38 Certificates of deposit, 24 Federal Housing Administration, 33, 37, 38 Commercial and industrial loans Federal Land Banks, 38 Commercial banks, 16, 19 Federal National Mortgage Association, 33, 37, 38 Weekly reporting banks, 19-21 Federal Reserve Banks Commercial banks Condition statement, 10 Assets and liabilities, 18-20 Discount rates (See Interest rates) Commercial and industrial loans, 16, 18, 19, 20, 21 U.S. government securities held, 4, 10, 11, 30 Consumer loans held, by type, and terms, 39, 40 Federal Reserve credit, 4, 5, 10, 11 Loans sold outright, 19 Federal Reserve notes, 10 Nondeposit funds, 17 Federal Savings and Loan Insurance Corporation insured Real estate mortgages held, by holder and property, 38 institutions, 26 Time and savings deposits, 3 Federally sponsored credit agencies, 33 Commercial paper, 23, 24, 36 Finance companies Condition statements (See Assets and liabilities) Assets and liabilities, 36 Construction, 46, 51 Business credit, 36 Consumer installment credit, 39, 40 Loans, 39, 40 Consumer prices, 46, 48 Paper, 23, 24 Consumption expenditures, 53, 54 Financial institutions Corporations Loans to, 19, 20, 21 Nonfinancial, assets and liabilities, 35 Selected assets and liabilities, 26 Profits and their distribution, 35 Float, 4 Security issues, 34, 67 Flow of funds, 41, 43, 44, 45 Cost of living (See Consumer prices) Foreign banks, assets and liabilities of U.S. branches and Credit unions, 26, 39. (See also Thrift institutions) agencies, 21 Currency and coin, 18 Foreign currency operations, 10 Currency in circulation, 4, 13 Foreign deposits in U.S. banks, 4, 10, 19, 20 Customer credit, stock market, 25 Foreign exchange rates, 70 Foreign trade, 56 DEBITS to deposit accounts, 15 Foreigners Debt (See specific types of debt or securities) Claims on, 57, 59, 62, 63, 64, 66 Demand deposits Liabilities to, 20, 56, 57, 59, 60, 65, 67, 68 Banks, by classes, 18-21 Ownership by individuals, partnerships, and GOLD corporations, 22 Certificate account, 10 Turnover, 15 Stock, 4, 56 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A79 Government National Mortgage Association, 33, 37, 38 Real estate loans—Continued Gross national product, 53 Terms, yields, and activity, 37 Type of holder and property mortgaged, 38 HOUSING, new and existing units, 51 Repurchase agreements, 6, 17, 19, 20, 21 Reserve requirements, 8 INCOME, personal and national, 46, 53, 54 Reserves Industrial production, 46, 49 Commercial banks, 18 Installment loans, 39, 40 Depository institutions, 3, 4, 5, 12 Insurance companies, 26, 30, 38 Federal Reserve Banks, 10 Interest rates U.S. reserve assets, 56 Bonds, 24 Residential mortgage loans, 37 Consumer installment credit, 40 Retail credit and retail sales, 39, 40, 46 Federal Reserve Banks, 7 Foreign central banks and foreign countries, 69 SAVING Money and capital markets, 24 Flow of funds, 41, 43, 44, 45 Mortgages, 37 National income accounts, 53 Prime rate, 23 Savings and loan associations, 26, 38, 39, 41. (See also International capital transactions of United States, 55-69 Thrift institutions) International organizations, 59, 60, 62, 65, 66 Savings banks, 26, 38, 39 Inventories, 53 Savings deposits (See Time and savings deposits) Investment companies, issues and assets, 35 Securities (See also specific types) Investments (See also specific types) Federal and federally sponsored credit agencies, 33 Banks, by classes, 18, 19, 20, 21, 26 Foreign transactions, 67 Commercial banks, 3, 16, 18-20, 38 New issues, 34 Federal Reserve Banks, 10, 11 Prices, 25 Financial institutions, 26, 38 Special drawing rights, 4, 10, 55, 56 State and local governments LABOR force, 47 Deposits, 19, 20 Life insurance companies (See Insurance companies) Holdings of U.S. government securities, 30 Loans (See also specific types) New security issues, 34 Banks, by classes, 18-20 Ownership of securities issued by, 19, 20, 26 Commercial banks, 3, 16, 18-20 Rates on securities, 24 Federal Reserve Banks, 4, 5, 7, 10, 11 Stock market, selected statistics, 25 Financial institutions, 26, 38 Stocks (See also Securities) Insured or guaranteed by United States, 37, 38 New issues, 34 Prices, 25 MANUFACTURING Student Loan Marketing Association, 33 Capacity utilization, 48 Production, 48, 50 TAX receipts, federal, 29 Margin requirements, 25 Thrift institutions, 3. (See also Credit unions and Savings Member banks (See also Depository institutions) and loan associations) Federal funds and repurchase agreements, 6 Time and savings deposits, 3, 13, 17, 18, 19, 20, 21 Reserve requirements, 8 Trade, foreign, 56 Mining production, 50 Treasury cash, Treasury currency, 4 Mobile homes shipped, 51 Treasury deposits, 4, 10, 28 Monetary and credit aggregates, 3, 12 Treasury operating balance, 28 Money and capital market rates, 24 Money stock measures and components, 3, 13 UNEMPLOYMENT, 47 Mortgages (See Real estate loans) U.S. government balances Mutual funds, 35 Commercial bank holdings, 18, 19, 20 Treasury deposits at Reserve Banks, 4, 10, 28 Mutual savings banks (See Thrift institutions) U.S. government securities Bank holdings, 18-20, 21, 30 NATIONAL defense outlays, 29 Dealer transactions, positions, and financing, 32 National income, 53 Federal Reserve Bank holdings, 4, 10, 11, 30 Foreign and international holdings and transactions, 10, OPEN market transactions, 9 30, 68 Open market transactions, 9 PERSONAL income, 54 Outstanding, by type and holder, 26, 30 Prices Rates, 24 Consumer and producer, 46, 52 U.S. international transactions, 55-69 Stock market, 25 Utilities, production, 50 Prime rate, 23 Producer prices, 46, 52 Production, 46, 49 VETERANS Administration, 37, 38 Profits, corporate, 35 WEEKLY reporting banks, 19-21 REAL estate loans Wholesale (producer) prices, 46, 52 Banks, by classes, 16, 19, 20, 38 Financial institutions, 26 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 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 T. 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 John F. Gardner Leonard W. Fernelius1 (Acting) KANSAS CITY 64198 Fred W. Lyons, Jr. Roger Gufifey 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. Digitized for FRASER 2. Executive Vice President. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories T MM s•- H* t, i | MMMK / - ^ r- s , Por'b*</ I *Heln, t ( . '© POroirLr . ( ! •^1/4) f'icffiSiS^I • Kansas c' Oklahoma Cir T V )© i I/i (1!) 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. A Consumer's Guide to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis