Federal Reserve Bulletin, 1990-03

VOLUME 76 • NUMBER 3 • MARCH 1990 FEDERAL RESERVE 'V BULLETIN E I" 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 107 MONETARY POLICY REPORT TO THE Joint Economic Committee of the Con- CONGRESS gress, January 30, 1990. Although growth was slower than in the The following statements by four Federal preceding two years, the U.S. economy Reserve Bank Presidents support House recorded its seventh consecutive year of Joint Resolution 409, which directs the Fedexpansion in 1989, including the creation of eral Reserve to achieve price stability 2Vi million jobs. Also, the trade and current within five years. These statements were account deficits shrank further, and the rate presented before the Subcommittee on Doof inflation was lower than many analysts mestic Monetary Policy of the House Comhad predicted. mittee on Banking, Finance and Urban Affairs on February 6, 1990. 120 STAFF STUDIES 132 E. Gerald Corrigan, President, Federal Re- In "New Data on the Performance of Non- serve Bank of New York, says that the U.S. bank Subsidiaries of Bank Holding Compa- economy would perform better, U.S. citinies," the authors use 1986 and 1987 data zens would be better off, and the internafrom a new reporting system to examine the tional competitiveness of the United States extent of the involvement of bank holding would improve in a setting in which the companies in nonbank activities and the goals of this resolution were achieved. profitability and riskiness of the nonbank 135 W. Lee Hoskins, President, Federal Resubsidiaries. serve Bank of Cleveland, says that this resolution wisely directs the Federal Re- 122 INDUSTRIAL PRODUCTION serve to place price stability above other economic goals because price stability is Industrial production rose 0.4 percent in the most important contribution the Federal December after an increase of 0.3 percent Reserve can make to achieve full employ- (revised) in November. ment and maximum sustainable growth. 142 Robert P. Black, President, Federal Re- 124 STATEMENTS TO CONGRESS serve Bank of Richmond, says that passage Alan Greenspan, Chairman, Board of Govof the resolution by the Congress would ernors of the Federal Reserve System, ansignificantly improve the overall framework alyzes the long-run implications of foreign in which monetary policy is conducted and investment in the United States, before the increase the chances of achieving price sta- House Committee on Ways and Means, bility and steady economic growth in the January 25, 1990. years ahead. 128 Chairman Greenspan discusses the current 146 Robert T. Parry, President, Federal Restate of the economy and says that the serve Bank of San Francisco, says that imbalances and dislocations that are evi- Federal Reserve officials have made it clear dent probably do not suggest anything more that achieving price stability is the longthan a temporary hesitation in the continu- term goal of the System and that H.J. Res. ing expansion of the economy, before the 409 would assist the Federal Reserve in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

pursuing a credible and consistent anti-in- AI FINANCIAL AND BUSINESS STATISTICS flation policy by providing a statement from These tables reflect data available as of the Congress that the Federal Reserve January 29, 1990. should focus primarily on achieving that one attainable goal within a specified period A3 Domestic Financial Statistics of time. A46 Domestic Nonfinancial Statistics A55 International Statistics 151 ANNOUNCEMENTS A71 GUIDE TO TABULAR PRESENTATION, New members named to Consumer Advis- STATISTICAL RELEASES, AND SPECIAL ory Council. TABLES New members named to Thrift Institutions Advisory Council. A90 BOARD OF GOVERNORS AND STAFF Preliminary figures available on income and A92 FEDERAL OPEN MARKET COMMITTEE expenses of the Federal Reserve Banks. AND STAFF; ADVISORY COUNCILS Revised list of OTC stocks subject to margin regulations now available. A94 FEDERAL RESERVE BOARD PUBLICATIONS Change in Board staff. A96 INDEX TO STATISTICAL TABLES 155 LEGAL DEVELOPMENTS Various bank holding company, bank ser- A98 FEDERAL RESERVE BANKS, vice corporation, and bank merger orders; BRANCHES, AND OFFICES and pending cases. A99 MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on February 20, had strengthened on exchange markets, reinforcing 1990, pursuant to the Full Employment and Balanced the signals conveyed bythe weakness in the monetary Growth Act of1978.1 aggregates. In June, the FOMC began a series of steps, undertaken with care to avoid excessive inflationary stimulus, that trimmed IVi percentage MONETARY POUCY AND THE ECONOMIC points from short-term interest rates by year-end. OUTLOOK FOR 1990 Longer-term interest rates moved down by a like amount, influenced by both the System's easing and The U.S. economy recorded its seventh consecutive a reduction in inflation expectations. year of expansion in 1989. Although growth was Growth of M2 rebounded to end the year at about slower than in the preceding two years, it was the midpoint of the 1989 target range. Growth of sufficient to support the creation of 2xh million jobs M3, however, remained around the lower end of its and to hold the unemployment rate steady at 5lA range, as a contraction of the thrift industry, percent, the lowest reading since the early 1970s. encouraged by the Financial Institutions Reform, On the external front, the trade and current account Recovery, and Enforcement Act of 1989 (FIRREA), deficits shrank further in 1989. And while inflation reduced needs to tap M3 sources of funds. The remained undesirably high, the pace was lower than primary effect of the shrinkage of the thrift industry's many analysts—and, indeed, most members of the assets was a rechanneling of funds in mortgage Federal Open Market Committee (FOMC)—had markets, rather than a reduction in overall credit predicted, in part because of the continuing diminu- availability; growth of the aggregate for nonfinancial tion in longer-range inflation expectations. sector debt that is monitored by the FOMC was just In 1989, monetary policy was tailored to the a bit slower in the second half than in the first, and changing contours of the economic expansion and to this measure ended the year only a little below the the potential for inflation. Early in the year, as for midpoint of its range. most of 1988, the Federal Reserve tightened money Thus far this year, the overnight rate on federal market conditions to prevent pressures on wages and funds has held at 8 lA percent, but other market rates prices from building. Market rates of interest rose have risen. Increases of as much as Vi percentage relative to those on deposit accounts, and unexpect- point have been recorded at the longer end of the edly large tax payments in April and May drained maturity spectrum. The bond markets responded to liquid balances, restraining the growth of the indicators suggesting a somewhat greater-thanmonetary aggregates in the first half of the year. By anticipated buoyancy in economic activity—which May, M2 and M3 lay below the lower bounds of the may have both raised expected real returns on annual target ranges established by the FOMC. investment and renewed some apprehensions about Around midyear, risks of an acceleration in the outlook for inflation. The rise in yields occurred inflation were perceived to have diminished as in the context of a general runup in international pressures on industrial capacity had moderated, capital market yields, which appears to have been in commodity prices had leveled out, and the dollar part a response to emerging opportunities associated with the opening of Eastern Europe; this development had particularly notable effects on the exchange value of the West German mark, which rose 1. The charts for the report are available on request from considerably relative to the dollar, the yen, and other Publications Services, Board of Governors of the Federal non-European Monetary System currencies. Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

108 Federal Reserve Bulletin • March 1990 Monetary Policy for 1990 expected to be moderate, as these institutions exercise caution in extending credit. An increase in The Federal Open Market Committee is committed lender—and borrower—caution more generally to the achievement, over time, of price stability. The points to some slowing in the pace at which importance of this objective derives from the fact nonfinancial sectors take on debt relative to their that the prospects for long-run growth in the econ- income in 1990. In particular, recent developments omy are brightest when inflation need no longer be a suggest that leveraged buyouts and other transacmaterial consideration in the decisions of households tions that substitute debt for equity in corporate and firms. The members recognize that certain capital structures will be noticeably less important in short-term factors—notably a sharp increase in food 1990 than in recent years. Moreover, a further and energy prices—are likely to boost inflation early decline in the federal sector's deficit is expected to this year, but they anticipate that these factors will reduce credit growth this year. In light of these not persist. Under these circumstances, policy can considerations, the Committee reduced the monitorsupport further economic expansion without aban- ing range for debt of the nonfinancial sectors to 5 to 9 doning the goal of price stability. percent. To foster the achievement of those objectives, the The setting of targets for money growth in 1990 is Committee has selected a target range of 3 to 7 made more difficult by uncertainty about developpercent for M2 growth in 1990. Growth in M2 may ments affecting thrift institutions. The behavior of be more rapid in 1990 than in recent years and yet be M3 and, to a more limited extent, M2 is likely to be consistent with some moderation in the rate of affected by such developments, but there is only increase in nominal income and restraint on prices; limited basis in experience to gauge the likely effect. in particular, M2 may grow more rapidly than In addition, in interpreting the growth of nonfinannominal GNP in the first part of this year in lagged cial debt, the Committee will have to take into response to last year's interest rate movements. account the amount of Treasury borrowing (re- Eventually, however, slower M2 growth will be corded as part of the debt aggregate) used to carry required to achieve and maintain price stability the assets of failed thrift institutions, pending their (table 1). disposal. With these questions adding to the usual The Committee reduced the M3 range to 2Vi to uncertainties about the relationship among move- 6Vi percent to take account of the effects of the ments in the aggregates and output and prices, the restructuring of the thrift industry, which is expected Committee agreed that, in implementing policy, to continue in 1990. A smaller proportion of mort- they would need to continue to consider, in addition gages is likely to be held at depository institutions to the behavior of money, indicators of inflationary and financed by elements in M3; thrift institution pressures and economic growth as well as developassets should continue to decline, as some solvent ments in financial and foreign exchange markets. thrift institutions will be under pressure to meet capital standards and insolvent thrift institutions will continue to be shrunk and closed, with a portion of Economic Projections for 1990 their assets carried, temporarily, by the government. While some of the assets shed by thrift institutions The Committee members, and other Reserve Bank are expected to be acquired by commercial banks, presidents, expect that growth in the real economy overall growth in the asset portfolios of banks is will be moderate during 1990. Most project real GNP growth over the four quarters of the year to be between 1% and 2 percent—essentially the same 1. Ranges of growth increase as in 1989, excluding the bounceback in for monetary and credit aggregates farm output after the 1988 drought. It is expected Percent change, fourth quarter to fourth quarter that this pace of expansion will be reflected in some Aggregate 1988 1989 1990 easing of pressures on domestic resources; the central tendency of forecasts is for an unemploy- M2 4 to 8 3 to 7 3 to 7 M3 4 to 8 3% to Vh 2% to 6% ment rate of 5 Vi to 5 % percent in the fourth quarter Debt 7 to 11 6Vi to 10% 5 to 9 (table 2). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 109 2. Economic projections for 1990 FOMC members and other FRB Presidents IItteemm 11998899 AAccttuuaall AAddmmiinniissttrraattiioonn Range Central tendency Percent change, fourth quarter to fourth quarter Nominal GNP 6.4 4 to 7 5Vito6'/* 7.0 Real GNP 2.4 lto2U 134 to 2 2.6 Consumer price index 4.5 3% to5 4 to4'/2 4.11 Average level in the fourth quarter, percent Unemployment rate 5.3 5V4 to6'/j 5% to 5% 5.42 1. CPI for Urban Wage Earners and Clerical Workers. FOMC forecasts are 2. Percent of total labor force, including armed forces residing in the United for CPI for All Urban Consumers. States. Certain factors have caused an uptick in inflation imported goods, excluding oil, increased in the early this year. Most notably, prices for food and fourth quarter after declining through the first three energy increased sharply as the year began, reflect- quarters of 1989. The full effect of this upturn likely ing the effect of the unusually cold weather in will not be felt on the domestic price level until some December. However, these run-ups should be additional time has passed. largely reversed in coming months, and inflation in Despite these adverse elements in the near-term food and energy prices for the year as a whole may picture, the Committee believes that progress toward not differ much from increases in other prices. price stability can be achieved over time, given the Given the importance of labor inputs in determin- apparently moderate pace of activity. In terms of the ing the trend of overall costs, a deceleration in the consumer price index, most members expect an cost of labor inputs is an integral part of any solid increase of between 4 and 4Vi percent, compared progress toward price stability. Nominal wages and with the 4.5 percent advance recorded in 1989. total compensation have grown relatively rapidly Relative to the Committee, the Administration during the past two years, while increases in labor currently is forecasting more rapid growth in real productivity have diminished. With prices being and nominal GNP. At the same time, the Administraconstrained by domestic and international competi- tion's projection for consumer price inflation is at the tion, especially in goods markets, profit margins low end of the Committee's central-tendency range. have been squeezed to low levels. A restoration of In its Annual Report, the Council of Economic more normal margins ultimately will be necessary if Advisers argues that, if nominal GNP were to grow businesses are to have the wherewithal and the at a 7 percent annual rate this year—as the Council is incentive to maintain and improve the stock of plant projecting—then M2 could exceed its target range, and equipment. particularly if interest rates fall as projected in the Unfortunately, the near-term prospects for a Administration forecast. As suggested above, monmoderation in labor cost pressures are not favorable. etary relationships cannot be predicted with absolute Compensation growth is being boosted in the first precision, but the Council's assessment is reasonhalf of 1990 by an increase in social security taxes able. And, although most Committee members and a hike in the minimum wage. The anticipated believe that growth in nominal GNP more likely will easing of pressures in the labor market should help be between 5l/z and 6V2 percent, a more rapid produce some moderation in the pace of wage expansion in nominal income would be welcome if it increases in the second half of 1990, but the promised to be accompanied by a declining path for Committee will continue to monitor closely the inflation in 1990 and beyond. growth of labor costs for signs of progress in this area. Finally, the recent depreciation of the dollar likely THE PERFORMANCE OF THE ECONOMY IN 1989 will constitute another impetus to near-term price increases, reversing the restraining influence exerted Real GNP grew 2 V2 percent over the four quarters of by a strong dollar through most of last year. Prices of 1989, 2 percent after adjustment for the recovery in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

110 Federal Reserve Bulletin • March 1990 farm output from the drought losses of the prior vehicles and housing. Real consumer spending on year. This rate of growth of GNP constituted a sig- goods and services increased 2 lA percent over the nificant downshifting in the pace of expansion from four quarters of 1989, IV2 percentage points less the unsustainably rapid rates of 1987 and 1988, than in 1988. Growth in real disposable income which had carried activity to the point that inflation- slowed last year, but continued to outstrip growth in ary strains were beginning to become visible in the spending, and, as a result, the personal saving rate economy. As the year progressed, clear signs increased to 5% percent in the fourth quarter of emerged that pressures on resource utilization were 1989. easing, particularly in the industrial sector. Nonethe- The slackening in consumer demand was concenless, the overall unemployment rate remained at 5.3 trated in spending on goods. Real spending on percent, the lowest reading since 1973, and inflation durable goods was about unchanged from the fourth remained at 4l/z percent despite the restraining in- quarter of 1988 to the fourth quarter of 1989-after fluence of a dollar that was strong for most of the jumping 8 percent in the prior year—chiefly reflectyear. ing a slump in purchases of motor vehicles. Spending The deceleration in business activity last year on nondurable goods also decelerated, increasing reflected, to some degree, the monetary tightening only V2 percent in 1989 after an advance of 2 percent from early 1988 through early 1989 that was in 1988. The principal support to consumer spending undertaken with a view toward damping the inflation came from continued large gains in outlays for forces. Partly as a consequence of that tightening, services. Spending on medical care moved up IV2 the U.S. dollar appreciated in the foreign exchange percent in real terms last year, and now constitutes markets from early 1988 through mid-1989, contrib- 11 percent of total consumption expenditures—up uting to a slackening of foreign demand for U.S. from 8 percent in 1970. Outlays for other services products. At the same time, domestic demand also rose 3 V* percent, with sizable increases in a number slowed, more for goods than for services. Reflecting of categories. these developments, the slowdown in activity was Sales of cars and light trucks fell % million units concentrated in the manufacturing sector: Factory in 1989, to l4Vi million. Most of the decline employment, which increased a total of90,000 over reflected reduced sales of cars produced by U.S.the first three months of 1989, declined 195,000 owned automakers; a decline in sales of imported over the remainder of the year, and growth in automobiles was about offset by an increase in sales manufacturing production slowed from 5 Vi percent of foreign nameplates produced in U.S. plants. The in 1988 to only 1 % percent last year. Employment in slowing in sales of motor vehicles was most manufacturing fell further in January of this year, pronounced during the fourth quarter of 1989, but that decline was largely attributable to temporary reflecting a "payback" for sales that had been layoff's in the automobile industry, and most of the advanced into the third quarter and a relatively large affected workers have since been recalled. increase in sticker prices on 1990-model cars. As noted above, the rate of inflation was about the Although part of this increase reflected the inclusion same in 1989 as it had been in the preceding two of additional equipment—notably the addition of years. While the appreciation of the U.S. dollar passive restraint systems to many models—consumthrough the first half of the year helped to hold down ers nevertheless reacted adversely to the overall the prices of imported goods, the high level of increase in prices. Beyond these influences, longerresource utilization continued to exert pressure on run factors appear to have been damping demand for wages and prices. In that regard, the moderation in autos and light trucks during 1989; in particular, the the expansion of real activity during 1989 was a robust pace of sales earlier in the expansion seems to necessary development in establishing an economic have satisfied demand pent up during the recessionenvironment that is more conducive to progress over ary period of the early 1980s. The rebuilding of the time toward price stability. motor vehicle stock suggests that future sales are likely to depend more heavily on replacement needs. The Household Sector Residential investment fell in real terms through the first three quarters of 1989, and with only a slight Household spending softened significantly in 1989, upturn in the fourth quarter, expenditures decreased with a marked weakening in the demand for motor 6 percent on net over the year. Construction was Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 111 weighed down throughout 1989 by the overbuilding financial health of the agricultural sector. Over the that occurred in some locales earlier in the decade. four quarters of 1989, total spending on equipment Vacancy rates were especially high for multifamily increased 6 percent in real terms—about 1 percentrental and condominium units. In the single-family age point below the robust pace of 1988. sector, affordability problems constrained demand, Business spending for new construction edged dramatically so in those areas in which home prices down xh percent in real terms during 1989—the had soared relative to household income. second consecutive yearly decline. Commercial Mortgage interest rates declined more than a construction, which includes office buildings, was percentage point, on net, between the spring of 1989 especially weak; vacancy rates for office space and the end of the year, helping to arrest the remain at high levels in many areas, lowering contraction in housing activity; however, the re- prospective returns on new investment. Outlays for sponse to the easing in rates appears to have been drilling and mining, which had dropped 20 percent muted somewhat by a reduction in the availability of over the four quarters of 1988, moved down further construction credit, likely reflecting, in part, the in the first quarter of 1989; later in the year, drilling tightening of regulatory standards in the thrift activity revived as crude oil prices firmed. The industry and the closing of several insolvent institu- industrial sector was the most notable exception to tions. Exceptionally cold weather also hampered the overall pattern of weakness: Real outlays building late in the year, but a sharp December drop increased 11 percent in 1989, largely because of in housing starts was followed by a record jump in construction that had been planned in 1987 and 1988 activity last month. when capacity in many basic industries tightened substantially and profitability was improving sharply. The Business Sector As noted above, the slowdown in investment spending during the second half of last year likely Business fixed investment, adjusted for inflation, was exacerbated by the deterioration in corporate increased only 1 percent at an annual rate during the cash flow. Before-tax operating profits of nonfinansecond half of 1989 after surging 7% percent during cial corporations dropped 12 percent from the fourth the first half. Although competitive pressures forced quarter of 1988 to the third quarter of 1989 (latest many firms to continue seeking efficiency gains data available); after-tax profits were off in about the through capital investment, the deceleration in same proportion. Reflecting the increased pressures overall economic growth made the need for capacity from labor and materials costs—and a highly expansion less urgent, and shrinking profits reduced competitive domestic and international environthe availability of internal finance. ment—before-tax domestic profits of nonfinancial Spending on equipment moved up briskly during corporations as a share of gross domestic product the first half of 1989, with particularly notable gains declined to an average level of 8 percent during the in outlays for information-processing equipment— first three quarters of 1989, the lowest reading since computers, photocopiers, telecommunications de- 1982. At the same time, taxes as a share of beforevices, and the like. However, equipment outlays tax operating profits increased to an estimated 44 were flat in the second half of the year; growth in the percent in the first three quarters of 1989; since information processing category slowed sharply, 1985, this figure has retraced a bit more than half of and spending in most other categories was either flat its decline from 54 percent in 1980. or down. Purchases of motor vehicles dropped Nonfarm business inventory investment averaged sharply in the fourth quarter from the elevated levels $21 billion in 1989. Although the average pace of of the second and third quarters. There were a few accumulation last year was slower than in 1988, the exceptions to the general pattern of weakness during pattern across sectors was somewhat uneven. Some the second half. Spending on aircraft was greater in of the buildup in stocks took place in industries— the second half of 1989 than in the first half, and such as aircraft—where orders and shipments have would have increased still more had it not been for been strong for some time now. But inventories in the strike at Boeing. Outlays for tractors and some other sectors became uncomfortably heavy at agricultural machinery moved up smartly; spending times and precipitated adjustments in orders and on farm equipment has been buoyed by the substan- production. The clearest area of inventory imbalance tial improvements over the past several years in the at the end of the year was at auto dealers, where Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

112 Federal Reserve Bulletin • March 1990 stocks of domestically produced automobiles were position of the state and local sector deteriorated at 1.7 million units in December—almost three further over the year; the annualized deficit of months' supply at the sluggish fourth-quarter sales operating and capital accounts, which excludes pace. In response, the domestic automakers imple- social insurance funds, increased $6 billion over the mented a new round of sales incentives and cut first three quarters of 1989 and appears to have sharply the planned assembly rate for the first quarter worsened further in the fourth quarter. of 1990. Elsewhere in the retail sector, inventories moved up substantially relative to sales at general merchandise outlets. Overall, however, most sectors The External Sector of the economy have adjusted fairly promptly to the deceleration in sales and appear to have succeeded in The U.S. external deficits improved somewhat in preventing serious overhangs from developing. 1989, but not by as much as in 1988. On a balanceof-payments basis, the deficit on merchandise trade fell from an annual rate of $128 billion in the fourth The Government Sector quarter of 1988 (and $127 billion for the year as a whole) to $114 billion in the first quarter of 1989. Budgetary pressures continued to restrain the growth Thereafter, there was no further net improvement. of purchases at all levels of government. At the The appreciation in the foreign exchange value of federal level, purchases fell 3 percent in real terms the dollar between early 1988 and mid-1989 appears over the four quarters of 1989, with lower defense to have played an important role in inhibiting ftirther purchases accounting for the bulk of the decline. progress on the trade front. During the first three Nondefense purchases also declined in real terms quarters of 1989, the current account, excluding the from the fourth quarter of 1988 to the fourth quarter influence of capital gains and losses that are largely of 1989; increases in such areas as the space program caused by currency fluctuations, showed a deficit of and drug interdiction were more than offset by $106 billion at an annual rate—somewhat below the general budgetary restraint that imposed real reduc- deficit of $124 billion in the comparable period of tions on most other discretionary programs. 1988. In terms of the unified budget, the federal deficit in Measured in terms of the other Group of Ten fiscal year 1989 was $152 billion, slightly smaller (G-10) currencies, the foreign exchange value of the than in 1988. Growth in total federal outlays, which U.S. dollar in December 1989 was about 3 percent include transfer payments and interest costs as well above its level in December 1988, but the dollar has as purchases of goods and services, picked up a bit in moved lower thus far in 1990. In real terms, the net fiscal year 1989. Outlays were boosted at the end of appreciation of the dollar during 1989 in terms of the the fiscal year by the initial $9 billion of spending by other G-10 currencies was about 5 percent as the Resolution Trust Corporation. On the revenue consumer prices rose somewhat faster here than side of the ledger, growth in federal receipts also they did abroad, on average. Over the year, the increased in fiscal 1989. The acceleration occurred dollar moved lower on balance against the curin the individual income tax category, but strong rencies of South Korea, Singapore, and especially increases also were recorded in corporate and social Taiwan. From a longer perspective, the modest security tax payments. uptrend on balance in the dollar over the past two Purchases of goods and services at the state and years marked a sharp departure from the substantial local level increased 2xh percent in real terms over weakening seen during the 1985-87 period. the four quarters of 1989, down more than a The behavior of the dollar differed greatly between percentage point from the average pace of the the two halves of 1989. In the first half, the dollar preceding five years. Nonetheless, there were some appreciated 12 percent in terms of the other G-10 areas of growth. Spending for educational buildings currencies, while depreciating against the curincreased, and employment in the state and local rencies of South Korea and Taiwan. The dollar sector rose 350,000 over the year, largely driven by fluctuated during the summer, and later in the year a pickup in hiring by schools. Despite the overall unwound most of the prior appreciation, as U.S. slowdown in the growth of purchases, the budgetary interest rates eased relative to rates abroad and in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 113 response to concerted intervention in exchange portion of the inflow; foreign direct investment markets in the weeks immediately after the Septem- holdings in the United States rose more than $40 ber meeting of Group of Seven officials and to events billion, and U.S. holdings abroad rose only half as in Eastern Europe. In the second half of the year, the much. Over the first three quarters of 1989, foreign dollar rose against the currencies of South Korea and official assets in the United States increased almost Taiwan while depreciating in terms of the Singapore $15 billion, but this increase was more than offset by dollar. Over the course of 1989, the dollar appreci- the increase in U.S. official holdings of assets ated nearly 16 percent against the Japanese yen and abroad, largely associated with U.S. intervention 14 percent against the British pound, but it depreci- operations to resist the dollar's strength. ated slightly against the German mark, the Canadian dollar, and most other major currencies. On a GNP basis, merchandise exports increased Labor Markets about 11 percent in real terms over the four quarters of 1989—roughly 4 percentage points less than in Employment growth slowed in the second half of 1988. This deceleration took place despite continued 1989; nonetheless, nonfarm payrolls increased strong growth in economic activity in most foreign nearly 2VI million during the year. The bulk of this industrial countries (with the exception of Canada expansion occurred in the service-producing sector. and the United Kingdom), and appears to have By contrast, the manufacturing sector shed 100,000 reflected, in large part, the effect on U.S. competi- jobs. These job losses were more than accounted for tiveness of the dollar's appreciation and the more by declines in the durable goods industries and rapid U.S. inflation over 1988 and much of 1989. appeared to reflect the slump in auto sales, the Exports were also depressed in the fourth quarter of weakening in capital spending, and the effects of a 1989 by several special factors, including the Boeing stronger dollar on exports and imports. strike. The volume of agricultural exports increased Despite the slowdown in new job creation, the about 11 percent in 1989—a bit faster even than the overall balance of supply and demand in the labor robust pace of 1988. The value of agricultural market remained steady over the year. The civilian exports rose much less, however, as agricultural unemployment rate, which had declined about V2 export prices reversed the drought-induced increases percentage point over the twelve months of 1988, of the previous year. finished 1989 at 5.3 percent—unchanged from Merchandise imports excluding oil expanded twelve months earlier. Moreover, there was no about 7 percent in real terms during 1989, with increase in the number of "discouraged" workers — much of the rise accounted for by imports of those who say they would re-enter the labor force if computers. Imports of oil increased 6 percent from they thought they could find a job. Nor was there any the fourth quarter of 1988 to the fourth quarter of net increase in workers who accepted part-time 1989, to a rate of 8.3 million barrels per day. At the employment when they would have preferred fullsame time, the average price per barrel increased time. The proportion of the civilian population with almost 40 percent, and the nation's bill for foreign oil jobs reached a historic high. jumped 45 percent. Reflecting the tightness of labor markets and the The counterpart of the current account deficit of persistence of inflation expectations in the range of 4 $106 billion at an annual rate over the first three to 5 percent, according to surveys, the employment quarters of 1989 was a recorded net capital inflow of cost index for wages and salaries in nonfarm private about $60 billion at an annual rate and an unusually industry increased 4% percent over the twelve large statistical discrepancy, especially in the second months of 1989-about the same as in 1988. Benefit quarter. More than half of the recorded net inflow of costs continued to rise more rapidly than wages and capital reflected transactions in securities, as foreign salaries last year, with health insurance costs private holdings of U.S. securities rose nearly $50 remaining a major factor; nonetheless, the rate of billion (half of the increase being in holdings of U.S. growth in overall benefit costs slowed in 1989, in Treasury securities), while U.S. holdings of foreign part because of a smaller increase in social security securities increased a bit less than $20 billion. Net taxes than in 1988. Total compensation-including direct investment accounted for another substantial both wages and salaries and benefits—rose 4% Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

114 Federal Reserve Bulletin • March 1990 percent during 1989. Compensation growth in the Consumer energy prices surged 17 percent at an service-producing sector—at 5 percent—continued annual rate during the first six months of 1989, to outpace the gain in the goods-producing sector by before dropping back 6 percent in the second half. about % percentage point. During the first half of the year, retail energy prices A slowdown in the growth of productivity often were driven up by increases in the cost of crude oil. accompanies a softening in the general economy, The increase in gasoline prices at midyear was and productivity gains were lackluster in 1989. exaggerated by the introduction of tighter standards Output per hour in the private nonfarm business governing the composition of gasoline during sector increased only V2 percent over the four summer months. Gasoline prices eased considerably quarters of the year — 1 percentage point below the in the second half, reflecting a dip in crude oil prices rate of increase in 1988. In the manufacturing and the expiration of the summertime standards. sector, productivity gains during the first half of Taking the twelve months of 1989 as a whole, the 1989 kept pace with the 1988 average of 3 percent; increase in retail energy prices came to a bit more in the second half, however, productivity growth than 5 percent. Heating oil prices jumped sharply at slowed to an annual rate of 2 lA percent. Reflecting the turn of the year, reflecting a surge in demand both the persistent growth in hourly compensation caused by December's unusually cold weather. The and the disappointing developments in productivity, spike in heating fuel prices largely reversed itself in unit labor costs in private nonfarm industry rose 5 spot markets during January of this year, but crude percent over the four quarters of 1989—the largest oil prices remained at high levels. increase since 1982. Consumer price increases for items other than food and energy remained at about 4Vi percent in 1989. Developments in this category likely would Price Developments have been less favorable had the dollar not been appreciating in foreign exchange markets through Inflation in consumer prices remained in the neigh- the first half of 1989. The prices of consumer borhood of 4j/2 percent for the third year in a row, as commodities excluding food and energy decelerated the level of economic activity was strong and sharply, and this slowdown was particularly marked continued to exert pressures on available resources. for some categories in which import penetration is During the first half of the year, overall inflation was high, including apparel and recreational equipment. boosted by a sharp run-up in energy prices and a Given the dollar's more recent depreciation, howcarry-over from 1988 of drought-related increases ever, the moderating effect of import prices on in food prices. However, inflation in food prices overall inflation may be diminishing. Indeed, prices slowed during the second half, and energy prices for imported goods excluding oil turned up in the retraced about a third of the earlier run-up. Prices fourth quarter of 1989, after declining earlier in the for imported goods excluding oil were little changed year. In contrast to goods prices, the prices of over 1989, on net, and acted as a moderating nonenergy services—which make up half of the influence on consumer price inflation. overall consumer price index—increased 5 lA percent Food prices increased 5Vi percent at the retail in 1989, lA percentage point more than in 1988. The pickup in this category was led by rents, medical level, slightly more than in 1988 when several crops services, and entertainment services. were severely damaged by drought. Continued supply problems in some agricultural markets in At the producer level, prices of finished goods 1989—notably a poor wheat crop and a shortfall in increased IV2 percent at an annual rate during the dairy production—likely prevented a deceleration first half—almost twice the pace of 1988— before from the drought-induced rate of increase in 1988. slowing to an annual rate of increase of 2xh percent At the same time, increases in demand, including over the second half. In large part, developments in sharp increases in exports of some commodities, this sector reflected the same sharp swings in energy also appear to have played a role. Still another prices that affected consumer prices. At earlier impetus to inflation in the food area last year stages of processing, the index for intermediate evidently came from the continuing rise in process- materials excluding food and energy decelerated ing and marketing costs. sharply during the first half of the year and then Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 115 edged down in the second half. For the year as a in short-term interest rates of 1V2 percentage points; whole, this index registered a net increase of only 1 money growth strengthened appreciably, and M2 percent, compared with more than 7 percent in was near the middle of its target range by the end of 1988. The sharp deceleration in this category 1989. The level of M3, on the other hand, remained appears to have reflected a relaxation of earlier around the lower bound of its range, with its pressures on capacity in the primary processing weakness mosdy reflecting the shifting pattern of industries, and the influence of the rising dollar financial intermediation as the thrift industry rethrough the first half of last year. Also consistent trenched. The growth of nonfinancial debt was with the weakening in the manufacturing sector and trimmed to 8 percent in 1989, about in line with the the strength of the dollar, the index for crude nonfood slowing in the growth of nominal GNP, and ended materials excluding energy declined 3 3A percent the year at the midpoint of its monitoring range. over the year, and spot prices for industrial metals moved sharply lower during the year, in part because of large declines for steel scrap, copper, and Implementation of Monetary Policy aluminum. In the opening months of the year, the Federal Open Market Committee, seeking to counter a disquieting MONETARY AND FINANCIAL DEVELOPMENTS intensification of inflationary pressures, extended DURING 1989 the move toward restraint that had begun almost a year earlier. Policy actions in January and February, In 1989, the Federal Reserve continued to pursue a restraining reserve availability and raising the policy aimed at containing and ultimately eliminat- discount rate, prompted a further increase of % ing inflation while providing support for continued percentage point in short-term market interest rates. economic expansion. In implementing that policy, Longer-term rates, however, moved up only moderthe Federal Open Market Committee maintained a ately; the tightening apparently had been widely flexible approach to monetary targeting, with policy anticipated and was viewed as helping to avoid an responding to emerging conditions in the economy escalation in underlying inflation. Real short-term and financial markets as well as to the growth of the interest rates—nominal rates adjusted for expected monetary aggregates relative to their established price inflation—likely moved higher, though remaintarget ranges. This flexibility has been necessitated ing below peak levels earlier in the expansion; these by the substantial variability in the short-run gains contributed to a strengthening of the foreign relationship between the monetary aggregates and exchange value of the dollar over this period, while economic performance; however, when viewed over the growth of the monetary aggregates slowed as the a longer perspective, those aggregates are still useful additional policy restraint reinforced the effects of in conveying information about price developments. actions in 1988. As the year began, monetary policy was following As evidence on prospective trends in inflation and through on a set of measured steps begun a year spending became more mixed in the second quarter, earlier to check inflationary pressures. By then, the Committee refrained from further tightening and however, evidence of a slackening in aggregate in June began to ease pressures on reserve markets. demand, along with sluggish growth of the monetary As the information on the real economy, along with aggregates, suggested that the year-long rise in the continued rise in the dollar, suggested that the short-term interest rates was noticeably restraining outlook for inflation was improving, most long-term the potential for more inflation. But, after an increase nominal interest rates fell as much as a percentage of V2 percentage point in the discount rate at the end point from their March peaks; the yield on the of February, the Federal Reserve took no further bellwether thirty-year Treasury bond moved down policy action until June. Over the balance of 1989, to about 8 percent by the end of June. The decline in the Federal Reserve moved toward an easing of interest rates outstripped the reduction in most money market conditions, as indications mounted of measures of investors' inflation expectations, so that slack in demand and lessened inflation pressures. estimated real interest rates fell from their levels The easing in reserve availability induced declines earlier in the year. These declines in nominal and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

116 Federal Reserve Bulletin • March 1990 real interest rates, however, were not accompanied intervention undertaken by the G-7 countries in the by declines in the foreign exchange value of the weeks immediately after a meeting of the finance dollar. Rather, because of better-than-expected trade ministers and central bank governors of these reports and political turmoil abroad, the dollar countries in September. The dollar continued to strengthened further. decline in response to the easing of short-term In July, when the FOMC met for its semiannual interest rates on dollar assets and increases in rates in review of the growth ranges for money and credit, Japan and Germany. The German currency rate rose M2 and M3 lay at, or a bit below, the lower bounds particularly sharply as developments in Eastern of their target cones. This weakness, reinforcing the Europe were viewed as favorable for the West signals from prices and activity, contributed to the German economy, attracting global capital flows. Committee's decision to take additional easing action Rising interest rates in Germany likely contributed in reserve markets. The Committee reaffirmed the to an increase in bond yields in the United States existing annual target ranges for the monetary and early in 1990, even as U.S. short-term rates debt aggregates and tentatively retained those ranges remained essentially unchanged. More important, for the next year, since they were likely to encompass however, for the rise in nominal, and likely real, money growth that would foster further economic long-term rates in the United States were incoming expansion and moderation of price pressures in data pointing away from recession in the economy 1990. and from any abatement in price pressures, espe- Late in the summer, longer-term interest rates cially as oil prices moved sharply higher. turned higher, as several releases of economic data suggested reinvigorated inflationary pressures. With growth in the monetary aggregates rebounding, the Behavior of Money and Credit Committee kept reserve conditions about unchanged until the direction of the economy and prices Growth in M2 was uneven over 1989, with marked clarified. weakness in the first part of the year giving way to Beginning in October, amid indications of added robust growth thereafter. On balance over the year, risks of a weakening in the economic expansion, the M2 expanded 4x/2 percent, down from 5 lA percent FOMC reduced pressures on reserve markets in growth in 1988, placing it about at the midpoint of its three separate steps, which nudged the federal funds 1989 target range of 3 to 7 percent. The slower rate rate down to around 8 lA percent by year-end, about of increase in M2 reflected some moderation in 1 xh percentage points below its level when incremen- nominal income growth as well as the pattern of tal tightening ceased in February. Over those ten interest rates and associated opportunity costs of months, other short- and long-term nominal interest holding money, with the effects of increases in 1988 rates fell about 1 to 1XA percentage points; and most and 1989 outweighing the later, smaller drop in rates major stock price indexes reached record highs at (table 3). the turn of the year, more than recovering the losses M2 has grown relatively slowly over the past that occurred on October 13. Reflecting some three years, as the Federal Reserve has sought to reduction in inflation anticipations over the same ensure progress over time toward price stability. period, estimated short- and long-term real interest There appears to be a fairly reliable long-term link rates fell somewhat less than nominal rates, dropping between M2 and future changes in inflation. One probably about xh to 3A percentage point. Still, most method of specifying that link is to estimate the measures of short- and long-term real interest rates equilibrium level of prices implied by the current remained well above their trough levels of 1986 and level of M2, assuming that real GNP is at its 1987-levels that had preceded rapid growth in the potential and velocity is at its long-run average, and economy and a buildup of inflationary pressures. compare that to actual prices. The historical record suggests that inflation tends to rise when actual Over the last three months of the year and into prices are below the equilibrium level and to January 1990, the foreign exchange value of the moderate when equilibrium prices are below actual. dollar declined substantially from its high, which At the end of 1986, the equilibrium level of prices was reached around midyear and largely sustained was well above the actual level, reinforcing through September. The dollar fell amid concerted Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 117 the view that the risks weighed on the side of an interest rates and an extraordinary bulge in net increase in inflation; at the end of 1989, that individual tax remittances to the Treasury. From equilibrium price had moved into approximate May to December, Ml rebounded at a 4 percent rate equality with the actual price level, indicating that as the cumulating effects of falling interest rates and basic inflation pressures had steadied. post-tax-payment rebuilding boosted demands for In 1989, compositional shifts within M2 reflected this aggregate. Ml velocity continued the upward the pattern of interest rates, the unexpected volume trend that resumed in 1987, increasing in the first of tax payments in the spring, and the flow of funds three quarters before turning down in the fourth out of thrift deposits and into other instruments. quarter of 1989. Early in the year, rising market interest rates buoyed The shift of deposits from thrift institutions to the growth of small-denomination time deposits at commercial banks and money fund shares owed, in the expense of more liquid deposits, as rates on the part, to regulatory pressures that brought down rates latter accounts adjusted only sluggishly to the paid by some excessively aggressive thrift instituupward market movements. The unexpectedly large tions. Beginning in August, the newly created tax payments in April and May contributed to the Resolution Trust Corporation (RTC) targeted some weakness in liquid instruments as those balances of its funds to pay down high-cost deposits at also were drawn down to meet tax obligations. As intervened thrift institutions and began a program of market interest rates fell, the relative rate advantage closing insolvent thrift institutions and selling their reversed in favor of liquid instruments and the deposits to other institutions—for the most part, growth in liquid deposits rebounded, boosted as well banks. On balance, the weak growth of retail deby the replenishment of accounts drained by tax posits at thrift institutions appears to have been payments. about offset by the shift into commercial banks and The Ml component of M2 was especially affected money market mutual funds, leaving M2 little by the swings in interest rates and opportunity costs affected overall by the realignment of the thrift last year, and in addition was buffeted by the effects industry. of outsized tax payments in April. After its rise of M3 was largely driven, as usual, by the funding 4lA percent in 1988, Ml grew only Vi percent in needs of banks and thrift institutions; under the 1989, with much of the weakness in this transactions special circumstances of the restructuring of the aggregate occurring early in the year. By May, Ml thrift industry, it was a less reliable barometer of had declined at an annual rate of about 2Vi percent monetary policy pressures than is normally the case. from its fourth-quarter 1988 level, reflecting a After expanding 6 lA percent in 1988, M3 hugged the lagged response to earlier increases in short-term lower bound of its 3 Vi to IVi percent target cone in 3. Growth of money and debt Percent change Debt of domestic Period Ml M2 M3 nonfinancial sectors Fourth quarter to fourth quarter 1980 7.4 8.9 9.5 9.5 1981 5.4 (2.5)' 9.3 12.3 10.2 1982 8.8 9.1 9.9 9.1 1983 10.4 12.2 9.8 11.1 1984 5.4 7.9 10.6 14.2 1985 12.0 8.9 7.8 13.1 1986 15.5 9.3 9.1 13.2 1987 6.3 4.3 5.8 9.9 1988 4.3 5.2 6.3 9.2 1989 .6 4.6 3.3 8.1 Quarterly growth rates (annual rates) 1989: 1 -.1 2.3 3.9 8.4 2 -4.4 1.6 3.3 7.9 3 1.8 6.9 3.9 7.2 4 5.1 7.1 2.0 8.0 1. Figure in parentheses is adjusted for shifts to NOW accounts in 1981. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

118 Federal Reserve Bulletin • March 1990 1989, closing the year about 3% percent above its Aggregate debt of the domestic nonfinancial fourth quarter of 1988 base. In 1989, bank credit sectors grew at a fairly steady pace over 1989, growth about matched the previous year's IV2 averaging 8 percent, which placed it near the percent increase, but credit at thrift institutions is midpoint of its monitoring range of 6V2 to IOV2 estimated to have contracted a bit on balance over percent. Although the annual growth of debt slowed the year, in contrast to its 6V4 percent growth in in 1989, as it had during the preceding two years, it 1988. This weakness in thrift credit directly owed to still exceeded the 6V2 percent growth of nominal asset shrinkage at savings and loan institutions GNR Federal sector debt grew 7 V2 percent, about V2 insured by the Savings Association Insurance Fund; percentage point below the 1988 increase—and the credit unions and mutual savings banks expanded lowest rate of expansion in a decade—as the deficit their balance sheets in 1989. In addition, funds paid leveled off. Debt growth outside the federal sector out by the RTC to thrift institutions and to banks eased by more to average 814 percent, mostly acquiring thrift deposits directly substituted for other because of a decline in the growth of household debt. sources of funds. As a result, thrift institutions Mortgage credit slowed in line with the reduced lessened their reliance on managed liabilities, as pace of housing activity, and consumer credit evidenced by the decline of 14% percent over the growth, though volatile from month to month, year in the sum of large time deposits and repurchase trended down through much of the year. The growth agreements at thrift institutions. Institution-only of nonfinancial business debt slipped further below money market mutual funds were bolstered by a the extremely rapid rates of the mid-1980s. Corporelative yield advantage, as fund returns lagged rate restructuring continued to be a major factor behind declining market interest rates in the second buoying business borrowing, although such activity half of the year; these funds provided the major showed distinct signs of slowing late in the year as source of growth for the non-M2 component of M3. lenders became more cautious and the use of debt to On balance, the effects of the thrift restructuring require equity ebbed. dominated the movements in M3, and the rebound in The second half of 1989 was marked by the M2 in the second half of the year did not show troubling deterioration in indicators of financial through to this broader aggregate. As a consequence, stress among certain classes of borrowers, with the velocity of M3 increased 3 percent in 1989, 1 lA implications for the profitability of lenders, includpercentage points faster than the growth in M2 ing commercial banks. In the third quarter, several velocity, and its largest annual increase in twenty measures of loan delinquency rates either rose years. sharply or continued on an uptrend. Delinquency Many of the assets shed by thrift institutions were rates on closed-end consumer loans at commercial mortgages and mortgage-backed securities, but this banks and auto loans at "captive" auto finance comappears to have had little sustained effect on home panies were close to historically high levels. At mortgage cost and availability. The spread between commercial banks as a whole in 1989, both delinthe rate on primary fixed-rate mortgages and the rate quency and charge-off rates for real estate loans on ten-year Treasury notes rose somewhat early in were little changed from the previous year. Still, the year, but thereafter remained relatively stable. problem real estate loans continued to be a drag on The share of mortgages held in securitized form the profitability of banks in Texas, Oklahoma, and again climbed in 1989, facilitating the tapping of a Louisiana; in the second half, such loans emerged as base of investors. Diversified lenders, acting in part a serious problem for banks in New England. On the through other intermediaries, such as federally other hand, smaller, agriculturally oriented banks sponsored agencies, mostly filled the gap left by the continued to recover from the distressed conditions thrift institutions. However, some shrinkage of of the mid-1980s. Since 1987, agricultural banks credit available for acquisition, development, and have charged off loans at well below the national construction appeared to follow from limits imposed rate, and their nonperforming assets represented a by the FIRREA on loans by thrift institutions to smaller portion of their loans than that for the single borrowers, though the reduction in funds country as a whole. available for these purposes probably also reflected The upswing in the profitability of insured problems in some residential real estate markets. commercial banks that began in 1988 only extended Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 119 through the first half of 1989. A slowing in the center banks sharply boosted their loss provisions on buildup of loan loss provisions, along with improve- loans to developing countries, while evidence of ments in interest rate margins, contributed to these rising delinquency rates on real estate and consumer gains, with the money center banks showing the loans suggested more widespread weakening. Desharpest turnaround. Information for the second half spite these developments, the spread of rates on of 1989, although still incomplete, clearly points to bank liabilities, certificates of deposit, and Eurodolan erosion of these profit gains, in part, because of lar deposits, over comparable Treasury bill rates problems in the quality of loans. Several money narrowed early in 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

120 Staff Studies The staff members of the Board of Governors of those of the authors and do not necessarily the Federal Reserve System and of the Federal indicate concurrence by the Board of Governors, Reserve Banks undertake studies that cover a by the Federal Reserve Banks, or by members of wide range of economic and financial subjects. their staffs. From time to time the studies that are of general Single copies of the full text of each study are interest are published in the Staff Studies series available without charge. The titles available are and are summarized in the FEDERAL RESERVE shown under "Staff Studies" in the list of Fed- BULLETIN. eral Reserve Board publications at the back of The analyses and conclusions set forth are each BULLETIN. STUDY SUMMARY NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDIARIES OF BANK HOLDING COMPANIES Nellie Liang and Donald Savage—Staff, Board of Governors Prepared as a staff study in the winter of 1989 The Federal Reserve Board is empowered to top ten held 74.6 percent. The nation's largest permit bank holding companies to engage in banking organizations are also among the largest those nonbank activities that are closely related owners of nonbank assets. The fifty largest bank to banking and that provide net public benefits. holding companies (in terms of consolidated There are few studies of the performance of bank and nonbank assets) held 90.6 percent of nonbank subsidiaries and those bank holding total net nonbank assets; twelve of these organicompanies that own them because, until 1986, zations held more than 10 percent of their total little financial information had been collected assets in nonbank subsidiaries. from nonbank subsidiaries. Using 1986 and For the most part, nonbank subsidiaries en- 1987 data from a new reporting system, this study gage in the same lines of business as do banks. examines the extent of the involvement of bank About 50 percent of aggregate nonbank assets holding companies in nonbank activities and the are accounted for by the assets held in subsidiarprofitability and riskiness of the nonbank subsi- ies engaged principally in commercial finance, diaries. mortgage banking, consumer finance, and leas- In 1987, net nonbank assets owned by the 298 ing. Securities brokerage subsidiaries, which enfirms reporting under the new system totaled gage in discount brokerage and some government $146.8 billion, representing 6.3 percent of the securities underwriting, are also significant in consolidated bank and nonbank assets of these terms of assets. firms. The ownership of these nonbank assets is In both 1986 and 1987, profit rates of the highly concentrated. Among the reporting firms, nonbank subsidiaries were higher than the profit the top five in terms of net nonbank assets held rates of affiliated banks and the consolidated 59.2 percent of the net nonbank assets, and the bank holding companies. Across the different Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

121 types of nonbank activities, profit rates vary Finally, nonbank subsidiaries are better capiwidely. In general, subsidiaries engaged in insur- talized than affiliated bank subsidiaries of bank ance underwriting and the insurance agency bus- holding companies. Some other commonly used iness have relatively high returns on assets, risk measures suggest, however, that some of the whereas subsidiaries engaged in leasing and nonbank subsidiaries are riskier than affiliated mortgage banking have relatively low returns. bank subsidiaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

122 Industrial Production Released for publication January 17 tion, particularly in petroleum refining and construction supplies. Aircraft production returned Industrial production rose 0.4 percent in Decem- to normal in December following the settlement ber following an upward revised increase in of a strike at a major producer in late November. November of 0.3 percent and slightly smaller At 142.8 percent of the 1977 annual average, the declines in October and September than were total index in December was 1.7 percent higher reported last month. The extremely cold weather than that of a year earlier; for the fourth quarter in December caused a sharp rise in utility output, on average, total industrial output was little but also resulted in some disruptions in produc- changed from the third quarter. Manufacturing Ratio scale, 1977=100 Total Index 140 120 100 80 Manufacturing 160 Nondurable 140 120 Durable 100 Consumer Goods Intermediate Business supplies. Products , » » " ^ • _ * * ~ / - * Construction Durable supplies J I Motor Vehicles and Parts Final Products Defense and space Business equipment ^ , - Consumer goods 1984 1986 1988 1990 1984 1986 1988 1990 All series are seasonally adjusted. Latest figures: December. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

123 1977 = 100 Percentage change from preceding month Percentage change, Group 1989 1989 Dec. 1988 1989 Nov. Dec. Aug. Sept. Oct. Nov. Dec. Major market groups Total industrial production 142.3 142.8 .4 -.1 -.4 .3 .4 1.7 Products, total 152.3 153.6 .5 -.1 -.6 .6 .8 2.8 Final products 150.1 151.6 .6 -.2 -1.0 .5 1.0 2.6 Consumer goods 139.8 140.6 .4 -.2 .6 -.1 .6 1.8 Durable 126.8 127.7 1.1 -.6 -.2 -.6 .7 -3.2 Nondurable 144.6 145.4 .2 -.1 .9 .1 .6 3.5 Business equipment... 167.2 169.9 .8 -.2 -2.6 1.2 1.6 4.5 Defense and space 176.9 179.6 .4 -.3 -3.4 .5 1.6 -.5 Intermediate products... 160.1 160.5 .0 .2 .6 .8 .3 3.5 Construction supplies. 143.9 142.9 -.5 -.4 1.1 1.0 -.7 1.1 Materials 128.6 128.2 .4 -.2 .0 .0 -.3 -.1 Major industry groups Manufacturing 148.6 148.8 .5 -.2 -.5 .4 .2 1.7 Durable 145.7 146.2 .7 -.4 -1.5 .4 .3 .3 Nondurable 152.7 152.6 .2 .0 .7 .3 -.1 3.7 Mining 104.4 103.2 .3 1.1 .6 .3 -1.2 -1.7 Utilities 115.5 122.7 -.5 1.0 1.2 -.3 6.3 6.3 NOTE. Indexes are seasonally adjusted. output rose 0.2 percent in December, and factory output rebounded; production of manufacturing utilization edged down to 83.1 percent. Detailed equipment has changed little recently, but most data for capacity utilization are shown separately other major sectors have posted gains. in "Capacity Utilization," Federal Reserve Output of construction supplies fell 0.7 percent monthly statistical release G.3. following sizable increases in the previous two In market groups, production of consumer months; the December decline reflected, at least goods rose 0.6 percent in December, mainly in part, the effects of the severe weather. Matereflecting a surge in electricity and gas output for rials production decreased 0.3 percent as output residential use and an increase in light truck of basic metals, coal mining, and parts for conproduction. Auto assemblies, at an annual rate of sumer durables, mainly motor vehicles, fell sig- 6.2 million units, were unchanged from Novem- nificantly. These losses more than offset the ber. Output of home goods, particularly appli- weather-related jump in utility output. ances, remained weak. Production of business In industry groups, excluding the comeback in equipment rose sharply last month as aircraft the aircraft industry, manufacturing production would have been nearly unchanged in December. Output of motor vehicles and parts remained Total industrial production—Revisions relatively weak in December; other related in- Estimates as shown last month and current estimates dustries, such as steel, fabricated metal products, and textiles, also have declined, on bal- Percentage change ance, in recent months. The production of paper, Index (1977=100) from previous MMoonntthh months printing, and publishing, and nonelectrical machinery posted further gains in December. Out- Previous Current Previous Current side of manufacturing, mining output fell because Sept 142.1 142.3 -.3 -.1 coal production was curtailed by an unusually Oct 141.3 141.8 -.6 -.4 long holiday shutdown; utility output rose Nov 141.5 142.3 .1 .3 Dec 142.8 .4 sharply because of the extremely cold weather. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

124 Statements to Congress Statement by Alan Greenspan, Chairman, Board although they are off from their peak levels of a of Governors of the Federal Reserve System, couple of years ago. before the Committee on Ways and Means, U.S. U.S. investment abroad also has grown in the House of Representatives, January 25, 1990. 1980s, but not as rapidly as foreign investment in the United States. Although the position of U.S. I am pleased to appear before this committee direct investors abroad as measured by book today to discuss foreign investment in the United value increased about 50 percent between the States. Over the past decade, foreign investment end of 1980 and the end of 1988, the book value in the United States has increased dramatically, of foreign direct investment in the United States reflecting both the increased integration of world rose from much lower levels to about the same financial markets and the financial flows that are total—$325 billion as of the end of 1988. Howthe necessary counterpart to large U.S. current ever, the market value of U.S. direct investments account deficits. In my testimony today, I would abroad, which have accumulated over many like to put these developments in perspective and years, undoubtedly still exceeds the market analyze their longer-run implications. value of foreign direct investments in the United Both direct and portfolio investment by for- States by a substantial margin. U.S. holdings of eigners in the United States have soared in the foreign stocks and bonds also have grown in the past decade. Since 1980 the position of foreign 1980s, as have the activities abroad of U.S. direct investors in the United States has in- financial intermediaries. creased 300 percent. Private foreign holdings of This surge in cross-border financial transac- U.S. Treasury securities have increased 500 per- tions has paralleled a large advance in the magcent, and holdings of equities have increased 200 nitude of cross-border trade of goods and serpercent. Holdings of corporate and U.S. govern- vices. A key factor behind these trends in ment agency bonds also have grown rapidly, as international trade and securities transactions is have liabilities of banks in the United States to a process that I have described elsewhere as the foreigners; growth of the latter was spurred by "downsizing of economic output." The creation regulatory changes in late 1981 that permitted the of economic value has shifted increasingly creation of international banking facilities. toward conceptual values with decidedly less These statistics on foreign investments in the reliance on physical volumes. Today, for exam- United States tell only part of the story of ple, major new insights have led to thin fiber increased foreign participation in U.S. financial optics, replacing vast tonnages of copper in commarkets. Foreign-based financial intermediaries munications. Financial transactions historically play an increasingly prominent role in U.S. bank- buttressed with reams of paper are being progresing and securities markets. The volume of trans- sively reduced to electronic charges. Such adactions by foreigners in U.S. securities markets vances not only reduce the amount of human has increased even more dramatically than for- physical effort required in making and completeign holdings. For example, foreign purchases ing financial transactions across national borders and sales of U.S. Treasury securities surpassed but facilitate more accuracy, speed, and ease in $3 trillion on a gross basis in 1988, up from $100 execution. billion to $200 billion earlier in the decade. Sim- Underlying this process have been quantum ilarly, foreign purchases and sales of U.S. cor- advances in technology, spurred by economic porate stocks and bonds also have been running forces. In recent years, the explosive growth in dramatically above levels earlier in the decade, information-gathering and processing techniques Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

125 has greatly extended our analytic capabilities of tutions to raise the share of foreign securities in substituting ideas for physical volume. The pur- investment portfolios. Such diversification propose of production of economic value will not vides investors a means of protecting against change. It will continue to serve human needs both the depreciation of the local currency on and values. But the form of output increasingly foreign exchange markets and the domestic ecowill be less tangible and hence more easily traded nomic disturbances affecting asset values on loacross international borders. It should not come cal markets. As international trade continues to as a surprise therefore that in recent decades the expand more rapidly than global output and growth in world trade has far outstripped the domestic economies become even more closely growth in domestic demand. As a necessary linked to those abroad, the objective of diversiconsequence, imports as a share of output, on fying portfolios of international securities will average, have risen significantly. Since irrevers- become increasingly important. Moreover, since ible conceptual gains are propelling the downsiz- the U.S. dollar is still the key international ing process, these trends almost surely will con- currency, such diversification has been, and may tinue into the twenty-first century and beyond. continue to be, disproportionately into assets New technology—especially computer and denominated in the dollar. telecommunications technology—is boosting Another factor facilitating the globalization of gross financial transactions across national bor- capital markets and the growth of foreign investders at an even faster pace than the net transac- ments in the United States has been deregulations supporting the increase in trade in goods tion. Technological change and innovations that and services. Rapidly expanding data processing have tied international economies more closely capabilities and virtually instantaneous informa- together have increased opportunities for arbition transmission are facilitating the development trage around domestic regulations, controls, and of a broad spectrum of complex financial instru- taxes, undermining the effectiveness of these ments that can be tailored to the hedging, fund- policies. Many governments have responded by ing, and investment needs of a growing array of dismantling domestic regulations designed to almarket participants. These types of instruments locate credit and by removing controls on interwere simply not feasible a decade or two ago. national capital flows, relying more heavily in- Some of this activity has involved an unbundling stead on market forces to allocate capital. An of financial risk to meet the increasingly special- additional factor contributing to an increase in ized risk management requirements of market Japanese gross investment abroad may have participants. Exchange rate and interest rate been the rise in stock and land prices in Japan swaps, together with financial futures and op- that has been leveraged to finance these intions, have become important means by which creased investments. currency and interest rate risks are shifted to The 1980s were marked not just by the expanthose more willing to take them on. The prolif- sion of gross capital flows into and out of the eration of financial instruments, in turn, implies United States but also by very large net capital an increasing number of arbitrage opportunities, inflows. As I noted earlier, foreign investment in which tend to boost further the volume of gross the United States has grown faster than U.S. financial transactions in relation to output. More- investment abroad. During the decade of the over, these technological advances and innova- 1980s, the U.S. net international investment potions have reduced the costs of managing opera- sition, as published by the Department of Comtions around the globe, and have facilitated merce, fell sharply from a positive $141 billion at direct, as well as portfolio, investment. the end of 1981 to a negative $533 billion by the Portfolio considerations also are playing an end of 1988. However, these numbers should not important role in the globalization of securities be viewed as precise measures of U.S. net intermarkets. As the welfare of people in the United national indebtedness. Because of valuation States and abroad becomes increasingly depen- problems in the U.S. international transactions dent on the performance of foreign economies, it accounts, the measurement of U.S. indebtedness is natural for both individual investors and insti- could be overstated by several hundred billion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

126 Federal Reserve Bulletin • March 1990 dollars. Much of this overstatement is the result strong growth in U.S. domestic demand, which of the inclusion of direct investment assets in the raised demand for imports and contributed furdata at book rather than market value. Nonethe- ther to the external deficit. less, while the precise level of our net investment The behavior of the U.S. national savings rate position is uncertain, the direction and magni- during most of the 1980s contrasted with events tude of recent changes are clear. They are the abroad. Over much of the past decade, other consequence of our large current account defi- major industrial countries generally were moving cits. fiscal policies toward restraint. In Germany and The growing U.S. net international indebted- Japan, especially, government deficits were beness and our large current account deficits are ing reduced, which contributed to their external two sides of the same coin. Over the past decade surpluses and to the outflow of financial rethe United States bought more goods and ser- sources from those countries. vices from the rest of the world than it sold, and The widening of the U.S. external deficit also it has paid for the difference, in essence, by was facilitated by the enhanced mobility of capborrowing from, and selling assets to, foreigners. ital; the tremendous growth in gross capital flows The U.S. current account moved from approxi- undoubtedly permitted the emergence of very mate balance in the early 1980s to a deficit of large net flows. On balance, though, the global more than $140 billion in 1987. More recently, integration of financial markets was probably the deficit has declined, but it remains substan- only a facilitating factor, not a motivating force, tial. behind the growth and persistence of U.S. net The most important underlying cause of the capital inflows. surge in our net borrowing from foreigners and The progress that has been made in reducing the deterioration in our external balance has been the budget deficit from its earlier peak levels, the substantial decline in our national savings along with declines in U.S. interest rates and the rate against the background of a relatively stable dollar since the mid-1980s, can explain much of domestic investment rate. As you are well aware, the more recent improvement in the external the decline in our savings rate reflected both the deficit. Nonetheless, we still have a long way to expansion of the fiscal deficit and some down- go to establish equilibrium in our international trend in the U.S. private savings rate. The fun- accounts. damental accounting identity between savings The persistence of inadequate domestic savand investment, of course, requires that any ings, large current account deficits, and continshortfall of domestic savings below domestic ued deterioration of the U.S. net international investment be made up in the form of a net inflow investment position remain matters of serious of savings from abroad. concern. Current U.S. savings levels are inade- It is important to understand just how this link quate to finance the domestic investment necesbetween lower domestic savings and increased sary to provide rising living standards for future inflows from abroad worked in practice. The generations on the scale enjoyed by previous increased demand for funds to finance both the generations. gaping budget deficit and growing private invest- The most important contribution the Congress ment in the face of a declining private savings can make to remedying this problem is to conrate put substantial upward pressure on U.S. tinue the progress made in recent years in reducinterest rates. Higher interest rates made invest- ing the federal budget deficit. As I have stated ment in the United States more attractive to here before, the ultimate target should be a foreigners, increased demand for dollars to im- budget surplus. plement such investments, and, thereby, pushed Efforts to limit directly or to discourage the up the foreign exchange value of the dollar. The inflow of capital from abroad would aggravate higher dollar, in turn, reduced U.S. international the problem by raising real interest rates in the price competitiveness and contributed to the United States and lowering domestic investment widening of the external deficit. The fiscal stim- toward levels consistent with already low domesulus and downtrend in private savings also led to tic savings. Even limited measures affecting only Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 127 certain capital flows, such as direct investment, ever, little attention is paid to the benefits of would necessitate larger inflows through other direct investment. The operations of multinachannels that could only be attracted at higher tional companies play an important role in facilrates of return or with a weaker dollar. itating the growth of world trade in goods, ser- Measures to restrict or discourage foreign in- vices, and information. Trade and direct vestment in the United States would be undesir- investment are intimately related; transactions able for other reasons as well. The United States between direct investment affiliates and their has benefited, and will continue to benefit, from U.S. or foreign parents accounted for 35 percent the inevitably closer integration of world markets of U.S. merchandise exports and 40 percent of for goods, services, and capital. As unfolding U.S. imports in 1987—the latest year for which events in Eastern Europe indicate, countries that data are available. It is essentially impossible to attempt to isolate their economies from the rest separate trade from investment and vice versa. of the world and do not heed market signals in Foreign investment in the United States spurs allocating scarce resources pay a high price in competition, provides infusions of new capital terms of low levels of economic welfare. and technology into industries like steel, and The globalization of capital markets offers speeds the spread of technological advances. many benefits in terms of increased competition, Concerns about direct investment in the reduced costs of financial intermediation that United States are understandable because these benefit both savers and borrowers, more efficient investments sometimes disrupt established patallocation of capital, and the more rapid spread terns of doing business. But, on the whole, such of innovations. However, this internationaliza- concerns are overblown. It is ironic that if a tion does pose certain risks as well: The United Japanese real estate company buys a building in States has become more vulnerable to distur- the United States, we record it as a direct investbances originating outside its borders. The Fed- ment and a possible source of concern. If, howeral Reserve has been actively interested in ef- ever, the real estate company dismantles the forts to limit risks in international payments and building brick by brick and ships it to Japan, it is settlement systems. In cooperation with author- recorded as a U.S. export, a positive event. ities in other countries, the Federal Reserve has Acquisitions of U.S. companies by foreigners pressed for improved capital adequacy for banks present somewhat different issues. The analysis and other financial intermediaries. of mergers and acquisitions in general is contro- These measures to protect the soundness and versial, but one conclusion with which nearly all integrity of our financial system are necessary investigators would concur is that the American regardless of whether the United States is a net stockholders of takeover targets are big gainers. debtor or a creditor. It should be noted that in the The former owners of acquired U.S. companies 1970s, when the United States was still a sub- can reinvest these funds in other enterprises that stantial net creditor, unfavorable developments they judge to have the highest returns. As for led to repeated episodes of downward pressure foreigners who outbid U.S. competitors for U.S. on the foreign exchange value of the dollar. companies, recent news indicates that overly Given the vast array of financial products cur- optimistic estimates of future earnings may have rently available, and the wealth of U.S. residents been an important factor in several important themselves, the size of net holdings of U.S. cases. assets by foreigners bears little relationship to Although foreign direct investment in the the magnitude of pressures that can arise in United States has grown very rapidly, it is still foreign exchange markets. relatively small. For manufacturing as a whole, Concern about foreign investment in the direct investment affiliates accounted for 13 per- United States tends to focus on direct invest- cent of assets and 11 percent of sales in 1987, the ment; highly visible purchases, such as Rock- latest data available. Comparison of the role of feller Center, Columbia Pictures, and Bloom- direct investment affiliates in U.S. sales, manuingdales, have given rise to fears about the selling facturing employment, and assets with ratios for of America at bargain basement prices. How- other countries indicates that direct investment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

128 Federal Reserve Bulletin • March 1990 plays a much smaller role in the U.S. economy retail U.S. business, but they have been more than in Canada, the United Kingdom, Germany, successful in the area of commercial and indusor France. trial lending to large companies. Foreign bank Most direct investment in the United States participation in that market has increased comoriginates from the United Kingdom, Japan, Can- petitive pressures to price loans off money marada, the Netherlands, and Germany—countries ket rates. U.S. consumers of banking services with which the United States has close economic have benefited from a more competitive banking and political ties. Direct investment in the United environment. Departure from a policy of national States gives these countries an even larger interest treatment in the banking industry could produce in ensuring continued U.S. prosperity. Moreover, retaliation and could seriously complicate negothe U.S. government has ample authority to block tiations to ensure access of U.S. banks to mardirect investments that have a negative impact on kets abroad, particularly to Europe after 1992. national security or that involve undesirable con- In conclusion, the globalization of markets for centrations of market power. goods, services, and finance benefits both the Comparison of the operations of affiliates of United States and the rest of the world. Efforts to foreign companies with U.S. firms in the same insulate the United States from the inexorable industry indicates that research and development forces of increasing globalization could be very expenditures, wage rates, and value added do not costly to our standard of living. However, condiffer systematically. Only a tendency to import tinued efforts should be made to limit risks in more clearly distinguishes affiliates from U.S.- international payments and securities settlement owned companies; however, since some foreign systems and to protect investors by increasing companies have built plants in the United States international cooperation and coordination of to replace imports, the net effect of direct invest- supervision and regulation. ment on the U.S. trade balance is probably small. The United States could help to ensure the One area of foreign direct investment of par- orderly progress of global integration by reducing ticular interest to the Federal Reserve Board is its current account imbalance. The necessary the banking industry. Foreign banks account for policies are not those that attack the symptoms— about one-fifth of all banking assets in the United large accumulations of foreign assets in the States. However, in many cases foreign banks United States—but rather policies that address conduct largely international transactions at their the underlying cause, which is our inadequate U.S. offices. Foreign-chartered banks typically national savings, particularly our large federal have not been very successful at competing for budget deficit. • Statement by Alan Greenspan, Chairman, Board Concerns that our long economic expansion of Governors of the Federal Reserve System, may be nearing an end may have been intensified before the Joint Economic Committee, U.S. last week by the release of initial estimates Congress, January 30, 1990. showing that real GNP rose only Vz percent at an annual rate in the fourth quarter of 1989. To be I am pleased, as always, to appear before this sure, activity in that period was affected by distinguished committee. As you know, the Fed- several special transitory influences—the Calieral Reserve will be submitting its semiannual fornia earthquake, Hurricane Hugo, extraordi- Humphrey-Hawkins Report to the Congress in narily cold weather, and the long strike at Boejust a few weeks. At that time, I will be in a ing. But even allowing for those factors, business position to address more meaningfully the tactics activity in recent months clearly has been less and strategy of monetary policy. Under the cir- vigorous than it was earlier. cumstances, I thought it might be most useful for The locus of the recent softness is in what we me to focus my initial remarks this morning on can broadly characterize as "durable" goods. the current state of the economy. Most notably, weakness has emerged in the auto Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 129 industry, and this has spread to related supplier ever, current and prospective developments in industries, including metals, textiles, and ma- the auto market reflect in part longer-range dechine tools. In addition, several categories of mand factors. Among the underlying forces are capital goods and consumer hard goods, as well the existing number of motor vehicles owned per as construction of both residential and nonresi- household and the average age of the auto and dential buildings, have softened in recent truck stocks. To see the role of these factors months. more clearly, it is useful to go back to the In evaluating trends in such long-lived physical beginning of the last decade. Between 1979 and assets, one must remember that household and 1983, the number of vehicles per household— business users' ownership of them does not which had been on a strong uptrend throughout appear anywhere in the gross national income the postwar period—fell nearly 3 percent. A and product accounts; nevertheless, by provid- decline of 3 percent may not sound very large ing flows of services, these balance sheet items until you consider that it represented a shortfall are an important determinant of the level of of about 10 million cars and trucks between the production. A fundamental characteristic of such actual stock of motor vehicles and the underlying durable items is that demand for them is shaped trend stock. This decline in the ownership per in part by the size of outstanding stocks relative household of motor vehicles was likely a result of to current household and producer needs. consumer reaction to the relative increase in Viewed in this light, the current economic slow- gasoline prices and the downturn in economic down represents, at least to an extent, a pause in activity that occurred during the period. Also, the accumulation of physical assets, a form of during the late 1970s and early 1980s consumers "inventory correction," so that levels of owner- slowed the pace at which they scrapped their ship do not get too far ahead of the long-term existing cars and light trucks; the combination of desired levels. lower scrappage and the lower sales of new Because of their importance in understanding vehicles pushed the average age of both the auto the current economic situation, it is worth exam- and truck stocks up approximately one year to ining some of these stock adjustment relation- more than seven years. ships in detail. Let me start with motor vehicles, The combination of an enormous pent-up defor which manufacturers have made sizable pro- mand—reflecting the gap between actual and duction cutbacks recently. It appears that auto presumptive desired levels of ownership—as assemblies in January may fall short of an annual well as increased replacement needs associated rate of 4Vi million units, well below the rate of 7 with an aging auto stock, provided the stimulus million units over 1989 as a whole. The proxi- for the extraordinarily strong pace of auto sales mate cause of the recent production cutback was posted from 1983 through much of the remainder soft demand and rising dealer inventories last of the decade. The number of vehicles per housefall. The soft demand reflects a payback from the hold has risen substantially, rising well above the elevated sales pace of the third quarter during earlier peak, and, as scrappage rates have rewhich the use of price incentives was especially turned to prior levels, the average ages of the heavy for the 1989 model-year cars. Moreover, auto and truck stocks have leveled out. This demand for 1990 model-year cars has been re- rebuilding of the motor vehicle stock and stabistrained by increases in sticker prices, which in lization in its average age suggest that the nummany cases exceeded 5 percent. However, with ber of autos sitting in America's driveways is the introduction of new incentive programs, sales adequate to meet much of the desired demand for picked up in late December and early January. transportation equipment, and lowered sales are This has reduced dealer inventories to more at this point likely to reflect primarily replaceacceptable levels, and automakers reportedly ment needs and growth in the driving-age popuplan to step up production somewhat in the lation. coming weeks. In contrast to motor vehicles, the current Looking beneath these short-run variations in slowdown in construction of new homes and sales, production, and dealer inventories, how- commercial buildings seems to reflect a situation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

130 Federal Reserve Bulletin • March 1990 in which earlier activity was so robust that the nationally, real estate values have continued to actual stocks of residential and nonresidential increase. structures exceed desired levels—at least in In the case of nonresidential structures, there some locales. Moreover, in the housing market also is an indication of stock overhang, with longer-run demographic factors also are having vacancy rates for office space in metropolitan an effect on the underlying stock demand—espe- areas at near-record levels. Moreover, lending cially the rate of household formation. This rate institutions—stung by a long series of questionhas been slowing and will slow further as more able investments—are scrutinizing loan applicaand more of the low birth cohort of the 1960s and tions more carefully than in the past so that 1970s matures into adulthood. What this means, highly risky projects are not getting funded as of course, is that we need to lower our sights readily. Reflecting these developments, buildabout what constitutes "normal" levels of home- ing permits have turned down and new conbuilding activity during the 1990s compared with struction spending has been stagnant over the the 1980s. past year in all major sectors except industrial How the broad decade averages of demand building. get distributed from year to year depends in Business demands for new equipment also large part on financial conditions. Interest rates reflect, to a large degree, stock-adjustment moon home mortgages have been around 10 per- tives. Recently available data for the fourth cent since mid-1989, and so, from the homebuy- quarter show that a sizable deceleration in er's perspective, financial considerations have business equipment spending is under way, not varied to a great extent. In recent months, reflecting the general slowdown in economic however, segments of the construction industry activity and expected sales. Real spending on have reported difficulty in obtaining credit in producers' durable equipment fell more than 4 the wake of newly imposed restrictions on percent at an annual rate in the fourth quarter. lending by thrift institutions. Some added cau- Part of the decline resulted from the work tion in acquisition, development, and construc- stoppage at Boeing; but even allowing for that tion lending was called for, given the riskiness special factor, real equipment outlays still deof this activity, but the difficulties now being clined somewhat. experienced by builders should diminish con- Looking forward, recent data are offering siderably over time as these businesses secure mixed signals about future capital spending. For other financing sources for their creditworthy example, orders for nondefense capital goods projects. received in November and December show a Despite the reduced pace of housing construc- bounceback from the decline that had occurred tion, there continues to be an overhang of new in the third quarter. Other indicators of capital single-family homes and condominiums for sale spending, however, give the impression of softin a few regions of the country, and rental ness ahead. For example, recent declines in real vacancy rates in the multifamily market remain cash flow of nonfinancial corporations do not high. But, it is important to note that much of the bode well for investment spending in the near market overhang is concentrated in the North- term. In the 1980s, growth in cash flow—meaeast and shows few signs of leading to a national sured as the sum of undistributed after-tax profits real estate market contraction. The reason is that and depreciation allowances—tended to move the spread of local problems generally is limited with growth in real gross business fixed investby the geographical segmentation of real estate ment. Thus the recent cash-flow experience— markets. Because neither residential property which has signaled a deterioration in the availnor occupants are perfectly mobile, the market ability of internal funds—is one factor likely to be will not necessarily arbitrage away price differ- a restraining influence on capital spending in ences observed in different local markets. 1990. Moreover, this signal is being reinforced by Hence, softness in housing prices in some areas surveys of plant and equipment expenditures is unlikely to prove highly contagious in the short taken this past fall that indicate real capital run. Indeed, in most areas, and on average spending will grow less this year than last, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 131 deceleration being most noticeable among non- nomic indicators with its pattern of movements durable manufacturing and nonmanufacturing just before and during previous recessions. Refirms. cently, statistical procedures have been devel- Until now, I have been sketching the negative oped that allow such a comparison to be transside of the economic landscape. Let me now lated into the likelihood of a recession. These suggest where we can look for more favorable procedures have been applied by Board staff to signs. First, demand for long-lived assets is still the Commerce Department's index of leading growing in some areas, creating opportunities for economic indicators, which comprise several strong production growth. This is most clearly real and financial market variables. The resulting evident in the case of civilian aircraft for which measure suggests that the probability of a recesthe level of the orders backlog has doubled over sion developing in the next six months increased the past two years. Second, in contrast to some last spring to almost 30 percent, but according to past cycles, we have not seen the type of spec- the most recent estimates has declined to about ulative buildups of materials and finished goods 20 percent. by businesses that can exacerbate the effects of A second probability-of-recession measure is any weakening in sales trends. I believe one based on a leading index recently compiled by reason for this is that thus far we have avoided a economists at the National Bureau of Economic cyclical upswing in inflation, so that the buy- Research, which relies less heavily on data from in-advance motive has been less of an influence. the manufacturing sector than does the Com- Third, foreign demand for many of our manufac- merce Department index and does not include tured products is strong. Real export growth of stock prices. The probability of a recession in the manufactured goods, although down somewhat next six months based on the National Bureau of from the torrid pace of 1988, remains sizable. Economic Research (NBER) index also has de- Strength runs across a wide variety of consumer clined since last spring and according to the and capital goods as well as industrial supplies. December reading stands at about 10 percent. Fourth, there is evidence from labor markets Both probabilities are much smaller than those that the spillover effects from durable manufac- occurring at the beginning of each of the four turing have been limited. Although manufac- recessions since the late 1960s. For example, the turing employment has fallen nearly 195,000 jobs probability exceeded 50 percent shortly before since last March, total private nonfarm payrolls each of the previous recessions using the NBER have continued to rise, with the increase totaling index. about Wi million over that period. The contribu- I wouldn't want to "bet the ranch" on such tion from the health services area to the overall statistical measures. I think we must continue to increase has been especially noteworthy. Em- monitor developments closely and stay alert to ployment in medical care, which made up about the possibility that, perhaps reinforced by some 7 percent of total payroll employment early last adverse shock not now visible, the weakness in year, has increased nearly 400,000 since then. the several sectors I have discussed might cumu- Other sizable employment contributions have late and lead to a more widespread downturn in come from business services and state and local activity. But such imbalances and dislocations as governments. we see in the economy today probably do not Favorable signs about the economy's eco- suggest anything more than a temporary hesitanomic health are also revealed by comparing tion in the continuing expansion of the recent movements in an index of leading eco- economy. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

132 Federal Reserve Bulletin • March 1990 Statement by E. Gerald Corrigan, President, average annual change in the consumer price Federal Reserve Bank of New York, before the index (CPI) was only 1.5 percent. Such an out- Subcommittee on Domestic Monetary Policy of come would also closely approximate experience the Committee on Banking, Finance and Urban over the past few years in Japan, Germany, and Affairs, U.S. House of Representatives, Febru- the Netherlands, the industrial countries that ary 6, 1990. have been among the leaders with regard to containing inflation over most of the 1980s. In I am pleased to appear before you this morning to short, the goal of seeking to replicate a pattern of lend my support to House Joint Resolution 409, price performance that approximates our own which calls for Federal Reserve monetary policy national experience between 1955 and 1965 and to be conducted with a view toward achieving to realize that goal in the timeframe of the price stability in five years. I want to applaud mid-1990s strikes me as appropriate. your efforts for taking the initiative on this im- The second major issue relates to the costs portant matter. There is no doubt in my mind that incurred in the transition to such an environment our economy would perform better, our citizens and the sustainability of that environment once it would be better off, and our international com- is achieved. There is absolutely no question that petitiveness would improve in a setting in which bringing the underlying inflation rate down from the goals of this resolution were achieved. There its current level of about 4.5 percent to about 1 or is also no doubt in my mind that the primary (but 1.5 percent will involve costs in terms of at least not sole) mission of the central bank should be to some shortfall of actual output relative to potenpromote a noninflationary economic environ- tial output over the transition period. Moreover, ment. Finally, I believe that monetary policy in history here in the United States, as well as the United States is capable of achieving that experience in all other countries, suggests that result, but how quickly it is achieved, at what such costs could be large. Indeed, I am very cost, and how sustainable that environment hard pressed to recall a single case in which a proves to be will depend importantly on other significant reduction in inflation was accomaspects of economic policy both here and, in- plished in a major industrial country without creasingly, in other countries as well. relatively large costs. And, in cases in which In this context, it seems to me that the resolu- the costs were more moderate and the success tion raises two basic issues that warrant the more lasting, the adjustment process typically careful consideration of the subcommittee and has been assisted by complementary moves on the Congress as a whole. The first relates to the the part of fiscal or other elements of economic definition of price stability and the second relates policy. But, even under the best of circumto the costs that may be incurred in moving stances, some costs will be incurred. For examtoward price stability and, more importantly, ple, over the last decade, in both Germany and what we, as a nation, can do to minimize such the Netherlands—the European superstars on costs. the inflation front—the unemployment rate has Let me turn first to the definitional question. been quite high by historic and international The resolution incorporates a definition of price comparative standards. stability that is couched in terms of a pattern of Having said that there will be at least some behavior in which expectations of future price costs associated with the transition, let me haschanges play no role in decisionmaking on the ten to add that it is not easy to judge just how part of businesses, households, and govern- small or how great those costs might be. This is ments. This definition is conceptually sound be- true, in part, because these costs can vary signifcause inflation is at least as much a state of mind icantly, depending on the broad economic and as it is a statistic. To be a bit more concrete, I expectational environment in which the transiwould suggest that the spirit of the resolution tion is made. To illustrate some of the dimenwould be essentially attained if we were able to sions of this situation, I have attached to my return to the pattern of behavior that character- statement a table containing a cross section of ized the period from 1955 through 1965, when the economic statistics covering the 1955-65 and the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 133 1983-89 periods. Clearly a handful of statistics materially lower in the earlier period even though cannot begin to capture all the elements and all the unemployment rate at the end of the 1980s the dynamics of a multitrillion dollar economy, had converged significantly toward its level in but I believe they convey many useful insights. 1965. The first cluster of those statistics provides a To some extent, these differences in inflation quick comparison of five measures of overall and unemployment may reflect changed struceconomic performance over the two periods. tural features in the economy. To illustrate this, These statistics suggest that the growth of real the second set of statistics shows that over the GNP was not, on average, wildly different in the interval spanned by the two time periods, we two periods. In fact, the similarity in the average have experienced a significant increase in the growth rates of real GNP in the two periods is following: (1) labor force participation rates; (2) very striking. However, the "core" inflation rate the share of the population in the household was much higher in the 1980s and unemployment formation age bracket of 25 to 44 years of age; and (3) the share of GNP that is accounted for by consumer spending on services, in which infla- Selected macroeconomic statistics tion rates tend to be relatively high. Average However, even after allowing for these Economic indicators changed structural features of the economy, the 1955-65 1983-89 "core" rate of inflation in the 1980s is both too Economic performance high and is materially higher than it was in the Percent change in nominal GNP 6.0 7.5 Percent change in real GNP 3.6 3.9 1955-65 interval. To shed further light on this, Percent change in CPI 1.4 3.6 Excluding food and energy 1.61 4.3 the third set of statistics presents data on com- Average unemployment rate 5.3 6.9 pensation per hour, productivity, and unit labor Unemployment rate at end of period 4.5 5.3 costs for the private nonfarm economy. At least Structural change in the economy in a proximate sense, these data provide partic- Percent of civilian population aged 16 or more in labor force 59.2 65.2 ularly good insights into the dynamics of the core Percent of total population aged 25-44 .. 26.2 31.3 Consumer spending on services inflationary process. In looking at these data, it is as percent of GNP 25.4 34.3 important to keep in mind that the aggregate P U e n r d c e e r n l t y i c n h g a n i g n e fl a in ti o c n om 2 pensation per hour .. 4.3 4.4 5.43 compensation bill represents a sizable fraction of Percent change in productivity 2.6 1.8 1.03 GNP. Therefore, as an approximation over time, Percent change in unit labor cost (all data for private nonfarm economy). 1.6 2.6 4.33 it follows that the only way in which the core inflation rate can rise at a materially slower rate Financial performance Percent change in M2 4 6.55 7.4 than the rise in unit labor costs would be when Inflation adjusted long-term bond yield6 ... 2.4 6.0 3.77 Inflation adjusted long-term bond yield profitability is falling. That is particularly imporusing CPI, excluding food and energy . 2.41 5.3 4.07 tant in the current setting in which profits already Underlying characteristics are squeezed and the share of "economic" profof the U.S. economy2 Federal budget deficit as percent of GNP .1 4.1 its in GNP is near to an all-time postwar low. Current account balance as percent of GNP .6 -2.6 Net private savings as percent of GNP ... 7.7 6.5 With those qualifications in mind, the most Excluding state and local government balances8 7.8 5.2 striking feature of the third set of statistics is that Net private investment as percent of GNP 6.9 4.8 by far the largest factor contributing to the more Net domestic savings gap as percent of GNP -2.4 rapid rise in unit labor costs in the 1980s is not Net economic profits as percent of GNP . 10.3 6.6 Net foreign assets or liabilities (-) the rate of increase in compensation but the as percent of GNP at end of period .. n.a.9 -11.7 distinct slowing of productivity growth. The im- 1. Based on 1958-65 average. mediate situation is even worse than the average 2. 1989 data are based on estimates. for 1983-89 since over the past four quarters 3. Percent change, 1988:3 to 1989:3. 4. Annual data calculated on fourth-quarter-to-fourth-quarter basis. productivity growth has slowed to only 1 percent 5. 1955-59 data are based on estimates. and unit labor costs are rising at 4.3 percent. I 6. Ten-year bond yield less change in CPI. 7. 1989. might also add in this regard that recent patterns 8. Includes state and local government surplus or deficit. of productivity increases in the United States not 9. 5.7 percent at end of 1970. only look poor relative to the 1955-65 period but n.a. Not available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

134 Federal Reserve Bulletin • March 1990 also look quite poor by international standards as tion may be even worse than indicated; some well. For example, overall productivity increases analytical work by my colleagues at the Federal not only in Japan and Germany, but also in Reserve Bank of New York suggests that the France and the United Kingdom, have outpaced stock of net capital per worker has been essenthose in the United States during the 1980s. tially flat over the past three years. While I will return to this point later, it is quite As another example that can be drawn from clear to me that if we want to achieve and sustain the lower panel of the table, should we be major improvements in inflation at modest costs, surprised that real interest rates are so high when we are going to have to do much better on the our domestic credit demands far exceed our productivity front than has been our recent his- domestic savings and, as a result, we must fitory. The reason for this is quite straightforward: nance much, and at times virtually all, of our Namely, the higher the rate of productivity budget deficit by attracting savings flows from growth, the lower the rise in unit labor costs the balance of the world in a setting in which our associated with any given rate of compensation net external liabilities are now so large. To be increase and the smaller the amount of slack sure, other factors such as volatility in economic needed in labor markets to achieve that lower growth patterns and high and volatile inflation rise in unit labor costs. rates also play a role in explaining the relatively The next set of data in the table provides some high level of U.S. real interest rates in recent insights on financial indicators during the two years. But, the persistent domestic savings gap periods under study. These, too, might be sur- and the resulting need to attract so much savings prising to some, especially since the growth of from abroad in recent years have to be recog- M2 over the two intervals was quite similar. nized as significant factors in this regard. However, there is a striking difference between As I mentioned earlier, I am under no illusion the inflation-adjusted interest rates on long-term that these few statistics can tell the whole story bonds over the two periods—a difference that, at about a large and complex economy such as that first blush, seems difficult to explain. For the of the United States. Despite these limitations, I 1983-89 period as a whole, the very high, real think the message from these statistics is clear: long-term interest rates are somewhat exagger- We have some major imbalances in our econated by extraordinarily high rates earlier in the omy, which, among other things, have a direct period as the economy adjusted from the very bearing on the relative ease—or lack thereof— high inflation rates of the early 1980s. However, with which the transition to price stability can be even at the end of 1989 the inflation-adjusted managed. For example, to the extent that the long-bond rate of about 4 percent was still about savings gap is eliminated by balancing the federal 1.5 percentage points above its average during budget, we would at least have much more room the 1955-65 period. The last set helps shed some to finance domestically a higher rate of private light on this difference and, in my judgment, gets investment, which, in turn, would assist producright to the heart of many of our current eco- tivity performance over time. Similarly, in those nomic difficulties. same circumstances, the potential for some de- There are truly massive differences in the cline in real interest rates is clear, although we behavior of the federal budget and current ac- must recognize that our status as a large net count relative to GNP in the two periods, as well debtor nation may limit the scope of these gains. as associated sharp differences in the private To put it differently, moving toward and sussavings and investment rates relative to GNP taining a noninflationary environment will be (bottom panel of the table). These differences can even easier if we have genuine success in implehave profound implications both for how the menting policies that will deal with the closely economy works and for the costs associated with interrelated problems of low savings, low investthe transition to price stability. For example, ment, and low productivity growth. But, these with the investment rate as low as it is, should we gains will only come slowly. be all that surprised that productivity behavior There is one other crucial variable that could has been so poor? In fact, the investment situamake an enormous difference with regard to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 135 containing the costs of the transition to price noninflationary environment, but that change stability, and that is the role of expectations. will not come easily or automatically. Many models of the economy and most elements In closing, I think that it is essential that any of casual observation suggest that expectations discussion of the costs of moving to price stabilof future inflation are importantly, if not deci- ity also includes a parallel discussion of the costs sively, influenced by experience with inflation in of coexisting with something like the current rate the recent-to-intermediate-term past. Economet- of inflation and the ever-present danger that the ric analysis also suggests that the deeper those inflation rate could move still higher. Virtually expectations are entrenched, the more difficult every observable facet of economic and financial and more costly will be the task of winding down history—here in the United States and around inflation. By the same token, the less entrenched, the world—tells us that high or rising rates of and even more important, the more forward inflation are simply incompatible with sustained looking such expectations are, the lower will be economic prosperity. Inflation inevitably underthe cost of moving toward and achieving price mines economic and financial discipline; it can stability. arbitrarily redistribute income; it surely under- For this reason, if the American public were cuts international competitiveness; and it can convinced that the national commitment to price induce wholly unnecessary and costly elements stability was real and lasting, the transition prob- of volatility in interest rates and exchange rates. lem would be much easier and less costly. How- Moreover, so long as an inflationary environment ever, it is going to take much more than rhetoric persists, these costs are ongoing and cumulative. to produce that change in expectations. Even if Looked at in this light, the costs of gradually H.J. Res. 409 were to become law with broad- winding down inflation—especially if we are able based bipartisan support, I am not at all sure that to maintain the discipline to keep the inflation the public would immediately and fully adjust down—look far less foreboding. Nevertheless, their expectations in a major way so long as both minimizing the transition costs and maxiperceptions about our national economic imbal- mizing the prospects of sustaining a noninflaances in areas such as the budget deficit remain tionary environment make it all the more clear to unchanged. In other words, a change in expecta- me that those complementary efforts aimed at the tions about future inflation would make a very savings gap, the investment rate, and productivmajor contribution to our success in achieving a ity growth are very important indeed. • Statement by W. Lee Hoskins, President, Fed- serve. Efficient utilization of our nation's reeral Reserve Bank of Cleveland, before the Sub- sources requires a sound and predictable monecommittee on Domestic Monetary Policy of the tary polidy. H.J. Res. 409 wisely directs the Committee on Banking, Finance and Urban Af- Federal Reserve to place price stability above fairs, U.S. House of Representatives, February other economic goals because price stability is 6, 1990. the most important contribution the Federal Reserve can make to achieve full employment and I am pleased to appear before this subcommittee maximum sustainable growth. to testify on House Joint Resolution 409. I strongly support your resolution directing the Federal Reserve System to make price stability THE BENEFITS OF PRICE STABILITY the main goal of monetary policy. Ultimately, the price level is determined by monetary policy. Price Stability Leads to Economic Stability While economic growth and the level of employment depend on our resources and the efficiency An important benefit of price stability is that it with which they are used, the aggregate price would stabilize the economy. High and variable level is determined uniquely by the Federal Re- inflation has always been one of the prime causes Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

136 Federal Reserve Bulletin • March 1990 of financial crises and economic recessions. Cer- cient to allow inflation to change the yardstick for tainly U.S. experience since World War II reaf- economic value. firms the notion that inflation is a leading cause of While the evidence that price stability maxirecessions. Every recession in our recent history mizes production and employment is not as has been preceded by an outburst of cost and direct or as extensive as I would like, it is price pressures and the associated imbalances persuasive to me. One source of evidence can and distortions. A monetary policy that strives be found in the comparison of inflation and for price stability, or zero inflation, as mandated real growth across countries. Several studies by H.J. Res. 409, would help markets avoid find that higher inflation or higher uncertainty distortions and imbalances, stabilize the business about inflation is associated with lower real cycle, and promote the highest sustainable growth. growth in our economy. Inflation adds risk to decisionmaking and retards long-term investments. Inflation causes people to invest scarce resources in activities Price Stability Maximizes Economic that have the sole purpose of hedging against Efficiency and Output inflation. Inflation interacts with the tax structure to stifle incentives to invest. A market economy achieves maximum produc- More evidence comes from the extreme cases, tion and growth by allowing market prices to the cases of hyperinflation. There we see that allocate resources. Money helps make markets economic performance clearly deteriorates with work more efficiently by reducing information high inflation. Both specialization and trade deand transactions costs, thus allowing for better cline as small firms go bankrupt and people decisions and improved productivity in resource return to home production for a larger share of use. Stabilizing the price level would make the goods and services. monetary system operate more efficiently and Even a relatively predictable and moderate would result in a higher standard of living for all rate of inflation can be quite harmful. During the Americans. Money is a standard of value. Much seven years of our economic expansion since of our wealth is held either in the form of money 1982, inflation has averaged between 3 and 4 or in claims denominated in and payable in percent. While that is low by the standards of the money. Money represents a claim on a share of 1970s, the purchasing power of the dollar has society's output. Stabilizing the price level pro- been reduced about 25 percent. Interest rates tects the value of that claim while inflation re- continue to include a premium for expected duces it. inflation and a premium for uncertainty about When we borrow, we promise to pay back the inflation. same amount with interest. When we allow un- Research at the Federal Reserve Bank of predictable inflation, we arbitrarily take from the Cleveland indicates that a fully anticipated inflalender and give to the borrower. When this tion, with no uncertainty about future inflation, condition persists, we create an environment in would reduce the capital stock through taxes on which interest rates rise once to accommodate capital income. Using 1985 as a benchmark and expected inflation and again to accommodate the using conservative assumptions, we have estiincreased risk involved in dealing with an uncer- mated that the interaction of an expected 4 tain inflation. When inflation rises and becomes percent inflation rate with the tax on capital uncertain, people are forced to develop elabo- income leads to a present value income loss in rate, complicated, and expensive mechanisms to the American economy of $600 billion or more. protect their wealth and income, such as new This is an amount much greater than the output accounting systems, markets for trading financial loss typically associated with recessions. This futures and options, and cash managers who estimate is from a policy of a perfectly anticispend all their time trying to keep cash balances pated 4 percent inflation and includes only the at zero. It would be inefficient to allow the length welfare loss associated with the failure to fully of a yardstick to vary over time, and it is ineffi- index taxes on capital income. It ignores the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 137 greater damage done to market efficiency by Even if we thought that eliminating the busimaking our monetary yardstick variable.1 ness cycle was a desirable and healthy long-term Even beyond these costs, I believe that infla- goal, I believe it is impossible to do so. There are tion diminishes productivity growth. Because the several reasons that prevent us from using monworldwide slowdown in productivity growth oc- etary policy to offset nonmonetary surprises. curred simultaneously with the acceleration in First, we cannot predict recessions. Second, inflation and the oil price shocks, the evidence is monetary policy does not work immediately or very difficult to sort out satisfactorily. But if I am predictably; it works with a lag, and the lag is correct in believing that inflation inhibits produc- variable and poorly understood. tivity growth, the present value of lost output from even a very small reduction in the trend of The Crystal Ball Syndrome productivity growth would far exceed the adjustment costs associated with the transition to price The limitations of economic forecasting are well stability. known. Analysis of forecast errors has shown that we often do not know that a recession has begun until it is well under way. At any point in THE LIMITATIONS OF MONETARY POLICY time, the range of uncertainty around economic forecasts of business activity for one quarter in A Fallacious Trade-Off: Inflation for the future is wide enough that both expansion Prosperity and recession are plausible outcomes. The people who make forecasts and those Unfortunately, over the years we have come to who use them often get a false sense of confibelieve that we can prolong expansion, or avoid dence because forecast errors are not distribrecession, with more inflation. A look at recent uted evenly over the business cycle. When the history reminds us that there is no trade-off economy is doing well, forecasts that prosperity between inflation and recession. Although we do will continue are usually correct. And when the not understand recessions completely, we have economy is performing poorly, forecasts that seen that they can be caused by monetary policy the slump will continue are also usually correct. actions as well as by nonmonetary factors. The problem lies in predicting the turning In the early 1980s we had recessions caused by points. However, the turning points are the monetary policy mistakes. The policy mistake things we must forecast to prevent recessions. was the excessive monetary growth of the 1970s, which allowed accelerating inflation and rising Monetary Policy's Long and Variable Lags interest rates and ultimately led to the need for disinflationary monetary policies. The disinfla- We do not know exactly how a particular policy tionary policies were necessary to get our econ- action will affect the economy. Macroeconomic omy back to an acceptable level of real activity. ideas about monetary policy and its effect on real Yet even today, we are apt to blame the reces- output have changed profoundly in the last decsions on policies that reduced inflation instead of ade, as we have recognized that the effect of blaming the policies that created the inflation to monetary policy depends importantly on how begin with. While recessions will occur even economic agents form and alter expectations under an ideal monetary policy, they will not be about policy. as frequent or as severe. With price stability, we Even if we could predict recessions and would not have recessions induced by inflation wanted to vary monetary policy to alleviate and the subsequent need to eliminate it. them, we still face an almost insurmountable problem—monetary policy operates with a lag. Moreover, the length of the lag varies over time, depending on conditions in the economy 1. David Altig and Charles T. Carlstrom, "Expected Inflaand on public perception of the policy process. tion and the Welfare Losses from Taxes on Capital Income," Federal Reserve Bank of Cleveland, February 1990. The effect of today's monetary policy actions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

138 Federal Reserve Bulletin • March 1990 will probably not be felt for at least six to nine THE IMPORTANCE OF ADOPTING months, with the main influence perhaps two to HOUSE JOINT RESOLUTION 409 three years in the future. The act of trying to prevent a recession may not only fail, but may Sound Policies Minimize Uncertainty also create a future recession—via an inflation—where otherwise there would not have Economic policies must have clear objectives, been one. verifiable outcomes, and rules that are consis- Economic agents, businessmen, and consum- tently adhered to in order to minimize uncerers alike do not act in a vacuum. The political tainty. Predictable, verifiable policies ensure that forces operating on a central bank make infla- long-term planning and resource allocation decition always a possibility. Uncertainty about sions will be efficient. Sound policy thus requires future inflation adds risk to future investments. a resolute focus on the long term and resistance Uncertainty about future inflation will raise real to policies that, while expedient in the short run, interest rates, drive investors away from long- introduce more uncertainty into an already unterm markets, and delay the very adjustments predictable world. If enacted, H.J. Res. 409 needed to end the recession. The more certain would make a valuable contribution to this impeople are about the stability of future mone- portant objective. tary policy, the more easily and quickly infla- In the long run, inflation is the one economic tion can be reduced and the economy can variable for which monetary policy is unambigrecover. uously responsible. The zero inflation policy called for in H.J. Res. 409 satisfies the key requirements of sound policy: It is clear, it is Lessons We Should Have Learned verifiable, and it has consistent rules. Unlike other rates of inflation, zero inflation is a policy If we have learned anything about economic goal that will be understood by everyone. policymaking in the last twenty years, we ought to have learned to think about policy as a dy- Responding to Multiple Goals namic process. To claim that "in order to reduce inflation, we must have a recession," is a wrong- The Federal Reserve Reform Act of 1977 headed notion that completely ignores the ability amended the Federal Reserve Act so that it now of humans to adapt their expectations as the requires the Federal Reserve "... to promote environment changes. effectively the goals of maximum employment, People do their best to forecast economic stable prices, and moderate long-term interest policies when they make decisions. If the rates." However, it is the Federal Reserve's central bank has a record of expanding the responsibility to decide how best to pursue those money supply in attempts to prevent reces- goals. sions, people will come to anticipate the policy, Because of the multiplicity of goals established setting off an acceleration of inflation and mis- by the Congress for the Federal Reserve, the allocation of resources that will lead to a reces- Federal Reserve can choose which goal it emphasion. sizes at any moment. Such discretion increases An economy often goes into recession after the likelihood that political and special interest an unexpected burst of inflation because people groups could try to influence the Federal Reserve have made decisions that were based on an to pursue the policy that is currently important to incorrect view of the future course of asset that group. prices and economic activity. The central bank In this respect, the Federal Reserve's situation can help prevent the need for such adjustments is different from that of West Germany's central by providing a stable price environment. More- bank, which is also independent. More than one over, price stability will be the optimal setting goal is specified by law for that bank, but German for adjustments in business inventories and bad law states that the goal of price stability is to be debts, should such adjustments be necessary. given highest priority whenever another goal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 139 might conflict with maintaining price stability. maintain a stable price level over time. Price This stipulation is a major reason why West stability is defined as an inflation rate so small Germany's price level only doubled between that it does not systematically affect economic 1950 and 1988, while the U.S. price level quadru- decisions. The definition may appear less specific pled. than some would like, but I believe that the Since current law requires the Federal Reserve decisions of economic agents will be very importo promote maximum employment, stable prices, tant in monitoring success in achieving price and moderate long-term interest rates, the Fed- stability. In practice, the size of the inflation eral Reserve must choose a viable strategy to premium estimated to be found in long-term accomplish this mission. Two approaches seem interest rates, surveys of the public's inflation plausible. expectations, and other market-generated mea- One approach would be for the central bank to sures of inflation expectations can be very useful. try to achieve a balance among its three congres- If policy is credible, both the inflation component sionally mandated objectives. The Federal Re- and the inflation uncertainty risk premium would serve could use its own judgment about what be eliminated from interest rates. Temporary and balance among the objectives to pursue, and unforeseen factors will cause the price level to could change that balance from time to time, deviate from the desired course. It would be a depending on its view of how the economy works mistake to try to keep some inflation index on and what course is broadly acceptable to the target each and every quarter, or even each and public. In essence, this is the practice that the every year. Federal Reserve has followed. It has strived to Price stability can be achieved by holding the balance desirable economic conditions such as money supply (as measured by M2) on or close to full employment, economic growth, and low a path that is consistent with price stability over long-term interest rates with low rates of infla- long periods. The relationship between money tion. But the major drawback to this approach is and the price level over long periods of time is its feasibility. To strike a balance among the stable and strong. However, the link between mandated goals requires that they be reliably money and the economy over periods perhaps as linked to one another. Furthermore, monetary short as a year is loose enough to afford the policy would need to be capable of influencing Federal Reserve considerable leeway in respondsimultaneously all these economic dimensions in ing to problems and crises—as long as economic the desired directions and quantities. agents believe that the future value of money will While monetary policy is capable of influ- be stable. Clearly, this resolution would not encing the economy in the short to intermediate prevent the Federal Reserve from providing lirun, over long periods of time monetary policy quidity in times of financial crises, such as the can only affect the rate of inflation. The rate of stock market crash in 1987. inflation, in turn, affects all dimensions of economic performance, including output, employ- Announcing a Commitment ment, and interest rates. Maximum production to Price Stability and employment and low interest rates can be achieved only with price stability. Announcement of a commitment to price stabil- By its very nature, a balancing act among ity, as embodied in H.J. Res. 409, would enhance complex economic goals causes substantial con- the ability of the Congress to hold the Federal fusion about the Federal Reserve's intentions. Reserve accountable for achieving the goal. Cen- Such confusion could be avoided to a large tral bank accountability is appropriate in a dedegree if the Congress or the Federal Reserve mocracy and, in fact, the Congress has the assigned priorities to the goals. ultimate authority to change the Federal Re- A more promising approach is to select one serve's goal. objective—the only one that the Federal Reserve A legislative commitment to price stability can influence directly. Under the provisions of would also enhance the Federal Reserve's inde- H.J. Res. 409, the Federal Reserve would seek to pendence from political pressures as it pursued Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

140 Federal Reserve Bulletin • March 1990 that goal. A commitment by the Congress to eryone believed that inflation would be reduced price stability would reduce the effectiveness of to zero, and planned accordingly, these costs political pressure to deviate from that goal. Thus, would be very low. The Federal Reserve has a distinction can be made between a central bank stated that it intends to reduce inflation to zero or that is accountable for long-run performance and to low levels, but it has not committed to a a central bank that can be influenced to pursue specific timetable for eliminating inflation, or to a short-run goals that might be incompatible with plan for doing so. The result is that the public in desirable long-term economic performance. general and the markets in particular wonder just The commitment to price stability supported how serious we are in those intentions, or by a legislative mandate would foster the credi- whether we will switch our priorities to some bility of the Federal Reserve. Improving the other goal, as we have in the past. Federal Reserve's credibility would strengthen the expectation that prices will be stable and Large-Scale Econometric Model Estimates would contribute to price and wage decisions of the Transition Cost that would make price stability easier to achieve and maintain. Economists have not made much progress in estimating the transition costs of eliminating inflation. Frequently, econometric models that em- ARGUMENTS AGAINST ADOPTING HOUSE body a large number of complex relationships JOINT RESOLUTION 409 ARE WEAK and variables are used to estimate the adjustment costs. For manageability, econometric models What About the Transition Costs? are built with many simplifying assumptions, one of which is the presumption that economic agents A commitment by the Congress and the Federal are backward looking in the way they form and Reserve to achieve price stability would entail change expectations. In these models, expectaadjustment costs. Adjustment costs would arise tions, which in effect determine adjustment from two sources: contractual obligations and costs, are formed from past experience, and are the credibility problem, or uncertainty about changed only slowly as the future unfolds. The whether price stability would be achieved and presumption that expectations change only maintained. The contractual costs can be allevi- slowly inevitably generates estimates of high ated with an appropriate adjustment period. H.J. transition costs. The real question about a Res. 409 recognizes that abrupt policy changes change in policy as specified by H J. Res. 409 is can be disruptive and provides a phase-in period how forward-looking economic agents would beto help reduce adjustment costs. have under a fully credible and fully understood Much of our day-to-day economic activity is policy change. Backward-looking models are relconducted under contracts and commitments atively useless in answering this question. that extend over longer periods of time and that In almost every case, such models are conembody the expectations of a continuing moder- structed to display the effects that are consistent ate inflation rate. Most of these contracts will with the model builder's theories and biases. expire in the next few years. The disruption to Almost all of the large models are based on the business and the arbitrary wealth redistribution dual notion that the only way to eliminate inflaof an abrupt adjustment to price stability would tion is to raise the unemployment rate. Naturally, be greatly reduced by an appropriate phase-in these models will find that eliminating inflation is period. H.J. Res. 409 gives us five years to get to very costly. These exercises have been conprice stability—a period long enough to reduce ducted many times in the past, and they have substantially the transition costs. consistently overestimated the costs of eliminat- The second set of adjustment costs emanates ing inflation and ignored the benefits of doing so. from the expectations of economic agents. As the I might also observe that those who really believe Congressional Budget Office (CBO) points out in the analytical structures contained in these modits recent Economic and Budget Outlook, if ev- els logically should advocate an acceleration of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 141 inflation because the models would predict great result from fiscal policy; indeed, it can only add benefits from doing so. to those costs. One member of the Council of Economic We are all familiar with the argument that Advisors, an expert on such matters, has devel- large federal budget deficits cause high interest oped large econometric models with sluggish rates, forcing the Fed to ease monetary policy resource adjustment induced by labor con- to keep interest rates at levels consistent with tracts. Even in these models, there is almost no full employment. This argument ignores the fact short-run cost to eliminating inflation with a that both the federal budget deficit and, more credible policy change. The reason is simply important, government spending, at least meathat, in these models, people are assumed to sured relative to the economy, have been falling change their behavior in response to the policy for the past several years and should continue change. to do so. As the CBO study states, "inflation could be There is, of course, legitimate concern that reduced relatively painlessly by lowering infla- the progress in deficit and expenditure reductionary expectations." A commitment by the tion might cease or even be reversed, for any Congress and the Federal Reserve would en- number of reasons. How should such a reversal hance credibility and convince economic agents influence monetary policy? Even if fiscal policy to begin to base decisions on gradual elimina- choices were to put upward pressure on interest tion of inflation over a five-year period. The rates, and there is little consensus among econtransitional costs presented elsewhere in the omists that this is the case, it is far from clear CBO study then would be grossly overesti- that the Federal Reserve can do anything to mated. alleviate the economic consequences of that A consistent commitment to a long-run policy problem. Ultimately, it is real interest rates that goal of price stability is important. One of the affect the consumption and production deciworst things we could do is to eliminate inflation sions of individuals and businesses and the for a while and then return to high inflation later. allocation of resources over time. Real rates of H.J. Res. 409 would contribute to an important return are based on the productivity of labor, change in the policy process, focusing it toward capital, and other real assets in a society, and consistent long-run goals and away from reac- have very little, if any, connection with monetions to each new report of economic activity. tary policy. Each policy action would become part of a policy In an inflationary environment, nominal rates process that is consistent with long-run price of return include an inflation premium to comstability. pensate lenders for being repaid in money of reduced purchasing power. The correlation between monetary policy and nominal interest rates Fiscal Policy Is No Obstacle that dominates discussion in the financial press to Price Stability tells us next to nothing about the relationship between monetary policy and the real interest Federal budget deficits should not compromise rates that govern the allocation of resources over either the Federal Reserve's goal of price sta- time. Every movement in the federal funds rate bility or the adoption of a specific timetable to does not produce equivalent changes in real achieve it. I do not mean to suggest or imply interest rates, in the productivity of our capital that current fiscal policy is ideal, appropriate, stock, or in any of the other important real or the result of bad monetary policy. Savings variables that affect economic activity. The fact are too low, at least partly because of budget that monetary policy exerts relatively direct condeficits, and measures to address our savings trol over the federal funds rate does not imply shortfall must include measures to reduce the that real interest rates can, similarly, be condeficit. However, while we strive for better trolled by monetary policy. fiscal policy, we should recognize that mone- It is unnecessary and undesirable for sound tary policy cannot offset whatever harm may monetary policy choices to await sound fiscal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

142 Federal Reserve Bulletin • March 1990 policy choices. Sound fiscal policy decisions, like policy change will be outweighed by the benesound private economic decisions, require the fits. These benefits will be large and permanent, stable inflation environment that H.J. Res. 409 and will far outweigh the costs of getting there. would direct the Federal Reserve to provide. The H.J. Res. 409, if enacted, would be a milestone tax-related distortions and economic complexi- in economic policy legislation because it would ties associated even with stable, positive rates of shift the focus of monetary policy away from inflation argue strongly for price stability. short-term fine tuning to the long term, where it belongs. It would enforce accountability for the one vital objective that the Federal Reserve can achieve. It would officially sanction those CONCLUSION sometimes unpopular short-run policy actions that most certainly are in our nation's long-term If H.J. Res. 409 is enacted and the Federal interest. It would make clear that the Federal Reserve commits to an explicit plan for price Reserve cannot achieve maximum output and stability, the transition period will soon be employment without achieving price stability. I over, and any costs that arise because of this fully support House Joint Resolution 409. • Statement by Robert P. Black, President, Fed- THE CASE FOR MAKING PRICE STABILITY eral Reserve Bank of Richmond, before the Sub- THE OVERRIDING OBJECTIVE OF committee on Domestic Monetary Policy of the MONETARY POLICY Committee on Banking, Finance and Urban Affairs, U.S. House of Representatives, Feb- The case for making price stability the primary ruary 6, 1990. objective of monetary policy is a compelling one. First, inflation imposes pervasive costs on our society, especially if it is not anticipated. Infla- I am delighted to be here today to testify in tion distorts the signals that prices send in our favor of House Joint Resolution 409, which market economy, which leads to serious ineffiwould instruct the Federal Reserve to achieve ciencies in the allocation of resources. These price stability within five years. I believe that distortions and inefficiencies reduce the long-run passage of the resolution by the Congress rate of growth of the economy below its full would significantly improve the overall frame- potential. In a similar way, inflation disrupts the work in which monetary policy is conducted functioning of our financial markets and on baland increase our chances of achieving price ance discourages saving and investment. Morestability and steady economic growth in the over, its volatility increases the risk associated years ahead. with particular business decisions. Finally, infla- I have been associated with the Federal Re- tion redistributes income and wealth in arbitrary serve Bank of Richmond for more than thirty-five ways, which creates dissatisfaction within the years and have attended at least some of the social and economic groups whose incomes and meetings of the Federal Open Market Committee wealth are adversely affected. for about thirty of those years. For seventeen Although many of these costs are hard to years, I have been the Richmond Bank's official measure, there is good reason to believe that representative at those meetings. My work with they are significant in the aggregate. First, there the Committee has convinced me that price sta- is a negative correlation between inflation and bility should be the primary long-run objective long-term economic growth across different for monetary policy and that the Federal Reserve countries. Second, our citizens have repeatedly can make its greatest contribution to the eco- made it clear that they strongly dislike inflation. nomic health of our country through pursuit of Finally, persistently high rates of inflation in that objective. peacetime in the United States have frequently Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 143 been associated with relatively low rates of real One problem that the Federal Reserve faces economic growth. in conducting monetary policy currently, in my Inflation is still a major problem today, despite view, is that our mandate is too broad. A clear the belief in some quarters that it has been and attainable objective is a necessary condiconquered. It disturbs me to hear people talk as tion for the success of any policy strategy. if inflation were dead when we have been expe- Unfortunately, current law does not provide the riencing an underlying inflation rate of about 4 to Federal Reserve with such an objective. In- 4Vi percent. The current rate is clearly an im- stead, our current mandate instructs us to conprovement over the very high rates prevailing in sider a wide range of economic conditions in the late 1970s and early 1980s, but it is not a carrying out monetary policy. Specifically, Secparticularly low rate when judged by longer-run tion 2A of the Federal Reserve Act requires the historical standards. As you may know, the System to take account of ". . . past and proconsumer price index rose at an average annual spective developments in employment, unemrate of 1.5 percent between the end of the Korean ployment, production, investment, real income, War and 1965. What is now considered by some productivity, international trade and payments, to be moderate inflation was regarded as an and prices. . . ." in setting its annual objecintolerable condition only a few years ago. Pres- tives for the growth of the monetary and credit ident Nixon imposed a comprehensive price and aggregates. wage control program on the economy in August A mandate that instructs the Federal Reserve 1971 when the rate of inflation was even lower to consider such a broad range of economic than the rates of recent years. conditions may not be the strongest foundation Moreover—and I believe that this is one of the for an effective strategy for monetary policy. critical issues addressed by the resolution—infla- Faced with the requirement to take account of all tion may well reaccelerate in the absence of a these conditions, policy choices necessarily are clear signal to the public that the Congress fully made in a discretionary manner that gives subsupports the Federal Reserve's commitment to stantial weight to current economic and financial reduce it further. As we all know, the System is conditions and prospects for the near-term fuunder constant pressure to "do something" with ture. This approach to policy fosters the notion monetary policy in the short run to improve the that the Fed can fine-tune the economy even economy's performance or deal with some other though both actual experience and much of the current problem. In the past such pressures most important recent research in macroeconomhave, at times, led the System to take actions ics argue persuasively to the contrary. It also that have eventually contributed to an accelera- encourages special interest groups to try to prestion of inflation. There is obviously a risk that sure the System to pursue the particular goals history will repeat itself unless an effort is made they consider important. These circumstances to reduce these pressures. tend to impart an inflationary bias to monetary I say this even though I believe that the present policy. members of the Federal Open Market Committee The resolution would help us overcome these as a group are especially strongly committed to problems by specifying clearly a single, feasible fighting inflation and that the public still has vivid objective for monetary policy and instructing the memories of the rampant inflation of the late Federal Reserve to achieve that objective. Price 1970s and early 1980s. The composition of the stability is obviously an appropriate objective for Federal Open Market Committee will change, any central bank. Further, it is a feasible objecand the memories of double-digit inflation will tive since there is no question that the System gradually fade, but the pressures on the Federal can achieve price stability over the long run by Reserve to make its monetary policy decisions controlling the rate of growth of the monetary on the basis of short-run considerations without aggregates. adequate regard for the long-run inflationary con- Moreover, I believe price stability is really the sequences of these decisions will surely persist in only feasible objective for monetary policy. the years ahead. Some might argue that increasing long-run eco- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

144 Federal Reserve Bulletin • March 1990 nomic growth or fine-tuning economic activity in necessarily influenced by numerous other conthe short run are alternative objectives. Most siderations. Passage of the resolution would send economists now agree, however, that the long- an unambiguous signal to the public and the run rate of real economic growth is determined financial markets that price stability is the overby nonmonetary factors such as population riding goal of the Federal Reserve. The credibilgrowth, increases in productivity, and the rate of ity of the System's efforts to reduce inflation saving and investment. Accordingly, most con- would therefore rise. This increased credibility clude that expansionary monetary policies can would, in turn, lower the public's expectations of raise the growth rate only temporarily, if at all. future inflation because these expectations would There is also a growing consensus that the Sys- be less influenced by the relatively high inflation tem could make its greatest contribution to long- rates in the recent past. Further, lower expected run economic growth by fostering price stability inflation would tend to reduce the costs of so that economic decisions could be made on the achieving price stability in terms of any tempobasis of reliable information on both current and rary loss of output and employment. This reducfuture prices. tion would occur, in part, because producers, There also is very little evidence that the when faced with monetary restraint, would be Federal Reserve can use monetary policy to fine- more inclined to reduce prices, or raise them at a tune the economy in the short run. Monetary slower pace, and less likely to reduce output and policy affects the economy with both long and employment. Similarly, workers would be more variable lags. These lags, in conjunction with the inclined to restrain their wage demands. It is inability of economists to forecast future eco- worth emphasizing that a truly clear and unamnomic conditions with much confidence, make it biguous congressional mandate to eliminate invery difficult for the System to determine what flation would play a vital role in this process. policy actions it should take today to produce a particular result at some point in the near-term future. Moreover, as I indicated earlier, focusing RESPONSES TO SOME LIKELY ARGUMENTS too narrowly on relatively short-run economic AGAINST THE RESOLUTION conditions tends to give monetary policy an inflationary bias. This is not to say that the The major arguments that will be made against Federal Reserve should ignore extraordinary the resolution are fairly predictable, and I would events such as the stock market crash in October like to say a few words about them. One argu- 1987. But, as I believe we demonstrated in late ment obviously concerns the potential transi- 1987, the System can react to such shocks to the tional cost of implementing the resolution. Speeconomy without weakening its long-run com- cifically, some will argue that trying to eliminate mitment to price stability. inflation altogether would risk a recession. It is One might argue, of course, that price stability impossible to predict the future, so we cannot has always been one of the System's primary dismiss this argument out of hand. In evaluating objectives and therefore that the resolution is not the argument, however, we should not simply needed since it simply instructs the Federal Re- extrapolate from our experience in dealing with serve to seek an objective it is already pursuing. past inflationary episodes such as the ones in I strongly disagree with this view. Despite our 1973-74 and 1979-81. In those periods, the Sysbest intentions, prices have not yet stabilized, as tem acted forcefully in a crisis atmosphere to evidenced by the fourfold increase in the price reduce the rate of inflation over a short period of level since 1964. Moreover, surveys of expected time and economic activity contracted sharply. inflation consistently indicate that the public In contrast, H.J. Res. 409 would require a graddoes not expect the Federal Reserve to make ual reduction in inflation over a relatively long much further progress in reducing inflation in the period of time following an extended period in future, let alone achieve price stability. Confi- which substantial progress has already been dence in the System's commitment to price sta- made. As I indicated earlier, there is good reason bility suffers because its policy decisions are to believe that passage of the resolution would Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 145 enable us to achieve such a reduction in inflation provided strong evidence that the public's total with relatively small costs to the economy. demand for balances included in the monetary Moreover, it is very important to weigh any aggregate, M2, has remained stable since the early short-run costs of achieving price stability as 1950s, despite the substantial amount of financial provided by the resolution against the longer-run innovation in recent years. This innovation has costs of not achieving it. These latter costs could affected the behavior of the components of M2, be particularly great if, at some future time, the but it has had little effect on the behavior of total Federal Reserve were forced to follow policies M2. Consequently, the velocity of M2, which is resulting in a recession in order to rein in an simply current-dollar GNP divided by M2, has not accelerating rate of inflation. exhibited any trend either upward or downward in A second possible argument against H.J. Res. this period. This constancy in the velocity of M2 409 is that it would prevent the Federal Reserve over time implies that the System could bring the from reacting appropriately to unanticipated trend rate of inflation to zero within a five-year "shocks" to the economy, such as the stock period by gradually lowering the trend rate of market crash in October 1987. As I suggested a growth of M2 to the longer-run potential rate of moment ago, however, there is simply no reason growth of real GNP. why shocks that may affect the System's actions It is worth noting that implementing the resoin the short run should prevent us from achieving lution would not require any major change in the price stability over a period as long as five years. Federal Reserve's operating procedures, since This would be especially true if the policy had we already set annual targets for M2 and ancredibility in the eyes of the general public and nounce them to the Congress. Under the resolufinancial market participants, as I believe it tion we would simply have to reduce these would if the resolution were enacted. In evaluat- targets gradually and persistently until they deing this argument, it is also important to distin- clined to the trend rate of growth of real GNP, guish between temporary adjustments in our which is probably somewhere in the neighborpolicy instruments or intermediate targets and hood of 2Vi to 3 percent a year. changes in our ultimate policy objectives. Ad- One fairly straightforward change in our projustments in our policy instruments or interme- cedures that I would favor would be to establish diate targets do not require us to alter our long- multiyear targets for M2 rather than the one-year run objectives. Following the stock market crash targets we currently set. Under the current proin 1987, for example, the System temporarily cedure, growth in M2 above or below the target supplied additional reserves to meet the greater for a given year is effectively forgiven at the end demand for liquidity induced by the crash, but of the year. Thus, the base for the next year's this action did not change our longer-run policy target is the actual level of M2 at the end of the goals. current year rather than the targeted level. As a result of this "base drift" in M2, the price level can drift up or down over time even though the IMPLEMENTATION OF THE RESOLUTION individual annual M2 targets may be consistent with a zero rate of inflation. Consequently, I A final question regarding H.J. Res. 409 concerns believe that the likelihood of achieving true longhow it would be implemented. I realize that the run price stability would be increased if we resolution leaves this matter to the Federal Re- eliminated base drift by setting a multiyear path serve. Nevertheless, in evaluating the resolution I for M2. think it is important to appreciate that from a This last point raises a corresponding point technical standpoint the System is quite capable regarding how, in practice, the System would of achieving price stability over a five-year period pursue the price stability objective mandated by and that pursuing this objective would require at the resolution. One approach would be to seek to most minor changes in our current procedures. hold the price level at a particular permanent Recent research both at the Board of Governors level on average over the long run. A second and at the Federal Reserve Bank of Richmond has approach would be to try to maintain the price Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

146 Federal Reserve Bulletin • March 1990 level at its current level at any point in time CONCLUSION irrespective of any past movements in the level. Under the first approach, the System would act In conclusion, I strongly support H.J. Res. 409 to bring prices back to their permanent target and its objective of achieving price stability in level if they moved away from that level in five years. The costs of the persistent inflation in response, for example, to an unanticipated this country are substantial. Without a significant change in M2 velocity. Under the second ap- change in the framework in which monetary proach, the System would not attempt to offset policy decisions are made, inflation is likely to the one-time effects of such shocks on the price continue to be a serious problem in the years level, but would simply try to hold the price level ahead, and it is entirely possible that the rate of at its then current level. We prefer the first inflation could reaccelerate. H.J. Res. 409 goes approach, although we recognize that it might to the heart of the policy problem, which stems take considerable time to reattain the permanent to a large extent from the Federal Reserve's objective in some instances in order to avoid overly broad current mandate. Price stability significant transitory disruptions to real eco- can, and should, be the overriding objective of nomic activity. Under the second approach, the monetary policy. Achieving and maintaining price level would almost certainly change perma- price stability is the best contribution monetary nently from time to time, and it is not unreason- policy can make to the successful performance of able to expect that political and other pressures the economy over the long run. • would tend to bias these movements upward. Statement by Robert T. Parry, President, Fed- Federal Reserve must consider the transitory eral Reserve Bank of San Francisco, before the effects of its actions on the business cycle, it Subcommittee on Domestic Monetary Policy of should orient its efforts mainly around the single the Committee on Banking, Finance and Urban variable it can control in the long run—the rate of Affairs, U.S. House of Representatives, Febru- inflation. ary 6, 1990. Federal Reserve officials have made it clear that achieving price stability is the long-term I am Robert Parry, President of the Federal goal of the System. H.J. Res. 409 would assist Reserve Bank of San Francisco, a position I have us in pursuing a credible and consistent antiheld since early 1986. I am pleased to speak on inflation policy by providing a statement from House Joint Resolution 409. Over all, I strongly the legislature that we should focus primarily on endorse the resolution—the Federal Reserve achieving that one attainable goal within a specshould gear monetary policy toward gradually ified period of time. Without this support, there eliminating inflation and maintaining price stabil- is the danger that the pursuit of the long-term ity thereafter. inflation goal could be unduly delayed because of pressure to respond to short-run, business- Since inflation is a monetary phenomenon, the cycle considerations.1 central bank is uniquely suited to control inflation in the long run. Monetary policy also can Eliminating inflation would help to promote have significant transitory effects on the produc- the highest possible standards of living for U.S. tion of goods and services. As a result, I believe residents and greater prosperity around the world. The magnitude of the costs of inflation, in that there is a role for countercyclical monetary terms of lost output and employment, are notopolicies, although the difficulty of forecasting future economic developments limits the extent to which the Federal Reserve can effectively engage in such policies. More important, mone- 1. For a discussion of the role of a monetary policy rule in combating inflation, see Robert J. Barro, "Recent Developtary policy cannot have any direct control over ments in the Theory of Rules Versus Discretion," Supplereal variables in the long run. Thus, although the ment to Economic Journal (1986), pp. 23-37. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 147 riously difficult to estimate.2 However, these most likely would be large. Unfortunately, calcosts almost surely are large. culations of the costs of eliminating inflation also The most worrisome of these costs stem from are problematic. uncertainty about future prices, which under- An upper limit to these costs can be obtained mines the ability of our market system to func- from the so-called Phillips curve, which relates tion efficiently. Price stability would reduce the inflation to the actual unemployment rate, an risk and uncertainty that have hampered long- estimate of the unemployment rate consistent term planning and contracting by business and with the economy operating at full capacity, and labor and that have reduced capital formation by an estimate of expected inflation. The latter raising the risk premia in long-term interest rates. estimate generally is based on an assumption that Moreover, price stability would lead to the the public's expectations adjust gradually to past avoidance of the many arbitrary transfers of observations of inflation. wealth and income that occur when the general The Phillips curve suggests that the short-run price level changes unexpectedly and thus would costs of reducing inflation are relatively high, reduce wasteful hedging activity designed to pro- largely because it assumes that inflation expectatect against these transfers. Eliminating inflation tions are slow to adjust to the introduction of an also would avoid confusion between absolute anti-inflation regime. For example, work at the price changes and movements in relative prices, Federal Reserve Bank of San Francisco on this which can lead to inefficient economic decisions relationship suggests that a recession is not necby businesses and households.3 essary to reduce inflation from approximately 4l/z The foregoing comments make it clear that I percent now to zero percent in 1994. The unemstrongly support the message of H.J. Res. 409. I ployment rate would need to rise a maximum of also have the following comments on its more about l3/4 percentage points above an estimated 5 specific features. to 6 percent "full-employment" rate.4 At the same time, real GNP growth would need to slow from 1 to 2 percent per year below what it would LENGTH OF THE TRANSITION PERIOD otherwise have been during the five-year transition period. Few would disagree that the elimination of infla- Two points about these estimates are worth tion is a desirable goal for the Federal Reserve. emphasizing. First, the costs would be transitory The issues center on the costs of achieving the only. In the long run, there is no trade-off begoal and on how large these costs are relative to tween inflation and unemployment. Thus, once the benefits. As I mentioned earlier, it is difficult inflation were eliminated, real GNP could go to produce reliable estimates of the gains in back to its long-run potential path, and the unoutput and employment that would accrue from employment rate to its "full-employment" level. price stability, although my judgment is that they The benefits of price stability, however, would continue indefinitely. Second, the figures represent average historical relationships over the past 2. For more formal discussions of the costs of inflation, see twenty-five years and should be taken only as Stanley Fischer, "Towards an Understanding of the Costs of very rough guidelines for the costs of implement- Inflation: II," in Karl Brunner and Allan H. Meltzer, eds., The Costs and Consequences of Inflation, Carnegie-Roch- ing the resolution //inflation expectations were to ester Conference Series on Public Policy, vol. 15 (Amster- adjust only gradually. dam: North-Holland, 1981), pp. 5-41; and Michelle R. It seems highly likely, however, that the costs Garfinkel, "What Is an 'Acceptable' Rate of Inflation?—A Review of the Issues," Federal Reserve Bank of St. Louis, would be smaller than this. Rather than adapting Review, vol. 71 (July/August 1989), pp. 3-15. 3. For example, an individual firm may speed up its production schedule because it finds that it can command a higher price for its product, only to subsequently find out that 4. For a discussion of how estimates of this type are made, the prices of its materials and other inputs also have risen see Laurence H. Meyer and Robert H. Rasche, "On the (along with the aggregate price level). By mistaking inflation Costs and Benefits of Anti-Inflation Policies," Federal Refor a rise in the demand for its product, the firm makes an serve Bank of St. Louis, Review, vol. 62 (February 1980), pp. inefficient production decision. 3-14. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

148 Federal Reserve Bulletin • March 1990 solely to declines in observed inflation, as as- believes the central bank's anti-inflation policy to sumed in the Phillips curve analysis, the public's be credible.8 I believe that the resolution as expectations of inflation probably would adjust proposed would help in this regard, but I also directly in response to the implementation of the recognize the possibility that achieving zero innew anti-inflation regime itself. This direct re- flation in five years might involve high transisponse might become quite strong over perhaps tional costs. We will only know for sure as such two to three years, as it became apparent that the a policy is being carried out. However, I do not Federal Reserve, with legislative support, indeed favor lengthening the transition period because was acting to eliminate inflation. the resolution's credibility, and thus its impact, Unfortunately, there appears to be little histor- would be diluted if the time limit were too far in ical evidence available that would provide a the future. reliable estimate of how strong the direct response might be. There is evidence that sweeping institutional changes put in place to limit hyper- PRICE STABILITY OR INFLATION STABILITY inflations have had dramatically beneficial effects, but the relevance of these experiences to There appears to be some ambiguity in the wordmoderate inflation is remote.5 In fact, there is ing of the resolution concerning what the Federal evidence that expectations did not respond di- Reserve would be required to do once zero rectly to the October 1979 change in Federal inflation is achieved: Should it aim at a constant Reserve monetary policy procedures.6 However, price level over time (price level stability) or at I seriously doubt that this experience is particu- zero inflation over time (inflation stability)? This larly relevant to the question at hand. The an- distinction would become important after an unnouncement of a policy change by the central anticipated price level change. A stable price bank itself will not carry as much credibility as level objective would require that a period of the same announcement initiated and supported deflation (inflation) follow a positive (negative) by a resolution of the legislative body. Moreover, price level shock. As a consequence, this apthe Federal Reserve has much more credibility as proach might imply a high level of volatility in an inflation fighter today than it did in the period short- to intermediate-run inflation. of double-digit inflation at the beginning of this Alternatively, a zero-inflation objective would decade.7 Finally, as noted by others, I also allow the price level to be permanently affected believe that the attainment of price stability by a price level shock, while monetary policy would be expedited if such a monetary policy would be geared toward permitting no further were supported by other policy actions, such as change in prices: that is, zero future inflation. a credible elimination of the federal deficit. This approach, by accommodating past price There is general agreement within the econom- level movements, would involve less short-term ics profession that the costs of reducing inflation volatility in inflation, but would permit more are closely tied to the degree to which the public long-run inflation or deflation if shocks or policy errors tended to be one-sided. I personally prefer a policy of price level stabil- 5. See Thomas J. Sargent, "The Ends of Four Big Inflaity. First, in my view, the costs of inflation that I tions," in Robert E. Hall, ed., Inflation: Causes and Effects (University of Chicago Press for the National Bureau of discussed earlier relate more closely to uncer- Economic Research, 1982), pp. 41-97. tainty about the long-run price level than to short- 6. See Benjamin M. Friedman, "Lessons on Monetary Policy from the 1980s," Journal of Economic Perspectives, vol. 2 (Summer 1988), pp. 51-72. 7. In recent years, long-term interest rates have not risen 8. For a discussion of the conceptual basis for this view, very much when tighter monetary policies have led to higher see Keith Blackburn and Michael Christensen, "Monetary short-term interest rates. This development suggests that Policy and Policy Credibility: Theories and Evidence," Jourfinancial market participants believed that recent periods of nal of Economic Literature, vol. 27 (March 1989), pp. 1-45; tighter monetary policy would be successful in controlling and Alex Cukierman, "Central Bank Behavior and Credibilinflation. See Frederick T. Furlong, "The Yield Curve and ity: Some Recent Theoretical Developments," Federal Re- Recessions," Federal Reserve Bank of San Francisco, serve Bank of St. Louis, Review, vol. 68 (May 1986), pp. Weekly Letter, March 10, 1989. 5-17. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to Congress 149 run inflation volatility.9 Moreover, the credibility DEFINITION OF PRICE STABILITY of a zero-inflation goal probably would be less than that of a price-level goal. Permitting the price For the reasons just given, there may be some level to drift (upward) under a zero-inflation goal flexibility needed in the implementation of policies inevitably would raise questions in the minds of designed to achieve price stability. Thus, I supthe public as to whether the Federal Reserve was port the concept of a functional definition instead serious about controlling inflation or instead was of a specific numerical target. It might be argued losing control of long-run inflation through a series that a numerical target would enhance the crediof "one-time" price-level adjustments. bility of the objective, since the public then could Finally, there is nothing to be gained, and a lot measure Federal Reserve performance against a to be lost, by permitting the price level to drift published standard. However, it would be difficult over the long run. Permitting this drift in re- to define, in advance, a specific numerical target sponse to the influences of fiscal and monetary that reasonably could be adhered to over a long policies obviously would defeat the purpose of period of time into the future. the resolution. In my view the appropriate re- First, there would be a great deal of debate over sponse to a supply shock, such as the oil em- which particular price index to target, and all bargo of the mid-1970s, also is to maintain price indexes most likely will not exhibit zero rates of stability in the long run. Following such a shock, change when "price stability" is achieved. Secreal GNP inevitably must fall to reflect the de- ond, there may be upward biases in the price cline in long-run potential output. This decline in indexes because they may not adequately adjust output will occur no matter where the price level for improvements in the quality of goods and eventually ends up, and thus there is nothing to services. This difficult-to-estimate bias should be gain by allowing prices to rise in the long run. reflected in a change in the price index that is There are, however, short-run problems to con- greater than zero, but it would be difficult to sider. For example, a recession could result from estimate the appropriate size of the adjustment.10 attempts by the Federal Reserve to hold the price Third, a specific numerical target would reduce level constant immediately after a large oil price Federal Reserve flexibility in responding to relashock. This example shows why it is important for tive price shocks. I already have discussed how the Federal Reserve to have some flexibility in an inflexible approach in such circumstances implementing the requirements of the resolution. could lead to undesirable effects on economic "Draconian" effects on economic activity could activity. be avoided by permitting some inflation for a time Of course, relying on a functional definition of in the wake of the oil shock. The potential damage price stability inevitably will lead to some debate done by price-level uncertainty simultaneously over how the Federal Reserve's performance could be avoided by monetary policies designed stacks up against its objective. This judgment to produce a subsequent period of gradual defla- will depend on the evaluation of a large number tion until the price level returned to its original of different price indexes. Other considerations level. Such an approach, once it became credible also could play a role. Does a recent supply with the public, would remove the long-run uncer- shock justify the inflation observed in a given tainty about the price level that damages the year? Have there been significant biases in price performance of the economy. 10. See Paul A. Armknecht, "Quality Adjustment in the 9. The one exception may be the problem of confusing CPI and Methods to Improve It," in Proceedings of the price level and relative price movements in making economic Business and Economic Statistics Section (American Statisdecisions. This cost of inflation may be exacerbated more by tical Association, August 13-16, 1984), pp. 57-63; Martin a price level target than by an inflation target because the Neil Baily and Robert J. Gordon, "The Productivity Slowformer would involve greater volatility in short-run inflation. down, Measurement Issues, and the Explosion of Computer However, this cost of inflation may be among the least Power/'Brookings Papers on Economic Activity, 1988:2, pp. onerous on my list, since information is readily available to 347-431; and Robert J. Gordon, The Measurement of Durabusinesses and individuals on the general price level each ble Goods Prices (University of Chicago Press for the Namonth. tional Bureau of Economic Research, forthcoming). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

150 Federal Reserve Bulletin • March 1990 indexes because of mismeasurement of quality CONCLUSION change? These issues can be discussed and evaluated in the context of the Federal Reserve's To sum up, I enthusiastically support H.J. Res. semiannual policy report to the Congress, as 409. Eliminating inflation would be the most specified in H.J. Res. 409. significant contribution that the Federal Reserve Although this process may not alleviate every- could make to the attainment of the highest one's concerns, I would like to point out that possible standards of living in the United States specifying a numerical target that later had to be and around the world. H.J. Res. 409 can assist modified in view of unforeseen events might the Federal Reserve in attaining this goal by damage credibility more than acknowledging the stating that we should design policies to eliminate need to retain some flexibility and judgment. inflation within a prescribed deadline. Once this Moreover, I am confident that credibility will goal is achieved, I believe that monetary policy develop as the evidence emerges that Federal should be geared toward maintaining a stable Reserve policy actions actually are being guided price level, so that businesses and individuals do by the resolution, and as the economy moves not need to be concerned about long-run inflation toward price stability. in making their economic decisions. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

151 Announcements NEW MEMBERS NAMED Kathleen E. Keest Staff Attorney TO CONSUMER ADVISORY COUNCIL National Consumer Law Center, Inc. Boston, Massachusetts The Federal Reserve Board named on January 25, 1990, eight new members to its Consumer Colleen D. McCarthy Executive Director Advisory Council to replace those members Kansas City Neighborhood Alliance whose terms have expired and designated a new Kansas City, Missouri chairman and vice chairman of the council for 1990. Bernard F. Parker, Jr. Executive Director The Consumer Advisory Council was estab- Community Resource Projects lished by the Congress in 1976, at the suggestion Detroit, Michigan of the Board, to advise the Board on the exercise of its duties under the Consumer Credit Protec- Nancy Harvey Steorts President tion Act and on other consumer-related matters. Nancy Harvey Steorts & Associates The thirty-member council meets three times a Dallas, Texas year. William E. Odom, Chairman of the Board of The other members of the Council are the followthe Ford Motor Credit Company in Dearborn, ing: Michigan, was designated chairman of the council, and James W. Head, Executive Director of George H. Braasch Corporate General Counsel the National Economic Development and Law Spiegel, Inc. Center in Berkeley, California, was designated Oakbrook, Illinois vice chairman. Betty Tom Chu The eight new members, named for staggered, Chairman three-year terms, are the following: Trust Savings Bank George C. Galster Arcadia, California Professor of Economics The College of Wooster Cliff E. Cook Wooster, Ohio Vice President and Compliance Officer Puget Sound National Bank E. Thomas Garman Tacoma, Washington Professor of Consumer Studies College of Human Resources Jerry D. Craft Virginia Polytechnic Institute Senior Vice President and State University First National Bank of Atlanta Blacksburg, Virginia Atlanta, Georgia Michael M. Greenfield Donald C. Day Professor of Law President Washington University New England Securities Corp. St. Louis, Missouri Boston, Massachusetts Deborah B. Goldberg R.B. Dean, Jr. Reinvestment Specialist on the Neighborhood Administrator of Community and Consumer Revitalization Project Affairs Center for Community Change South Carolina National Bank Washington, D.C. Columbia, South Carolina Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

152 Federal Reserve Bulletin • March 1990 William C. Dunkelberg David B. Ward Dean of the School of Business & Management Consultant Temple University Beneficial Management Corp. Philadelphia, Pennsylvania Chester, New Jersey James Fletcher Lawrence Winthrop President and Director President South Shore Bank of Chicago Consumer Credit Counseling Services Chicago, Illinois of Oregon, Inc. Portland, Oregon Robert A. Hess President and General Manager Wright Patman Congressional Federal Credit Union NEW MEMBERS APPOINTED TO THRIFT Washington, D.C. INSTITUTIONS ADVISORY COUNCIL Barbara Kaufman Co-Director of KCBS Call for Action The Federal Reserve Board announced on Janu- San Francisco, California ary 19, 1990, the names of the five new members A.J. King appointed to its Thrift Institutions Advisory Chairman and Vice President Council (TIAC) to replace those members whose Valley Bank of Kalispell terms have expired and designated a new Presi- Kalispell, Montana dent and Vice President of the council for 1990. The council is an advisory group made up of Michelle S. Meier Counsel for Government Affairs twelve representatives from thrift institutions. Consumers Union The panel was established by the Board in 1980 Washington, D.C. and includes savings and loan, savings bank, and credit union representatives. The council meets Linda K. Page Director at least four times each year with the Board of Ohio Department of Commerce Governors to discuss developments relating to Columbus, Ohio thrift institutions, the housing industry, mortgage finance, and certain regulatory issues. Sandra Phillips Donald B. Shackelford, Chairman of the Board Executive Director Pittsburgh Partnership for of State Savings Bank, Columbus, Ohio, will Neighborhood Development serve as president of the council and Marion O. Pittsburgh, Pennsylvania Sandler, President/Chief Executive Officer of World Savings and Loan Association, Oakland, Vincent P. Quayle Director California, will serve as vice president. St. Ambrose Housing Aid Center The five new members, named for two-year Baltimore, Maryland terms that began January 1, are the following: Clifford N. Rosenthal Executive Director David L. Hatfield National Federation of Community President Fidelity Federal Savings and Loan Association Development Credit Unions Kalamazoo, Michigan New York, New York Alan M. Silberstein Lynn W. Hodge Senior Vice President President and Chief Executive Officer Chemical Bank United Savings Bank Inc. New York, New York Greenwood, South Carolina Ralph E. Spurgin Elliott K. Knutson President and Chief Executive Officer Chairman and Chief Executive Officer Limited Credit Services, Inc. Washington Federal Savings and Loan Association Columbus, Ohio Seattle, Washington Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Announcements 153 John Wm. Laisle Operating expenses of the twelve Reserve President Banks and their Branches totaled $1,331 billion, MidFirst Bank SSB including $147 million for the earnings credits Oklahoma City, Oklahoma granted to depository institutions under the Mon- John A. Pancetti etary Control Act of 1980. Assessments by the Chairman and Chief Executive Officer Board of Governors for Board expenditures to- The Manhattan Savings Bank taled $90 million, and the cost of currency New York, New York amounted to $175 million. Net additions to income amounted to $1,296 The other members of the Council are the billion, primarily resulting from gains on assets following: denominated in foreign currencies. Statutory dividends to member banks were $130 million; and Charlotte Chamberlain payments to the Treasury amounted to $21,627 Vice Chairman New America Saving billion. Los Angeles, California Under the policy established by the Board of Governors at the end of 1964, all net income after Adam A. Jahns the statutory dividend to member banks and the Chairman and President Cragin Federal Bank for Savings amount necessary to equate surplus to paid-in Chicago, Illinois capital is transferred to the U.S. Treasury as interest on Federal Reserve notes. H.C. Klein President and General Manager Little Rock AFB Federal Credit Union Jacksonville, Arkansas REVISED LIST OF OTC STOCKS SUBJECT TO MARGIN REGULATIONS Philip E. Lamb Chairman and Chief Executive Officer NOW AVAILABLE Springfield Institution for Savings Springfield, Massachusetts The Federal Reserve Board published on January 26, 1990, a revised list of over-the-counter Charles B. Stuzin (OTC) stocks that are subject to its margin reg- Chairman, President, and Chief Executive Officer ulations, effective February 12, 1990. Citizens Federal Savings and Loan Association This revised List of Marginable OTC Stocks Miami, Florida supersedes the list that was effective on November 13, 1989. The changes that have been made to the list, which now includes 2,859 OTC stocks, INCOME AND EXPENSES are as follows: OF THE FEDERAL RESERVE BANKS • Seventy stocks have been included for the first time, sixty-three under National Market Preliminary figures released on January 9, 1990, System (NMS) designation. indicate that operating income of the Federal • Forty-six stocks previously on the list have Reserve Banks amounted to $22,230 billion dur- been removed for substantially failing to meet the ing 1989. Net income before dividends, additions requirements for continued listing. to surplus, and payments to the Treasury totaled • Fifty-eight stocks have been removed for $21,888 billion. About $21.6 billion was paid to reasons such as listing on a national securities the U.S. Treasury during 1989. exchange or involvement in an acquisition. Federal Reserve System income is derived This list is published by the Board for the primarily from interest earned on U.S. govern- information of lenders and the general public. It ment securities that the Federal Reserve has includes all OTC securities designated by the acquired through open market operations. In- Board pursuant to its established criteria as well come from the provision of financial services as all stocks designated as NMS securities for amounted to $702 million. which transaction reports are required to be Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

154 Federal Reserve Bulletin • March 1990 made pursuant to an effective transaction report- CHANGE IN BOARD STAFF ing plan. Additional OTC securities may be designated as NMS securities in the interim between William C. Schneider, Jr., has been appointed the Board's quarterly publications and will be to the Office of Staff Director for Management immediately marginable. The next publication of as Project Director of the National Information the Board's list is scheduled for April 1990. Center (NIC), effective January 12, 1990. Besides NMS-designated securities, the Board Before this appointment, Mr. Schneider served will continue to monitor the market activity of as Vice President at the Federal Reserve other OTC stocks to determine which stocks Bank of Cleveland. He holds an M.B.A. in meet the requirements for inclusion and contin- Computer Science from George Mason Univerued inclusion on the list. sity. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

155 Legal Developments FINAL RULE—AMENDMENT TO REGULATIONS City Investing Company Liquidating Trust: Units of G, T, U AND X beneficial interest Columbia Pictures Entertainment, Inc.: Warrants The Board of Governors is amending 12 C.F.R. Parts (expire 06-01-92) 207, 220, 221 and 224, its Securities Credit Transac- Commercial Decal, Inc.: $.20 par common tions; List of Marginable OTC Stocks. The List of Commodore Environmental Services, Inc.: $.10 par Marginable OTC Stocks is comprised of stocks traded common over-the-counter (OTC) that have been determined by Connaught Biosciences Inc.: No par common the Board of Governors of the Federal Reserve Sys- Constar International, Inc.: Warrants (expire tem to be subject to the margin requirements under 11-13-89) certain Federal Reserve regulations. The List is published four times a year by the Board as a guide for Entree Corporation: $.01 par common lenders subject to the regulations and the general public. This document sets forth additions to or dele- First American Bank and Trust of Palm Beach tions from the previously published List which was County: Class A, $1.00 par common effective November 13, 1989, and will serve to give Flight International Group, Inc.: $.01 par common notice to the public about the changed status of certain Fonar Corporation: $.0001 par common stocks. Frances Denney Companies, Inc.: $.01 par common Effective February 12, 1990, accordingly, pursuant Frontier Savings Association: $.80 par capital to the authority of sections 7 and 23 of the Securities Exchange Act of 1934, as amended (15 U.S.C. §§ 78g Harvard Knitwear, Inc.: $.001 par common and 78w), and in accordance with 12 C.F.R. 207.2(k) Hauserman, Inc.: $1.00 par common and 207.6(c) (Regulation G), 12 C.F.R. 220.2(s) and High Plains Corporation: $.10 par common 220.17(c) (Regulation T), and 12 C.F.R. 221.2(j) and 221.7(c) (Regulation U), there is set forth below a Kimmons Environmental Service Corp.: 9% convertlisting of deletions from and additions to the Board's ible subordinated debentures List of Marginable OTC Stocks: Kurzweil Music Systems, Inc.: $.001 par common Deletions From the List of Marginable OTC Lyphomed, Inc.: $.01 par common, 5-Vi% convertible Stocks subordinated debentures Stocks Removed For Failing Continued Listing Macrochem Corporation: $.005 par common Requirements Management Assistance Inc. Liquidating Trust: Units of beneficial interest 3CI Incorporated: $.01 par common McM Corporation: $1.00 par common Medical Sterilization, Inc.: $.01 par common ABQ Corporation: $.01 par common Monoclonal Antibodies, Inc.: No par common AFP Imaging Corporation: $.01 par common American Savings & Loan Association of Florida: $.01 Northern Trust Corporation: Series B, no par prepar preferred ferred stock Braniff, Inc.: $.01 par common Pantera's Corporation: $.01 par common Brown, Robert C. & Co., Inc.: $.01 par common Plains Resources Inc.: $1.00 par cumulative convertible preferred Central Bancorporation: $1.67 par common Ports of Call, Inc.: $.20 par common Chemex Pharmaceuticals, Inc.: $.01 par common, Priam Corporation: $.001 par common 1989-1 Warrants (expire 03-31-94) Properties of America, Inc.: $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

156 Federal Reserve Bulletin • March 1990 Rentrak Corp.: $.001 par common International Genetic Engineering, Inc.: No par com- Rudy's Restaurant Group, Inc.: $.01 par common mon Scanforms, Inc.: $.01 par common Jefferson Smurfit Corporation: $1.00 par common Silvar-Lisco: No par common Skipper's Inc.: $.10 par common Leo's Industries, Inc.: $.001 par common Unifast Industries, Inc.: $.01 par common Management Science America, Inc.: $.0025 par common Yorkridge-Calvert Savings and Loan Association Marine Transport Lines, Inc.: $.10 par common (Maryland): $1.00 par common Mayfair Super Markets, Inc.: Class A, $.01 par common Stocks Removed for Listing on a National Microbilt Corporation: No par common Securities Exchange or Being Involved in an Midwest Financial Group, Inc.: $5.00 par common Acquisition Noxell Corporation: Class B, non-voting, $1.00 par Alco Health Services Corporation: $.01 par common common Alliance Financial Corporation: $10.00 par common Numerex Corporation: $.01 par common American Home Shield Corporation: $.04 par common American Savings Financial Corporation (Washing- Pace Membership Warehouse, Inc.: $.01 par common ton): $1.00 par common Pacific First Financial Corp.: $1.00 par common Associated Natural Gas Corp.: $.10 par common Pacific Silver Corporation: $.25 par common Peoples Savings Bank F.S.B.: $1.00 par common Beaman Corporation: $1.00 par common Praxis Biologies, Inc.: $.01 par common Precision Castparts Corp.: No par common Clinical Sciences, Inc.: $.01 par common CMS Enhancements, Inc.: $.01 par common Ravenswood Financial Corp.: $1.00 par common Coast Federal Savings and Loan Association Reisterstown Federal Savings Bank (Maryland): $1.00 (Florida): $.01 par common par common Convex Computer Corporation: $.01 par common Resurgens Communications Group, Inc.: $.01 par Crawford & Company: $1.00 par common common CVB Financial Corp.: No par common Rhone-Poulenc S.A.: American Depositary Receipts CVN Companies, Inc.: No par common Richton International Corp.: $.10 par common RSI Corporation: $.05 par common Digilog, Inc.: $.01 par common Dumagami Mines Limited: $1.00 par common Safecard Services, Inc.: $.01 par common Dunkin' Donuts Inc.: $1.00 par common SAG Harbor Savings Bank (New York): $1.00 par Dyatron Corporation: $.66-% par common common Security American Financial Enterprises, Inc.: $.10 E.I.L. Instruments, Inc.: $.10 par common par common Elan Corporation PLC: American Depositary Receipts Starpointe Savings Bank: $2.00 par common Stratus Computer, Inc.: $.01 par common First Banc Securities, Inc.: $5.00 par common First Ohio Bancshares, Inc.: $6.25 par common Trustcorp, Inc.: $1.00 par common Gen-Probe Incorporated: $.01 par common Weisfield's, Inc.: $2.00 par capital Guber-Peters Entertainment Company, The: $.01 par Westmarc Communications, Inc.: Class A, $.01 par common common H.M.S.S., Inc.: $.01 par common Additions to the List of Marginable OTC HCC Industries Inc.: $.10 par common Stocks Hibernia Corporation: Class A, no par common Howard Bancorp: $5.00 par common Allied Capital Corporation II: $1.00 par common American Capital and Research Corporation: Class A, Inca Resources, Inc.: No par common $.01 par common Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 157 Amtech Corporation: $.01 par common MAF Bancorp, Inc.: $1.00 par common Aztar Corporation: $.01 par common MIPS Computer Systems, Inc.: No par common BKLA Bancorp: No par common New Horizons Savings & Loan Association: No par Borland International, Inc.: $.01 par common common Boston Technology, Inc.: $.001 par common Nucorp, Inc.: Class C, Warrants (expire 06-30-91) BT Shipping Limited: American Depositary Receipts Pacific Bank, N.A., The: $5.00 par common Pamrapo Bancorp, Inc.: $.01 par common Caere Corporation: $.001 par common Parametric Technology Corporation: $.01 par common Candela Laser Corporation: $.01 par common People's Telephone Company, Inc.: $.01 par common Cellular Information Systems, Inc.: Class A, $.01 par Pinnacle Financial Services, Inc.: $10.00 par common common Players International, Inc.: $.005 par common Century South Banks, Inc.: No par common Procyte Corporation: $.01 par common Continental Gold Corporation: No par common Cray Computer Corporation: $.01 par common Ramtron Australia Limited: American Depositary Re- Cupertino National Bancorp: No par common ceipts Cytogen Corporation: $.01 par convertible exchangeable preferred Receptech Corporation: Paired common stock & a Warrant Ren Corporation - USA: No par common Economy Savings Bank, PASA: $1.00 par common Robec, Inc.: $.01 par common Energy Ventures, Inc.: $1.00 par common Exabyte Corporation: $.001 par common Sierra Tucson Companies, Inc.: $.01 par common Exide Electronics Group, Inc.: $.01 par common Smith International, Inc.: Class A, Warrants (expire 02-28-95) Financial Center Bancorp: No par common Solectron Corporation: No par common First American Financial Corporation, The: Class B, Summit Technology, Inc.: $.01 par common $1.00 par common Sun Sportswear, Inc.: No par common First Bank of Philadelphia: $2.00 par common First Federal Capital Corp.: $.01 par common T2 Medical, Inc.: $.01 par common TW Holdings, Inc.: No par common G-III Apparel Group, Ltd.: $.01 par common Gehl Company: $.10 par common United Artists Entertainment Company: 12.875%, no Great Southern Bancorp, Inc.: $.01 par common par cumulative convertible preferred Urcarco, Inc.: $.01 par common Harmonia Bancorp, Inc.: $.01 par common Healthsource, Inc.: $.10 par common Ventura County National Bancorp: No par common Henley Group, Inc., The (Delaware): $.01 par com- Village Financial Services, Inc.: $.01 par common mon Home Nutritional Services, Inc.: No par common Westcott Communications, Inc.: $.01 par common Hycor Biomedical Inc.: $.01 par common Workmen's Bancorp, Inc.: $1.00 par common Ilio, Inc.: $.01 par common, Warrants (expire Yes Clothing Company: No par common 10-25-92) Immunogen, Inc.: $.01 par common Industrial Funding Corporation: Class A, no par FINAL RULE—AMENDMENT TO RULES common REGARDING FOREIGN GIFTS AND DECORATIONS Keegan Management Company: $.001 par common The Board of Governors is amending 12 C.F.R. Part Knowledge ware, Inc.: No par common 264b, its Rules Regarding Foreign Gifts and Decorations. Congress has permitted federal government Landmark Bancorp: No par common employees to accept gifts from foreign governments in Laserscope: No par common amounts up to a "minimal value" that is to be estab- Lattice Semiconductor Corporation: $.01 par lished by the Government Services Administration common ("GSA") in consultation with the Secretary of State. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

158 Federal Reserve Bulletin • March 1990 The GSA's regulations currently establish "minimal Barclays Bank PLC value" to be $180, while the Board's Rules Regarding London, England Foreign Gifts and Regulations set "minimal value" at $100. Accordingly, this amendment will change the Order Approving Applications to Engage, to a Board's definition of "minimal value" by increasing it Limited Extent, in Underwriting and Dealing in Debt to $180 or such higher amount as might be established and Equity Securities by the GSA. Effective January 29, 1990, and pursuant to the Canadian Imperial Bank of Commerce, Toronto, On- Board's authority under section ll(i) of the Federal tario, Canada ("Canadian Imperial"), The Royal Bank Reserve Act (12 U.S.C. § 248(i)), 12 C.F.R. Part 264b of Canada, Montreal, Quebec, Canada ("Royal is amended as follows: Bank"), and Barclays PLC and Barclays Bank PLC, London, England ("Barclays") (together referred to as "Applicants"), bank holding companies within the Part 264b—Rules Regarding Foreign Gifts and meaning of the Bank Holding Company Act ("BHC Decorations Act"), have each applied for the Board's approval under section 4(c)(8) of the BHC Act, 12 U.S.C. § 1843(c)(8), and section 225.23(a)(3) of the Board's 1. The authority citation for Part 264b continues to Regulation Y, 12 C.F.R. 225.23(a)(3), for their indirect read as follows: subsidiaries, Wood Gundy Corp., RBC Dominion Securities Corporation, and Barclays de Zoete Wedd Authority: 5 U.S.C. § 7342, as amended; and section Government Securities, Inc., respectively, each loll(i) of the Federal Reserve Act (12 U.S.C. § 248(i)); cated in New York, New York ("Companies"), to 5 U.S.C. § 552. underwrite and deal in, on a limited basis, all types of debt securities, including without limitation, sovereign 2. In section 264b.3 paragraph (a) is revised to read as debt securities, corporate debt, debt securities confollows: vertible into equity securities, and securities issued by a trust or other vehicle secured by or representing Section 264b.3—Foreign gifts. interests in debt obligations. In addition, Canadian Imperial and Royal Bank have each applied for approval to underwrite and deal in equity securities, including, without limitation, com- (a) Gifts of minimal value. If not otherwise prohibited mon stock, preferred stock, American Depositary by Board regulations, Board members and employees Receipts, and other direct and indirect equity ownermay accept and retain a tangible or intangible gift of ship interests in corporations and other entities.1 minimal value, intended as a souvenir or mark of Notice of the applications, affording interested percourtesy, from a foreign government. A gift of minimal sons an opportunity to submit comments on the provalue is one having a retail value in the United States posals, has been duly published (54 Federal Register at the time of acceptance not in excess of $180 (or such 25,173; 54 Federal Register 29,388; 54 Federal Regishigher amount established in 41 C.F.R. Part 101-49). ter 26,252 (1989)). The Board received comments in opposition to approval of all the applications from the Securities Industry Association ("SIA"), a trade as- ORDERS ISSUED UNDER BANK HOLDING sociation of the investment banking industry, and in COMPANY ACT opposition to approval of the application of Royal Bank from the Investment Company Institute ("ICI"), Orders Issued Under Section 4 of the a trade association of the mutual fund industry. The Bank Holding Company Act Board also received comments in support of the proposals from the Institute of International Bankers, the Canadian Imperial Bank of Commerce Bankers' Association for Foreign Trade, and the Bank Toronto, Ontario, Canada Capital Markets Association. The Royal Bank of Canada Montreal, Quebec, Canada 1. Applicants have not proposed to underwrite or deal in securities issued by open-end investment companies and, accordingly, may not Barclays PLC do so without further application under section 4(c)(8) of the BHC Act. Canadian Imperial and Royal Bank have proposed to underwrite London, England and deal in securities issued by closed-end investment companies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 159 Canadian Imperial has total consolidated assets Reserve Bulletin 473, 485 (1987).7 Accordingly, the equivalent to approximately $82.6 billion.2 Canadian Board concludes that Applicants' proposals would be Imperial owns bank subsidiaries in Los Angeles, Cal- consistent with section 20 of the Glass-Steagall Act. ifornia, and New York, New York, and operates agencies in Atlanta, New York City, Los Angeles, and II. Bank Holding Company Act San Francisco. Royal Bank has total consolidated assets equivalent In order to approve an application under section to approximately $96.0 billion. Royal Bank owns bank 4(c)(8) of the BHC Act, the Board must find that the subsidiaries in New York, New York, and San Juan, activities to be conducted are "so closely related to Puerto Rico, and operates branches in Portland, Ore- banking . .. as to be a proper incident thereto." gon, New York City, and Puerto Rico and agencies in 12 U.S.C. § 1843(c)(8). In January 1989, the Board Miami and San Francisco. determined that bank holding companies, through sep- Barclays has total consolidated assets equivalent to arately incorporated and capitalized subsidiaries approximately $196.1 billion.3 Barclays owns bank ("section 20 subsidiaries" or "underwriting subsidiarsubsidiaries in New York City, Wilmington, Dela- ies"), may underwrite and deal in ineligible debt and ware, and Charlotte, North Carolina, and operates equity securities, subject to the 5 to 10 percent revebranches in New York, Boston, Seattle, and Chicago nue limit established under the Glass-Steagall Act. and agencies in San Francisco and Miami. J.P. Morgan & Co. Incorporated, et al., 75 Federal Reserve Bulletin 192 (1989) (the "section 20 Order"). I. Glass-Steagall Act The Board concluded that these activities are closely related to banking and a proper incident thereto, Applicants have previously received Board approval provided that the activities are conducted within a under section 4(c)(8) of the BHC Act for Companies to framework of prudential limitations that avoid the underwrite and deal in securities that member banks potential for conflicts of interest, unsound banking are authorized to underwrite and deal in under the practices, unfair competition and other adverse Glass-Steagall Act4 (hereinafter "eligible securities") effects.8 In reaching this decision, the Board found and to engage in various other activities permissible that the proposals could be expected to result in public for bank holding companies. In order to ensure that benefits such as increased competition, gains in effi- Companies would not be engaged principally in under- ciency, greater convenience to users of these services writing or dealing in securities in violation of section and a strengthened and more competitive banking and 20 of the Glass-Steagall Act5 upon commencing the financial system. proposed debt and equity securities activities, each Applicants have proposed for Companies to conduct Company will limit the gross revenues derived from the new activities within the prudential framework of these activities to no more than 10 percent of its total limitations established by the Board in the section 20 gross revenues over any two-year period.6 The Board Order. They have requested, however, certain modihas previously determined that a company would not fications to that framework, which are discussed bebe in violation of section 20 of the Glass-Steagall Act low, to account for the fact that each Applicant is a if the gross revenue the company derived from under- foreign bank that operates predominately outside the writing and dealing in ineligible securities does not United States. exceed between 5 and 10 percent of the company's Applicants' requests for modification raise issues total gross revenues on average over any two-year under the BHC Act and the framework established in period. CiticorplJ.P. Morgan & Co. Incorporated1 the section 20 Order because, unlike U.S. bank hold- Bankers Trust New York Corporation, 73 Federal ing companies, Applicants are both banks and bank holding companies. The framework established in the section 20 Order required a separation of federallyinsured bank or thrift institutions from an affiliated 2. Unless otherwise noted, asset data are as of April 30, 1989. 3. Asset data are as of June 30, 1989. 4. Other types of securities, which member banks may not underwrite deal in under the Glass-Steagall Act, are referred to herein as 7. That decision has been affirmed by the United States Court of "ineligible securities". Appeals for the Second Circuit. Securities Industry Ass'n v. Board of 5. 12 U.S.C. § 377. Section 20 provides that ". . . no member bank Governors, 839 F.2d 47, 67, cert, denied, 108 S.Ct. 2830 (1988). See shall be affiliated . . . with any . . . organization engaged principally in also Press Release, dated September 21, 1989, 75 Federal Reserve the issue, flotation, underwriting, public sale, or distribution at Bulletin 751 (1989), raising the revenue limitation for section 20 wholesale or retail or through syndication of stocks, bonds, deben- subsidiaries from 5 to 10 percent. tures, notes, or other securities . . . ." 8. The Board hereby adopts and incorporates herein by reference 6. Compliance with the revenue limits shall be calculated in the the reasoning and analysis from that Order for these findings, except manner set forth in J. P. Morgan & Co. Incorporated, et al., 75 as that reasoning and analysis is specifically modified by this Order to Federal Reserve Bulletin 192, 196-197 (1989). account for the particular circumstances of these cases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

160 Federal Reserve Bulletin • March 1990 section 20 subsidiary in order both to insulate U.S.- IBA and its policy of national treatment, foreign banks insured institutions and the federal safety net from the must conduct the proposed activities in the United risk of the section 20 subsidiary's activities and for States within the framework of prudential limitations reasons of competitive equity in the United States. established in the section 20 Order. Giving due regard Although as banks, Applicants are not supported to to the principles of national treatment and the Board's any significant extent by the U.S. federal safety net, policy not to extend U.S. bank supervisory standards they have access to any benefits that are associated extraterritorially, the Board has determined, as diswith their respective home country safety nets, from cussed further below, to adjust the funding and certain which they may derive some competitive advantage operational requirements of the section 20 Order over U.S. bank holding companies operating under the where these adjustments would not change the balance section 20 framework or other U.S. securities firms. of public interest factors that the Board considered in Rigid application of the section 20 framework to Ap- the section 20 Order or cause adverse effects to plicants as banks, however, would prevent them gen- outweigh public benefits. Consistent with the terms erally from being able to establish section 20 subsid- and objectives of the BHC Act and the IBA, the iaries in the United States unless they adopted a conditions to which the Board believes Applicants holding company structure. should be subject are designed to ensure that the prudential, competitive equity, safety net and preven- The International Banking Act of 1978 ("IBA"), tion of moral hazard objectives of the conditions 12 U.S.C. §3101 et seq., established that foreign continue to be met; that U.S. regulation does not banks were to operate in the United States under the interfere with the operations of foreign banks outside principle of national treatment. National treatment in the United States; and that foreign bank applicants will this context calls for parity of treatment between not have any significant competitive advantage in the domestic and foreign banking organizations to the United States over section 20 subsidiaries and nonextent possible such that one group does not have bank-owned securities firms. competitive advantages relative to the other in the United States. To achieve these ends, the Board has determined In order to assist in achieving this objective, the IBA that: provided that any foreign bank that operates a bank, (1) the prudential framework of the section 20 Order branch or agency in the United States "shall be will apply without modification to the U.S. bank and subject to the provisions of the Bank Holding Com- thrift affiliates of Applicants' underwriting subsidiarpany Act ... in the same manner and to the same ies; extent that bank holding companies are subject thereto (2) the framework will also generally cover U.S. . . ." 12 U.S.C. § 3106(a). The legislative history of branches and agencies of Applicants; the IBA states that this was "to insure competitive (3) the Applicants, insofar as their foreign offices equality by allowing foreign financial institutions to and operations are concerned, will be treated as expand their U.S. banking-related activities in accord- bank holding companies for purposes of the frameance with the same standards applicable to domestic work consistent with the IBA; and bank holding companies. . . . [T]he bill does not affect (4) the responsibility for compliance with the framethe type or scope of a foreign bank's nondomestic work will be placed on the section 20 subsidiaries in business." S. Rep. No. 1073, 95th Cong., 2d Sess. 15 order to avoid U.S. regulation having an extraterri- (1978). torial impact. Applicants have asserted that some of the conditions established in the section 20 Order were imposed The Board recognizes that this modified framework on domestic bank holding companies for supervisory raises certain issues of compatibility with that estabreasons and that such conditions should not be appli- lished for U.S.-owned section 20 subsidiaries, princicable to the operations of Applicants. Consequently, pally in the area of bank funding and investment. For they have requested modification of certain condi- example, under the modified framework, a foreign tions, principally those that apply to their non-U.S. bank may establish and fund a section 20 subsidiary, operations. Without appropriate modifications, Appli- while a U.S. bank may not. cants assert, the conditions of the section 20 Order While there could be potential advantages accruing would be an extraterritorial extension of U.S. regula- to Applicants through this differing structure, the tion and supervision, which would be inconsistent Board believes that any advantage would not be with U.S. policy and international agreements on bank significant in light of the effect on them of the overall supervision. section 20 framework and the circumstances of these The Board has carefully considered Applicants' cases, and should not preclude foreign bank ownership requests and has determined that, consistent with the of section 20 subsidiaries. The Board notes that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 161 absolute size of the ineligible securities activities of needed for that support would not be put at risk to section 20 companies owned by foreign banks will fund the expanded securities activities.10 generally be small, as they will necessarily be con- Applicants have proposed that, in the case of a strained by the 10 percent revenue limitation estab- foreign bank seeking to establish a section 20 comlished by the Board. The base of eligible securities pany, the proper authority to assess capital adequacy activities against which to measure ineligible securities is the home country supervisor, using its own capital activities is derived mainly from U.S. government guidelines consistent with the standards established by securities, which do not form as relatively large or as the Basle Committee on Banking Regulations and natural an asset base for foreign banks as they do for Supervisory Practices. The Board has adopted guide- U.S. banking organizations. In addition, foreign banks lines consistent with these standards and considers the in their capacity as bank holding companies will be Basle Accord an important step toward a more consubject to the provisions of the section 20 Order sistent and equitable international standard for assessrequiring a bank holding company to deduct from its ing capital adequacy.11 capital investments in and unsecured lending to a In 1979, the Board adopted a Policy Statement on section 20 subsidiary. Finally, the U.S. operations of Foreign-Based Bank Holding Companies12 that states the foreign bank will be subject to the provisions of the a foreign bank with U.S. banking operations is exsection 20 Order to the same extent as U.S.-owned pected to meet the same general standards of financial and section 20 subsidiaries, and, significantly, a for- strength as U.S. bank holding companies. The Board eign-owned section 20 subsidiary may not utilize the recognized, however, that foreign banks operate outcredit facilities of its foreign bank parent to gain an side the United States in accordance with different advantage over U.S. firms in its securities underwrit- banking practices and in different legal environments, ing and dealing activities. The Board notes that this and that the Board's supervisory responsibilities exassessment could change with a significant change in tend only to the safety and soundness of U.S. banking the factors considered by the Board, such as if the size operations. The Board stated that, consistent with the of section 20 companies becomes significant, due to an principles of the BHC Act and the IBA, its policy is increase in the revenue limitations, a change in the law not to extend U.S. bank supervisory standards extraterritorially to foreign banks. Rather, the Board would governing bank securities activities, or sizeable seek to assure itself of the foreign bank's ability to be growth in the base of eligible securities. In such a source of strength to its U.S. operations. circumstances, the Board may reevaluate its position on these matters from the standpoint of the principles In light of the Board's policy with respect to foreign of national treatment. bank holding companies and the endorsement and The modifications adopted by the Board to the implementation of the Basle Accord by the Applisection 20 framework as it applies to Applicant foreign cants' home country regulators, the Board has considbanks are discussed below. ered the following in assessing Applicants' capital positions: both before and after deduction of invest- Capital Adequacy Considerations ments in and unsecured loans to the section 20 subsidiary, each Applicant meets the risk-based capital stan- In the section 20 Order, the Board stated that it would dards established by its home country supervisor not permit any impairment in an applicant's financial under the Basle Accord; each is in good standing with strength as a result of the provision of capital or the home country supervisor; the U.S. offices, subsidliquidity support for the proposed activities. The iary banks, and any subsidiary U.S. holding company Board required that each bank holding company de- of Applicants are in generally satisfactory condition; duct from its consolidated primary capital any invest- and all other financial and managerial factors are ments in, or unsecured extensions of credit to, the consistent with the capability of each Applicant to section 20 subsidiary9 and exclude from its total con- remain a source of strength to its U.S. banking opersolidated assets the assets of the section 20 subsidiary. ations. This requirement was designed to ensure that the One of the conditions of the section 20 Order is that holding company maintains a strong capital position to the section 20 subsidiary maintain at all times capital support its subsidiary banks and that the resources adequate to support its activity and cover reasonably 9. The applicants were required to deduct any loans extended directly or indirectly to the section 20 subsidiary that were not fully 10. In accordance with the new Risk-Based Capital Guidelines, the secured by U.S. government or other marketable securities in the applicants were required to take 50 percent of the deductions from same manner and to the same extent as would be applicable in the case Tier 1 capital and 50 percent from Tier 2 capital. of member bank loans or extensions of credit to an affiliate under 11. See 54 Federal Register 4186 (1989). section 23A(c) of the Federal Reserve Act. 12 U.S.C. § 371c(c). 12. Federal Reserve Regulatory Service 11 4-835. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

162 Federal Reserve Bulletin • March 1990 expected expenses and losses in accordance with guards that most countries afford to their banking industry norms. The Board has reviewed the capitali- systems. Unlike the typical U.S. banking organization zation of each of the section 20 subsidiaries and structure, foreign banking institutions are not generbelieves that each is adequate in light of its business ally organized in a holding company structure. The plan which, at the outside, projects a modest increase foreign bank itself is generally the parent in outstanding ineligible securities positions. Barclays organization.13 Applicants argue that, in light of this notes that additional capitalization of its section 20 organizational structure, the foreign bank parent is the subsidiary may be necessary, and has committed to only ultimate source of support for the operations of increase capital in the securities subsidiary in early the section 20 subsidiary. Accordingly, Applicants 1991 if, at year end 1990, the subsidiary's assets have contend, a determination by the Board that the foreign grown to the size projected. The section 20 subsidiar- bank parent could not fund its section 20 subsidiary ies of Canadian Imperial and Royal Bank may also through loans or investments because it is a bank have a need for increased capital if their businesses would have the effect of preventing foreign banks from grow beyond current projections. Accordingly, and establishing section 20 subsidiaries in the United subject to any commitments related to capital, ap- States unless they adopted the U.S. holding company proval of these activities is limited to a level consistent structure. with the projections of position size and types of As previously noted, the Board has considered the securities contained in each of the applications unless implications of modifying the section 20 conditions to the section 20 subsidiaries receive an appropriate permit extensions of credit and other support by a infusion of additional capital. foreign bank to its section 20 subsidiary in light of the The Board notes that Applicants have an ongoing purposes of the prohibition against such support by a responsibility under the Board's regulations to con- bank affiliate. Because funds of a foreign bank that are tinue to act as a source of financial strength to their generated from abroad are not federally insured, and U.S. subsidiary banks. 12 C.F.R. 225.4(a). Under this the foreign bank itself does not have access to the rule, Applicants are expected to manage their opera- discount window, the provision of support by a foreign tions, including their section 20 subsidiaries, in such a bank to its underwriting subsidiary from outside the way as not to compromise or prejudice their ability to United States would not directly implicate the federal continue to act as a source of strength to their U.S. safety net. In addition, for the reasons discussed subsidiary banks and thrifts. above, it does not appear that the ability to provide such support would give securities companies owned Funding of Section 20 Subsidiaries by foreign banks a significant competitive advantage over domestically-owned companies. In addition to these capital adequacy considerations, Moreover, whether or not a funding advantage the Board determined in the section 20 Order that the exists by virtue of Applicants' status as banks, U.S. broadening in the scope of permissible securities ac- securities companies, whether or not affiliated with a tivities required a prohibition on lending by a bank or U.S. bank, may borrow from foreign bank affiliates. thrift affiliate to the section 20 subsidiary, as well as a The Board notes that certain of the largest U.S. prohibition on the purchase and sale of financial assets investment banking companies are affiliated with forbetween these institutions for their own account, eign banks from which they may obtain credit. In the subject to limited exceptions for clearing U.S. govern- case of a U.S. bank holding company that directly ment and agency securities and the purchase and sale owns a foreign bank, the section 20 conditions would of U.S. Treasury securities. The purpose of the pro- not prohibit loans by that foreign bank affiliate to an hibitions is to limit the transfer of risk from the underwriting subsidiary in the United States, subject securities activities to the federal safety net, both to to the lending and capital deduction requirements protect the resources of the federal safety net and to established in the section 20 Order, which are appliprevent a securities company affiliated with a bank cable also to the foreign bank Applicants. from gaining an unfair competitive advantage over Accordingly, in light of these considerations and securities companies that are not bank-affiliated. The consistent with the IBA, the Board has determined section 20 Order permitted a bank holding company to that Applicant foreign banks should be able to lend to provide secured and unsecured credit to an underwrit- their section 20 subsidiaries in accordance with their ing subsidiary. status as bank holding companies. The restrictions In these cases, Applicants are not only bank holding companies within the meaning of the BHC Act but are also banks that have access to deposits in the United 13. In some cases, this organizational structure is required by the States and abroad and have the benefits of the safe- home country's laws governing ownership of banks. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 163 against lending and purchasing or selling assets will should not be necessary to extend its application to the apply, however, to all of Applicants' U.S. banking foreign offices and subsidiaries of Applicants, which offices, including their U.S. bank and thrift subsidiar- are supervised by home country authorities. ies, branches, and agencies. The Board has considered Applicants' arguments Barclays has requested modification of the section and believes that, while the home country supervisors 20 conditions in order to lend to its section 20 subsid- have primary responsibility for the financial soundness iary through its U.S. branches. In support of the of Applicants, it is an appropriate concern of the request, Barclays notes that the deposits in its U.S. Board to ensure that Applicants' investments in and branches are not insured by the Federal Deposit liquidity support for section 20 companies do not Insurance Corporation and Barclays is expected by adversely affect their ability to support their U.S. the Federal Reserve to call on home country resources insured subsidiary banks and other U.S. banking opbefore seeking credit at the discount window. There- erations in accordance with the Board's source of fore, according to Barclays, the U.S. federal safety net strength policy. Accordingly and consistent with the would not be exposed even if Barclays' U.S. branches general approach to these applications outlined above, were to lend to its section 20 subsidiary. the Board has determined not to grant Applicants an The Board has considered this request and has exception from the requirement for prior approval for determined that an exception to the section 20 Order additional investments in or loans or transfers of assets to permit U.S. branches of foreign banks to lend to the to the section 20 subsidiary. This requirement is not section 20 subsidiaries would not be appropriate. expected to impose a significant burden as each Ap- Although their deposits are not FDIC-insured, these plicant has requested approval for investments and offices are part of the U.S. financial structure and have funding in amounts that should be adequate for its statutory access to the discount window and payments section 20 company's operations for the next several system. Moreover, in the Board's view, lending to a years. section 20 subsidiary from a U.S. branch is inconsis- The Board recognizes that the capital deduction for tent with, and could potentially undermine, the frame- unsecured lending and prior approval requirements for work that the Board has adopted for the operation of bank holding companies raise a number of difficult and the section 20 companies in the United States. complex issues for foreign bank applicants that, as noted, need not be definitively or finally resolved by Compliance with Capital and Funding Conditions the specific factual setting of the present applications. The Board believes that these requirements are issues In the section 20 Order, the Board required that any of concern to both domestic and foreign applicants funds supplied to a section 20 subsidiary by the that implicate significant banking structure policies. In holding company or its nonbank subsidiaries, whether light of the concerns raised by this issue, the Board in the form of capital, secured or unsecured loans or intends to review this requirement generally to detertransfer of assets, be subject to prior notice to and mine whether it need be retained for domestic and approval by the Board. The Board imposed this re- foreign applicants. quirement as a method to ensure compliance with the condition that requires a bank holding company to Credit Enhancement and Loans to Customers deduct from capital any investments in and unsecured lending to its section 20 subsidiary. In this manner, the In the section 20 Order, the Board established several Board could assure itself that any funds necessary to limitations on extensions of credit by the applicants or support a bank holding company's bank or thrift their subsidiaries to customers of the section 20 subsubsidiaries would not be diverted to fund the activi- sidiaries. The Board provided that bank holding comties of the section 20 subsidiary. The Board stated that panies and their subsidiaries may not extend credit or it would consider requests for prior approval of spe- issue or enter into any facility that might be viewed as cific quantitative levels of funding by a holding com- enhancing the creditworthiness or marketability of pany for a section 20 subsidiary in accordance with the ineligible securities underwritten or distributed by the particular holding company's capitalization and re- section 20 subsidiary, or make loans to issuers of sources and the requirements outlined in the section 20 ineligible securities underwritten by the section 20 Order. subsidiaries for the purpose of payment of principal, Applicants have requested modification to this con- interest, or dividends on such securities. Affiliates of dition to permit them to fund their section 20 subsid- section 20 subsidiaries also could not knowingly exiaries without prior notice. Applicants argue that this tend credit to a customer secured by, or for the requirement was designed to protect the safety and purpose of purchasing, any ineligible security that the soundness of the U.S. banking system; accordingly, it section 20 subsidiary underwrites during the period of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

164 Federal Reserve Bulletin • March 1990 the underwriting and for 30 days thereafter, or to achieved by placing the restriction on the operations of purchase from the section 20 subsidiary any ineligible the section 20 subsidiary, rather than on its non-U.S. security in which the subsidiary makes a market. affiliates. Accordingly, the section 20 company would These limitations were imposed in order to protect be prohibited from underwriting any ineligible securithe soundness of U.S. banking institutions by remov- ties where it became aware, in the ordinary course of ing improper incentives from the credit granting pro- conducting a due diligence review, that an affiliate was cess. In addition, the limitations protect the federal providing a credit enhancement. Because virtually safety net from the potential for abusive credit prac- every credit facility that would enhance an issue of tices and prevent bank-affiliated securities companies securities would be listed in the required disclosure from obtaining an unfair advantage over companies documents for the issue, the section 20 subsidiary that are not affiliated with banks. would be in a position to know if an affiliate is Applicants argue that because the limitations were providing credit. imposed primarily to protect the soundness of U.S. banking institutions and the federal safety net, they Credit to Customers and Issuers should not be applied to Applicants' non-U.S. operations in a manner that interferes with those operations Applicants offered various commitments with respect or requires them to create costly new compliance to the conditions prohibiting credit to customers to systems. Applicants view such requirements not only purchase ineligible securities underwritten or dealt in as entailing substantial costs, but also as amounting to by the section 20 subsidiary or to issuers of ineligible an unwarranted extraterritorial regulation of their non- securities underwritten by the section 20 subsidiary to U.S. operations. Applicants have suggested a number pay the principal, interest, or dividends on those of alternatives to ensure compliance by their non-U.S. securities. Each Applicant committed to comply fully operations with the goals of the section 20 conditions. with these conditions in the United States. Canadian Imperial and Royal Bank committed to comply with Credit Enhancements the conditions worldwide in any instance in which the section 20 subsidiary is sole underwriter or lead or Although Applicants argue generally against the need co-lead manager of an underwriting syndicate in refor limitations on credit enhancements, each has spect of ineligible securities. Canadian Imperial also agreed to comply fully with the conditions with respect suggested that the prohibitions not apply to pre-exto their U.S. operations. Barclays also committed to isting or new lines of credit unless such lines were comply with the condition worldwide, while Canadian purposely marketed to an issuer in connection with the Imperial and Royal Bank proposed to comply world- offering of services by the section 20 subsidiary. wide with the restrictions when the section 20 subsid- As with the condition prohibiting credit enhanceiary is the sole underwriter or lead or co-lead manager ments, the Board believes it is important to maintain of an underwriting of ineligible securities. Canadian these conditions relating to credit granted to customers Imperial and Royal Bank contend that a section 20 and issuers. As in the previous condition, the Board subsidiary should not be prohibited from handling a also believes that it is appropriate to place the responsmall part of an underwriting that is managed by other sibility for compliance with these prohibitions on Apsecurities companies simply because a foreign affiliate plicants' section 20 subsidiaries rather than on their has provided credit enhancements for that issue. non-U.S. affiliates. Therefore, the section 20 subsidiary The Board is of the view that it is appropriate to may not participate in any underwriting where it aradopt one general framework for foreign banks and ranges for an affiliate to provide credit, or knowingly section 20 subsidiaries, rather than to rely on individ- participates in any arrangement whereby an affiliate ual and differing commitments from each foreign bank provides credit, to a customer or issuer for a prohibited applicant. In considering the merits of Applicants' purpose. This modification would limit the extraterritovarious arguments, the Board has determined not to rial impact of establishing compliance procedures in the grant an exception from the condition prohibiting an non-U. S. offices of the foreign banks, while also achievaffiliate from providing credit enhancements for ineli- ing the purposes of the conditions in the section 20 gible securities underwritten by a section 20 subsid- Order and preserving competitive equality. iary. The Board, however, recognizes that a compliance requirement imposed on the foreign operations of Purchase by Affiliate of Securities Underwritten by Applicants could be viewed as having an inappropriate the Section 20 Subsidiary extraterritorial effect on their non-U.S. business. Consequently, the Board has determined that the objec- The section 20 Order did not permit bank holding tives of the credit enhancement condition may be companies or their subsidiaries to purchase, as princi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 165 pal, ineligible securities underwritten by the section 20 quires all section 20 companies to establish approprisubsidiaries during the period of the underwriting and ate documentation procedures to assure that such for 60 days thereafter. The Order also prohibited the purchases or sales are related to customer demand in purchase from the section 20 subsidiary of any ineli- the market and are not entered into to evade the gible security in which it makes a market. The Board requirements established in this Order or the section imposed these prohibitions in order to prevent a bank 20 Order. holding company from using its resources, to the detriment of its banking subsidiaries, to support a Personnel Interlocks and Other Restrictions failing underwriting or ineligible securities in which the section 20 subsidiary makes a market. The section 20 Order prohibited officer, director, or Royal Bank has proposed that this prohibition ex- employee interlocks between a section 20 subsidiary tend only to its U.S. subsidiaries, branches, and and any affiliated bank or thrift institution. It also agencies. Canadian Imperial has put forward a more prohibited an affiliated bank or thrift institution from limited proposal, requesting only that Wood Gundy engaging in certain marketing activities on behalf of Inc., the Canadian parent company of its section 20 the section 20 subsidiary. These limitations were subsidiary, be exempt from the prohibition in order to among the measures established to ensure that the permit the joint participation by Wood Gundy Inc. and section 20 company was insulated, both structurally the section 20 subsidiary in cross-border transactions. and operationally, from the holding company's subsid- Barclays has requested that its foreign securities affil- iary banks and thrifts. iates be permitted to purchase securities from the Canadian Imperial and Royal Bank have each comsection 20 subsidiary at any time. mitted to comply with these restrictions and to extend The Board has considered these requests and has them to their U.S. branches and agencies. Barclays determined that it is not appropriate to modify this has agreed to the prohibition against personnel intercondition generally. The Board believes, however, locks and marketing with respect to its U.S. bank and that this limitation should be modified for all section 20 thrift affiliates, but has requested that it be permitted companies, both domestic and foreign-owned, in one to have management interlocks and engage in joint limited respect. Canadian Imperial has argued that this marketing between its U.S. branches and agencies and restriction would potentially interfere with the effec- the section 20 subsidiary. Barclays argues that these tive distribution of securities that are issued in a prohibitions were adopted in order to assure the simultaneous, cross-border offering. In such situa- protection of federally-insured depositors. This ratiotions, where the securities are issued in two or more nale would be inapplicable, however, to U.S. branches markets at the same time, a syndicate in each market and agencies of a foreign bank that are not insured by commits to a portion of the issue. During the under- the FDIC and, consequently, are not covered by the writing period, fluctuations in market conditions may federal safety net. enhance demand for the issue in one market and Barclays also states that qualified personnel availdampen demand in another. Intersyndicate agree- able to foreign banks for employment in the United ments in such circumstances permit the sale of secu- States are scarce and that it would impose a particular rities between syndicate members to ensure smooth hardship on foreign banks to require them to build up and broad distribution of the securities. duplicate marketing staffs in New York for their The Board believes that modifying this prohibition branches and their section 20 subsidiaries. Barclays to permit purchases and sales of ineligible securities argues further that applying these prohibitions to its between affiliates that are participating in simulta- New York branch would also place the section 20 neous underwritings in more than one market could subsidiary at a competitive disadvantage. Because promote efficiency and better service to customers. If there are a number of officers and employees in the the transactions are entered into to satisfy bona fide New York office of Barclays whose responsibilities are customer demand, the risk of adverse effects appears not specifically confined to the New York branch, to be slight. Accordingly, in this limited circumstance, Barclays states that it would be administratively difthe Board believes that the purposes of the condition ficult to exclude those officers and employees from prohibiting purchases or sales during the underwriting involvement with any permitted transactions between period and for 60 days thereafter would not be under- Barclays as a bank holding company and the section 20 mined where such purchases or sales result from bona subsidiary. fide indications of interest from customers in the With respect to interlocks, the Board notes that various markets. This exception will extend to all various proposals considered by the Congress to section 20 companies whether owned by U.S. bank amend the Glass-Steagall Act would not have required holding companies or foreign banks. The Board re- a complete prohibition on interlocks between a section Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

166 Federal Reserve Bulletin • March 1990 20 subsidiary and an insured bank, and would have banking organizations into debt and equity securities authorized the Board to permit officer or director underwriting and dealing activities, it was appropriate interlocks, taking into consideration the size of the to proceed cautiously and to establish an extensive organizations, safety and soundness considerations, framework of prudential limitations to guard against and other appropriate factors, including unfair compe- potential conflicts of interest, unsound banking practition in securities activities. In these applications, the tices, and other adverse effects.14 The Board continues Board, as a regulator of foreign bank offices in the to be of this view. The Board also continues to believe United States, has an interest in assuring that these that careful supervisory review is needed to ensure foreign banks have in place a mechanism for proper that the structural and operating conditions estabcontrol of all of their U.S. operations. Accordingly, lished in the section 20 Order are observed in order to while the Board has determined at this time to retain achieve the objectives of the conditions of minimizing the general prohibition against interlocks, the Board adverse effects and insulating affiliated banks and believes that, giving due regard to all relevant factors, thrifts and the federal safety net from the risks of the it is appropriate to permit an interlock between a U.S. new activity.15 Thus, the Board expects careful adherbranch and agency of a foreign bank and a section 20 ence by section 20 subsidiaries, including Companies, subsidiary as a means of providing the foreign bank and their affiliates to the conditions established in this with a mechanism to monitor effectively the opera- and the section 20 Order and directs the appropriate Federal Reserve Banks to undertake at least annual tions of the underwriting subsidiary for supervisory inspections for compliance. The Board will review the purposes. In these applications, such an interlock results of these inspections annually. would not appear to result in any adverse effects in light of the general framework of conditions to which In addition, the Board continues to believe that, Applicants' section 20 subsidiaries will be subject. before the new activities may be commenced, the The Board has determined not to modify at this time appropriate Reserve Bank should determine by inthe condition relating to marketing activities as it spection that the section 20 subsidiaries and their would apply to U.S. branches and agencies in light of affiliates have put in place the operational and manathe general approach to these applications as outlined gerial infrastructure necessary to ensure compliance above and considerations of competitive equity. How- with the conditions in this and the section 20 Order, ever, with respect to this condition as well as the including computer, audit and accounting systems, general prohibition on interlocks between U.S. banks internal risk management controls and other policies or banking offices and a section 20 subsidiary, the and procedures consistent with sound operating prac- Board will consider, based on experience with the tices. operations of section 20 subsidiaries, whether modifi- As indicated in the section 20 Order, the Board may cation of these general restrictions would be appropri- review the continued appropriateness of particular ate consistent with the purposes of the section 20 operating limitations as section 20 subsidiaries estabprudential framework. lish a record of experience in the proposed activities. In accordance with the policy of not extending U.S. The Board also reserves the right to establish, from regulation extraterritorially, the Board has also modi- time to time, based upon the supervisory process and fied the condition relating to purchases by an affiliate experience with the activities, additional limitations on of a section 20 company, acting in a trustee or other the conduct of the proposed activities to ensure that fiduciary capacity, of ineligible securities from the they are consistent with safety and soundness, and section 20 affiliate. This condition, which reflects conflict of interest and other considerations relevant applicable U.S. fiduciary principles, was intended to under the BHC Act. apply only to U.S. organizations or entities operating in the United States. This condition would apply fully Canadian Government Securities to the U.S. affiliates, branches and agencies of Applicants, but would not apply to the non-U.S. operations Canadian Imperial and Royal Bank have proposed that of Applicants, which are governed by their home Canadian government securities be treated in the same country law. manner as U.S. government securities for purposes of exemptions granted U.S. government securities from Supervision of Section 20 Subsidiaries and two of the section 20 conditions. First, the prohibition Reservation of Authority to Modify Operating Limitations In the section 20 Order, the Board stated that, because 14. J.P. Morgan & Co. Incorporated, at 210. the proposals represented the first major entry of 15. Id. at 209. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 167 against purchase and sale of financial assets between a purpose of their applications is merely to obtain apbank or thrift affiliate and a section 20 subsidiary proval for their section 20 subsidiaries to resume, on a contains an exemption for U.S. Treasury securities. very limited basis, underwriting activities that had Second, the section 20 prohibition against a bank or been an essential part of their operations for many thrift affiliate extending credit to a section 20 subsid- years prior to their acquisition by the Canadian banks iary contains an exemption for an extension of credit in 1988. that is incidental to the provision of clearing services In imposing the one-year waiting period in the by the bank or thrift to the section 20 subsidiary with section 20 Order, the Board explained that it wanted to respect to U.S. government securities if the extension allow the applicants time to establish the managerial of credit is fully secured by such securities, is on and operational infrastructure and other policies and market terms, and is repaid on the same calendar day. procedures necessary "to comply with the require- In light of the United States-Canada Free-Trade ments of this Order." 75 Federal Reserve Bulletin 209. Agreement, under which member banks were autho- Accordingly, in addition to being concerned with the rized to underwrite and deal in Canadian governmental bank holding companies' lack of experience in undersecurities, and in light of the nature of the Canadian writing equity securities, the Board recognized that government securities market, the Board has deter- the applicants would require time to develop and put mined that a section 20 subsidiary may engage in into place the policies and procedures required by the transactions involving Canadian government securi- operating conditions of the section 20 Order, espeties with a U.S. bank or thrift affiliate to the same cially when applied in the context of underwriting extent it is permitted to do so with respect to U.S. and equity securities. other government securities.16 This authority is ex- In light of these concerns and the principle estabtended to all section 20 subsidiaries, whether owned lished by the IBA of equality of treatment in the by foreign or U.S. bank holding companies. United States, the Board does not believe it would be appropriate to authorize Canadian Imperial and Royal Immediate Authority to Underwrite and Deal in Bank to begin underwriting equity securities immedi- Equity Securities ately. Although Applicants' section 20 subsidiaries may have had substantial experience in underwriting The section 20 Order imposed a one-year waiting equity securities prior to their acquisition by Appliperiod on the applicants in those cases before they cants, the subsidiaries and their U.S. bank affiliates were permitted to commence underwriting and dealing and the U.S. offices of their parent foreign banks have in equity securities.17 The Board indicated that it never had to comply with the framework of conditions would review in one year whether the applicants had established in the section 20 Order. Thus, the Board established the managerial and operational infrastruc- finds no basis to differentiate between the Canadian ture and other policies and procedures necessary to and U.S. applicants with respect to the need for an comply with the requirements of the section 20 Order infrastructure review. and thus to be able to implement the equity securities In the alternative, Canadian Imperial and Royal underwriting and dealing activities. Bank have requested an exemption pursuant to section Canadian Imperial and Royal Bank have requested 4(c)(9) of the BHC Act (12 U.S.C. § 1843(c)(9)) to immediate authority to commence underwriting and underwrite and deal in the equity securities of Canadealing in equity securities. They assert that, unlike dian issuers immediately. Section 4(c)(9) permits the U.S. bank holding companies, their section 20 subsid- Board to grant an exemption from the BHC Act's iaries were engaged in a full range of securities activ- nonbanking activity prohibitions to a foreign bank if ities in the United States for over 70 years prior to the Board determines that the exemption would not be their acquisition by the Applicants. At that time, the substantially at variance with the purposes of the BHC companies terminated their ineligible securities activ- Act and would be in the public interest. ities to conform to U.S. banking law. Applicants assert Applicants assert that granting the exemption would that the companies already have the necessary mana- not be substantially at variance with the purposes of gerial and operational infrastructure in place for un- the BHC Act because the Board has determined that derwriting equity securities. Applicants state that the underwriting and dealing in equity securities are closely related to banking under the BHC Act. Moreover, Applicants argue, there is no basis for finding a substantial competitive disadvantage to U.S. compet- 16. Where exceptions to the requirements apply only to U.S. Treasury Securities, rather than the broader category of government itors because U.S. companies may commence the securities, the exception is extended only to direct obligations of the activity as well as soon as they are found to have the Canadian federal government. necessary procedures and expertise. Applicants fur- 17. J.P. Morgan & Co. Incorporated, at 209. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

168 Federal Reserve Bulletin • March 1990 ther contend that the proposed exemption would be in "closely related" and "proper incident to banking" the public interest in that it would provide the public standards of section 4(c)(8) of the BHC Act. The ICI with additional sources of equity underwriting and makes similar contentions to the extent that the applidealing services. Finally, Applicants contend that their cation by Royal Bank requests authority to underwrite underwriting subsidiaries will suffer substantial com- and deal in investment company securities.19 petitive harm if they are not permitted to resume With respect to the comments previously made by underwriting and dealing in equity securities immedi- the SIA and ICI in connection with the January 1989 ately in that they will lose valuable, experienced staff Order regarding the Glass-Steagall Act and the BHC to companies who are able to engage in such activities. Act, the Board has considered and rejected such The Board believes, however, that granting Appli- comments in that Order, the reasons for which have cants' request for an exemption pursuant to section been incorporated and made part of the Board's deci- 4(c)(9) would give them a competitive advantage over sion herein.20 U.S. bank holding companies as well as other securi- The SIA also contends that consistent application of ties companies owned by foreign banks. By virtue of the Board's statutory interpretation and related reguthe exemption, Applicants would be able to offer latory framework is appropriate, given that the appliequity underwriting services while their U.S. bank- cable statutory language applies equally to all conduct owned competitors could not without having been covered by it regardless of the status or locale of the examined with respect to their managerial and opera- particular banking entity involved. The SIA argues tional infrastructure and other policies and proce- that such a consistent rationale counsels against grantdures. Moreover, it has long been the policy of the ing additional authority to or reducing limitations Board not to grant exemptions under section 4(c)(9) to proposed by a given applicant, such as Canadian foreign organizations if the exemption would give the foreign organization a material competitive advantage over U.S. bank holding companies.18 Accordingly, the 19. The ICI also argues that, to the extent Royal Bank seeks authority for the Section 20 subsidiary to engage in underwriting or Board does not believe Applicants' request for an dealing in bank-ineligible affiliate securities, the application is contrary exemption to be consistent with the policies governing to law and should be denied. By Order dated September 21, 1989, the implementation of section 4(c)(9) of the BHC Act however, the Board made a determination to permit a section 20 subsidiary to underwrite and deal in securities of affiliates, where the and the request is denied. securities are rated by an unaffiliated, nationally recognized rating organization or are issued or guaranteed by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corpora- Public Benefits tion, or the Government National Mortgage Association, or represent interests in such obligations. 75 Federal Reserve Bulletin 751 (1989). Consummation of Applicants' proposals would pro- The Board hereby incorporates the reasoning of that decision. 20. The SIA has also indicated that a determination to increase from vide increased convenience to the section 20 subsid- 5 to 10 percent the revenue limit on the amount of total revenues a iaries' customers and gains in efficiency. In addition, Section 20 subsidiary may derive from ineligible securities underwritthe Board expects that the de novo entry of Applicants ing and dealing activities should be addressed in the context of a response to the Board's general request for comments on that issue, into the market for these services would increase the rather than in the context of this particular application. The Board level of competition among providers of these ser- acted on this issue by Order dated September 21, 1989, determining that it would be appropriate to raise the revenue limit from 5 to 10 vices. Accordingly, for these reasons and the reasons percent. set forth in the section 20 Order, the Board finds that The SIA also contends that Royal Bank and Barclays appear to be the performance of the proposed activities by the requesting permission to engage in "riskless principal" transactions in which their section 20 subsidiaries would act in effect as dealers for section 20 subsidiaries can reasonably be expected to securities underwritten or distributed by foreign affiliates. While it is produce benefits to the public. unclear which of the proposed activities the SIA is referring to as "riskless principal" transactions, Royal Bank and Barclays have committed that any of the activities of the section 20 subsidiaries that Contentions of SI A and ICI constitute underwriting or dealing in securities within the meaning of section 20 of the Glass-Steagall Act would be subject to the 10 percent revenue limitation. The SIA and ICI, in their comments on these applica- The Board also notes that Royal Bank and Barclays have not tions, incorporated by reference the arguments each applied to engage in riskless principal transactions as an eligible had made relating to the Board's January 1989 section securities activity in accordance with the conditions established by the Board for the conduct of that activity. Bankers Trust New York 20 Order. The SIA contends that the proposed activi- Corporation, 75 Federal Reserve Bulletin 829 (1989). One of the ties would result in a violation of section 20 of the conditions established in the Bankers Trust Order is that, for a riskless Glass-Steagall Act and that they do not meet the principal transaction to be considered an eligible activity for a section 20 subsidiary, it may not be entered into on behalf of a foreign affiliate that deals in securities abroad. The Board had previously stated that, where a U.S. company acts as a riskless principal on behalf of foreign securities affiliates, such activity could constitute dealing in securities. 18. See Midland Bank Limited, 67 Federal Reserve Bulletin 729 Letter from William W. Wiles to Security Pacific Corporation (1981). (April 18, 1988). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 169 Imperial, Royal Bank or Barclays, relative to those Board's approval is subject to the following condipreviously enunciated by the Board. tions: The Board has considered the SIA's comments and has found, for the reasons discussed in this Order, that A. Capital Adequacy Conditions modifications to the conditions previously imposed by the Board on the conduct of the proposed activities are 1. Applicant meets internationally-accepted risk-based appropriate in these cases, particularly in light of the capital requirements before and after deduction from policy of national treatment mandated by the IBA and Applicant's consolidated capital of: Applicants' status as bank holding companies. More- (a) any investment it makes in the underwriting over, the Board has not modified the commitments for subsidiary that is treated as capital in that subsidparticular foreign bank applicants; rather, the Board iary, and has adopted a general framework that adjusts certain (b) any credit Applicant or a subsidiary extends of the section 20 conditions to address the issues directly or indirectly to the underwriting subsidiary raised by Applicants' foreign status without creating unless the extension of credit is fully secured by the potential for adverse effects that outweigh ex- U.S. Treasury securities, securities that are direct pected public benefits. obligations of the Canadian federal government, or Finally, SI A appears to contend that Applicants' other marketable securities and is collateralized in branches and agencies are subject to all the same laws the same manner and to the same extent as would be and regulations as national banks by virtue of required under section 23A(c) of the Federal Re- 12 U.S.C. § 3106a, and therefore the Board may not serve Act if the extension of credit were made by a modify any conditions of the section 20 Order for member bank.21 Applicants that are applicable to national banks. The Board does not agree with this reading of the statute. 2. In calculating risk-based capital ratios, Applicant The provision in question provides that foreign banks should deduct 50 percent of the amount of any investoperating in the United States are subject to all the ment in, and 50 percent of any unsecured or not fully same laws and regulations affecting U.S. banks that secured or inadequately collateralized loans to, the relate to discrimination based on race, sex, creed or underwriting subsidiary from Tier 1 capital and 50 national origin. percent from Tier 2 capital. Applicant should also For these reasons, and subject to the framework and exclude the underwriting subsidiary's assets from its conditions established in this Order, the Board be- consolidated assets. Notwithstanding these adjustlieves that the proposals are not likely to result in ments, Applicant should continue to maintain adedecreased or unfair competition, conflicts of interest, quate capital on a fully consolidated basis. unsound banking practices, concentration of re- 3. No Applicant nor any of its subsidiaries shall, sources, or other adverse effects that outweigh the directly or indirectly, provide any funds to, or for the reasonably expected public benefits from the pro- benefit of, an underwriting subsidiary, whether in the posals. form of capital, secured or unsecured extensions of credit, or transfer of assets, without prior notice to and Conclusion approval by the Board. 4. The underwriting subsidiary shall maintain at all Based on the foregoing and other facts of record, and times capital adequate to support its activity and cover subject to the conditions set forth in this Order, the reasonably expected expenses and losses in accord- Board concludes that Applicants' proposals are con- ance with industry norms. sistent with section 20 of the Glass-Steagall Act and are so closely related to banking as to be a proper B. Credit Extensions to Customers of the incident thereto within the meaning of section 4(c)(8) Underwriting Subsidiary22 of the BHC Act. Accordingly, the applications are hereby approved. The Board's approval of these pro- 5(a) No U.S. affiliate or branch or agency of Applicant posals extends only to activities conducted within the shall directly or indirectly extend credit or issue or conditions of this Order and subject to the gross enter into a stand-by letter of credit, asset purchase revenue limitation discussed above. Underwriting and dealing in the approved securities in any manner other than as approved in this Order is not within the scope 21. An extension of credit means any loan, guarantee, or other form of the Board's approval and is not authorized for the of credit exposure, including those described in Condition 5. section 20 subsidiaries. As more fully set forth in the 22. Unless otherwise stated, these conditions shall apply to a subsidiary of a bank or thrift institution to the same extent as they section 20 Order, as modified by this Order, the apply to the bank or thrift institution. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

170 Federal Reserve Bulletin • March 1990 agreement, indemnity, guarantee, insurance or ble securities of an issuer if it becomes aware that an other facility that might be viewed as enhancing the affiliate is providing credit to an issuer for such creditworthiness or marketability of an ineligible purposes. securities issue underwritten or distributed by the (c) These limitations are inapplicable to any credit underwriting subsidiary. lines extended to an issuer by any Applicant or any (b) The underwriting subsidiary shall not under- subsidiary of an Applicant that provide for subwrite or distribute ineligible securities if the under- stantially different timing, terms, conditions and writing subsidiary is aware in the ordinary course of maturities from the ineligible securities being unconducting a due diligence review that an affiliate is derwritten. It would be clear, for example, that a extending credit or issuing or entering into a stand- credit has substantially different terms and timing by letter of credit, asset purchase agreement, indem- if it is for a documented special purpose (other nity, guarantee, insurance or other facility that than the payment of principal, interest or divimight be viewed as enhancing the creditworthiness dends) or there is substantial participation by other or marketability of such ineligible securities. lenders. 6(a) No U.S. affiliate or branch or agency of Appli- 8. Each Applicant shall adopt appropriate procedures, cant (other than the underwriting subsidiary) shall including maintenance of necessary documentary recknowingly extend credit to a customer directly or ords, to assure that any extension of credit by any of indirectly secured by, or for the purpose of pur- its U.S. affiliates, branches, or agencies to issuers of chasing, any ineligible security that the underwrit- ineligible securities underwritten or dealt in by an ing subsidiary underwrites during the period of the underwriting subsidiary are on an arm's length basis underwriting or for 30 days thereafter, or to pur- for purposes other than payment of principal, interest, chase from the underwriting subsidiary any ineli- or dividends on the issuer's ineligible securities being gible security in which the underwriting subsidiary underwritten or dealt in by the underwriting subsidmakes a market. iary. An extension of credit is considered to be on an (b) The underwriting subsidiary shall not arrange for arm's length basis if the terms and conditions are an Applicant or any of its subsidiaries to extend, or substantially the same as those prevailing at the time knowingly participate in any arrangement whereby for comparable transactions with issuers whose secuan Applicant or any of its subsidiaries extends, rities are not underwritten or dealt in by the underwritcredit to a customer directly or indirectly secured ing subsidiary. by, or for the purpose of purchasing, any ineligible 9. In any transaction involving an underwriting subsecurity that the underwriting subsidiary under- sidiary, Applicant's thrift subsidiaries shall observe writes during the period of the underwriting or for 30 the limitations of sections 23A and 23B of the Federal days thereafter, or to purchase from the underwrit- Reserve Act as if the thrifts were banks.23 ing subsidiary any ineligible security in which the 10. The requirements relating to credit extensions to underwriting subsidiary makes a market. issuers noted in paragraphs 5 - 9 above shall also apply (c) These limitations extend to all customers of to extensions of credit to parties that are major users Applicant and its subsidiaries, including broker- of projects that are financed by industrial revenue dealers and unaffiliated banks, but do not include bonds. lending to a broker-dealer for the purchase of secu- 11. Applicants shall cause their U.S. bank and thrift rities where an affiliated bank is the clearing bank for subsidiaries, branches, and agencies to adopt polisuch broker-dealer. cies and procedures, including appropriate limits on 7(a) No U.S. affiliate or branch or agency of Appli- exposure, to govern their participation in financing cant may, directly or indirectly, extend credit to transactions underwritten or arranged by an underissuers of ineligible securities underwritten by the writing subsidiary as set forth in this Order. The underwriting subsidiary for the purpose of the Reserve Banks shall ensure that these policies and payment of principal, interest or dividends on such procedures are in place at Applicants' U.S. bank and securities. thrift subsidiaries, branches, and agencies and shall (b) The underwriting subsidiary shall not arrange for assure that loan documentation is available for rean Applicant or any of its subsidiaries to extend, or view by Reserve Banks to ensure that an indepenknowingly participate in any arrangement whereby dent and thorough credit evaluation has been underan Applicant or any of its subsidiaries extends, credit to an issuer of ineligible securities underwritten by the underwriting subsidiary for the purpose of 23. The Board notes that the Applicants in these cases do not the payment of principal, interest, or dividends on currently own thrift subsidiaries in the United States. The Board is including this limitation as part of a general framework for foreign such securities and shall not underwrite any ineligi- banks operating in the United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 171 taken in connection with the participation by the E. Marketing Activities on Behalf of an bank, thrift, branch, or agency in such financing Underwriting Subsidiary packages and that such lending complies with the requirements of this Order and section 23B of the 15. No underwriting subsidiary nor any affiliated U.S. Federal Reserve Act. bank or thrift institution, branch, or agency will en- 12. Applicants' U.S. bank and thrift subsidiaries and gage in advertising or enter into an agreement stating branches and agencies should also establish appropri- or suggesting that an affiliated U.S. bank, thrift, ate policies, procedures, and limitations regarding branch, or agency is responsible in any way for the exposure of Applicants' U.S. subsidiaries and offices underwriting subsidiary's obligations as required for on a consolidated basis to any single customer whose affiliates of member banks under section 23B of the securities are underwritten or dealt in by the under- Federal Reserve Act. writing subsidiary. 16. No U.S. bank or thrift subsidiary or U.S. branch or agency of Applicant will act as agent for, or engage in C. Limitations to Maintain Separateness of an marketing activities on behalf of, the underwriting Underwriting Affiliate's Activity subsidiary.25 In this regard, prospectuses and sales literature relating to securities being underwritten or 13. There will be no officer, director, or employee dealt in by an underwriting subsidiary may not be interlocks between an underwriting subsidiary and any distributed by a U.S. bank or thrift subsidiary or U.S. of Applicant's U.S. bank or thrift subsidiaries, branch or agency of Applicant; nor should any such branches, or agencies, except that one officer of a literature be made available to the public at any offices branch or agency may act as a director of the under- of any such bank, thrift, branch, or agency, unless writing subsidiary. The underwriting subsidiary will specifically requested by a customer. have separate offices from any bank or thrift subsidiary or branch or agency of Applicant.24 F. Investment Advice by Bank/Thrift Affiliates, Branches, and Agencies D. Disclosure by the Underwriting Subsidiary 17. An affiliated U.S. bank or thrift institution or a 14. An underwriting subsidiary will provide each of U.S. branch or agency may not express an opinion on its customers with a special disclosure statement the value or the advisability of the purchase or the sale describing the difference between the underwriting of ineligible securities underwritten or dealt in by an subsidiary and its bank and thrift affiliates and its affiliated underwriting subsidiary unless the affiliated U.S. branches and agencies and pointing out that an institution, branch, or agency notifies the customer affiliated bank or thrift or U.S. branch or agency that the underwriting subsidiary is underwriting, makcould be a lender to an issuer and referring the ing a market, distributing or dealing in the security. customer to the disclosure documents for details. In 18. No U.S. bank, thrift, or trust or investment advisaddition, the statement shall state that securities ory subsidiaries, or U.S. branches or agencies, of an sold, offered, or recommended by the underwriting Applicant shall purchase, as a trustee or in any other subsidiary are not deposits, are not insured by the fiduciary capacity, for accounts over which they have Federal Deposit Insurance Corporation, are not investment discretion ineligible securities: guaranteed by an affiliated bank or thrift or branch or (a) underwritten by the underwriting subsidiary as agency, and are not otherwise an obligation or re- lead underwriter or syndicate member during the sponsibility of such a bank or thrift or branch or period of any underwriting or selling syndicate, and agency (unless such is the case). The underwriting for a period of 60 days after the termination thereof, subsidiary should also disclose any material lending and relationship between the issuer and a bank or lending (b) from the underwriting subsidiary if it makes a affiliate of the underwriting subsidiary as required market in that security, unless, in either case, such under the securities laws and in every case, to the purchase is specifically authorized under the instruextent known, whether the proceeds of the issue will ment creating the fiduciary relationship, by court be used to repay outstanding indebtedness to affili- order, or by the law of the jurisdiction under which ates. the trust is administered. 24. An underwriting subsidiary may have offices in the same building as a bank or thrift subsidiary or branch or agency of Applicant 25. This condition does not prevent a bank, thrift, branch, or agency if the underwriting subsidiary's offices are clearly distinguished from from informing its customers of the available services of the underthose of the bank, thrift, branch, or agency. writing subsidiary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

172 Federal Reserve Bulletin • March 1990 G. Extensions of Credit and Purchases and securities, is on market terms, and is repaid on the Sales of Assets same calendar day. If the intra-day clearing of such securities cannot be completed because of a bona 19. An underwriting subsidiary may not sell to any fide fail or operational problem incidental to the affiliate that is acting as principal in the transaction, clearing process that is beyond the control of the ineligible securities that are underwritten by the un- affiliate, branch or agency and the underwriting derwriting subsidiary during the period of the under- subsidiary, the affiliate, branch or agency may conwriting and for 60 days after the close of the under- tinue the intra-day extension of credit overnight writing period, or any ineligible security in which the provided the extension of credit is fully secured as underwriting subsidiary makes a market, except that, to principal and interest as described above, is on in the case of ineligible securities that are being issued market terms, and is repaid as early as possible on in a simultaneous cross-border underwriting in which the next business day. the underwriting subsidiary and a foreign affiliate or 22. No U.S. bank or thrift subsidiary, branch, or affiliates are participating, such securities may be agency shall, directly or indirectly, for its own acpurchased or sold pursuant to an intersyndicate agree- count, purchase financial assets of an affiliated underment for the period of the underwriting where the writing subsidiary or a subsidiary thereof or sell such purchase or sale results from bona fide indications of assets to the underwriting subsidiary or subsidiary interest from customers. Such purchases or sales shall thereof. This limitation shall not apply to the purchase not be made for purposes of providing liquidity or and sale of U.S. Treasury securities or direct obligacapital support to the underwriting subsidiary or oth- tions of the Canadian federal government that are not erwise to evade the requirements of this Order. An subject to repurchase or reverse repurchase agreeunderwriting subsidiary shall maintain documentation ments between the underwriting subsidiary and its on such transactions. affiliated bank or thrift subsidiary, branch, or agency. 20. An underwriting subsidiary may not underwrite or deal in any ineligible securities issued by its affiliates H. Limitations on Transfers of Information or representing interests in, or secured by, obligations originated or sponsored by its affiliates (except for 23. No U.S. bank, thrift, branch, or agency shall grantor trusts or special purpose corporations created disclose to an affiliated underwriting subsidiary, nor to facilitate underwriting of securities backed by assets shall an underwriting subsidiary disclose to an affiloriginated by a non-affiliated lender) unless such secu- iated bank, thrift, branch, or agency, any nonpublic rities are rated by an unaffiliated, nationally recog- customer information (including an evaluation of the nized rating organization or are issued or guaranteed creditworthiness of an issuer or other customer of that by the Federal National Mortgage Association, the bank, thrift, branch, agency, or underwriting subsid- Federal Home Loan Mortgage Corporation, or the iary) without the consent of that customer. Government National Mortgage Association or represent interests in securities issued or guaranteed by I. Reports such agencies. 21(a) Applicants shall assure that no U.S. bank or 24. Applicants shall submit quarterly to the approprithrift subsidiary, branch, or agency shall, directly or ate Federal Reserve Bank FOCUS reports filed with indirectly, extend credit in any manner to an affil- the NASD or other self-regulatory organizations, and iated underwriting subsidiary or a subsidiary detailed information breaking down the underwriting thereof; or issue a guarantee, acceptance, or letter subsidiaries' business with respect to eligible and of credit, including an endorsement or standby letter ineligible securities, in order to permit monitoring of of credit, for the benefit of the underwriting subsid- the underwriting subsidiaries' compliance with the iary or a subsidiary thereof, provisions of this Order. (b) This prohibition shall not apply to an extension of credit by an affiliated bank or thrift subsidiary, J. Transfer of Activities and Formation of branch, or agency to an underwriting subsidiary that Subsidiaries of an Underwriting Subsidiary to is incidental to the provision of clearing services by Engage in Underwriting and Dealing such affiliate, branch or agency to the underwriting subsidiary with respect to securities of the United 25. The Board's approval of the proposed underwrit- States or Canada or their agencies, or securities on ing and dealing activities extends only to the subsidwhich the principal and interest are fully guaranteed iaries described above for which approval has been by the United States or Canada or their agencies, if sought in the instant applications. The activities in the the extension of credit is fully secured by such United States may not be conducted by Applicants in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 173 any other subsidiary without prior Board review. that it has established the managerial and operational Pursuant to Regulation Y, no corporate reorganization infrastructure and other policies and procedures necof an underwriting subsidiary, such as the establish- essary to comply with the requirements of this Order. ment of subsidiaries of the underwriting subsidiary to The Board's approval determination is subject to the conduct the activities, may be consummated without conditions set forth in the Board's Regulation Y, prior Board approval. including those in sections 225.4(d) and 225.23(b), and to the Board's authority to require modification or K. Limitations on Reciprocal Arrangements termination of the activities of a bank holding comand Discriminatory Treatment pany or any of its subsidiaries as the Board finds necessary to assure compliance with, and to prevent 26. No Applicant nor any of its subsidiaries may, evasion of, the provisions and purposes of the BHC directly or indirectly, enter into any reciprocal ar- Act and the Board's regulations and orders issued rangement. A reciprocal arrangement means any thereunder. agreement, understanding, or other arrangement un- By order of the Board of Governors, effective der which one bank holding company (or subsidiary January 4, 1990. thereof) agrees to engage in a transaction with, or on behalf of, another bank holding company (or subsid- Voting for this action: Chairman Greenspan and Governors iary thereof), in exchange for the agreement of the Johnson, Seger, Angell, Kelley, and LaWare. second bank holding company (or any subsidiary thereof) to engage in a transaction with, or on behalf JENNIFER J. JOHNSON Associate Secretary of the Board of, the first bank holding company (or any subsidiary thereof) for the purpose of evading any requirement of this Order or any prohibition on transactions between, Concurring Statement of Governor Seger or for the benefit of, affiliates of banks established pursuant to federal banking law or regulation. I concur in the decision of the Board to approve these 27. No U.S. bank or thrift subsidiary or branch or applications. I believe, however, that the Board agency of Applicant shall, directly or indirectly: should reevaluate the need for continued imposition (a) acting alone or with others, extend or deny credit on any section 20 company, whether U.S. or foreignor services (including clearing services), or vary the owned, of any firewalls that are not related to safety terms or conditions thereof, if the effect of such and soundness of affiliated banks. action would be to treat an unaffiliated securities In these cases, I would not require that Applicants firm less favorably than its affiliated underwriting obtain the Board's prior approval for future investsubsidiary, unless the bank, thrift, branch, or ment and lending. Moreover, I do not see the need to agency demonstrates that the extension or denial is continue to require U.S.-owned section 20 companies based on objective criteria and is consistent with to obtain such approval. I would also permit Applisound business practices; or cants to establish interlocks without restriction between the section 20 companies and their U.S. (b) extend or deny credit or services or vary the branches and agencies, and would urge the Board to terms or conditions thereof with the intent of creatreconsider the section 20 Order's total prohibition on ing a competitive advantage for an underwriting interlocks with bank and thrift affiliates. subsidiary of an affiliated bank holding company. January 4, 1990 L. Requirement for Supervisory Review Before Commencement of Activities Concurring Statement of Governor LaWare 28. An Applicant may not commence the proposed These applications present a number of complex isdebt or equity securities underwriting and dealing sues that require difficult choices on the part of the activities until the Board has determined that the Board. The Board's decision to approve the applica- Applicant has established policies and procedures to tions within the framework of its previous section 20 ensure compliance with the requirements of this Or- Orders reflects a careful balancing of competing interder, including computer, audit and accounting sys- ests and, in my view, the decision strikes the approtems, internal risk management controls and the nec- priate balance under the circumstances. essary operational and managerial infrastructure. In As the Board's Order recognizes, there is a basic this regard, the Board will review whether an Appli- incongruity presented by Applicants' status as both cant may commence underwriting and dealing in eq- banks and bank holding companies. In my view, the uity securities based on a determination by the Board Board correctly determined, consistent with the pro- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

174 Federal Reserve Bulletin • March 1990 visions of the International Banking Act, that the section 4(c)(8) of the BHC Act (12 U.S.C. Applicant foreign banks should be treated as bank § 1843(c)(8)) and section 225.23 of the Board's Reguholding companies and that the conditions or firewalls lation Y (12 C.F.R. 225.23) for its subsidiary, First should be appropriately adjusted to reflect that policy. Union Securities, Incorporated, Charlotte, North My disagreement with the Board lies in its decision to Carolina ("Company"), to act as agent in the private leave open the possibility that other circumstances placement of all types of securities. could arise that would warrant a different treatment for First Union, with approximately $19.9 billion in an applicant foreign bank than the one reached today. deposits, is the third largest commercial banking orga- I recognize that the Board is proceeding cautiously in nization in North Carolina.1 It operates five subsidiary this difficult area and that it is not willing to establish a banks and engages directly and through subsidiaries in general principle applicable to situations not before it. a broad range of permissible nonbanking activities in Nevertheless, it is my opinion that the Board's basic the United States, including engaging through Comdecision to treat the Applicant foreign banks as bank pany to a limited extent in underwriting and dealing in holding companies is the correct principle to apply certain securities.2 Company is and will continue to be generally under current law. a broker-dealer registered with the Securities and In applying the principles of national treatment and Exchange Commission and subject to the recordcompetitive equity in the context of the International keeping, reporting, fiduciary standards, and other re- Banking Act's instruction that Applicants be treated as quirements of the Securities Exchange Act of 1934, bank holding companies, the Board felt compelled not and the National Association of Securities Dealers. to exempt Applicants from the requirement of the Notice of the application, affording interested persection 20 Order that bank holding companies deduct sons an opportunity to submit comments on the profrom their capital any investments in and unsecured posal, has been published (54 Federal Register 24,038 lending to the section 20 company, and seek prior (1989)). The time for filing comments has expired, and approval for such actions in the future. The Board the Board has considered the application and all established the condition in its original decision in comments received in light of the public interest order to ensure that the parent bank holding company factors set forth in section 4(c)(8) of the BHC Act. The met its capital requirements after the applicable deduc- Board received written comments opposing the applitions and thus could continue to serve as a source of cation from the Investment Company Institute strength to its subsidiary banks. While I recognize that ("ICI"), a trade association of the mutual fund it is the Board's objective through the condition to industry.3 strengthen and preserve the capital position of domes- Because Company would be affiliated through comtic bank holding companies, I disagree with the need mon ownership with a member bank, Company may for that requirement in the context of foreign banks not be "engaged principally" in underwriting or dealwhose financial condition is subject to comparable ing in securities within the meaning of section 20 of the home country supervision. Any advantage that might Banking Act of 1933 (the "Glass-Steagall Act").4 In be conferred on Applicants by an exemption would earlier decisions, the Board has determined that Comnot, in my opinion, be so substantial as to warrant the pany is not "engaged principally" in section 20 activcondition in order to maintain competitive equity. I ities if revenues from underwriting and dealing in note, however, that the Board has stated it will review the requirement for prior approval of bank holding company funding of section 20 subsidiaries, whether 1. All data are as of June 30, 1989. domestically or foreign owned, outside the context of 2. See First Union Corporation, 75 Federal Reserve Bulletin 645 these applications. I welcome that review. (1989). 3. The comments of the ICI were received substantially after the January 4, 1990 close of the comment period prescribed in the notice of this application. Under the Board's Rules of Procedure, the Board may, but is not First Union Corporation required to consider comments received after the close of the public comment period. 12 C.F.R. 262.3. In any event, the ICI has objected Charlotte, North Carolina to First Union's proposal to the extent that it could be construed to seek approval for Company to privately place securities of investment companies that are sponsored or advised by Company or First Union. Order Approving Application to Act in the Private This application does not involve a request by First Union to place Placement of All Types of Securities such securities. 4. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) provides that First Union Corporation, Charlotte, North Carolina ". . . no member bank shall be affiliated . . . with any . . . ("First Union"), a bank holding company within the organization engaged principally in the issue, flotation, underwritmeaning of the Bank Holding Company Act ("BHC ing, public sale, or distribution at wholesale or retail or through syndicate participation of stocks, bonds, debentures, notes, or Act"), has applied for the Board's approval under other securities. ..." 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Legal Developments 175 securities that banks are not authorized to underwrite 23B of the Federal Reserve Act, which provides that and deal in directly ("ineligible securities") do not certain types of transactions between a bank and a exceed 10 percent of Company's gross revenues. nonbank affiliate must be on an arm's length basis.7 In its recent Bankers Trust decision, the Board While it is not entirely clear that section 23B will apply determined that acting as agent in the private place- to all of these credit transactions, the Board expects ment of securities does not constitute underwriting that the standards set out in that section will nevertheand dealing in securities for purposes of section 20 of less be complied with. the Glass-Steagall Act, and therefore revenue derived Accordingly, the Board believes that it is approprifrom these activities is not subject to the 10 percent ate to allow banks affiliated with section 20 subsidiarrevenue limitation on ineligible securities underwriting ies or other nonbank affiliates to extend credit to an and dealing.5 In addition, in its Bankers Trust and J.P. issuer to repay the principal amount of the securities, Morgan decisions the Board found that, subject to a provided there is some reasonable time difference number of prudential limitations that address the po- between the placement of the securities and the decitential for conflicts of interests, unsound banking sion to extend credit,8 and provided the extensions of practices or other adverse effects, private placement credit meet prudent and objective standards. The was so closely related to banking as to be a proper Board conditions its decision with regard to these incident thereto within the meaning of section 4(c)(8) extensions of credit on the requirement that First of the BHC Act. First Union has committed that Union's subsidiary banks or other affiliates maintain Company will conduct its private placement activities detailed and clearly identified credit and collateral in a manner consistent with, and subject to, all of the documentation so that examiners may determine that a prudential limitations approved by the Board in J.P. thorough, objective and independent analysis of the Morgan.6 credit has been undertaken. In addition, documenta- First Union has proposed to have its affiliated banks tion must be maintained to show that the participation extend credit to an issuer whose debt securities have by a bank or thrift affiliate in the transaction has been been placed by the section 20 subsidiary where the undertaken under circumstances and on terms and proceeds would be used to pay the principal amount of conditions (including pricing, minimum borrower cash the securities at maturity. Such transactions may be flow-to-debt service or collateral requirements, or appropriate if at the time the securities mature it were repayment terms) that are not preferential and that more advantageous to the issuer to obtain financing fully reflect the risks associated with the loan, as from the bank rather than to reissue the securities. required under section 23 B of the Federal Reserve In situations where the decision to extend credit to Act. The Federal Reserve Bank of Richmond will an issuer of securities placed by the section 20 subsid- closely review loan documentation of bank affiliates to iary to repay the principal amount of the securities at ensure that an independent and thorough credit evalmaturity is made at a different time than when the uation has been undertaken with respect to the particsecurities are actually being placed, the likelihood that ipation of the bank in these credit extensions to issuers the decision to extend credit would be influenced by of securities privately placed by an agent affiliated with any promotional incentive associated with the place- the bank. ment activity would be minimized, especially in the With respect to the affiliate purchase restriction, case of longer-term securities. Since the decision First Union also has proposed to have Company place whether to extend credit in this situation would not be securities with its parent holding company or with a made while the securities are being marketed, the nonbank subsidiary of the parent company consistent likelihood that the bank would not exercise indepen- with the Board's ruling in J.P. Morgan.9 The Board dent judgment in assessing the creditworthiness of the notes that since purchases of securities will not be issuer in light of all relevant circumstances at the time made by an affiliated bank, the possibility that losses would be lessened. The bank's credit decisions, more- as a result of these investments will adversely affect over, can be closely scrutinized through the examina- the federal safety net protecting the bank is minimized. tion process. In addition, many of these credit transactions could be subject to the requirements of section 7. 12 U.S.C. § 371c-l. 8. In the Board's view, this requirement will be satisfied if at the time the extension of credit is made, a period of at least three years has 5. Bankers Trust New York Corporation, 75 Federal Reserve elapsed from the time of the placement of the securities. Bulletin 829 ("Bankers Trust"). See also J.P. Morgan & Company 9. Under current legal restrictions, member banks cannot generally Incorporated, 76 Federal Reserve Bulletin 26 {"J.P. Morgan"). purchase securities privately placed by an affiliate. This is because 6. First Union has agreed to consult with Federal Reserve staff member banks are prohibited from acquiring any equity securities or before transferring its private placement activities from Company to unmarketable debt securities, i.e., those that cannot be resold because any other nonbank subsidiary of First Union to assure that none of the of SEC private placement restrictions. See 12 U.S.C. §§ 24 (Seventh) provisions of the J.P. Morgan Order are evaded by the transfer. and 335. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

176 Federal Reserve Bulletin • March 1990 Accordingly, the Board believes that it is appropri- visions of the BHC Act and the Board's regulations ate to allow Company to place securities with its and Orders issued thereunder. parent holding company or a nonbank affiliate. The This transaction shall not be consummated later Board recognizes that the potential for certain con- than three months after the effective date of this flicts of interest may be increased if affiliates were to Order, unless such period is extended for good cause purchase the entire issue of securities placed by the by the Board or by the Federal Reserve Bank of section 20 subsidiary or a substantial portion of such Richmond, pursuant to delegated authority. an issue. The Board therefore believes that it is By order of the Board of Governors, effective appropriate to require that affiliates of the section 20 January 4, 1990. subsidiary limit their investment, both individually and in the aggregate, in any particular issue of securities Voting for this action: Chairman Greenspan and Governors that are placed by the section 20 subsidiary. The Board Johnson, Seger, Angell, Kelley, and LaWare. expects that First Union will establish appropriate internal policies, procedures, and limitations regarding JENNIFER J. JOHNSON the amount of securities of any particular issue placed Associate Secretary of the Board by Company that may be purchased by First Union Orders Issued Under Sections 3 and 4 of the and each of its nonbanking subsidiaries, individually and in the aggregate.10 These policies and procedures, Bank Holding Company Act as well as the purchases themselves, will be reviewed CoreStates Financial Corp. by the Federal Reserve Bank of Richmond. Philadelphia, Pennsylvania In sum, the record shows that under the framework established in this and prior decisions, consummation Order Approving Merger of Bank Holding of this proposal is not likely to result in any significant Companies undue concentration of resources, decreased or unfair competition, conflicts of interest, unsound banking CoreStates Financial Corp., Philadelphia, Pennsylvapractices, or other adverse effects. nia ("CoreStates"), a bank holding company within Consummation of this proposal would provide the meaning of the Bank Holding Company Act greater efficiencies and added convenience to First ("BHC Act"), has applied for the Board's approval Union's customers by allowing consolidation of a under section 3 of the BHC Act (12 U.S.C. § 1842) to wider range of services in a single entity. Accordingly, merge with First Pennsylvania Corp., Philadelphia, the Board has determined that the performance of the Pennsylvania ("First Penn"), and thereby indirectly proposed activities by First Union can reasonably be acquire First Pennsylvania Bank, N.A., Philadelphia, expected to produce public benefits which would Pennsylvania, First Pennsylvania Bank (NJ), N.A., outweigh adverse effects under the proper incident to Evesham Twp., New Jersey, and First Pennsylvania banking standard of section 4(c)(8) of the BHC Act. Bank (Del), Wilmington, Delaware. CoreStates also Based on the above, the Board has determined to has applied for the Board's approval under section approve First Union's application subject to all of the 4(c)(8) of the BHC Act to acquire the nonbanking terms and conditions set forth above. The Board's subsidiaries of First Penn.1 determination is subject to all of the conditions set Notice of the applications, affording interested perforth in the Board's Regulation Y, including those in sons an opportunity to submit comments, has been sections 225.4(d) and 225.23(b), and to the Board's published (54 Federal Register 51,235 (1989)). The authority to require modification or termination of the time for filing comments has expired, and the Board activities of a bank holding company or any of its has considered the applications and all comments subsidiaries as the Board finds necessary to assure compliance with, and to prevent evasion of, the pro- 1. CoreStates proposes to acquire Centre Square Investment 10. The limit established shall not exceed 50 percent of the issue Group, Inc., Philadelphia, Pennsylvania, and thereby engage in inbeing placed. Additionally, in the development of these policies and vestment advisory services; Pennco Life Insurance Company, Phoeprocedures, First Union should incorporate, with respect to place- nix, Arizona, and thereby engage in underwriting as a reinsurer of ments of securities, the limitations established by the Board in credit life and accident and health insurance in connection with condition 12 of its Order regarding aggregate exposure of the holding extensions of credit by its subsidiary banks; and First Pennsylvania company on a consolidated basis to any single customer whose Financial Services, Inc., Philadelphia, Pennsylvania, and thereby securities are underwritten or dealt in by Company. J.P. Morgan & engage in second-mortgage lending. Co. Incorporated, The Chase Manhattan Corporation, Bankers Trust These activities are authorized for bank holding companies pursu- New York Corporation, Citicorp and Security Pacific Corporation, 75 ant to the Board's Regulation Y, 12 C.F.R. 225.25(b)(4), (b)(8), and Federal Reserve Bulletin 192 (1989). (b)(1). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 177 received in light of the factors set forth in sections 3(c) banking market.6 In that market, CoreStates is the and 4 of the BHC Act. third largest of 184 commercial banking and thrift Section 3(d) of the BHC Act, the Douglas Amend- organizations, controlling $6.6 billion in deposits, repment, prohibits the Board from approving an applica- resenting approximately 10 percent of total deposits in tion by a bank holding company to acquire control of commercial banking organizations in the market any bank located outside of the holding company's ("market deposits").7 First Penn is the sixth largest home state,2 unless such acquisition is "specifically commercial banking organization in the Philadelphia/ authorized by the statute laws of the State in which Trenton market, controlling $3.6 billion in deposits, [the] bank is located, by language to that effect and not representing approximately 5.4 percent of market demerely by implication." 12 U.S.C. § 1842(d). The posits. Upon consummation of this proposal, Core- Board has previously determined that the acquisition States would become the second largest commercial of a Delaware bank by a Pennsylvania bank holding banking organization in the market, controlling company is specifically authorized by the statute laws $10.2 billion in deposits, representing approximately of Delaware, subject to CoreStates's obtaining the 15.4 percent of market deposits.8 The Philadelphia/ approval required pursuant to Delaware law.3 The Trenton market is considered unconcentrated, with a Board has also previously determined that the acqui- Herfindahl-Hirschman Index ("HHI") of 660, which sition of a New Jersey bank by a Pennsylvania bank would increase by 108 points to 768 upon consummaholding company is specifically authorized by the tion of the proposal. statute laws of New Jersey.4 Based on the foregoing, Based on the facts of record in this case, the Board the Board has determined that the proposed merger is has determined that consummation of the proposal specifically authorized by the statute laws of Delaware would not have a significantly adverse effect on existand New Jersey, and that Board approval of the ing competition in the Philadelphia/Trenton banking proposal is not barred by the Douglas Amendment, market, or in any other relevant banking market. The subject to CoreStates's obtaining the required ap- increase in concentration resulting from the proposal proval of state banking authorities. is small, and a significant number of competitors CoreStates controls commercial banking institutions would remain after consummation. The Board also has in Pennsylvania, New Jersey and Delaware. Core- considered the effects of the proposal on probable States is the fourth largest commercial banking orga- future competition in relevant markets. In light of the nization in Pennsylvania, controlling deposits of market concentration and the number of probable $11 billion, representing approximately 6.7 percent of future entrants into those markets, the Board conthe total deposits in commercial banks in the state.5 cludes that consummation of this proposal would not First Penn operates commercial bank subsidiaries in have a significantly adverse effect on probable future Pennsylvania, New Jersey and Delaware. First Penn is competition in any relevant market. the eighth largest commercial banking organization in In evaluating these applications, the Board has Pennsylvania, with total deposits of $4.8 billion, rep- considered the financial and managerial resources of resenting 3.3 percent of the total deposits in commer- CoreStates, First Penn and their bank subsidiaries, cial banks in the state. Upon consummation of the and the effect of the proposed merger on the resources proposal, CoreStates would become the third largest and future prospects of these companies. The Board commercial banking organization in Pennsylvania, has stated and continues to believe that capital adecontrolling deposits of approximately $15.8 billion, quacy is an important factor in the analysis of bank representing approximately 10 percent of the total holding company expansion proposals.9 In this regard, deposits in commercial banking organizations in Penn- the Board expects banking organizations contemplatsylvania. Consummation of this proposal would not ing expansion proposals to maintain strong capital have a significantly adverse effect upon the concentra- levels substantially above the minimum levels specition of commercial banking resources in Pennsylvania. CoreStates and First Penn compete directly in the Philadelphia, Pennsylvania/Trenton, New Jersey 6. The Philadelphia/Trenton banking market is comprised of Philadelphia, the counties of Bucks, Chester, Delaware and Montgomery in Pennsylvania, and Trenton and the counties of Burlington, Camden, 2. A bank holding company's home state is that state in which the Gloucester and Mercer in New Jersey. operations of the bank holding company's banking subsidiaries were 7. Market data are as of June 30, 1988. principally conducted on July 1, 1966, or the date on which the 8. This includes 50 percent of thrift deposits. company became a bank holding company, whichever is later. 9. The Bank of New York Company, Inc., 74 Federal Reserve 3. Meridian Bancorp, Inc., 74 Federal Reserve Bulletin 51 (1988). Bulletin 257 (1988); Chemical New York Corporation, 73 Federal 4. CoreStates Financial Corporation, 72 Federal Reserve Bulletin Reserve Bulletin 378 (1987); Citicorp, 72 Federal Reserve Bulletin 497 796 (1986). (1986); National City Corporation, 70 Federal Reserve Bulletin 743 5. Banking data are as of September 30, 1989. (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

178 Federal Reserve Bulletin • March 1990 fied in the Board's Capital Adequacy Guidelines10 The Board also received letters from 12 community without significant reliance on intangibles, in particu- organizations13 in support of this application. The lar goodwill. The Board carefully analyzes the effect of letters describe the initiatives these organizations have expansionary proposals on the preservation or undertaken in collaboration with PNB and the positive achievement of strong capital levels, and has adopted relationship PNB has developed with their organizaa policy that there should be no significant diminution tions, generally over a period of years. of financial strength below these levels for the purpose The Board has carefully reviewed the CRA perforof effecting major expansion proposals. mance record of PNB, as well as Protestant's com- CoreStates proposes to accomplish the merger ments and CoreStates's response to those comments, in through an exchange of shares. CoreStates would light of the CRA, the Board's regulations, and the remain well capitalized following consummation of the jointly issued Statement of the Federal Financial Superproposal, with capital ratios above the minimum levels visory Agencies Regarding the Community Reinvestspecified in the Board's Capital Adequacy Guidelines. ment Act ("CRA Policy Statement").14 The CRA Pol- Based on these and all of the other facts of record, the icy Statement provides guidance regarding the types of Board concludes that financial and managerial consid- policies and procedures that the supervisory agencies erations are consistent with approval of this applica- believe financial institutions should have in place in tion. order to fulfill their responsibilities under the CRA on In considering the convenience and needs of the an ongoing basis, and the procedures that the supervicommunities to be served, the Board has taken into sory agencies will use during the application process to account the record of CoreStates's subsidiary banks review an institution's CRA compliance and perforunder the Community Reinvestment Act ("CRA"). mance. The CRA requires the federal financial supervisory Initially, the Board notes that PNB has received a agencies to encourage financial institutions to help satisfactory rating from the Office of the Comptroller meet the credit needs of the local communities in of the Currency in a January 1990 examination of its which they operate, consistent with the safe and sound CRA performance. The record also shows that Coreoperation of such institutions. To accomplish this end, States's other subsidiary banks have each received the CRA requires the appropriate federal supervisory satisfactory ratings from their primary regulators in authority to "assess an institution's record of meeting the most recent examinations of their CRA perforthe credit needs of its entire community, including mance. In addition, CoreStates has in place the types low- and moderate-income neighborhoods, consistent of programs outlined in the CRA Policy Statement as with the safe and sound operation of the institution," essential to any effective CRA program. Specifically, and to "take this record into account in its evaluation PNB has a Public Responsibility Department that of bank holding company applications."11 reports to the Board of Directors of CoreStates and In this regard, the Board has received comments concentrates on CRA matters, monitors the CRA filed by the Black Clergy of Philadelphia and Vicinity activities and initiatives taken by the bank, and main- ("Protestant") critical of the CRA performance of tains contacts within the community to develop and CoreStates's subsidiary bank, Philadelphia National monitor all of its CRA activities. CoreStates also has a Bank, Philadelphia, Pennsylvania ("PNB"). Protes- Compliance Committee to evaluate CRA activity in a tant alleges that PNB has shown a lack of commitment similar manner throughout the entire organization. to low- and moderate-income minority neighborhoods PNB routinely codes and analyzes the geographic in the Philadelphia area. In particular, Protestant as- distribution of its loans in order to monitor the effecserts that PNB engaged in a significantly smaller tiveness of its lending and outreach programs and percentage of its mortgage business in low- to moder- advertises the availability of its products and services ate-income and minority areas than in other parts of in community newspapers, including foreign-language the Philadelphia area. CoreStates has submitted a newspapers, directed at low- and moderate-income detailed response to the comments made by areas. PNB sponsors community informational events Protestant.12 to publicize products which could be of interest to 13. These are the Glenwood Development Corporation, Women's Community Revitalization Project, Venture Theatre, the Resource 10. Capital Adequacy Guidelines, 50 Federal Register 16,057 Center for Human Services, Indochinese-American Council, Hispanic (April 24, 1985). Association of Contractors and Enterprises, Inc., People's Emer- 11. 12 U.S.C. § 2903. gency Center, Better Housing for Chester, Inc., Neighborhoods 12. CoreStates has met with Protestant in an effort to clarify the Action Bureau, Inc., Community Ventures, Inc., Housing Consorissues presented under the CRA, although the parties failed to resolve tium for Disabled Individuals, and Centra Pedro Claver. all of their differences. 14. 54 Federal Register 13,742 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 179 members of the community, including low- and mod- lending was roughly the same as the aggregate in those erate-income neighborhoods. neighborhoods during 1987 and 1988. PNB has been extensively involved in the Philadel- Protestant bases its comments on an analysis of the phia Mortgage Plan, which is a city-wide plan with level of loans by dollar amount, rather than on the participation by local banks to grant mortgages in the number of loans made as reported under HMD A. inner-city; the Philadelphia Rehabilitation Plan, which Because differences in housing values will affect the makes inner-city rehabilitation loans; the Action Loan size of mortgage and home improvement loans, anal- Program, which consists of subsidized home improve- ysis of the number of loans made is a more reliable ment loans in low- to moderate-income neighborhoods; indicator of lending practices than percentages based and other loans to multi-family rental housing made in on loan amounts. cooperation with community groups. It has also partic- For the foregoing reasons, and based upon the ipated in subsidized public mortgage lending programs, overall CRA record of CoreStates and PNB, and other as well as lending to local governments, underwriting facts of record, the Board concludes that convenience debt issues, investing in municipal bonds, lending to and needs considerations, including the record of small businesses, farms and nonprofit organizations, performance under the CRA of CoreStates, PNB and and the creation of no-frills and basic checking ac- CoreStates's other subsidiaries, are consistent with counts. approval of this application. CoreStates engages in a variety of other CRA activ- CoreStates has also applied, pursuant to section ities, including support for public debt issues for local 4(c)(8) of the BHC Act, to acquire certain nonbanking units of government; industrial development lending in subsidiaries of First Penn. CoreStates and First Penn cooperation with local and regional development au- operate subsidiaries that engage in investment advisthorities; a wide range of credit and banking services ory activities, credit related health, accident and life to health care facilities; and secured loans to individ- insurance, and mortgage lending. These activities are uals and businesses through consumer finance and permissible for bank holding companies under the commercial finance subsidiaries as well as the banks. Board's Regulation Y.16 The market share controlled The Board has carefully reviewed Protestant's alle- by each of these subsidiaries is small, and there are gation that 83 percent of mortgage dollars extended by numerous competitors for their services. Accordingly, PNB went to census tracts with less than 10 percent consummation of this proposal would have a de minminority population, while only 5.3 percent of mortgage imis effect on competition in each of these markets, dollars were extended in census tracts with minority and the Board concludes that the proposal would not populations of 40 percent or more. An analysis of the have any significantly adverse effect on competition in Home Mortgage Disclosure Act ("HMDA") data for the provision of these services in any relevant market. PNB in the Philadelphia Metropolitan Statistical Area Furthermore, there is no evidence in the record to ("PMSA") indicates, however, that there is no evi- indicate that approval of this proposal would result in dence of discriminatory or other illegal credit practices undue concentration of resources, decreased or unfair by PNB. When compared with other HMDA-reporting competition, conflicts of interests, unsound banking lenders in the PMSA, PNB devoted a much higher practices, or other adverse effects on the public interpercentage of its portfolio to those areas with a substan- est. Accordingly, the Board has determined that the tial minority population, and a lesser percentage of its balance of public interest factors it must consider mortgage loan portfolio to mostly white neighborhoods under section 4(c)(8) of the BHC Act is favorable and than aggregate lenders. In 1987 and 1988, PNB made 25 consistent with approval of CoreStates's application to and 24 percent of the total number of mortgage loans in acquire the nonbanking subsidiaries of First Penn. census tracts with minority populations of greater than Based on the foregoing and other facts of record, the 40 percent. These census tracts constitute approxi- Board has determined that the consummation of the mately 16 percent of the owner-occupied housing units transaction would be in the public interest, and that in the PMSA. In mostly white census tracts, which the applications under sections 3 and 4 should be, and constitute 68 percent of owner-occupied units, PNB hereby are, approved. The acquisition of First Penn made 62 and 55 percent of its mortgage loans in 1987 shall not be consummated before the thirtieth calendar and 1988.15 For home improvement lending, PNB's day following the effective day of this Order, or later than three months following the effective date of this Order, unless such period is extended for good cause 15. Eighteen percent, or 217 out of 1,187, of the PMSA's census by the Board or by the Federal Reserve Bank of tracts have a minority population of 40 percent or more. These 217 tracts account for only 16 percent of the owner-occupied housing units in the PMSA. At the same time, 756, or 64 percent, of the tracts have lower than 10 percent minority population, and account for 68 percent of the owner-occupied units. 16. 12 C.F.R. 225.25(b)(4), (b)(8) and (b)(1), respectively. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

180 Federal Reserve Bulletin • March 1990 Philadelphia, acting pursuant to delegated authority. situation, the Board has not followed its normal prac- The determinations as to Applicant's nonbanking activ- tice of affording interested parties the opportunity to ities are subject to all of the conditions contained in the submit comments and views. In view of the emergency Board's Regulation Y, including sections 225.4(d) and situation involving Bank, the Office of Thrift Supervi- 225.23(b)(3) (12 C.F.R. 225.4(d) and 225.23(b)(3)), and sion has recommended immediate action by the Board to the Board's authority to require such modification or to prevent the probable failure of Bank. termination of the activities of a holding company or In connection with the application, the Secretary of any of its subsidiaries as the Board finds necessary to the Board has taken into consideration the competitive assure compliance with, or to prevent evasion of, the effects of the proposed transaction, the financial and provisions and purposes of the BHC Act and the managerial resources of the banks concerned, and the Board's regulations and orders issued thereunder. convenience and needs of the communities to be By order of the Board of Governors, effective served. On the basis of the information before the January 29, 1990. Board, the Secretary of the Board finds that an emergency situation exists so as to require that the Secretary Voting for this action: Chairman Greenspan and Governors of the Board act immediately pursuant to the provisions Johnson, Seger, Angell, Kelley, and LaWare. of section 18(c)(3) of the Federal Deposit Insurance Act (12 U.S.C. § 1828 (c)(3)) in order to safeguard the JENNIFER J. JOHNSON depositors of Bank. Having considered the record of Associate Secretary of the Board this application in light of the factors contained in the Bank Merger Act, the Secretary of the Board has determined that consummation of the transaction ORDERS ISSUED UNDER BANK MERGER ACT would be in the public interest and that the application should be approved on a basis that would not preclude Manufacturers and Traders Trust Company immediate consummation of the proposal. On the basis Buffalo, New York of these considerations, the application is approved. The transaction may be consummated immediately, Order Approving the Acquisition of Assets and but in no event later than three months after the Assumption of Liabilities of a Savings Bank effective date of this Order, unless such period is extended for good cause by the Board or by the Manufacturers and Traders Trust Company, Buffalo, Federal Reserve Bank of New York, acting pursuant New York, has applied for the Board's approval under to delegated authority. the Bank Merger Act (12 U.S.C. § 1828(c)) to acquire By order of the Secretary of the Board acting certain assets and assume certain liabilities of Monroe pursuant to delegated authority for the Board of Gov- Savings Bank, FSB, Rochester, New York, ("Bank"), ernors, effective January 26, 1990. an FDIC-insured savings bank. Public notice of the application before the Board is WILLIAM W. WILES not required by the Act, and, in view of the emergency Secretary of the Board APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 3 Effective Applicant(s) Bank(s) , date First Commercial Corporation, ABT Bancshares Corporation, January 16, 1990 Little Rock, Arkansas Hot Springs, Arkansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 181 Section 3—Continued Appiicant(s) Bank(s) ^ate^ First Security Corporation, United Savings Bank, January 31, 1990 Salt Lake City, Utah Salem, Oregon West One Bancorp, Bank of Tacoma, January 29, 1990 Boise, Idaho Tacoma, Washington West One Bancorp, Washington Bellevue, Washington Section 4 Effective Applicant(s) Bank(s) date Mid-South Bancorp, Inc., General Trust Company, January 19, 1990 Franklin, Kentucky Nashville, Tennessee 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 Bradford Bankshares, Inc., First National Bank of Bradford Atlanta December 22, 1989 Starke, Florida County, Starke, Florida Brotherhood Bancshares, Inc., The Brotherhood Bank and Kansas City January 12, 1990 Kansas City, Kansas Trust Company, Kansas City, Kansas Chrisman-Sawyer Bancshares, First City Bank, Kansas City January 19, 1990 Inc., Independence, Missouri Independence, Missouri The Citizens and Southern M.B. Group, Inc., Atlanta January 4, 1990 Corporation, Marathon, Florida Atlanta, Georgia The Citizens and Southern Florida Corporation, Fort Lauderdale, Florida Durand Bancorp, Inc., Durand State Bank, Chicago January 8, 1990 Durand, Illinois Durand, Illinois Financial Bancshares, Inc., First Bank of East Prairie, St. Louis December 29, 1989 St. Louis, Missouri East Prairie, Missouri First Banks, Inc., West Frankfort Community St. Louis January 9, 1990 St. Louis, Missouri Bancshares, Inc., West Frankfort, Illinois Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

182 Federal Reserve Bulletin • March 1990 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date First City, Inc., First City, A Federal Savings St. Louis December 29, 1989 Memphis, Tennessee Bank, Memphis, Tennessee First Eldorado Bancshares, Inc., First State Bank of Eldorado, St. Louis December 27, 1989 Eldorado, Illinois Eldorado, Illinois First Maiden Bancshares, Inc., First National Bank of Maiden, St. Louis December 19, 1989 Maiden, Missouri Maiden, Missouri First Mid-America Bancorp, Inc., The State Bank of Annawan, Chicago January 10, 1990 Davenport, Iowa Annawan, Illinois First Mutual Bancorp of Illinois, First State Bancorp of Harvey, Chicago January 11, 1990 Inc., Harvey, Illinois Chicago, Illinois First Patriot Bankshares Patriot National Bank of Reston, Richmond December 27, 1989 Corporation, Reston, Virginia Fairfax, Virginia First State Bancorp of Busey Bank of McLean County, Chicago January 3, 1990 Monticello, Inc., Heyworth, Illinois Monticello, Illinois First State Bancorp of Princeton, First Bank and Trust Co. of Chicago January 5, 1990 Illinois, Inc., Gridley, Princeton, Illinois Gridley, llinois FMS Bancorp, Inc., First Missouri State Bank, St. Louis December 19, 1989 Poplar Bluff, Missouri Poplar Bluff, Missouri Goodenow Bancorporation, First Trust & Savings Bank, Chicago January 10, 1990 Spirit Lake, Iowa Armstrong, Iowa Gore-Bronson Bancorp, Inc., IRVING BANCORP, INC., Chicago December 22, 1989 Prospect Heights, Illinois Chicago, Illinois International Brotherhood of Brotherhood Bancshares, Inc., Kansas City January 12, 1990 Boilermakers, Iron Ship Kansas City, Kansas Builders, Blacksmiths, Forgers and Helpers, Kansas City, Kansas Las Cruces B.R.G., Inc., Rio Grande, N.A., Dallas January 12, 1990 Las Cruces, New Mexico Las Cruces, New Mexico Lincoln Financial Corporation, PTC Financial Corporation, Chicago December 29, 1989 Fort Wayne, Indiana Peru, Indiana Mercantile Bankshares Baltimore Trust Company, Richmond December 28, 1989 Corporation, Selbyville, Delaware Baltimore, Maryland Merchant Bankshares Group, Merchant National Bank, Atlanta December 22, 1989 Inc., Fort Myers, Florida Fort Myers, Florida National Penn Bancshares, Inc., Valley Community Bank, Philadelphia January 10, 1990 Boyertown, Pennsylvania Kingston, Pennsylvania Overton Bank Shares, Inc., Mondamin Savings Bank, Chicago December 27, 1989 Mondamin, Iowa Mondamin, Iowa The Owego National Financial The Owego National Bank, New York December 29, 1989 Corporation, Owego, New York Owego, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 183 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Piedmont Bancshares Enterprise National Bank of the Richmond January 3, 1990 Corporation, Piedmont, Winston-Salem, North Carolina Winston-Salem, North Carolina Royal Bancshares, Inc., Bank of Elroy, Chicago January 8, 1990 Elroy, Wisconsin Elroy, Wisconsin Security Chicago, Corp., First Bank and Trust Company Chicago January 5, 1990 Chicago, Illinois of Gridley, Gridley, Illinois Star Banc Corporation, Fir-Ban Inc., Cleveland January 5, 1990 Cincinnati, Ohio Verona, Kentucky Thompson Financial, Ltd., Texas Security Bancshares, Inc., Dallas January 10, 1990 Fort Worth, Texas Fort Worth, Texas Central Bank and Trust, Fort Worth, Texas North Fort Worth Bank, Fort Worth, Texas Union Planters Corporation, First Financial Services, Inc., St. Louis January 4, 1990 Memphis, Tennessee Brownsville, Tennessee Union Planters Corporation, Security Bancshares, Inc., St. Louis January 4, 1990 Memphis, Tennessee Paris, Tennessee Valley Bancorporation, Peoples State Bank, Chicago December 21, 1989 Appleton, Wisconsin Three Lakes, Wisconsin Valley Bancorporation, First National Bank of Chippewa Chicago December 21, 1989 Appleton, Wisconsin Falls, Chippewa Falls, Wisconsin WallCo, Inc., The Nehawka Bank, Kansas City December 21, 1989 Nehawka, Nebraska Nehawka, Nebraska Section 4 Nonbanking Reserve Effective Applicant Activity/Company Bank date Compagnie Financiere de Suez, brokerage of foreign currency New York December 22, 1989 Paris, France options and in the provision of Banque Indosuez, incidental investment advice Paris, France with respect to such options Dunlap Iowa Holding Co., to increase the dollar volume of Chicago December 27, 1989 Dunlap, Iowa its lending authority Northern Missouri Bancshares, Harrison County Bancshares, Kansas City January 18, 1990 Inc., Inc., Unionville, Missouri Bethany, Missouri Norwest Corporation, First Interstate Corporation of Minneapolis December 29, 1989 Minneapolis, Minnesota Wisconsin, Kohler, Wisconsin Union Planters Corporation, Union Planters Investment St. Louis December 28, 1989 Memphis, Tennessee Bankers Corporation, Memphis, Tennessee Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

184 Federal Reserve Bulletin • March 1990 Section 4—Continued Nonbanking Reserve Effective Applicant Activity/Company Bank date The Yasuda Trust & Banking MASI, Ltd., New York January 22, 1990 Co., Ltd., Deerfield, Illinois Tokyo,Japan 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 Central State Bank, First State Savings Bank, Chicago December 21, 1989 Elkader, Iowa McGregor, Iowa First Illini Bank, Abingdon Bank and Trust Chicago January 12, 1990 Galesburg, Illinois Company, Abingdon, Illinois Community Bank & Trust Company, Canton, Illinois Madison Park Bank, Peoria, Illinois Ohio Citizens Bank, Fremont Office of Diamond Cleveland January 19, 1990 Toledo, Ohio Savings and Loan Company, Findlay, Ohio PENDING CASES INVOLVING THE BOARD OF 1989). Petition for review of Board order approving GOVERNORS application under section 4(c)(8) to engage in private placement and riskless principal activities. The case has been held in abeyance pending the outcome of This list of pending cases does not include suits Securities Industry Association v. Board of Goveragainst the Federal Reserve Banks in which the Board nors, No. 89-1127 (D.C. Circuit). of Governors is not named a party. Babcock and Brown Holdings, Inc., et al. v. Board of Governors, No. 89-70518 (9th Cir., filed November Woodward v. Board of Governors, No. 90-3031 (11th 22, 1989). Petition for review of Board determina- Cir., filed January 16, 1990); Kaimowitz v. Board of tion that a company would control a proposed Governors, undocketed (11th Cir., filed January 23, insured bank for purposes of the Bank Holding 1990). Petitions for review of Board order dated Company Act. December 22, 1989, approving application by First Consumers Union of U.S., Inc. v. Board of Gover- Union Corporation to acquire Florida National nors, No. 89-3008 (D.D.C., filed November 1, Banks. Petitioners object to approval on Commu- 1989). Challenge to various aspects of amendments nity Reinvestment Act grounds, and have moved for to Regulation Z implementing the Home Equity a stay of the Board's order. Loan Consumer Protection Act. Securities Industry Association v. Board of Gover- Synovus Financial Corp. v. Board of Governors, No. nors, No. 89-1730 (D.C. Cir., filed November 29, 89-1394 (D.C. Cir., filed June 21, 1989). Petition for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 185 review of Board order permitting relocation of a ter stayed pending Supreme Court review of Contibank holding company's national bank subsidiary nental Illinois Corp. v. Lewis, 827 F.2d 1517 (11th from Alabama to Georgia. Cir. 1987). MCorp v. Board of Governors, No. 89-2816 (5th Cir., filed May 2, 1989). Appeal of preliminary injunction against the Board enjoining pending and future enforcement actions against bank holding company FINAL ENFORCEMENT ORDERS ISSUED BY THE now in bankruptcy. Awaiting decision. BOARD OF GOVERNORS Independent Insurance Agents of America v. Board of Governors, No. 89-4030 (2d Cir., filed March 9, 1989). Petition for review of Board order ruling that Bruce F. Dailey the non-banking restrictions of section 4 of the Bank Director of First Security Bank of Missoula Holding Company Act apply only to non-bank sub- Missoula, Montana sidiaries of bank holding companies. Board's order upheld on November 29, 1989. Petition for rehearing The Federal Reserve Board announced on October 31, denied; petitioners have moved for a stay pending 1989, the issuance, on October 30, 1989, of an Order of Supreme Court review. Prohibition against Bruce F. Dailey, the former chair- Securities Industry Association v. Board of Goverman of the board of directors of the First Security nors, No. 89-1127 (D.C. Cir., filed February 16, Bank of Missoula, Missoula, Montana, in settlement 1989). Petition for review of Board order permitting of an enforcement action instituted against him. five bank holding companies to engage to a limited In an enforcement proceeding, the Board contended extent in additional securities underwriting and dealthat Mr. Dailey misappropriated at least $100,000 from ing activities. the bank, while he was the chairman of its board, American Land Title Assoc. v. Board of Governors, through the use of false loan documents. Without No. 88-1872 (D.C. Cir., filed December 16, 1988). admitting any allegations made by the Board, Mr. Petition for review of Board order ruling that ex- Dailey consented to the issuance of the Order of emption G from the section 4(c)(8) prohibition on Prohibition. Mr. Dailey is henceforth prohibited from insurance activities, which grandfathers insurance participating, including serving as an officer, director, agency activities by bank holding companies that or employee, in any manner in the conduct of the conducted insurance agency activities before Januaffairs of any financial institution supervised by a ary 1, 1971, does not limit those grandfathered federal financial institutions supervisory agency withactivities to the specific ones undertaken at that out the approval of the appropriate federal banking time. Board's order upheld on December 29, 1989. agencies. MCorp v. Board of Governors, No. CA3-88-2693 (N.D. Tex., filed October 10, 1988). Application for injunction to set aside temporary cease and desist EVCO, Inc. orders. Stayed pending outcome of MCorp v. Board Evanston, Wyoming of Governors in Fifth Circuit. White v. Board of Governors, No. CU-S-88-623-RDF (D. Nev., filed July 29, 1988). Age discrimination Stockgrowers State Bank Company, Inc. complaint. Worland, Wyoming Cohen v. Board of Governors, No. 88-1061 (D.N.J., filed March 7, 1988). Action seeking disclosure of documents under the Freedom of Information Act. The Federal Reserve Board announced on January 30, Chase Manhattan Corp. v. Board of Governors, No. 1990, the issuance of a Final Decision and Final Order 87-1333 (D.C. Cir., filed July 20, 1987). Petition to assessing civil money penalties in an aggregate amount review order conditionally approving application for of $3,015,000 against seven former officials of EVCO, bank holding company to underwrite and deal in Inc., Evanston, Wyoming, and Stockgrowers State mortgage-related securities to a limited extent. Dis- Bank Company, Inc., Worland, Wyoming. missed by stipulation on December 28, 1989. They are Daniel M. Burke, John P. Burke, M. Lewis v. Board of Governors, Nos. 87-3455, 87-3545 Joseph Burke, John A. Edmiston, Don C. Davis, Lyle (11th Cir., filed June 25, August 3, 1987). Petition for R. Lake, and James R. Sperry. The Board also issued review of Board orders approving applications of Orders of Prohibition against four of those officials, non-Florida bank holding companies to expand ac- Daniel M. Burke, M. Joseph Burke, Edmiston, and tivities of Florida trust company subsidiaries. Mat- Davis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

186 Federal Reserve Bulletin • March 1990 National Bank of Greece unsafe and unsound practices and alleged violations of Athens, Greece law and regulation that generally arose out of the receipt of deposits by representative offices of the The Federal Reserve Board announced on National Mortgage Bank in New York and in three September 25, 1989, the issuance of a Consent Cease other states. and Desist Order and Consent Assessment of Civil The National Mortgage Bank of Greece, without Money Penalty as to the National Bank of Greece and admitting any of the allegations in the proceeding, the National Mortgage Bank of Greece. agreed to pay a fine of $2,000,000. The National Bank The Consent Order is in settlement of enforcement of Greece, without admitting any of the allegations in proceedings instituted by the Board because of alleged the proceeding, agreed to pay a fine of $125,000. 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 3.11, 3.15-3.20, 3.22-3.25, 3.27, 3.28, and 4.30. discontinuities in historical data for some series For a more detailed explanation of the changes, beginning with the December 1989 issue: 1.12, see the announcement on page 16 of the January 1.33, 1.44, 1.52, 1.57-1.60, 2.10, 2.12, 2.13, 3.10, 1990 Bulletin. CONTENTS COMMERCIAL BANKING INSTITUTIONS A17 Major nondeposit funds Domestic Financial Statistics A18 Assets and liabilities, last-Wednesday-of-month series MONEY STOCK AND BANK CREDIT A3 Reserves, money stock, liquid assets, and debt WEEKLY REPORTING COMMERCIAL BANKS measures Assets and liabilities A4 Reserves of depository institutions, Reserve A19 All reporting banks Bank credit A20 Banks in New York City A5 Reserves and borrowings—Depository A21 Branches and agencies of foreign banks institutions A22 Gross demand deposits—individuals, A6 Selected borrowings in immediately available partnerships, and corporations funds—Large member banks FINANCIAL MARKETS POLICY INSTRUMENTS A23 Commercial paper and bankers dollar acceptances outstanding A7 Federal Reserve Bank interest rates A23 Prime rate charged by banks on short-term A8 Reserve requirements of depository institutions business loans A9 Federal Reserve open market transactions A24 Interest rates—money and capital markets A25 Stock market—Selected statistics A26 Selected financial institutions—Selected assets and liabilities FEDERAL RESERVE BANKS A10 Condition and Federal Reserve note statements FEDERAL FINANCE All Maturity distribution of loan and security holdings A28 Federal fiscal and financing operations A29 U.S. budget receipts and outlays A30 Federal debt subject to statutory limitation A30 Gross public debt of U.S. Treasury—Types MONETARY AND CREDIT AGGREGATES and ownership A31 U.S. government securities A12 Aggregate reserves of depository institutions dealers—Transactions and monetary base A32 U.S. government securities dealers—Positions A13 Money stock, liquid assets, and debt measures and financing A15 Bank debits and deposit turnover A3 3 Federal and federally sponsored credit A16 Loans and securities—All commercial banks agencies—Debt outstanding Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2 Federal Reserve Bulletin • March 1990 SECURITIES MARKETS AND A56 U.S. reserve assets CORPORATE FINANCE A56 Foreign official assets held at Federal Reserve Banks A34 New security issues—State and local A57 Foreign branches of U.S. banks—Balance governments and corporations sheet data A35 Open-end investment companies—Net sales A59 Selected U.S. liabilities to foreign official and asset position institutions A35 Corporate profits and their distribution A35 Total nonfarm business expenditures on new plant and equipment REPORTED BY BANKS IN THE UNITED STATES A36 Domestic finance companies—Assets and liabilities and business credit A59 Liabilities to and claims on foreigners A60 Liabilities to foreigners A62 Banks' own claims on foreigners REAL ESTATE A63 Banks' own and domestic customers' claims on foreigners A37 Mortgage markets A63 Banks' own claims on unaffiliated foreigners A3 8 Mortgage debt outstanding A64 Claims on foreign countries—Combined domestic offices and foreign branches CONSUMER INSTALLMENT CREDIT A39 Total outstanding and net change REPORTED BY NONBANKING BUSINESS A40 Terms ENTERPRISES IN THE UNITED STATES A65 Liabilities to unaffiliated foreigners FLOW OF FUNDS A66 Claims on unaffiliated foreigners A41 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit SECURITIES HOLDINGS AND TRANSACTIONS markets A44 Summary of credit market debt outstanding A67 Foreign transactions in securities A45 Summary of credit market claims, by holder A68 Marketable U.S. Treasury bonds and notes—Foreign transactions Domestic Nonfinancial Statistics INTEREST AND EXCHANGE RATES SELECTED MEASURES A69 Discount rates of foreign central banks A46 Nonfinancial business activity—Selected A69 Foreign short-term interest rates measures A70 Foreign exchange rates A47 Labor force, employment, and unemployment A71 Guide to Tabular Presentation, A48 Output, capacity, and capacity utilization Statistical Releases, and Special A49 Industrial production—Indexes and gross value Tables A51 Housing and construction A52 Consumer and producer prices A53 Gross national product and income SPECIAL TABLES A54 Personal income and saving A73 Terms of lending at commercial banks, May 1989 and November 1989 International Statistics A84 Assets and liabilities of U. S. branches and agencies of foreign banks, September 30, 1989 SUMMARY STATISTICS A88 Pro forma balance sheet and income statement A55 U.S. international transactions—Summary for priced service operations, September 30, A56 U.S. foreign trade 1989 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A3 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Annual rates of change, seasonally adjusted in percent1 1989 1989 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaatteess Ql Q2 Q3 Q4 Aug. Sept. Oct.' Nov.' Dec. Reserves of depository institutions2 1 Total -4.2 -8.7 .3 5.7 1.1 9.6 8.1 -1.1 8.5 2 Required -4.4 -7.6 .1 5.5 2.8 8.6 6.5 .4 9.1 3 Nonborrowed .0 -10.2 8.3 7.8 1.5 9.3 11.0 3.1 10.3 4 Monetary base3 4.6 1.5 2.9 4.1 1.2 7.5 2.8 1.3 9.4 Concepts of money, liquid assets, and debt4 5 Ml -.4 -5.6 1.5 6.7 .3 5.8 10.1 2.8 12.2 6 M2 1.9 1.2 7.1' 7.7 7.3 6.8' 7.6 8.6 7.8 7 M3 3.7 2.5' 4.0' 2.8 1.9 .4' 2.9 5.0 3.7 8 L 5.0 4.7 4.4r n.a. 3.9' 1.6' 3.1 3.1 n.a. 9 Debt 8.4 7.9 7.2 7.5 8.1 7.1 7.8 8.2 n.a. Nontrgnsaction components 10 In M25 2.6 3.6' 9.0r 8.0 9.6' 7.2' 6.8 10.4 6.4 11 In M3 only6 10.5' i.y -7.or -15.0 -17.5' -22.8' -14.8 -8.4 -12.3 Time and savings deposits Commercial banks 12 Savings -3.7 -14.2 -.2 8.9 7.3 7.9 5.9 13.6 11.4 13 Small-denomination time 22.5 29.0 10.3r 8.3 7.5 3.9 13.0 6.0 8.3 14 Large-denomination time • 18.1 17.7 2.r 1.5 -2.<r -3.3' 5.0 6.6 -5.9 Thrift institutions 15 Savings -7.7 -19.0 -6.7 4.1 -1.7' 4.2' 3.6 7.7 3.7 16 Small-denomination time 4.3 14.0 9.9' -4.5 5.3' -2.9 -10.0 -4.0 -2.0 17 Large-denomination time 1.2 5.9 -9.6 -28.4 -22.6' -29.2' -34.3 -27.1 -23.3 Debt components4 18 Federal 7.7 6.9 4.6 9.6 8.8 11.0 9.8 11.1 n.a. 19 Nonfederal 8.6 8.2 8.0 6.9 8.0 5.9 7.2 7.4 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 • March 1990 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending FFFaaaccctttooorrrsss 1989 1989 Oct. Nov. Dec. Nov. 15 Nov. 22 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 260,634 265,521 269,244 261,218 261,012 264,506 266,554 267,710 267,551 270,879 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 215,920 217,455 224,142 214,890 217,268 220,059 223,003 223,498 222,841 224,613 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 215,920 216,475 223,031 214,890 216,872 216,254 223,003 223,040 222,609 221,943 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 980 1,111 0 396 3,805 0 458 232 2,670 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 6,546 6,602 6,683 6,525 6,536 6,845 6,525 6,549 6,544 6,786 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 6,546 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 77 158 0 11 320 0 24 19 261 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 608 346 289 341 202 680 171 132 189 513 1111100000 FFFFFllllloooooaaaaattttt 734 1,024 1,128 1,197 858 981 672 832 1,314 1,692 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 36,825 37,093 37,003 38,265 36,148 35,941 36,184 36,699 36,665 37,275 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,064 11,062 11,059 11,062 11,061 11,060 11,060 11,059 11,059 11,059 1111133333 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt............... 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 1111144444 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 19,462 19,529 19,585 19,522 19,536 19,550 19,564 19,578 19,592 19,606 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 249,190 251,807 256,870 251,338 252,158 253,641 253,842 255,349 256,683 259,112 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 439 448 448 449 451 448 445 448 447 447 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 6,111 5,008 4,787 4,757 4,449 5,093 5,162 4,475 4,402 4,571 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 245 234 286 213 239 253 327 223 252 215 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,866 1,944 1,817 1,880 1,984 1,966 1,904 2,165 1,881 1,822 2222200000 OOOOOttttthhhhheeeeerrrrr 327 333 397 248 293 457 283 231 337 337 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 8,091 7,862 8,242 7,716 7,651 7,912 8,464 8,458 7,839 8,140 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 33,410 33,993 35,559 33,717 32,903 33,866 35,268 35,515 34,878 35,417 End-of-month figures Wednesday figures 1989 1989 Oct. Nov. Dec. Nov. 15 Nov. 22 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 264,717 267,060 276,622 261,062 263,150 275,731 266,028 272,155 270,208 283,575 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss''''' 218,176 223,142 228,367 216,088 219,406 228,898 221,821 226,601 224,245 233,951 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 218,176 223,142 226,775 216,088 216,633 216,672 221,821 223,395 222,623 222,195 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 0 1,592 0 2,773 12,226 0 3,206 1,622 11,756 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 6,525 6,525 7,050 6,525 6,599 7,689 6,525 6.691 6,655 8,026 2222288888 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 2222299999 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 0 525 0 74 1,164 0 166 130 1,501 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 270 181 481 1,329 170 1,225 136 147 182 2,159 3333322222 FFFFFllllloooooaaaaattttt 1,471 668 1,093 563 890 1,022 1,003 1,649 2,100 1,514 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 38,275 36,544 39,631 36,556 36,086 36,898 36,543 37,068 37,028 37,926 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,062 11,060 11,059 11,062 11,061 11,060 11,059 11,059 11,059 11,059 3333355555 SSSSSpppppeeeeeccccciiiiiaaaaalllll dddddrrrrraaaaawwwwwiiiiinnnnnggggg rrrrriiiiiggggghhhhhtttttsssss ccccceeeeerrrrrtttttiiiiifffffiiiiicccccaaaaattttteeeee aaaaaccccccccccooooouuuuunnnnnttttt............... 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 3333366666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccuuuuurrrrrrrrrreeeeennnnncccccyyyyy ooooouuuuutttttssssstttttaaaaannnnndddddiiiiinnnnnggggg 19,494 19,564 19,615 19,522 19,536 19,550 19,564 19,578 19,592 19,606 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3 3 3 3 3 3 3 3 3 3 7 8 7 8 7 8 7 8 7 8 TTTTT CCCCC rrrrr uuuuu eeeee rrrrr aaaaa rrrrr sssss eeeee uuuuu nnnnn rrrrr ccccc yyyyy yyyyy ccccc iiiii aaaaa nnnnn sssss ccccc hhhhh iiiii rrrrr hhhhh ccccc ooooo uuuuu lllll lllll ddddd aaaaa iiiii ttttt nnnnn iiiiiooooo ggggg nnnnn sssss22222 249,0 4 2 4 5 4 253,9 4 6 4 0 5 260,4 4 4 5 3 5 251,5 4 5 5 5 2 253,3 4 8 4 9 7 253,9 4 2 4 8 8 254,5 4 6 4 1 8 256,0 4 1 4 3 7 257,7 4 0 4 0 7 260,2 4 9 4 1 7 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 13,124 5,500 6,217 6,637 4,504 6,470 4,020 5.692 5,356 5,029 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 252 307 589 277 244 185 241 206 228 269 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,623 1,638 1,618 1,636 1,639 1,639 1,638 1,636 1,637 1,626 4444422222 OOOOOttttthhhhheeeeerrrrr 292 311 1,298 301 232 949 230 217 228 523 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 8,303 8,402 8,486 7,405 7,572 7,855 8,292 7,878 7,641 8,062 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 30,728 35,639 36,709 31,901 34,238 43,385 35,739 39,221 36,141 46,511 1. Includes securities loaned—fully guaranteed by U.S. government securities Monetary Affairs, 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 1987 1988 1989 1989 Dec. Dec. Dec. June July Aug. Sept. Oct. Nov. Dec. 1 Reserve balances with Reserve Banks2 37,673 37,830 35,437 33,852 33,902 32,823 33,556 33,123 33,94 V 35,437 2 Total vault cash 26,185 27,197 28,782 27,151 27,851 28,358 28,085 28,900 28,519 28,782 3 Vault4 24,449 25,909 27,374 25,735 26,351 26,735 26,570 27,275 27,048 27,374 4 Surplus 1,736 1,288 1,409 1,416 1,500 1,622 1,515 1,625 1,471 1,409 5 Total reserves6 62,123 63,739 62,810 59,587 60,254 59,559 60,126 60,397 60,989 62,810 6 Required reserves 61,094 62,699 61,887 58,681 59,288 58,674 59,188 59,378 60,044 61,887 7 Excess reserve balances at Reserve Banks 1,029 1,040 923 905 966 885 938 1,020 945 923 8 Total borrowings at Reserve Banks 777 1,716 265 1,490 694 675 693 555 349 265 9 Seasonal borrowings at Reserve Banks 93 130 84 431 497 490 452 330 134 84 10 Extended credit at Reserve Banks 483 1,244 20 917 106 41 22 21 21 20 Biweekly averages of daily figures for weeks ending 1989 1990 Sept. 6 Sept. 20 Oct. 4 Oct. 18 Nov. 1 Nov. 15 Nov. 29 Dec. 13r Dec. 27r Jan. 10 11 Reserve balances with Reserve Banks2 33,053 34,424 32,643 33,581 32,778 34,468 33,394 35,399 35,131 36,630 12 Total vault cash1 27,710 28,095 28,298 29,096 28,875 27,907 29,156 27,821 29,415 29,695 13 Vault4.. 26,153 26,660 26,695 27,531 27,177 26,552 27,574 26,509 27,903 28,334 14 Surplus5 1,557 1,436 1,603 1,565 1,698 1,355 1,582 1,312 1,513 1,361 15 Total reserves6 59,206 61,083 59,338 61,112 59,955 61,020 60,968 61,908 63,033 64,963 16 Required reserves 58,247 60,195 58,343 60,186 58,827 60,139 59,958 61,149 62,015 63,841 17 Excess reserve balances at Reserve Banks7 959 888 995 926 1,128 881 1,009 759 1,018 1,122 18 Total borrowings at Reserve Banks 538 614 898 653 345 272 441 151 351 339 19 Seasonal borrowings at Reserve Banks 485 438 453 342 280 147 115 87 89 58 20 Extended credit at Reserve Banks 22 21 25 19 23 20 23 22 19 19 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 • March 1990 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks1 Averages of daily figures, in millions of dollars 1988 and 1989 week ending Monday Maturity and source Dec. 5 Dec. 12 Dec. 19 Dec. 26 Jan. 2 Jan. 9 Jan. 16 Jan. 23 Jan. 30 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 74,471 70,886 69,448 70,964 67,427 75,520 70,344 69,604 66,372 2 For all other maturities 9,940 9,829 10,114 9,810 9,356 9,753 10,870 10,424 99,,994477 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 28,709 30,368 26,454 24,933 22,855 28,713 26,331 24,937 27,974 4 For all other maturities 6,545 7,418 7,778 8,730 7,709 6,801 7,431 6,694 6,345 Repurchase agreements on U.S. government and federal agency securities in immediately available funds Brokers and nonbank dealers in securities 5 For one day or under continuing contract 14,929 15,392 14,634 13,043 12,610 15,134 14,513 15,955 16,041 6 For all other maturities 10,352 10,890 10,659 11,003 8,252 9,458 11,235 11,280 12,425 All other customers 7 For one day or under continuing contract 30,312 30,307 29,321 27,986 27,418 28,613 29,334 28,826 28,775 8 For all other maturities 9,790 9,651 9,790 10,860 9,248 9,154 9,547 9,389 9,750 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 39,202 35,912 39,237 40,080 38,015 42,159 40,105 40,596 40,075 10 To all other specified customers2 13,277 13,936 14,108 14,987 12,747 15,135 14,111 14,784 13,584 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 On Effective Previous On Effective Previous On EfFective Previous 1/29/90 date rate 1/29/90 date rate 1/29/90 date rate Effective date Boston 7 2/24/89 6V5 7 2/24/89 6Vl 8.70 1/25/90 8.75 1/11/90 New York 2/24/89 2/24/89 1/25/90 1/11/90 Philadelphia 2/24/89 2/24/89 1/25/90 1/11/90 Cleveland 2/24/89 2/24/89 1/25/90 1/11/90 Richmond 2/24/89 2/24/89 1/25/90 1/11/90 Atlanta 2/24/89 2/24/89 1/25/90 1/11/90 Chicago 2/24/89 2/24/89 1/25/90 1/11/90 St. Louis 2/24/89 2/24/89 1/25/90 1/11/90 Minneapolis 2/24/89 2/24/89 1/25/90 1/11/90 Kansas City 2/24/89 2/24/89 1/25/90 1/11/90 Dallas 2/27/89 2/27/89 1/25/90 1/11/90 San Francisco ... 7 2/24/89 6Vi 7 2/24/89 6V5 8.70 1/25/90 8.75 1/11/90 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or 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 o n f k Effectiv A le l v l e F l) . — R. Banks N.Y. Banks N.Y. Banks I 1 n 9 7 e 8 f — fec J t a n D . ec. 9 3 1, 1977. 6- 6 6 V1 6 6 Vi 1980-——JJuullyy 2 2 9 8 10 1 - 0 1 1 1 1 0 0 11998844——AApprr.. 1 9 3 81/ 9 5 -9 9 9 20 6'/5 6V5 Sept. 26 11 11 Nov. 71 8V5-9 m May 11 6V5-7 7 Nov. 17 12 12 76 8 Vl 8'A 12 7 7 Dec. 5 12-13 13 Dec. 74 8 8 July 3 7-7V4 71/4 10 71/4 7V4 1981-——MMaayy 5 13-14 14 11998855——MMaayy 70 7V5-8 71/5 Aug. 21 7V4 7% 8 14 14 74 71/5 71/5 Sept. 22 8 8 Nov. 2 13-14 13 Oct. 2 1 0 6 8- 8 8 '/ i > /> 8 8V V 5 2 Dec. 4 6 1 1 3 2 1 1 3 2 1986—Mar. 1 7 0 7-7 7 ! A 7 7 Nov. 1 S'A-9>A m Apr. 71 61/5-7 6 Vi 3 9Vi 9 Yi 1982---JJuullyy 20 11V5-12 UVi July 11 6 6 1979—J A u u ly g . 2 1 0 7 10- 1 1 0 0 '/! 1 1 0 0 '/> AAuugg.. 2 2 3 3 11 1 - 1 1 1 1 1 1 /5 1 / ! l 1 1 l> 1 1 /5 AAuugg.. 7 7 1 7 51 5 / 5 V - 5 6 5 5 V 1/5 5 20 10V5 10W 16 10 Vl 10V5 11998877——SSeepptt.. 4 5V5-6 6 Sept. 19 10!/5-l 1 11 27 10-10V5 10 11 6 6 21 11 11 30 10 10 Oct. 8 11-12 12 Oct. 12 91-5-10 9 Vi 11998888——AAuugg.. 9 6-61/5 6V5 10 12 12 13 9 Vl 91Vi 11 6"/5 6'/5 Nov. 22 9-9V2 9 1980—Feb. 15 12-13 13 26 9 9 1989—Feb. 74 6V5-7 7 19 13 13 Dec. 14 8W-9 9 77 7 7 May 29 12-13 13 15 8V5-9 m 30 12 12 17 8V5 8 Vi In effect Jan .. 2299 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 '/> percent above the rate on adjustment adjustment credit borrowings by institutions with deposits of $500 million or more credit. The program was reestablished for 1986 and 1987 but was not renewed for that had borrowed in successive weeks or in more than four weeks in a calendar 1988. quarter. A 3 percent surcharge was in effect from Mar. 17, 1980 through May 7, 2. Extended credit is available to depository institutions, when similar assist- 1980. There was no surcharge until Nov. 17, 1980, when a 2 percent surcharge was ance is not reasonably available from other sources, when exceptional circum- adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and stances or practices involve only a particular institution or when an institution is to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective experiencing difficulties adjusting to changing market conditions over a longer Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981 the period of time. formula for applying the surcharge was changed from a calendar quarter to a 3. For extended-credit loans outstanding more than 30 days, a flexible rate moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. somewhat above rates on market sources of funds ordinarily will be charged, but Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Nonfinancial Statistics • March 1990 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Type of deposit, and Monetary Control Act deposit interval Effective date Net transaction accounts3'4 $0 million-$40.4 million.... 12/19/89 More than $40.4 million ... 12/19/89 Nonpersonal time deposits5 By original maturity Less than 1 Vi years 10/6/83 1 l/i years or more 10/6/83 Eurocurrency liabilities All types 1. Reserve requirements in effect on Dec. 31, 1989. 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. ber institutions may maintain reserve balances with a Federal Reserve Bank 3. Transaction accounts include all deposits on which the account holder is indirectly on a pass-through basis with certain approved institutions. For previous permitted to make withdrawals by negotiable or transferable instruments, payreserve requirements, see earlier editions of the Annual Report or 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 change 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. 19, ment each year for the succeeding calendar year by 80 percent of the percentage 1989 for institutions reporting quarterly and Dec. 26, 1989 for institutions increase in the total reservable liabilities of all depository institutions, measured reporting weekly, the amount was decreased from $41.5 million to $40.4 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 1989 TTyyppee ooff ttrraannssaaccttiioonn 11998866 11998877 11998888 May June July Aug. Sept. Oct. Nov. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 22,604 18,983 8,223 311 0 0 0 0 219 8,794 2 Gross sales 2,502 6,051 587 321 571 5,517 934 0 1,633 0 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 1,000 9,029 2,200 1,200 1,200 2,400 800 0 1,400 3,530 Others within 1 year 5 Gross purchases 190 3,659 2,176 0 0 0 0 0 0 155 6 Gross sales 0 300 0 0 0 0 0 0 0 0 7 Maturity shift 18,674 21,504 23,854 2,863 1,828 1,749 4,200 1,832 852 3,915 8 Exchange -20,180 -20,388 -24,588 -3,628 -1,434 -1,073 -4,025 0 -2,678 -5,502 9 Redemptions 0 70 0 0 0 0 0 0 500 0 1 to 5 years 10 Gross purchases 893 10,231 5,485 0 0 0 0 0 0 0 11 Gross sales 0 452 800 75 0 13 150 0 24 0 12 Maturity shift -17,058 -17,975 -17,720 -2,036 -1,828 -1,584 -3,321 -1,832 -758 -2,869 13 Exchange 16,985 18,938 22,515 3,328 1,434 787 3,425 0 2,552 4,902 5 to 10 years 14 Gross purchases 236 2,441 1,579 0 0 0 0 0 0 0 15 Gross sales 0 0 175 0 0 9 0 0 0 0 16 Maturity shift -1,620 -3,529 -5,946 258 0 -165 -879 0 -95 -1,046 17 Exchange 2,050 950 1,797 200 0 286 400 0 126 400 Over 10 years 18 Gross purchases 158 1,858 1,398 0 0 0 0 0 0 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift 0 0 -188 -1,086 0 0 0 0 0 0 21 Exchange 1,150 500 275 100 0 0 200 0 0 200 All maturities 22 Gross purchases 24,081 37,170 18,863 311 0 0 0 0 219 8,949 23 Gross sales 2,502 6,803 1,562 396 571 5,539 1,084 0 1,657 0 24 Redemptions 1,000 9,099 2,200 1,200 1,200 2,400 800 0 1,900 3,530 Matched transactions 25 Gross sales 927,999 950,923 1,168,484 123,029 128,139 123,373 146,611 116,502 111,430 105,696 26 Gross purchases 927,247 950,935 1,168,142 113,041 138,141 118,221 147,228 120,144 111,893 105,243 Repurchase agreements2 27 Gross purchases 170,431 314,621 152,613 31,419 66,,220033 4,961 0 9,396 0 1155,,335500 28 Gross sales 160,268 324,666 151,497 41,117 6,203 4,961 0 9,396 0 15,350 29 Net change in U.S. government securities 29,988 11,234 15,872 -20,971 8,232 -13,091 -1,267 3,642 -2,875 4,966 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 0 0 45 0 54 30 0 Repurchase agreements2 33 Gross purchases 31,142 80,353 57,259 1122,,773322 11,,666666 1,137 0 4,011 0 11,,224477 34 Gross sales 30,521 81,350 56,471 16,573 1,666 1,137 0 4,011 0 1,247 35 Net change in federal agency obligations 222 -1,274 198 -3,841 0 -45 0 -54 -30 0 36 Total net change in System Open Market Account 30,212 9,961 16,070 -24,812 8,232 -13,136 -1,267 3,588 -2,905 4,966 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 • March 1990 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1989 1989 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 Oct. Nov. Dec. Consolidated condition statement ASSETS 1 Gold certificate account 11,060 11,059 11,059 11,059 11,059 11,062 11,060 11,059 2 Special drawing rights certificate account 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 3 473 477 495 489 467 492 465 456 Loans 4 To depository institutions 1,225 136 146 182 2,159 270 182 481 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 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 8 Held under repurchase agreements 1,164 0 166 130 1,501 0 0 525 U.S. Treasury securities Bought outright 9 Bills 94,477 99,626 101,201 100,428 100,000 96,136 100,947 104,581 10 Notes 91,381 91,381 91,381 91,381 91,381 91,426 91,381 91,381 11 Bonds 30,814 30,814 30,814 30,814 30,814 30,614 30,814 30,814 12 Total bought outright2 216,672 221,821 223,395 222,623 222,195 218,176 223,142 226,775 13 Held under repurchase agreements 12,226 0 3,206 1,622 11,756 0 0 1,592 14 Total U.S. Treasury securities 228,897 221,821 226,602 224,245 233,951 218,176 223,142 228,367 15 Total loans and securities 237,812 228,482 233,439 231,081 244,136 224,971 229,848 235,898 16 Items in process of collection 6,275 7,547 7,594 8,516 8,150 10,120 6,103 8,903 17 Bank premises 776 787 789 790 789 775 776 790 Other assets 18 Denominated in foreign currencies 29,075 29,593 29,679 29,722 29,784 28,953 29,593 31,333 19 All other4 7,047 6,163 6,600 6,516 7,353 8,548 6,175 7,465 20 Total assets 301,036 292,626 298,173 296,691 310,256 293,439 292,539 304,424 LIABILITIES 21 Federal Reserve notes 235,299 235,923 237,377 239,045 241,599 230,467 235,306 241,739 Deposits 22 To depository institutions 45,024 37,377 40,858 37,777 48,136 32,351 37,277 38,327 23 U.S. Treasury—General account 6,470 4,020 5,692 5,356 5,029 13,124 5,500 6,217 24 Foreign—Official accounts 185 241 206 228 269 252 307 590 25 Other 949 230 217 228 523 292 311 1,298 26 Total deposits 52,628 41,868 46,973 43,589 53,958 46,018 43,395 46,430 27 Deferred credit items 5,253 6,543 5,945 6,417 6,637 8,649 5,436 7,773 28 Other liabilities and accrued dividends 3,041 2,952 3,003 2,808 3,198 2,819 3,081 3,994 29 Total liabilities 296,221 287,286 293,299 291,858 305,392 287,954 287,217 299,935 CAPITAL ACCOUNTS 30 Capital paid in 2,230 2,229 2,232 2,244 2,247 2,223 2,229 2,243 31 Surplus 2,112 2,112 2,112 2,112 2,112 2,112 2,112 2,243 32 Other capital accounts 472 999 530 477 505 1,150 980 0 33 Total liabilities and capital accounts 301,036 292,626 298,173 296,691 310,256 293,439 292,539 304,423 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 233,024 235,957 233,712 232,269 230,616 235,318 235,096 233,048 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 279,559 280,873 281,361 280,943 280,128 278,866 279,629 279,665 36 LESS: Held by bank 44,260 44,950 43,984 41,899 38,529 48,398 44,321 37,926 37 Federal Reserve notes, net 235,299 235,923 237,377 239,045 241,599 230,467 235,306 241,739 Collateral held against notes net: 38 Gold certificate account 11,060 11,059 11,059 11,059 11,059 11,062 11,060 11,059 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 215,721 216,345 217,800 219,468 222,022 210,887 215,728 222,162 42 Total collateral 235,299 235,923 237,377 239,045 241,599 230,467 235,306 241,739 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 Type and maturity groupings 1989 1989 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 Oct. 31 Nov. 30 1 Loans—Total 1,225 136 146 182 2,159 270 182 2 Within 15 days 1,214 72 89 177 2,157 193 134 3 16 days to 90 days 101 6 0 4 5 0 7 0 5 02 7 0 7 4 0 8 4 91 days to 1 year 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 8 91 days to 1 year 9 U.S. Treasury securities—Total .. 228,897 221,821 226,602 224,245 233,951 218,176 223,142 10 Within 15 days2 19,836 9,418 12,291 11,241 18,134 8,144 4,468 11 16 days to 90 days 48,452 48,932 50,825 52,183 52,297 48,677 51,283 12 91 days to 1 year 68,641 70,726 70,741 68,076 70,776 70,197 74,646 13 Over 1 year to 5 years 52,732 53,509 53,509 53,509 53,509 51,476 53,509 14 Over 5 years to 10 years 12,529 12,529 12,529 12,529 12,529 13,175 12,529 15 Over 10 years 26,706 26,706 26,706 26,706 26,706 26,506 26,706 16 Federal agency obligations—Total 7,689 6,525 6,691 6,655 8,026 6,525 6,525 17 Within 15 days2 1,480 70 203 307 1,654 89 316 18 16 days to 90 days 418 673 636 496 568 672 418 19 91 days to 1 year 1,395 1,386 1,386 1,386 1,346 1,357 1,395 2 2 2 1 2 0 O O O v v v e e e r r r 5 1 1 0 y y e e y a a e r r a s r t s o t o 5 1 y 0 e a y r e s a rs 3 1 , , 1 0 1 5 4 8 9 8 9 3 1 , , 1 0 1 4 6 8 1 6 9 3 1 , , 2 0 1 7 0 8 1 6 9 3 1 , , 2 0 1 0 7 8 6 1 8 3 1 , , 1 0 1 9 7 8 8 1 8 3 1 , , 1 0 1 8 3 8 0 8 9 3 1 , , 1 0 1 5 4 8 9 8 9 1. Holdings under repurchase agreements are classified as maturing within 15 NOTE: Components may not add to totals due to rounding, days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Nonfinancial Statistics • March 1990 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1989 1986 1987 1988 1989 IItteemm Dec. Dec. Dec. Dec. May June July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 58.14 58.69 60.71 59.99 58.74 58.35 58.70 58.75 59.22 59.62 59.57 59.99 2 Nonborrowed reserves 57.31 57.92 58.99 59.73 57.02 56.86 58.00 58.08 58.53 59.07 59.22 59.73 3 Nonborrowed reserves plus extended credit 57.62 58.40 60.23 59.75 58.22 57.78 58.11 58.12 58.55 59.09 59.24 59.75 4 Required reserves 56.77 57.66 59.67 59.07 57.71 57.44 57.73 57.87 58.29 58.60 58.62 59.07 5 Monetary base 241.45 257.99 275.50 285.22 278.43 279.06 280.01 280.29 282.04 282.70 283. O(Y 285.22 Not seasonally adjusted 6 Total reserves3 59.46 60.06 62.21 61.50 57.72 58.41 58.95 58.30 58.91 59.14 59.72 61.50 7 Nonborrowed reserves 58.64 59.28 60.50 61.24 56.00 56.92 58.26 57.62 58.21 58.58 59.37 61.24 8 Nonborrowed reserves plus extended credit4 58.94 59.76 61.74 61.26 57.20 57.84 58.37 57.66 58.24 58.61 59.39 61.26 9 Required reserves 58.09 59.03 61.17 60.58 56.69 57.51 57.99 57.41 57.97 58.12 58.77' 60.58 10 Monetary base 245.25 262.08 279.71 289.44 277.59 280.19 282.10 281.09 280.70 281.37 284.13 289.44 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS 11 Total reserves3 59.56 62.12 63.74 62.81 58.91 59.59 60.25 59.56 60.13 60.40 60.99 62.81 12 Nonborrowed reserves 58.73 61.35 62.02 62.54 57.19 58.10 59.56 58.88 59.43 59.84 60.64 62.54 13 Nonborrowed reserves plus extended credit4 59.04 61.83 63.27 62.56 58.39 59.01 59.67 58.93 59.46 59.86 60.66 62.56 14 Required reserves 58.19 61.09 62.70 61.89 57.88 58.68 59.29 58.67 59.19 59.38 60.04 61.89 15 Monetary base 247.71 266.16 283.18 292.71 280.64 283.28 285.39 284.23 283.78 284.49 287.35 292.71 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 actuail 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 1986 1987 1988 1989 Dec. Dec. Dec. Dec. Sept. Oct. Nov.' Dec. Seasonally adjusted 1 Ml 725.9 752.3 790.3 797.6 781.1 787.7 789.6 797.6 2 M2 2,811.2 2,909.9 3,069.6 3,217.0 3,153.5' 3,173.6' 3,196.2 3,217.0 3 M3 3,494.9 3,677.8' 3,915.6' 4,039.6 4,001.0' 4,010.6' 4,027.3 4,039.6 4 L 4,135.1 4,336.8'' 4,672.3' n.a. 4,813.9' 4,826.2' 4,838.7 n.a. 3 Debt 7,597.0 8,316.1 9,082.2 n.a. 9,615.3 9,677.9' 9,744.2 n.a. Ml components 6 Currency3 180.5 196.4 211.8 222.1 219.3 219.7 220.2 222.1 7 Travelers checks4 6.5 7.1 7.6 7.5 7.2 7.3 7.5 7.5 8 Demand deposits5 303.2 288.3 288.6 281.2 277.3 280.4 278.9 281.2 9 Other checkable deposits6 235.8 260.4 282.3 286.8 277.3 280.3 283.0 286.8 Nontransactions components 10 In M27 2,085.3 2,157.6 2,279.3 2,419.4 2,372.4' 2,385.9' 2,406.6 2,419.4 11 In M3 only8 683.7 767.9'' 846.0' 822.6 847.4' 837.0' 831.1 822.6 Savings deposits9 12 Commercial Banks 155.8 178.5 192.5 189.0 184.2 185.1 187.2 189.0 13 Thrift institutions 215.2 237.8 238.8 222.8 220.0 220.7 222.1 222.8 Small-denomination time deposits10 14 Commercial Banks 364.6 385.3 443.1 521.4 509.7' 515.2' 517.8 521.4 15 Thrift institutions 489.3 528.8 582.2 614.3 622.5 617.3' 615.3 614.3 Money market mutual funds 16 General purpose and broker-dealer 208.0 221.1 239.4 309.1 292.4' 298.4' 306.5 309.1 17 Institution-only 84.4 89.6 87.6 102.8 99.1 98.7 102.0 102.8 Large-denomination time deposits" 18 Commercial Banks 288.8 325.4 364.9 397.8 395.9' 397.6' 399.8 397.8 19 Thrift institutions 150.1 162.0 172.9 156.4 167.9 163.1 159.5 156.4 Debt components 20 Federal debt 1,805.8 1,957.4 2,113.5 n.a. 2,220.1 2,238.3 2,259.0 n.a. 21 Nonfederal debt 5,791.2 6,358.6 6,968.7 n.a. 7,395.2 7,439.5' 7,485.2 n.a. Not seasonally adjusted 22 Ml 740.4 766.4 804.4 811.5 778.5 784.4 791.1 811.5 23 M2 2,821.1 2,918.7 3,077.3 3,223.6 3,146.9' 3,169.5' 3,194.2 3,223.6 24 M3 3,507.4 3,688.7r 3,925.4r 4,048.2 3,999.0' 4,008.0' 4,032.6 4,048.2 25 L 4,150.1 4,351.r 4,685.8' n.a. 4,808.6' 4,821.5' 4,847.4 n.a. 26 Debt 7,580.7 8,297.6 9,067.5 n.a. 9,577.0 9,643.7' 9,711.1 n.a. Ml components 27 Currency3 183.0 199.3 214.9 225.3 218.7 219.0 221.1 225.3 28 Travelers checks4 6.0 6.5 6.9 6.9 7.7 7.3 7.0 6.9 29 Demand deposits5 314.0 298.6 298.8 291.2 275.9 280.3 281.1 291.2 30 Other checkable deposits6 2i7.4 262.0 283.7 288.1 276.2 277.8 281.8 288.1 Nontransactions components 31 M2 2,080.7 2,152.3 2,272.9 2,412.1 2,368.5' 2,385.1' 2,403.1 2,412.1 32 M3 only8 686.3 770.1' 848.1' 824.6 852.1' 838.5' 838.3 824.6 Money market deposit accounts 33 Commercial Banks 379.6 358.8 352.5 354.4 338.9 342.0 349.7 354.4 34 Thrift institutions 192.9 167.5 150.3 132.0 130.2 131.0 132.0 132.0 Savings deposits9 35 Commercial Banks 154.2 176.6 190.3 186.8 184.0' 185.5 186.7 186.8 36 Thrift institutions 212.7 234.8 235.6 219.7 220.9' 221.9 221.2 219.7 Small-denomination time deposits10 37 Commercial Banks 365.3 386.1 444.1 522.8 510.1' 515.6 519.5 522.8 38 Thrift institutions 489.8 529.1 582.4 614.4 619.7 617.8' 615.8 614.4 Money market mutual funds 39 General purpose and broker-dealer 208.0 221.1 239.4 309.1 292.4' 298.4' 306.5 309.1 40 Institution-only 84.4 89.6 87.6 102.8 99.1 98.7 102.0 102.8 Large-denomination time deposits" 41 Commercial Banks 289.1 325.8 365.6 398.8 398.1' 399.3' 401.2 398.8 42 Thrift institutions 150.7 163.0 174.1 157.5 168.3 164.9 161.2 157.5 Debt components 43 Federal debt 1,803.9 1,955.6 2,111.8 n.a. 2,200.9 2,222.6 2,250.8 n.a. 44 Nonfederal debt 5,776.8 6,342.0 6,955.7 n.a. 7,376.1 7,421.1' 7,460.2 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • March 1990 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. officii 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. 1989 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11998866 11998877 11998888 May June July Aug. Sept. Oct. DEBITS TO Seasonally adjusted Demand deposits3 1 All insured banks 188,346.0 217,116.2 226,888.4 266,468.1 284,129.2 276,453.7 292,446.5 281,432.2 293,424.9 2 Major New York City banks 91,397.3 104,496.3 107,547.3 120,984.1 129,166.6 114,991.8 121,378.1 125,206.9 136,039.0 3 Other banks 96,948.8 112,619.8 119,341.2 145,483.9 154,962.7 161,461.9 171,068.3 156,225.3 155,385.9 4 ATS-NOW accounts4 2,182.5 2,402.7 2,757.7 3,406.5 3,696.5 3,596.3 3,943.1 3,601.9 3,911.9 5 Savings deposits 403.5 526.5 583.0 647.2 640.0 580.4 650.0 672.3 665.4 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 556.5 612.1 641.2 767.1 824.0 788.4 841.8 802.2 826.4 7 Major New York City banks 2,498.2 2,670.6 2,903.5 3,342.1 3,588.5 3,222.3 3,402.4 3,482.2 3,486.5 8 Other banks . 321.2 357.0 376.8 467.5 501.8 512.6 548.8 496.2 492.5 9 ATS-NOW accounts4 15.6 13.8 14.7 18.2 19.8 19.1 20.6 18.8 20.1 10 Savings deposits 3.0 3.1 3.1 3.6 3.6 3.2 3.6 3.7 3.6 Not seasonally adjusted Demand deposits 11 All insured banks 188,506.7 217,125.1 227,010.7 274,861.8 295,522.8 268,243.0 304,407.5 266,882.2 292,750.0 12 Major New York City banks 91,500.1 104,518.8 107,565.0 121,507.2 134,020.7 117,276.1 132,158.8 115,187.4 138,964.6 13 Other banks 97,006.7 112,606.2 119,445.7 153,354.6 161,502.1 150,966.9 172,248.7 151,694.7 153,785.5 14 ATS-NOW accounts4 2,184.6 2,404.8 2,754.7 3,325.2 3,770.8 3,549.0 3,762.6 3,702.7 3,891.4 15 MMDA 1,609.4 1,954.2 2,430.1 2,910.5 3,136.0 2,686.7 3,068.7 2,554.3 2,651.5 16 Savings deposits 404.1 526.8 578.0 637.9 641.4 610.4 656.7 665.2 690.4 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 556.7 612.3 641.7 805.9 855.6 761.3 891.5 763.1 829.6 18 Major New York City banks 2,499.1 2,674.9 2,901.4 3,482.5 3,795.0 3,247.5 3,911.6 3,279.7 3,594.8 19 Other banks 321.2 356.9 377.1 500.9 520.9 477.4 559.9 482.2 489.4 20 ATS-NOW accounts4 15.6 13.8 14.7 18.0 20.3 18.9 20.0 19.5 20.3 21 MMDA 4.5 5.3 6.9 9.0 9.7 8.2 9.2 7.6 7.8 22 Savings deposits 3.0 3.1 3.1 3.5 3.6 3.4 3.6 3.7 3.8 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 DomesticN onfinancial Statistics • March 1990 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1989 CCaatteeggoorryy Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Seasonally adjusted 1 Total loans and securities2 2,422.8 2,451.9 2,464.9 2,470.9 2,486.3 2,496.8 2,518.1 2,534.4 2,544.1 2,575.5 2,583.9 2,577.4 2 U.S. government securities 360.4 361.8 368.8 370.7 373.5 373.8 374.4 376.6 378.8 391.7 397.5 396.9 i Other securities 189.6 190.4 189.7 187.2 186.4 185.7 184.6 182.8 182.9 182.7 180.3 181.3 4 Total loans and leases2 1,872.9 1,899.7 1,906.5 1,913.1 1,926.5 1,937.3 1,959.1 1,974.9 1,982.4 2,001.1 2,006.1 1,999.2 S Commercial and industrial ..... 606.6 619.0 617.8 620.6 626.3 624.9 632.1 637.3 636.9 641.1 641.5' 634.2 6 Bankers acceptances held ... 4.4 4.2 4.0 4.1 4.2 4.2 4.1 4.5 44..88 55..44 44..99 44..33 / Other commercial and industrial 602.2 614.8 613.7 616.6 622.1 620.7 628.1 632.8 632.1 635.7 636.7 629.9 8 U.S. addressees4 596.6 609.9 608.3 611.7 616.6 615.2 622.2 627.1 626.6 629.3' 631.2' 624.6 9 Non-U.S. addressees4 5.7 4.9 5.4 4.9 5.4 5.5 5.9 5.7 5.5 6.3' 5.5' 5.2 10 Real estate 678.9 685.6 691.8 699.5 705.5 712.0 719.9 729.0 734.4 741.1 747.7 754.8 11 Individual 357.9 358.9 360.6 362.9 365.4 366.0 367.0 369.3 372.1 374.4 376.9 378.1 12 Security 37.6 44.7 43.5 39.9 38.0 41.2 40.0' 39.3' 3399..99'' 41.4' 4400..66'' 3377..88 13 Nonbank financial institutions 30.1 30.5 29.6 29.1 28.6 30.2 31.2' 31.lr 31.3' 32.4' 33.1 32.2 14 Agricultural 30.7 30.7 30.7 30.4 30.3 30.3 30.4 30.3 3300..22 3300..11 3300..33'' 3300..55 15 State and political subdivisions 44.2 44.3 44.3 44.4 44.4 44.2 43.9 43.6 43.5 42.9 42.3 41.0 16 Foreign banks 7.8 8.5 8.2 8.4 9.4 9.3 8.9 9.3 8.5 9.7r 9.0' 9.1 17 Foreign official institutions 4.8 4.8 4.8 4.9 4.9 4.7 4.5 4.3 4.3 4.0 3.8 3.8 1 1 9 8 A L l e l a o se th f e in r a l n oa c n in s g receivables .... 4 2 4 9 . . 8 4 4 2 3 9 . . 1 6 4 2 5 9 . . 6 6 4 2 3 9 . . 2 8 4 3 3 0 . . 7 0 4 2 4 9 . . 5 9 5 3 0 0 . . 8 3 ' 5 3 1 0 . . 3 V 5 31 0 .0 . 2r 5 3 2 1 . . 3 6 ' 4 3 9 1 . . 2 6 ' 4 3 6 1 . . 5 1 Not seasonally adjusted 20 Total loans and securities2 2,430.7 2,453.6 2,462.8 2,473.9 2,487.4 2,500.9 2,511.8 2,526.9 2,541.2 2,565.6 2,582.6' 2,591.7 21 U.S. government securities 362.2 366.3 370.2 370.9 372.6 372.6 373.1 376.8 378.5 388.3 396.1 397.2 22 Other securities 191.7 190.1 188.9 187.2 186.8 186.0 184.1 183.1 182.8 181.6 180.5 181.2 23 Total loans and leases2 1,876.9 1,897.2 1,903.7 1,915.9 1,928.0 1,942.3 1,954.6 1,966.9 1,980.0 1,995.6 2,006.1 2,013.3 24 Commercial and industrial ..... 605.8 618.3 621.1 625.2 630.0 629.0 631.0 632.7 632.2 636.0 638.7 637.9 25 Bankers acceptances held ... 4.1 4.1 4.0 4.0 4.3 4.4 4.2 4.6 44..99 55..55 44..88 44..33 26 Other commercial and industrial 601.7 614.2 617.1 621.3 625.8 624.6 626.8 628.0 627.3 630.5 634.0 633.6 27 U.S. addressees 596.4 608.9 611.8 616.0 620.2 619.0 621.1 622.6 621.7'' 624.9' 628.5' 628.3 28 Non-U.S. addressees 5.3 5.3 5.3 5.3 5.5 5.6 5.6 5.5 5.5 5.6' 5.4 5.3 29 Real estate 678.9 683.6 689.2 697.4 704.1 712.1 720.6 730.4 736.5 741.9 749.8 756.4 30 Individual 360.7 358.2 357.7 360.3 363.2 364.5 365.9 369.3 374.0 375.6 378.1 382.4 31 Security 38.1 43.7 44.1 42.0 38.9 42.8' 39.7r as.tr 3388..44rr 3399..77'' 3399..99"" 3388..22 32 Nonbank financial institutions 30.6 29.9 29.0 28.9 28.8 30.3' 31.2'" sur 31.2r 32.1' 33.3 33.4 3333 Agricultural 30.1 29.7 29.6 29.5 30.1 30.6 31.1 31.2 3311..11 3311..00 3300..55'' 3300..33 34 State and political subdivisions 45.6 45.3 44.9 44.6 44.3 43.9 43.4 43.2 42.9 42.5 41.8 40.9 3355 Foreign banks 8.1 8.5 8.0 8.1 9.0 9.1 9.0 9.1 8.7 9.8 9.1' 9.5 3 S 6 I F L o e r a e s i e g f n i n o a f n fi c c i ia n l g i r n e s c ti e t i u v t a io b n le s s 2 4 9 . . 8 7 2 4 9 . . 8 7 2 4 9 . . 8 7 2 4 9 . . 9 8 3 4 0 . . 9 0 3 4 0 . . 7 0 3 4 0 . . 5 2 3 4 0 . . 3 2 3 4 0 . . 3 9 3 4 1 . . 0 4 3 3 1 . . 8 5 3 3 1 . . 8 4 38 All other loans 44.4 45.4 45.8 45.0 44.8 45.2 48. lr 47.6' 49.8' 51.7' 49.6' 49.3 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 Source Jan. Feb. Apr. May June July Aug. Sept. Oct. Nov/ Dec. Seasonally adjusted 1 Total nondeposit funds — 208.2 211.3 212.1 205.9 209.9 226.9 228.3 229.8r 238.C 248.4' 251.9 245.2 2 Net balances due to related foreign offices — 8.2 10.7 8.2 3.0 -.1 7.7 11.1 9.3' 9.7r lO.O' 3.0 3 Borrowings from other than commercial banks in United States 200.0 200.6 203.9 203.0' 210.0 219.3' 217.2 220.5 228.3 238.4 243.1 242.2 4 Domestically chartered banks 163.0 161.3 165.8 164.2 169.2 179.1 175.4 178.2 184.9 192.0 194.4 194.9 5 Foreign-related banks 37.0 39.3 38.1 38.8r 40.8r 40.1 41.8 42.3 43.4 46.4 48.7 47.3 Not seasonally adjusted 6 Total nondeposit funds 207.4 216.1 217.7 208.6 217.6' 230. lr 224.0 228.6' 234.0' 241.5' 247.6 238.2 7 Net balances due to related foreign offices — 7.9 10.5 7.2 .9 2.5 7.9 8.1 8.9' 10.7' 9.7' 9.8 5.5 8 9 F D o o r m ei e g s n ti - c r a el l a ly te c d h a b r a t n e k re s d banks -2 2 0 8 . . 2 1 -1 2 7 8 . . 6 1 -1 2 9 6 . . 5 7 -2 2 2 3 . . 8 7 -2 2 1 4 . . 9 4 -1 2 8 6 . . 3 2 -1 2 6 4 . . 4 5 -1 2 5 4 . . 5 4 ' -1 2 4 4 .2 ^ -1 2 4 4 . . 8 5 ' -1 2 5 5 . . 2 0 -1 2 9 4 . . 0 6 10 Borrowings from other than commercial banks in United States4 199.5 205.7 210.6 207.7 215.0 222.2 215.9 219.7 223.3 231.8 237.8 232.7 11 Domestically chartered banks 161.3 165.1 170.9 168.1 173.8 180.5 173.5 177.7 180.7 187.2 192.7 187.8 12 Federal funds and security RP borrowings 157.9 161.9 167.5 163.8 170.1 177.0 170.8 175.1 178.1 184.8 190.7 185.3 13 Other6 3.4 3.2 3.5 4.3 3.7 3.4 2.7 2.6 2.6 2.4 2.0 2.5 14 Foreign-related banks6 38.1 40.6 39.6 39.6 41.2 41.7 42.4 42.0 42.6 44.7 45.0 44.9 MEMO Gross large time deposits 15 Seasonally adjusted 434.9 440.3 446.7 452.7 456.8 458.8 461.6 460.4 458.0 459.4' 461.4 460.1 16 Not seasonally adjusted 434.5 440.2 448.2 450.6 455.5 457.3 458.8 461.2 460.1 461.1' 462.9 461.1 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 20.3 20.3 20.3 20.9 27.1 27.4 22.7 22.9 23.8 19.9 20.4 21.3 18 Not seasonally adjusted 25.0 25.9 18.1 20.2 34.3 26.2 23.0 15.8 24.8' 20.6 14.7 19.6 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. Tliese 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 DomesticN onfinancial Statistics • March 1990 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1989 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 2,624.0 2,627.1 2,623.0 2,659.8 2,660.7 2,677.1 2,692.5 2,695.7 2,728.1 2,764.7 2,771.0 2 Investment securities 535.8 539.1 538.3 541.1 541.6 538.3 542.8 542.4 545.4 549.5 550.4 3 U.S. government securities 351.3 355.5 356.6 359.1 362.2 360.3 365.3 366.4 370.8 375.8 375.7 4 Other 184.5 183.6 181.7 182.0 179.4 178.1 177.5 176.1 174.6 173.7 174.7 5 Trading account assets 20.1 21.8 17.8 19.2 18.2 19.8 18.7 18.3 26.6 27.6 23.4 6 Total loans 2,068.0 2,066.2 2,066.8 2,099.5 2,100.9 2,119.0 2,131.0 2,135.0 2,156.1 2,187.6 2,197.2 7 Interbank loans 173.2 154.9 150.7 160.5 155.0 162.4 162.9 158.0 164.2 179.9 181.9 8 Loans excluding interbank 1,894.9 1,911.3 1,916.2 1,939.0 1,945.9 1,956.6 1,968.1 1,977.1 1,992.0 2,007.8 2,015.3 9 Commercial and industrial 617.6 622.9 627.3 631.1 628.3 635.3 631.9 630.3 634.9 638.7 639.4 10 Real estate 684.1 692.6 699.4 706.7 715.1 722.8 733.9 737.5 743.2 752.0 757.7 11 Individual 358.3 358.1 361.8 363.8 366.0 366.2 371.4 375.5 376.1 378.8 384.5 12 All other 234.8 237.7 227.7 237.4 236.6 232.3 231.0 233.7 237.8 238.2 233.8 13 Total cash assets 227.4 211.5 215.8 248.3 214.2 211.7 212.0 219.6 213.0 234.8 259.3 14 Reserves with Federal Reserve Banks. 27.7 30.9 33.4 27.8 27.9 30.6 28.7 31.7 28.0 38.7 42.8 15 Cash in vault 26.6 26.8 26.9 27.9 27.6 27.4 28.5 28.0 27.9 30.7 31.6 16 Cash items in process of collection ... 89.1 75.9 78.8 107.6 78.7 75.2 77.4 82.6 77.5 84.1 9988..88 17 Demand balances at U.S. depository institutions 33.3 28.8 28.5 34.9 29.6 28.8 29.7 29.0 28.8 28.9 32.5 18 Other cash assets 50.7 49.0 48.3 50.2 50.5 49.7 47.7 48.3 50.7 52.3 53.7 19 Other assets 191.4 194.1 200.7 206.8 198.7 201.1 199.6 203.9 203.8 201.9 208.2 20 Total assets/total liabilities and capital.... 3,042.8 3,032.7 3,039.5 3,114.9 3,073.6 3,090.0 3,104.0 3,119.3 3,144.9 3,201.3 3,238.6 21 Deposits 2,125.2 2,123.7 2,134.2 2,182.6 2,138.2 2,152.0 2,166.6 2,175.3 2,194.2 2,221.1 2,265.1 22 Transaction deposits 602.6 583.2 594.5 628.5 580.5 579.4 583.4 588.5 588.0 602.5 643.3 23 Savings deposits 527.3 523.2 512.0 509.7 507.4 514.0 518.9 520.7 527.6 537.6 540.3 24 Time deposits 995.3 1,017.3 1,027.6 1,044.3 1,050.2 1,058.6 1,064.4 1,066.1 1,078.6 1,081.0 1,081.5 25 Borrowings 502.9 483.6 486.7 510.6 512.7 510.2 504.6 516.5 526.5 542.2 530.6 2 26 1 R O e th si e d r u l a ia l b (a il s it s i e e t s s less liabilities) 2 1 1 9 6 8 . . 5 2 2 2 0 2 1 3 . . 4 9 2 2 0 1 1 7 . . 2 4 2 2 0 1 3 8 . . 2 6 2 2 0 1 4 8 . . 4 4 2 2 2 0 3 4 . . 1 7 2 2 0 2 6 6 . . 5 3 2 20 2 6 1 . . 1 4 2 20 2 1 2 . . 9 4 2 20 3 2 5 . . 9 2 2 2 3 0 9 3 . . 1 8 MEMO 28 U.S. government securities (including trading account) 366.2 372.1 369.5 372.3 374.4 373.5 377.5 378.5 390.4 396.2 339922..22 29 Other securities (including trading account) 189.7 188.8 186.6 188.0 185.4 184.6 184.0 182.3 181.6 180.9 181.6 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,405.9 2,407.8 2,407.8 2,446.0 2,439.9 2,452.1 2,467.6 2,473.6 2,506.5 2,526.4 2,535.9 31 Investment securities 509.0 513.1 513.8 516.1 517.3 514.2 519.4 519.0 521.6 523.0 524.3 32 U.S. government securities 338.1 342.7 344.1 345.9 349.5 347.8 353.5 354.5 358.7 362.1 363.3 33 Other 171.0 170.4 169.7 170.2 167.8 166.5 165.9 164.5 162.9 160.9 161.0 34 Trading account assets 20.1 21.8 17.8 19.2 18.2 19.8 18.7 18.3 26.6 27.6 23.4 35 Total loans 1,876.8 1,872.8 1,876.2 1,910.6 1,904.5 1,918.1 1,929.4 1,936.3 1,958.3 1,975.8 1,988.3 36 Interbank loans 138.9 122.3 120.2 131.5 119.3 126.4 127.0 125.1 134.9 142.1 145.8 3/ Loans excluding interbank 1,737.8 1,750.5 1,756.0 1,779.2 1,785.1 1,791.7 1,802.5 1,811.2 1,823.5 1,833.7 1,842.5 38 Commercial and industrial 503.4 506.1 511.3 515.5 511.6 515.6 512.8 510.4 514.2 515.3 515.9 39 Real estate 661.7 669.8 676.0 683.2 691.6 698.2 708.7 712.2 717.1 724.4 729.7 40 Individual 358.0 357.7 361.4 363.5 365.6 365.8 371.1 375.2 375.8 378.5 384.2 41 All other 214.7 216.9 207.3 217.0 216.3 212.0 209.9 213.5 216.4 215.5 212.7 42 Total cash assets 206.4 191.4 195.3 227.0 192.3 190.1 191.7 197.6 191.5 209.5 235.0 43 Reserves with Federal Reserve Banks. 26.6 29.5 30.7 26.7 26.6 29.6 27.0 29.5 26.3 37.9 41.7 44 Cash in vault 26.6 26.8 26.8 27.9 27.6 27.4 28.5 28.0 27.9 30.7 31.5 45 Cash items in process of collection ... 88.1 75.1 77.9 106.6 77.7 74.4 76.5 81.3 76.3 8822..22 9977..44 46 Demand balances at U.S. depository institutions 31.2 26.6 26.8 32.9 27.5 27.0 28.0 27.3 26.9 27.0 30.7 47 Other cash assets 33.9 33.4 33.1 33.0 32.9 31.7 31.7 31.6 34.2 31.7 33.6 48 Other assets 129.6 130.6 134.6 133.6 131.6 128.4 127.5 131.5 126.3 132.2 136.0 49 Total assets/liabilities and capital 2,741.8 2,729.9 2,737.7 2,806.6 2,763.9 2,770.6 2,786.7 2,802.8 2,824.3 2,868.2 2,906.9 50 Deposits 2,052.7 2,047.4 2,056.2 2,103.0 2,058.8 2,071.3 2,086.9 2,094.5 2,112.4 2,139.2 2,182.3 51 Transaction deposits 593.5 574.1 584.8 618.7 571.2 570.2 574.7 578.8 578.4 592.7 633.2 52 Savings deposits 524.8 520.7 509.4 507.1 504.8 511.3 516.2 517.9 525.0 534.8 537.5 53 Time deposits 934.4 952.6 961.9 977.2 982.9 989.9 995.9 997.7 1,009.0 1,011.6 1,011.7 54 Borrowings 378.7 362.8 368.2 383.0 387.3 380.2 375.5 390.8 393.2 404.4 398.3 55 Other liabilities 115.8 121.7 115.6 120.9 116.9 117.8 121.3 114.9 120.4 125.2 125.9 56 Residual (assets less liabilities) 194.6 197.9 197.7 199.7 200.8 201.2 203.0 202.6 198.4 199.4 200.3 MEMO 57 Real estate loans, revolving 41.7 42.5 43.4 44.3 45.3 45.7 46.4 47.1 47.9 48.5 49.1 58 Real estate loans, other 620.0 627.3 632.6 638.9 646.2 652.5 662.3 665.0 669.2 676.0 680.6 1. Back data are available from the Banking and Monetary Statistics section, the last Wednesday of the month based on a weekly reporting sample of Board of Governors of the Federal Reserve System, Washington, D.C., 20551. foreign-related institutions and quarter-end condition reports. These data also appear in the Board's weekly H.8 (510) release. 2. Commercial banking institutions include insured domestically chartered Figures are partly estimated. They include all bank-premises subsidiaries and commercial banks, branches and agencies of foreign banks, Edge Act and other significant majority-owned domestic subsidiaries. Loan and securities data Agreement corporations, and New York State foreign investment corporations. for domestically chartered commercial banks are estimates for the last Wednes- 3. Insured domestically chartered commercial banks include all member banks day of the month based on a sample of weekly reporting banks and quarter-end and insured nonmember banks. condition report data. Data for other banking institutions are estimates made for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A19 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS1 Millions of dollars, Wednesday figures 1989 AAccccoouunntt Nov. V Nov. 8R Nov. 15R Nov. 22 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 1 Cash and balances due from depository institutions 130,647 109,220 117,955 111,966' 120,195' 113,198 115,176 123,602 139,112 2 Total loans, leases, and securities, net 1,274,536 1,245,950 1,265,997 1,250,175 1,250,240 1,257,325 1,258,300 1,258,888 1,251,465 3 U.S. Treasury and government agency 159,975 160,544 163,222 162,577R 161,329' 164,458 164,785 160,736 156,540 4 Trading account 21,235 21,716 23,416 22,109 20,406 22,782 22,685 19,700 16,554 5 Investment account 138,740 138,828 139,806 140,468' 140,923' 141,677 142,101 141,036 139,986 6 Mortgage-backed securities 69,066 69,219 70,775 71,209' 71,483' 71,836 72,131 72,163 71,822 All other maturing in 7 One year or less 19,880 19,744 19,342 19,307 19,189 19,929 20,406 19,949 19,846 8 Over one through five years 35,237 35,431 35,401 35,649' 35,644' 34,763 34,526 34,238 33,868 9 Over five years 14,556 14,433 14,288 14,303' 14,606' 15,148 15,038 14,686 14,450 10 Other securities 67,141 66,817 66,971 66,658' 66,556' 66,693 66,737 66,591 66,646 11 Trading account 913 900 1,064 1,032 1,182 1,087 1,078 1,253 1,276 12 Investment account 66,229 65,918 65,907 65,626' 65,374' 65,605 65,658 65,338 65,370 13 States and political subdivisions, by maturity 39,125 38,800 38,628 38,525 38,395 38,036 37,790 37,406 37,332 14 One year or less 4,850 4,943 4,932 4,947 4,948 5,017 4,963 4,919 4,876 15 Over one year 34,275 33,857 33,696 33,578 33,447 33,018 32,827 32,487 32,456 16 Other bonds, corporate stocks, and securities 27,104 27,118 27,278 27,101' 26,979' 27,570 27,868 27,932 28,038 17 Other trading account assets 6,148 6,118 6,066 6,046 5,982 6,265 6,001 5,866 5,570 18 Federal funds sold4 88,666 70,289 81,758 66,208 67,784 71,574 70,838 72,093 69,681 19 To commercial banks 62,061 46,908 57,063 43,944' 46,306' 48,399 49,069 51,964 50,681 20 To nonbank brokers and dealers in securities 16,978 16,444 16,603 15,875' 15,090' 15,341 14,731 13,552 13,577 21 To others 9,628 6,937 8,092 6,389 6,389' 7,834 7,037 6,576 5,422 22 Other loans and leases, gross 995,523 985,228 991,078 991,82c 991,549 991,529 993,296 996,866 995,794 23 Other loans, gross 969,371 959,125 964,936 965,614' 965,323 965,642 967,382 970,873 969,625 24 Commercial and industrial 320,642 318,275 320,301 320,156' 319,046' 317,973 318,337 320,047 318,783 25 Bankers acceptances and commercial paper 1,816 1,798 1,721 1,721 1,520 1,495 1,410 1,404 1,404 26 All other 318,827 316,477 318,579 318,435' 317,526' 316,477 316,926 318,643 317,379 27 U.S. addressees 317,000 314,720 316,681 316,685' 315,771' 314,724 315,152 316,916 315,573 28 Non-U.S. addressees 1,827 1,757 1,898 1,750' 1,754' 1,753 1,774 1,727 1,806 29 Real estate loans 347,332 348,200 348,900 349,330' 350,282 352,077 353,080 353,327 352,524 30 Revolving, home equity 26,491 26,542 26,653 26,734 26,816 26,908 27,035 27,222 27,271 31 All other 320,841 321,658 322,247 322,596' 323,466 325,169 326,046 326,105 325,253 32 To individuals for personal expenditures 174,030 174,049 174,713 174,802 175,401 175,594 176,721 177,262 177,825 33 To depository and financial institutions 51,068 48,618 49,315 49,542' 48,921' 49,119 48,480 47,948 47,572 34 Commercial banks in the United States 23,049 21,194 22,137 22,798 21,591' 21,490 21,140 20,633 20,813 35 Banks in foreign countries 5,168 4,660 4,691 4,549' 4,458' 4,615 4,368 4,876 4,430 36 Nonbank depository and other financial institutions .. 22,851 22,764 22,487 22,195 22,872 23,014 22,972 22,439 22,329 37 For purchasing and carrying securities 17,319 15,137 16,006 16,356 15,760 15,286 16,852 17,110 16,261 38 To finance agricultural production 5,559 5,511 5,521 5,449 5,402 5,355 5,398 5,379 5,452 39 To states and political subdivisions 25,935 25,836 25,548 25,429 25,389 25,210 24,996 24,919 24,856 40 To foreign governments and official institutions 1,459 1,481 1,483 1,388 1,414 1,340 1,364 1,452 1,415 41 All other 26,026 22,017 23,148 23,163' 23,708' 23,688 22,153 23,428 24,936 42 Lease financing receivables 26,152 26,103 26,142 26,206 26,226 25,887 25,913 25,993 26,169 43 LESS: Unearned income 4,863 4,886 4,890 4,941 4,912 4,813 4,817 4,784 4,762 44 Loan and lease reserve 38,054 38,161 38,208 38,194 38,050 38,381 38,539 38,480 38,004 45 Other loans and leases, net 952,606 942,181 947,980 948,685' 948,588 948,336 949,940 953,602 953,027 46 All other assets 134,716 135,227 138,016 132,920' 133,365' 135,449 136,581 136,322 135,528 47 Total assets 1,539,899 1,490,398 1,521,968 1,495,062' 1,503,799 1,505,973 1,510,058 1,518,812 1,526,105 48 Demand deposits 247,426 222,095 243,064 227,363 223,373 227,177 228,103 247,131 247,985 49 Individuals, partnerships, and corporations 193,984 177,368 193,079 181,649 178,974 182,551 185,306 191,286 197,147 50 States and political subdivisions 7,122 5,244 6,632 6,925 5,623 5,998 5,944 7,450 7,245 51 U.S. government 1,582 3,227 4,266 3,212 1,793 2,675 1,446 5,099 1,853 52 Depository institutions in the United States 26,572 20,374 23,788 20,081 21,049 20,475 20,199 22,542 23,729 53 Banks in foreign countries 7,138 6,068 6,050 6,583 6,250 6,304 5,982 8,196 6,844 54 Foreign governments and official institutions 738 621 592 781 618 606 878 628 681 55 Certified and officers' checks 10,290 9,192 8,655 8,131 9,066 8,567 8,349 11,929 10,485 56 Transaction balances other than demand deposits 77,424 77,648 77,533 76,872 76,012 79,918 78,322 79,232 79,264 57 Nontransaction balances 702,216 702,174 705,266 703,451 703,876 706,637 706,401 702,865 704,033 58 Individuals, partnerships, and corporations 664,376 664,443 667,394 665,702 665,914' 668,841 668,522 665,733 666,359 59 States and political subdivisions 29,252 29,202 29,462 29,332' 29,409' 29,273 29,298 28,424 28,968 60 U.S. government 945 948 945 952' 948' 898 900 886 886 61 Depository institutions in the United States 7,039 6,963 6,886 6,890 7,037 7,061 7,128 7,289 7,241 62 Foreign governments, official institutions, and banks .. 604 617 579 574 569 563 554 533 579 63 Liabilities for borrowed money 323,954 302,262 309,420 298,644' 310,423' 306,167 306,043 299,242 302,906 64 Borrowings from Federal Reserve Banks 0 0 1,150 0 899 0 25 0 1,943 65 Treasury tax-and-loan notes 24,403 2,520 3,244 7,613 9,610' 7,786 7,360 17,626 15,064 66 All other liabilities for borrowed money 299,552 299,742 305,026 291,030' 299,914' 298,381 298,658 281,616 285,899 67 Other liabilities and subordinated notes and debentures .. 90,466 87,779 88,427 89,939' 91,243' 87,003 92,012 91,000 92,732 68 Total liabilities 1,441,486 1,391,958 1,423,710 1,396,268 1,404,928 1,406,901 1,410,881 1,419,470 1,426,920 69 Residual (total assets minus total liabilities)7 98,413 98,439 98,258 98,794' 98,871 99,072 99,176 99,342 99,185 MEMO 70 Total loans and leases (gross) and investments adjusted . 1,232,344 1,220,896 1,229,895 1,226,568' 1,225,304' 1,230,630 1,231,448 1,229,554 1,222,737 71 Total loans and leases (gross) adjusted 999,080 987,416 993,636 991,286' 991,437' 993,214 993,925 996,361 993,980 72 Time deposits in amounts of $100,000 or more 218,072 218,747 218,339 218,219 217,748 217,753 217,113 215,307 214,664 73 U.S. Treasury securities maturing in one year or less 18,413 18,288 17,957 17,594 17,100 18,496 19,039 17,882 17,257 74 Loans sold outright to affiliates—total 1,526 1,523 1,126 829 536 536 536 524 532 75 Commercial and industrial 1,226 1,221 825 525 231 233 232 229 235 76 Other 300 302 301 304 305 304 304 295 297 77 Nontransaction savings deposits (including MMDAs) 264,644 264,325 266,525 265,355 265,832 268,157 268,617 266,828 268,435 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 billion or 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 DomesticN onfinancial Statistics • March 1990 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1989 AAccccoouunntt Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29 Dec. 6 Dec. 13 Dec. 20 Dec. 27 1 Cash balances due from depository institutions 34,938 25,318 24,768 21,833 28,750 22,921 21,572 28,238 36,663 2 Total loans, leases, and securities, net2 222,339 207,756 220,795 209,742 212,537 209,462 214,997 210,684 207,786 Securities 3 U.S. Treasury and government agency 0 0 0 0 0 0 0 0 0 4 Trading account3 0 0 0 0 0 0 0 0 0 5 Investment account 15,927 15,890 15,718 16,173 16,100 16,141 16,043 15,969 15,848 6 Mortgage-backed securities 8,442 8,447 8,376 8,627 8,534 88,,558888 88,,446644 88,,440022 88,,224422 All other maturing in 7 One year or less 2,836 2,844 2,849 2,858 2,831 2,792 2,813 2,816 2,774 8 Over one through five years 3,180r 3,209' 3,111' 3,342' 3,242' 3,236 3,240 3,289 3,330 9 Over five years l^ 1,389' 1,381' 1,346' 1,494' 1,525 1,525 1,462 1,500 10 Other securities 0 0 0 0 0 0 0 0 0 11 Trading account3 0 0 0 0 0 0 0 0 0 12 Investment account 15,312 15,032 15,092 15,056 14,846 14,873 14,900 14,805 14,830 13 States and political subdivisions, by maturity 8,403 8,120 8,057 8,020 7,988 7,893 7,867 7,837 7,833 14 One year or less 1,061 1,046 1,051 1,052 1,049 1,052 1,055 1,053 1,047 15 Over one year 7,343 7,074 7,006 6,969 6,940 6,841 6,812 6,783 6,786 16 Other bonds, corporate stocks, and securities 6,908 6,912 7,035 7,036 6,858 6,980 7,033 6,968 6,997 17 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold5 25,543 17,730 27,450 16,640 19,788 17,344 20,548 17,304 16,289 19 To commercial banks 13,429 9,001 16,294 8,473 12,046 8,310 12,041 10,169 10,381 20 To nonbank brokers and dealers in securities 6,296 4,919 6,104 5,077 4,600 4,922 5,098 4,154 3,339 21 To others 5,818 3,811 5,052 3,089 3,143 4,113 3,409 2,981 2,569 22 Other loans and leases, gross 185,571 179,133 182,583 181,982 181,873 181,205 183,655 182,749 180,812 23 Other loans, gross 179,860 173,458 176,911 176,269 176,168 175,510 177,917 177,023 175,068 24 Commercial and industrial 61,631 60,418 61,406 60,506 60,040 59,781 60,455 60,379 58,571 25 Bankers acceptances and commercial paper 165 160 151 136 131 122 116 134 125 26 All other 61,466 60,259 61,255 60,371 59,909 59,659 60,339 60,245 58,445 27 U.S. addressees 60,764 59,620 60,473 59,795 59,332 59,056 59,724 59,635 57,838 28 Non-U.S. addressees 702 639 782 576 578 603 616 609 607 29 Real estate loans 59,768 59,939 59,925 60,099 60,309 61,332 61,563 61,303 60,850 30 Revolving, home equity 3,798 3,809 3,810 3,828 3,835 3,840 3,852 3,864 3,841 31 All other 55,970 56,130 56,115 56,270 56,474 57,492 57,711 57,439 57,009 32 To individuals for personal expenditures 20,055 20,139 20,150 20,168 20,148 19,975 19,969 19,967 20,046 33 To depository and financial institutions 19,624 16,926 18,481 18,256 18,188 18,596 18,479 18,066 18,098 34 Commercial banks in the United States 8,082 5,901 7,380 7,391 6,954 7,166 7,259 6,797 7,446 35 Banks in foreign countries 3,777 3,357 3,382 3,239 3,127 3,200 3,006 3,536 3,026 36 Nonbank depository and other financial institutions 7,765 7,668 7,720 7,626 8,108 8,230 8,214 7,733 7,625 37 For purchasing and carrying securities 7,069 5,516 6,366 6,857 6,404 5,425 6,841 6,298 6,150 38 To finance agricultural production 122 114 113 102 103 103 111 113 113 39 To states and political subdivisions 5,969 5,961 5,695 5,565 5,555 5,515 5,350 5,340 5,349 40 To foreign governments and official institutions 384 412 425 339 382 316 346 405 384 41 All other 5,238 4,032 4,350 4,377 5,037 4,465 4,803 5,154 5,509 42 Lease financing receivables 5,711 5,676 5,672 5,714 5,705 5,695 5,739 5,726 5,744 43 LESS: Unearned income 1,738 1,759 1,757 1,820 1,791 1,801 1,807 1,808 1,801 44 Loan and lease reserve 18,275 18,271 18,290 18,290 18,280 18,301 18,343 18,336 18,192 45 Other loans ancLleases, net 165,558 159,103 162,536 161,873 161,802 161,103 163,506 162,606 160,819 46 All other assets 60,546 61,507 62,540 59,368 59,680 61,547 61,204 59,750 61,849 47 Total assets 317,824 294,581 308,103 290,943 300,966 293,930 297,773 298,672 306,298 Deposits 4488 Demand deposits 61,956 51,659 56,515 50,289 50,743 48,644 50,476 59,194 55,232 49 Individuals, partnerships, and corporations 41,668 35,810 40,130 35,858 34,999 34,518 36,648 39,192 38,291 50 States and political subdivisions 956 582 965 635 493 584 547 953 810 51 U.S. government 170 626 715 604 326 448 168 1,004 270 52 Depository institutions in the United States 8,798 5,028 6,800 4,114 5,920 4,451 4,458 5,424 5,432 53 Banks in foreign countries 5,849 4,941 4,675 5,413 4,944 5,037 4,799 6,708 5,547 54 Foreign governments and official institutions 554 458 453 646 468 479 740 392 541 55 Certified and officers' checks 3,962 4,213 2,777 33,,001188 33,,559933 33,,112277 33,,111144 55,,552211 44,,334400 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,255 8,305 8,361 8,252 8,205 8,560 8,505 8,675 8,701 57 Nontransaction balances 115,441 113,697 116,677 115,318 115,313 116,075 115,658 116,117 115,660 58 Individuals, partnerships, and corporations 105,718 104,048 106,976 105,704 105,701 106,650 106,374 107,067 106,870 59 States and political subdivisions 7,388 7,274 7,353 7,281 7,292 7,117 7,040 6,819 6,691 60 U.S. government 29 29 30 29 29 30 29 27 26 61 Depository institutions in the United States 2,034 2,074 2,062 2,051 2,041 2,041 1,980 1,976 1,833 62 Foreign governments, official institutions, and banks 271 273 256 252 249 238 234 228 240 63 Liabilities for borrowed money 75,784 67,473 72,910 62,029 69,940 68,108 67,054 61,462 71,691 64 Borrowings from Federal Reserve Banks 0 0 1,150 0 883 0 0 0 1,680 65 Treasury tax-and-loan notes 5,684 422 604 1,465 1,878 1,594 1,541 4,664 3,831 66 All other liabilities for borrowed money8 70,100 67,050 71,157 60,564 67,179 66,515 65,514 56,798 66,180 67 Other liabilities and subordinated notes and debentures 32,327 29,333 29,622 30,619 32,460 28,037 31,589 28,929 30,930 68 Total liabilities 293,763 270,467 284,085 266,507 276,662 269,425 273,282 274,377 282,214 69 Residual (total assets minus total liabilities)9 24,060 24,114 24,018 24,436 24,305 24,505 24,491 24,295 24,084 MEMO 70 Total loans and leases (gross) and investments adjusted2'10 220,842 212,884 217,169 213,987 213,608 214,087 215,846 213,862 209,952 71 Total loans and leases (gross) adjusted 189,604 181,962 186,359 182,758 182,662 183,073 184,904 183,087 179,274 72 Time deposits in amounts of $100,000 or more 42,444 41,933 42,576 41,804 41,576 41,740 41,535 41,798 41,103 73 U.S. Treasury securities maturing in one year or less 3,353 3,005 2,904 2,990 2,970 3,066 3,084 3,118 3,240 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 FR 5 6A . . S I I n nE c cR l l u u d d e e s s s a e ll c o u c r a i t t e ie d s t p ra u n rc sf h e a r s e r d is k u n r d es e e r r a v g e r . eements to resell. cial banks. 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 Nov. 1 Nov. 8 Nov. 15 Nov. 22 Nov. 29' Dec. 6 Dec. 13 Dec. 20 Dec. 27 1 Cash and due from depository institutions ... 12,734 12,083' 12,983 12,064 13,482 12,161 12,958 13,008 13,410 2 Total loans and securities 137,835' 139,655 140,684 141,024 146,884 142,824 143,456 143,263 144,880 3 U.S. Treasury and government agency securities 8,167 8,237 8,268 8,367 8,997 8,922 9,054 8,380 88,,226666 4 Other securities 6,159 6,204 6,347 6,423 6,577 6,637 6,672 6,810 6,925 5 Federal funds sold 4,441 5,321 4,996 4,865 8,219 4,984 6,182 4,857 6,956 6 To commercial banks in the United States . 3,049 3,985 3,338 3,349 6,567 3,233 4,293 3,532 5,745 7 To others 1,392 1,336 1,658 1,516 1,652 1,751 1,889 1,325 1,211 8 Other loans, gross 119,068'' 119,893 121,073 121,369 123,091 122,281 121,548 123,216 122,733 9 Commercial and industrial 74,366 75,074 74,987 75,917 75,345 74,487 73,952 75,238 75,075 10 Bankers acceptances and commercial paper 2,329 2,129 2,032 2,328 2,399 2,050 2,062 2,065 2,054 11 All other 72,037 72,945 72,955 73,589 72,946 72,437 71,890 73,173 73,021 12 U.S. addressees 70,117 71,196 71,224 71,838 71,263 70,762 70,244 71,492 71,318 13 Non-U.S. addressees 1,920 1,749 1,731 1,751 1,683 1,675 1,646 1,681 1,703 14 Loans secured by real estate 17,426 17,379 17,753 17,643 18,077 18,226 18,206 18,244 18,553 15 To financial institutions 22,63 lr 23,280 23,168 23,366 24,399 24,869 24,441 24,826 24,542 16 Commercial banks in the United States.. 16,981' 16,881' 17,326' 17,507' 18,262 18,487 18,082 18,348 18,388 17 Banks in foreign countries 1,398' 1,508' 1,311' 1,330' 1,552 1,803 1,779 1,636 1,415 18 Nonbank financial institutions 4,252 4,891 4,531 4,529 4,585 4,579 4,580 4,842 4,739 19 To foreign governments and official institutions 489 374 373 384 382 431 434 402 388 20 For purchasing and carrying securities 1,627 1,472 2,306 1,722 2,317 2,026 2,206 2,141 1,956 21 All other3 2,529 2,314 2,486 2,337 2,571 2,242 2,309 2,365 2,219 22 Other assets (claims on nonrelated parties) .. 36,183 36,499' 36,571 36,570' 36,761 37,903 38,117 38,122 37,250 23 Net due from related institutions 20,307 15,348 16,029 16,429^ 11,454 13,961 12,517 13,350 12,124 24 Total assets 207,059 203,584 206,268 206,087' 208,580 206,852 207,047 207,742 207,665 25 Deposits or credit balances due to other than directly related institutions 51,313 50,944 52,887 50,359 49,927 49,684 50,906 50,992 50,180 26 Transaction accounts and credit balances . 4,483 3,772 4,918 3,757 4,204 3,735 4,292 4,241 4,047 27 Individuals, partnerships, and corporations 2,531 2,250 2,635 2,661 2,439 2,509 2,514 2,612 2,632 28 Other 1,952 1,522 2,283 1,096 1,765 1,226 1,778 1,629 1,415 29 Nontransaction accounts 46,830 47,172 47,969 46,602 45,723 45,949 46,614 46,751 46,133 30 Individuals, partnerships, and corporations 38,998' 39,006' 39,184 38,828 38,584 38,311 38,334 38,961 38,816 31 Other 7,832' 8,166' 8,785 7,774 7,139 7,638 8,280 7,790 7,317 32 Borrowings from other than directly related institutions 96,525 90,730 92,556 92,251 90,291 92,244 88,366 92,845 86,771 33 Federal funds purchased6 46,988 40,454 42,500 37,192 38,907 39,896 35,839 41,464 34,624 34 From commercial banks in the United States 25,390 21,168 25,151 18,392 19,041 21,010 18,551 23,606 16,521 35 From others 21,598 19,286 17,349 18,800 19,866 18,886 17,288 17,858 18,103 36 Other liabilities for borrowed money 49,537 50,276 50,056 55,059 51,384 52,348 52,527 51,381 52,147 37 To commercial banks in the United States 32,411 32,698 32,588 35,040 33,158 33,718 33,508 32,250 33,674 38 To others 17,126 17,578 17,468 20,019 18,226 18,630 19,019 19,131 18,473 39 Other liabilities to nonrelated parties 36,260 36,141 37,070 37,114 36,552 37,386 38,052 37,582 37,169 40 Net due to related institutions 22,962 25,769 23,754 26,361' 31,808 27,537 29,722 26,323 33,545 41 Total liabilities 207,059 203,584 206,268 206,087' 208,580 206,852 207,047 207,742 207,665 MEMO 42 Total loans (gross) and securities adjusted .. 117,805' 118,789' 120,020' 120,168' 122,055 121,104 121,081 121,383 120,747 43 Total loans (gross) adjusted 103,479' 104,348' 105,405' 105,378' 106,481 105,545 105,355 106,193 105,556 1. Effective Jan. 4, 1989, the reporting pane) 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 NonfinancialS tatistics • March 1990 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 11998855 11998866 11998877 11998888 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Sept. Dec. Mar. June Sept. Dec. 1 All holders—Individuals, partnerships, and corporations 321.0 363.6 343.5 354.7 337.8 354.7 330.4 329.3 337.3 n.a. 2 Financial business 32.3 41.4 36.3 38.6 34.8 38.6 36.3 33.0 33.7 n.a. 3 Nonfinancial business 178.5 202.0 191.9 201.2 190.3 201.2 182.2 185.9 190.4 n.a. 4 Consumer 85.5 91.1 90.0 88.3 87.8 88.3 87.4 86.6 87.9 n.a. 5 Foreign 3.5 3.3 3.4 3.7 3.2 3.7 3.7 2.9 2.9 n.a. 6 Other 21.2 25.8 21.9 22.8 21.7 22.8 20.7 21.0 22.4 n.a. Weekly reporting banks 1988 1989 11998855 11998866 11998877 11998888 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Sept. Dec. Mar. June Sept. Dec. 7 All holders—Individuals, partnerships, and corporations 168.6 195.1 183.8 198.3 185.3 198.3 181.9 182.2 186.6 196.7 8 Financial business 25.9 32.5 28.6 30.5 27.2 30.5 27.2 25.4 26.3 27.6 9 Nonfinancial business 94.5 106.4 100.0 108.7 101.5 108.7 98.6 99.8 101.6 108.8 10 Consumer 33.2 37.5 39.1 42.6 41.8 42.6 41.1 42.4 43.0 44.1 11 Foreign 3.1 3.3 3.3 3.6 3.1 3.6 3.3 2.9 2.8 3.0 12 Other 12.0 15.4 12.7 12.9 11.7 12.9 11.7 11.7 12.9 13.2 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 . June July Aug. Sept. Oct.' Nov. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 237,586 298,779 329,991 357,129 455,017 503,445 506,095 516,476 507,090 507,902 n.a. Financial companies' Dealer-placed paper 2 Total 56,485 78,443 101,072 101,958 159,947 167,681 179,354 183,992 179,050 177,713 n.a. 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 paper 4 Total 110,543 135,320 151,820 173,939 192,442 211,020 205,847 208,915 206,521 210,855 n.a. 5 Bank-related (not seasonally adjusted) ^ 42,105 44,778 40,860 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies 70,558 85,016 77,099 81,232 102,628 124,744 121,217 125,478 123,489 121,466 n.a. Bankers dollar acceptances (not seasonally adjusted)6 7 Total 78,364 68,413 64,974 70,565 66,631 64,141' 65,588 65,764 63,814'" 63,660 63,704 Holder 8 Accepting banks 9,811 11,197 13,423 10,943 9,086 9,442' 9,410' 9,935' 9,526' 10,811 10,025 9 Own bills 8,621 9,471 11,707 9,464 8,022 8,397' 8,334' 8,874' 8,779' 9,108 8,518 10 Bills bought 1,191 1,726 1,716 1,479 1,064 1,046 1,076 1,061 747' 1,703 1,507 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 1,177 1,026 1,014 1,016 1,016 1,034 13 Others 67,881 56,279 50,234 58,658 56,052 53,521 55,152' 54,615' 53,370 51,833 52,645 Basis 14 Imports into United States 17,845 15,147 14,670 16,483 14,984 15,093 15,338 16,140 16,101' 16,157 15,664 15 Exports from United States 16,305 13,204 12,960 15,227 14,410 15,063 15,270 14,895 14,304' 14,275 14,397 16 All other 44,214 40,062 37,344 38,855 37,237 33,985r 34,980 34,729 33,409' 33,228 33,643 1. Institutions engaged primarily in activities such as, but not limited to, 5. Includes public utilities and firms engaged primarily in such activities as commercial savings, and mortgage banking; sales, personal, and mortgage fi- communications, construction, manufacturing, mining, wholesale and retail trade, nancing; factoring, finance leasing, and other business lending; insurance under- transportation, and services. writing; and other investment activities. 6. Beginning January 1988, the number of respondents in the bankers accep- 2. Includes all financial company paper sold by dealers in the open market. tance survey were reduced from 155 to 111 institutions—those with $100 million 3. Beginning January 1989, bank-related series have been discontinued. or more in total acceptances. The new reporting group accounts for over 90 4. As reported by financial companies that place their paper directly with percent of total acceptances activity. investors. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year Rate Period Av r e a r t a e g e Period Av r e a r t a e ge 1987 8.21 1988—Jan. ... 8.75 1989—Jan. . 1988 9.32 Feb. .. 8.51 Feb. 7.75 1989 10.87 Mar. .. 8.50 Mar. 8.00 Apr. .. 8.50 Apr. 8.25 1987- 7.50 May ... 8.84 May . 8.75 Feb. 7.50 June .. 9.00 June 9.25 Mar. 7.50 July .. 9.29 July . 9.00 Apr. 7.75 Aug. .. 9.84 Aug. 8.75 May . 8.14 Sept. .. 10.00 Sept. 8.50 June 8.25 Oct. ... 10.00 Oct. . 9.00 July . 8.25 Nov. .. 10.05 Nov. 9.50 Aug. 8.25 Dec. .. 10.50 Dec. 10.00 Sept. 8.70 10.50 Oct. . 9.07 1990—Jan. . 11.00 Nov. 8.78 11.50 Dec. 8.75 11.00 10.50 10.00 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 NonfinancialS tatistics • March 1990 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 Instrument 11998877 11998888 11998899 Sept. Oct. Nov. Dec. Dec. 1 Dec. 8 Dec. 15 Dec. 22 Dec. 29 MONEY MARKET RATES 1 Federal funds1,2 6.66 7.57 9.21 9.02 8.84 8.55 8.45 8.51 8.52 8.47 8.52 8.38 2 Discount window borrowing1, 5.66 6.20 6.93 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 Commercial paper • 3 1-month 6.74 7.58 9.11 8.87 8.66 8.47 8.61 8.42 8.53 8.61 8.67 8.66 4 3-month 6.82 7.66 8.99 8.70 8.53 8.35 8.29 8.25 8.24 8.31 8.33 8.31 5 6-month , 6.85 7.68 8.80 8.50 8.24 8.00 7.93 7.90 7.86 7.94 7.94 7.99 Finance paper, directly placed4, 6 1-month 6.61 7.44 8.99 8.76 8.54 8.33 8.40 8.21 8.40 8.45 8.43 8.28 7 3-month 6.54 7.38 8.72 8.35 8.29 8.07 8.01 7.97 8.00 8.01 8.01 8.00 8 6-month . 6.37 7.14 8.16 7.56 7.50 7.45 7.33 7.34 7.33 7.31 7.34 7.36 Bankers acceptances ,6 9 3-month 6.75 7.56 8.87 8.59 8.42 8.21 8.15 8.12 8.10 8.19 8.15 8.16 10 6-month 6.78 7.60 8.67 8.37 8.08 7.86 7.78 7.77 7.73 7.81 7.77 7.84 Certificates of deposit, secondary market 11 1-month 6.75 7.59 9.11 8.83 8.62 8.44 8.65 8.43 8.55 8.67 8.72 8.72 12 3-month 6.87 7.73 9.09 8.78 8.60 8.39 8.32 8.27 8.26 8.35 8.37 8.33 13 6-month 7.01 7.91 9.08 8.75 8.45 8.21 8.12 8.09 8.04 8.16 8.15 8.16 14 Eurodollar deposits^ 3-month8 7.07 7.85 9.16 8.85 8.67 8.42 8.39 8.25 8.34 8.40 8.48 8.39 U.S. Treasury bills5 Secondary market9 15 3-month 5.78 6.67 8.11 7.75 7.64 7.69 7.63 7.63 7.61 7.65 7.60 7.68 16 6-month 6.03 6.91 8.03 7.74 7.62 7.49 7.42 7.43 7.35 7.40 7.42 7.56 17 1-year 6.33 7.13 7.92 7.65 7.45 7.25 7.21 7.21 7.22 7.22 7.15 7.27 Auction average 18 3-month 5.82 6.68 8.12 7.72 7.63 7.65 7.64 7.63 7.55 7.60 7.62 7.77 19 6-month 6.05 6.92 8.04 7.74 7.61 7.46 7.45 7.45 7.30 7.41 7.43 7.64 20 1-year 6.33 7.17 7.91 7.61 7.35 7.17 7.14 n.a. n.a. n.a. 7.14 n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities 21 1-year 6.77 7.65 8.53 8.22 7.99 7.77 7.72 7.73 7.73 7.73 7.66 7.80 22 2-year 7.42 8.10 8.57 8.28 7.98 7.80 7.78 7.76 7.77 7.78 7.71 7.89 23 3-year 7.68 8.26 8.55 8.26 8.02 7.80 7.77 7.76 7.77 7.74 7.72 7.90 24 5-year 7.94 8.47 8.50 8.17 7.97 7.81 7.75 7.77 7.74 7.72 7.69 7.88 25 7-year 8.23 8.71 8.52 8.23 8.03 7.86 7.85 7.83 7.83 7.83 7.81 7.99 26 10-year 8.39 8.85 8.49 8.19 8.01 7.87 7.84 7.85 7.84 7.82 7.78 7.93 27 20-year n.a. 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 8.59 8.96 8.45 8.15 8.00 7.90 7.90 7.91 7.90 7.88 7.85 7.98 Composite 29 Over 10 years (long-term) 8.64 8.98 8.58 8.31 8.15 8.03 8.02 8.03 8.02 8.00 7.97 8.12 State and local notes and bonds Moody's series 30 Aaa 7.14 7.36 7.00 6.97 6.93 6.77 6.72 6.67 6.61 6.73 6.76 6.76 31 Baa 8.17 7.83 7.40 7.26 7.33 7.16 7.03 7.00 6.83 7.10 7.10 7.10 32 Bond Buyer series15 7.63 7.68 7.23 7.26 7.22 7.14 6.98 7.04 7.00 6.99 6.96 6.97 Corporate bonds Seasoned issues 33 All industries 9.91 10.18 9.66 9.41 9.34 9.32 9.30 9.31 9.30 9.29 9.28 9.32 34 Aaa 9.38 9.71 9.26 9.01 8.92 8.89 8.86 8.88 8.86 8.85 8.85 8.88 35 Aa 9.68 9.94 9.46 9.23 9.19 9.14 9.11 9.14 9.11 9.12 9.08 9.14 36 A 9.99 10.24 9.74 9.51 9.44 9.42 9.39 9.40 9.40 9.38 9.36 9.41 37 Baa 10.58 10.83 10.18 9.91 9.81 9.81 9.82 9.83 9.81 9.81 9.82 9.85 38 A-rated, recently offered utility bonds17 9.96 10.20 9.79 9.55 9.39 9.28 9.36 9.26 9.29 9.33 9.40 9.54 MEMO: Dividend/price ratio18 39 Preferred stocks 8.37 9.23 n.a. 8.82 8.85 8.73 8.75 8.67 8.69 8.68 8.75 8.75 40 Common stocks 3.08 3.64 n.a. 3.29 3.29 3.39 3.33 3.37 3.33 3.29 3.39 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 often issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1989 IInnddiiccaattoorr 11998877 11998888 11998899 Apr. May June July Aug. Sept. Oct. Nov. Dec. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 161.78 149.97 180.13 169.38 175.30 180.76 185.15 192.93 193.02 192.49 188.50 192.67 2 Industrial 195.31 180.83 228.04 204.81 211.81 216.75 221.74 231.32 230.86 229.40 224.38 230.12 3 Transportation 140.52 134.09 174.90 164.32 169.05 173.47 179.32 197.53 202.02 190.36 174.26 177.25 4 Utility 74.29 72.22 94.33 79.69 84.21 87.95 90.40 92.90 93.44 94.67 94.95 99.73 5 Finance 146.48 127.41 162.01 143.26 146.82 154.08 157.78 164.86 165.51 166.55 160.89 155.63 6 Standard & Poor's Corporation (1941-43 = 10)1 287.00 265.88 323.05 302.25 313.93 323.73 331.92 346.61 347.33 347.40 340.22 348.57 7 American Stock Exchange (Aug. 31, 1973 = 50p 316.78 295.08 356.67 336.82 349.50 362.73 368.52 379.28 382.75 383.63 371.92 373.87 Volume of trading (thousands of shares) 8 New York Stock Exchange 188,922 161,386 165,568 161,863 171,495 180,680 162,501 171,683 151,752 182,394 144,389 160,671 9 American Stock Exchange 13,832 9,955 13,124 11,529 11,699 13,519 11,702 14,538 12,631 13,853 12,001 13,298 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 31,990 32,740 34,320 32,610 33,140 34,730 34,360 33,940 35,020 35,110 34,630 34,320 Free credit balances at brokers4 11 Margin-account 4,750 5,660 7,040 5,450 5,250 6,900 5,420 5,580 5,680 6,000 5,815 7,040 12 Cash-account 15,640 16,595 18,505 16,125 15,965 19,080 16,345 16,015 15,310 16,340 16,345 18,505 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 carry "margin securities" (as defined in the regulations) when such credit is companies. With this change the index includes 400 industrial stocks (formerly collateralized by securities. Margin requirements on securities other than options 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 are the difference between the market value (100 percent) and the maximum loan financial. value of collateral as prescribed by the Board. Regulation T was adopted effective 2. Beginning July 5, 1983, the American Stock Exchange rebased its index Oct. 15, 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. effectively cutting previous readings in half. 11, 1968; and Regulation X, effective Nov. 1, 1971. 3. Beginning July 1983, under the revised Regulation T, margin credit at On Jasv. 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 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • March 1990 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1989 AAccccoouunntt 11998877 11998888 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. SAlF-insured institutions 1 Assets 1,250,855 1,350,500 1,337,382 1,339,115 1,340,502 1,345,347' 1,346,564' 1,338,576' 1,331,965' 1,318,148' 1,301,825' 1,289,468 2 Mortgages 721,593 764,513 767,260 767,603 769,398 773,386' 774,358' 772,720' 771,654' 770,072' 764,703' 757,730 3 Mortgage-backed securities 201,828 214,587 211,308 213,090 215,203 216,129'" 216,256' 211,325' 204,321' 195,262' 188,397' 181,589 4 Contra-assets to mortgage assets' . 42,344 37,950 37,157 37,013 37,842 37,791' 37,504' 37,540' 37,204' 36,781' 36,235' 34,835 5 Commercial loans 23,163 33,889 32,974 32,955 32,866 32,812' 33,009' 33,073' 33,213 32,004' 32,939' 32,579 6 Consumer loans 57,902 61,922 61,998 61,981 61,402 61,71c 61,869' 60,769' 61,100' 60,981' 60,425' 59,795 7 Contra-assets to nonmortgage loans2 . 3,467 3,056 2,840 2,923 3,074 2,899' 2,918' 3,192' 3,192' 3,157' 3,001' 3,111 8 Cash and investment securities 169,717 186,986 178,813 177,178 177,094 175,841' 174,333' 175,222' 175,244' 171,674' 169,643' 172,721 9 Other3 122,462 129,610 125,026 126,243 125,455 126,065' 127,161' 126,200' 126,829' 127,092' 125,054' 123,000 10 Liabilities and net worth . 1,250,855 1,350,500 1,337,382 1,339,115 1,340,502 1,345,347' 1,346,564' 1,338,576' 1,331,965' 1,318,148' 1,301,825' 1,289,468 11 Savings capital 932,616 971,700 963,820 957,358 956,663 954,495 955,566 960,073' 963,158 960,344' 958,949' 948,531 12 Borrowed money 249,917 299,400 299,415 305,675 312,988 318,671' 318,367' 312,093' 301,581 289,631 281,474 275,979 13 FHLBB 116,363 134,168 135,712 140,089 146,007 148,000 146,520 144,217 141,875 138,331 133,633 130,514 14 Other 133,554 165,232 163,703 165,586 166,981 170,671' 171,847' 167,876' 159,706 151,300 147,841 145,465 15 Other 21,941 24,216 29,751 31,749 29,593 31,629' 33,585' 29,892' 31,884' 33,807' 29,831' 30,875 16 Net worth 46,382 55,185 58,882 58,962 57,113 56,068' 54,596' 52,741' 50,916' 49,959' 47,802' 49,157 SAIF-insured federal savings banks 17 Assets 284,270 425,983 423,846 432,675 443,167 455,143 469,939 495,739 507,020' 504,187' 501,128' 502,589 18 Mortgages 161,926 227,869 234,591 238,415 241,076 249,940' 257,187' 276,613' 285,072' 285,503' 283,188' 283,674 19 Mortgage-backed securities 45,826 64,957 62,773 65,896 68,086 69,964 73,963 73,943 74,341 72,082 72,438' 72,318 20 Contra-assets to mortgage assets' . 9,100 13,140 12,258 12,685 12,896 13,049 13,227 13,662 13,972 13,859 13,821' 13,492 21 Commercial loans 6,504 16,731 16,172 16,320 16,313 16,497' 16,934' 18,014 18,279' 18,169 18,195 18,301 22 Consumer loans 17,696 24,222 25,033 25,977 26,096 26,768' 27,957' 28,157 28,996' 28,985 28,766 28,326 23 Contra-assets to nonmortgage loans . 678 889 814 857 977 863 888 976 980 987 1,029 1,051 24 Finance leases plus interest 591 880 907 946 1,011 1,047 1,072 1,083 1,088 1,075 1,092 1,087 25 Cash and investment ... 35,347 61,029 57,434 57,986 60,272 61,278 62,002 65,778 66,068 65,109 64,232 65,277 26 Other 24,069 35,428 33,954 34,664 34,964 37,333 38,021 39,644 40,340' 40,534' 40,680 40,756 27 Liabilities and net worth . 284,270 425,983 423,846 432,675 443,167 455,143 469,939 495,739 507,020' 504,187' 501,128' 502,589 28 Savings capital 203,196 298,197 298,515 301,770 307,580 315,725 324,369 342,145 352,547 352,099 353,461' 355,903 29 Borrowed money 60,716 99,286 98,304 102,902 107,179 110,004 114,854 121,895 121,195 117,970 115,628 114,232 30 FHLBB 29,617 46,265 46,470 48,951 51,532 53,519 55,463 58,505 59,781 59,189 57,941 57,793 31 Other 31,099 53,021 51,834 53,951 55,647 56,485 59,391 63,390 61,414 58,781 57,687 56,439 32 Other 5,324 8,075 8,270 8,884 8,649 9,306 10,174 9,825 10,697 11,443 9,904' 10,298 33 Net worth 15,034 20,235 21,625 22,700 23,090 23,404 23,926 25,677 26,266' 26,369' 26,134' 26,126 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.37—Continued 1989 AAccccoouunntt 11998877 11998888 Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Credit unions5 34 Total assets/liabilities and capital 174,593 175,027 176,270 178,175 177,417 178,812 180,664 179,029 180,035 181,812 181,527 35 Federal 114,566 114,909 115,543 117,555 115,416 116,705 117,632 117,475 117,463 118,746 118,887 36 State 60,027 60,118 60,727 60,620 62,001 62,107 63,032 61,554 62,572 63,066 62,640 37 Loans outstanding n.a. 113,191 114,012 113,880 114,572 115,249 116,947 119,101 119,720 120,577 122,522 122,997 38 Federal 73,766 74,083 73,917 74,395 75,003 76,052 77,729 78,472 78,946 80,548 80,570 39 State 39,425 39,927 39,963 40,177 40,246 40,895 41,372 41,248 41,631 41,874 42,427 40 Savings 159,010 159,106 161,073 164,322 161,388 162,134 164,415 162,405 162,754 164,050 164,695 41 Federal 104,431 104,629 105,262 107,368 105,208 105,787 106,984 106,266 106,038 106,633 107,588 42 State 54,579 54,477 55,811 56,954 56,180 56,347 57,431 56,139 56,716 57,417 57,107 Life insurance companies 43 Assets 1,044,459 1,157,140 1,176,042 1,186,208 1,199,125 1,209,242 1,221,332 1,232,195 1,247,341 1,257,045 1,266,773 Securities 44 Government 84,426 84,051 84,042 84,190 84,485 82,873 83,847 84,564 84,438 83,225 82,867 45 United States6 57,078 58,564 58,473 58,509 58,417 57,127 57,790 57,817 57,698 56,978 56,684 46 State and local 10,681 9,136 8,918 8,817 8,860 8,911 8,953 9,036 9,061 9,002 9,037 47 Foreign 16,667 16,351 16,651 16,864 17,208 16,835 17,104 17,711 17,679 17,245 17,146 48 Business n.a. 660,416 667,026 678,541 687,777 697,703 706,960 714,398 726,599 735,441 742,537 n. a. 49 Bonds 472,684 556,043 560,385 571,365 579,232 587,889 595,500 601,786 606,686 614,585 621,856 50 Stocks n.a. 104,373 106,641 107,176 108,545 109,814 111,460 112,612 119,913 120,856 120,681 51 Mortgages 203,545 232,863 232,941 233,556 234,632 235,312 236,651 237,444 237,865 238,944 240,189 52 Real estate 34,172 37,371 37,453 37,603 37,842 37,976 38,598 38,190 38,622 38,822 38,942 53 Policy loans 53,626 54,236 54,517 54,738 54,921 55,201 55,525 55,746 55,812 56,077 56,403 54 Other assets 89,586 93,358 98,063 97,580 99,468 100,173 99,751 101,853 104,005 104,536 105,835 1. Contra-assets are credit-balance accounts that must be subtracted from the NOTE. FSLIC-insured institutions: Estimates by the FHLBB for all institutions corresponding gross asset categories to yield net asset levels. Contra-assets to insured by the FSLIC and based on the FHLBB thrift Financial Report. mortgage loans, contracts, and pass-through securities include loans in process, FSLIC-insured federal savings banks: Estimates by the FHLBB for federal unearned discounts and deferred loan fees, valuation allowances for mortgages savings banks insured by the FSLIC and based on the FHLBB thrift Financial "held for sale," and specific reserves and other valuation allowances. Report. 2. Contra-assets are credit-balance accounts that must be subtracted from the Savings banks: Estimates by the National Council of Savings Institutions for all corresponding gross asset categories to yield net asset levels. Contra-assets to savings banks in the United States and for FDIC-insured savings banks that have nonmortgage loans include loans in process, unearned discounts and deferred loan converted to federal savings banks. fees, and specific reserves and valuation allowances. Credit unions: Estimates by the National Credit Union Administration for 3. Holding of stock in Federal Home Loan Bank and Finance leases plus federally chartered and federally insured state-chartered credit unions serving interest are included in "Other" (line 9). natural persons. 4. Excludes checking, club, and school accounts. Life insurance companies: Estimates of the American Council of Life Insurance 5. Data include all federally insured credit unions, both federal and state for all life insurance companies in the United States. Annual figures are annualchartered, serving natural persons. statement asset values, with bonds carried on an amortized basis and stocks at 6. Direct and guaranteed obligations. Excludes federal agency issues not year-end market value. Adjustments for interest due and accrued and for guaranteed, which are shown in the table under "Business" securities. differences between market and book values are not made on each item separately 7. Issues of foreign governments and their subdivisions and bonds of the but are included, in total, in "other assets." International Bank for Reconstruction and Development. As of June 1989 Savings bank data are no longer available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Nonfinancial Statistics • March 1990 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal Fiscal Fiscal Type of account or operation year year year 1989 1987 1988' 1989 July Aug. Sept. Nov. Dec. U.S. budget1 1 Receipts, total 854,143 908,166 990,789 66,191 76,161 99,233 68,426 71,213 89,130 2 On-budget 640,741 666,675 727,123 45,673 57,156 75,711 50,122 51,989 69,052 3 Off-budget 213,402 241,491 263,666 20,518 19,004 23,522 18,304 19,223 20,077 4 Outlays, total 1,003,804 ,063,318 1,142,777 84,430 98,310 105,299 94,515 100,172 103,770 5 On-budget 809,972 860,626 931,556 66,624 79,218 86,548 75,096 80,794 91,249 6 Off-budget 193,832 202,691 211,221 17,806 19,092 18,750 19,419 19,378 12,522 7 Surplus, or deficit (-), total -149,661 -155,151 -151,988 -18,239 -22,150 -6,066 -26,089 -28,959 -14,641 8 On-budget -169,231 -193,951 -204,433 -20,951 -22,062 -10,837 -24,974 -28,804 -22,1% 9 Off-budget 19,570 38,800 52,445 2,712 4,771 -1,115 -155 7,556 Source of financing (total) 10 Borrowing from the public 151,717 166,139 140,156 35,854 36,690 19,790 11 Operating cash (decrease, or increase <")), -5,052 -7,963 3,425 21,564 -3,235 -15,589 -2,513 21,772 -5,221 12 Other 2 2,996 -3,025 8,407 636 -10,469 14,977 -12,603 13,040 MEMO 13 Treasury operating balance (level, end of period) 36,436 44,398 40,973 22,149 25,384 40,973 43,486 21,715 26,935 14 Federal Reserve Banks 9,120 13,024 13,452 5,312 6,652 13,452 13,124 5,501 6,217 15 Tax and loan accounts 27,316 31,375 27,521 16,837 18,732 27,521 30,362 16,214 20,718 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 1988 1989 1989 111999888888 111999888999 HI H2 HI H2 Oct. Nov. Dec. RECEIPTS 1 All sources 908,166 990,789 475,724 449,394 527,574 470,354 68,426 71,213 89,130 2 Individual income taxes, net 401,181 445,690 207,659 200,300 233,572 218,661 35,493 34,448 37,385 3 Withheld 341,435 361,386 169,300 179,600 174,230 193,296 32,751 34,439 35,443 4 Presidential Election Campaign Fund .... 33 32 28 4 28 3 0 0 0 5 Nonwithheld 132,199 154,839 101,614 29,880 121,563 33,303 3,684 1,459 2,717 6 Refunds 72,487 70,567 63,283 9,186 62,251 7,943 943 1,450 775 Corporation income taxes 7 Gross receipts 109,683 117,015 58,002 56,409 61,585 52,269 3,279 3,381 19,731 8 Refunds 1155,,448877 13,723 8,706 7,250 7,259 6,842 2,549 996 853 9 Social insurance taxes and contributions, net 334,335 359,416 181,058 157,603 200,127 162,574 24,308 26,791 25,805 10 Employment taxes and contributions 305,093 332,859 164,412 144,983 184,569 152,407 23,100 24,303 25,266 11 Self-employment taxes and contributions 17,691 18,405 14,839 3,032 16,371 1,947 0 140 0 12 Unemployment insurance 24,584 22,011 14,363 10,359 13,279 7,909 859 2,088 161 13 Other net receipts4 4,659 4,547 2,284 2,262 2,277 2,260 350 401 377 14 Excise taxes 35,540 34,386 16,440 19,299 16,814 16,844 2,970 2,939 2,763 15 Customs deposits 15,411 16,334 7,522 8,107 7,918 8,667 1,493 1,421 1,293 16 Estate and gift taxes 7,594 8,745 3,863 4,054 4,583 4,451 835 693 850 17 Miscellaneous receipts 19,909 22,927 9,950 10,873 10,235 13,728 2,598 2,535 2,156 OUTLAYS 18 All types 1,063,318 1,142,777 512,856 552,801 565,524 586,496 94,515 100,172 103,770 19 National defense 290,361 303,551 143,080 150,496 148,098 149,613 19,930 25,234 28,570 20 International affairs 10,471 9,596 7,150 2,636 6,605 5,981 2,117 495 1,306 21 General science, space, and technology 10,841 12,891 5,361 5,852 6,238 7,091 1,342 1,155 1,202 22 Energy 2,297 3,745 555 1,966 2,221 564 363 -170 160 23 Natural resources and environment 14,625 16,084 6,776 9,144 7,022 9,209 1,975 2,064 1,319 24 Agriculture 17,210 16,948 7,872 6,911 9,619 4,132 904 1,967 1,097 25 Commerce and housing credit 18,828 27,716 5,951 19,836 4,129 22,200 5,4% 2,030 1,107 26 Transportation 27,272 27,623 12,700 14,922 13,035 14,982 2,618 2,584 2,515 27 Community and regional development 5,294 5,755 2,765 2,690 1,833 4,879 790 1,100 841 28 Education, training, employment, and social services 31,938 35,697 15,451 16,152 18,083 18,663 3,251 3,194 3,151 29 Health 44,490 48,391 22,643 23,360 24,078 25,339 4,511 4,136 4,435 30 Social security and medicare 297,828 317,506 135,322 149,017 162,195 162,322 27,143 27,337 27,166 31 Income security 129,332 136,765 65,555 64,978 70,937 67,950 9,711 11,456 13,217 32 Veterans benefits and services 29,406 30,066 13,241 15,797 14,891 14,864 1,503 2,627 3,664 33 Administration of justice 8,436 9,396 4,379 4,351 4,801 4,963 842 771 968 34 General government 9,518 8,940 4,337 5,137 3,858 4,753 842 1,437 745 35 General-purpose fiscal assistance 1,816 n.a. 448 0 0 n.a. n.a. n.a. n.a. 36 Net interest6 * 151,748 169,314 76,098 78,317 86,009 87,927 14,124 15,526 14,579 37 Undistributed offsetting receipts -36,967 -37,212 -17,766 -18,771 -18,131 -18,935 -2,945 -2,771 -2,271 1. Functional details do not add to total outlays for calendar year data because 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous revisions to monthly totals have not been distributed among functions. Fiscal year receipts. total for outlays does not correspond to calendar year data because revisions from 6. Net interest function includes interest received by trust funds. the Budget have not been fully distributed across months. 7. Consists of rents and royalties on the outer continental shelf and U.S. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. government contributions for employee retirement. 3. Old-age, disability, and hospital insurance. SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of 4. Federal employee retirement contributions and civil service retirement and Receipts and Outlays of the U.S. Government, and the U.S. Office of Managedisability fund. ment and Budget, Budget of the U.S. Government, Fiscal Year 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Nonfinancial Statistics • March 1990 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1987 1988 1989 IItteemm Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 1 Federal debt outstanding 2,354.3 2,435.2 2,493.2 2,555.1 2,614.6 2,707.3 2,763.6 2,824.0 2,881.1 2 Public debt securities 2,350.3 2,431.7 2,487.6 2,547.7 2,602.2 2,684.4 2,740.9 2,799.9 2,857.4 3 Held by public 1,893.1 1,954.1 1,996.7 2,013.4 2,051.7 2,095.2 2,133.4 2,142.1 2,180.7 4 Held by agencies 457.2 477.6 490.8 534.2 550.4 589.2 607.5 657.8 676.7 5 Agency securities 4.0 3.5 5.6 7.4 12.4 22.9 22.7 24.0 23.7 6 Held by public 3.0 2.7 5.1 7.0 12.2 22.6 22.3 23.6 23.5 7 Held by agencies 1.0 .8 .6 .5 .2 .3 .4 .5 .1 8 Debt subject to statutory limit 2,336.0 2,417.4 2,472.6 2,532.2 2,586.9 2,669.1 2,725.6 2,784.6 2,829.8 9 Public debt securities 2,334.7 2,416.3 2,472.1 2,532.1 2,586.7 2,668.9 2,725.5 2,784.3 2,829.5 10 Other debt1 1.3 1.1 .5 .1 .1 .2 .2 .2 .3 11 MEMO: Statutory debt limit 2,800.0 2,800.0 2,800.0 2,800.0 2,800.0 2,800.0 2,800.0 2,800.0 2,870.0 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 1987 1988 Q4 Q1 Q2 Q3 1 Total gross public debt 1,945.9 2,214.8 2,431.7 2,684.4 2,684.4 2,740.9 2,799.9 2,857.4 By type 2 Interest-bearing debt ,943.4 2,212.0 2,428.9 2,663.1 2,663.1 2.738.3 2,797.4 2,836.3 3 Marketable ,437.7 1,619.0 1,724.7 1,821.3 1,821.3 1,871.7 1,877.3 1,892.8 4 Bills 399.9 426.7 389.5 414.0 414.0 417.0 397.1 406.6 5 Notes 812.5 927.5 1,037.9 1,083.6 1,083.6 1.121.4 1,137.2 1,133.2 6 Bonds 211.1 249.8 282.5 308.9 308.9 318.4 328.0 338.0 7 Nonmarketable 505.7 593.1 704.2 841.8 841.8 866.6 920.1 943.5 8 State and local government series 87.5 110.5 139.3 151.5 151.5 154.4 156.0 158.6 9 Foreign issues 7.5 4.7 4.0 6.6 6.6 6.7 6.2 6.8 10 Government 7.5 4.7 4.0 6.6 6.6 6.7 6.2 6.8 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes. 78.1 90.6 99.2 107.6 107.6 110.4 112.3 114.0 13 Government account series 332.2 386.9 461.3 575.6 575.6 594.7 645.2 663.7 14 Non-interest-bearing debt 2.5 2.8 2.8 21.3 21.3 2.6 2.5 21.1 By holder4 15 U.S. government agencies and trust funds 348.9 403.1 477.6 589.2 589.2 607.5 657.8 676.7 16 Federal Reserve Banks 181.3 211.3 222.6 238.4 238.4 228.6 231.8 220.6 17 Private investors 1,417.2 1,602.0 1,745.2 1,852.8 1,852.8 1,900.2 1,905.4 1,954.6 18 Commercial banks 198.2 203.5 201.5 193.8 193.8 200.9 206.7 n.a. 19 Money market funds 25.1 28.0 14.6 18.8 18.8 13.0 11.6 12.4 20 Insurance companies 78.5 105.6 104.9 111.2 111.2 112.5 n.a. n.a. 21 Other companies 59.0 68.8 84.6 86.5 86.5 89.2 90.7 n.a. 22 State and local Treasurys 226.7 262.8 284.6 313.6 313.6 320.4 322.1 n.a. Individuals 23 Savings bonds 79.8 92.3 101.1 109.6 109.6 112.2 114.0 115.7 24 Other securities 75.0 70.4 70.2 77.0 77.0 82.9 89.1 n.a. 25 Foreign and international 224.8 263.4 299.7 362.1 362.1 375.6 367.9 393.5 26 Other miscellaneous investors6 450.1 506.6 584.0 587.2 587.2 593.5 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 11998877 11998888 11998899 Oct/ Nov/ Dec. Nov. 22' Nov. 29r Dec. 6 Dec. 13 Dec. 20 Dec. 27 Immediate delivery2 1 U.S. Treasury securities 110,050 101,623 112,730 130,820 115,717 84,256 102,465 103,002 84,048 86,756 105,779 72,754 By maturity 2 Bills 37,924 29,387 30,741 35,905 32,619 26,846 30,234 31,041 24,334 26,890 34,298 24,327 3 Other within 1 year 3,271 3,426 3,182 3,312 2,809 2,559 2,892 2,660 2,593 2,393 2,745 2,193 4 1-5 years 27,918 27,777 33,665 39,950 38,445 25,879 38,594 38,543 24,995 25,871 34,564 22,201 5 5-10 years 24,014 24,939 28,682 34,368 26,207 18,250 17,045 20,540 22,193 20,356 20,487 14,356 6 Over 10 years 16,923 16,093 16,460 17,285 15,638 10,723 13,701 10,219 9,933 11,247 13,685 9,677 By type of customer 7 U.S. government securities dealers 2,936 2,761 3,287 4,298 3,496 2,552 2,753 2,582 2,081 2,410 3,364 2,920 8 U.S. government securities brokers 61,539 59,844 66,419 77,566 66,555 45,734 59,514 59,607 46,781 48,224 57,553 38,286 9 All others 45,575 39,019 43,024 48,956 45,666 35,970 40,198 40,813 35,186 36,123 44,862 31,549 10 Federal agency securities 18,084 15,903 18,622 20,989 20,026 17,908 19,816 15,963 19,857 23,434 17,557 13,325 11 Certificates of deposit 4,112 3,369 2,798 2,422 2,184 1,596 2,281 2,150 1,783 2,016 1,807 1,046 12 Bankers acceptances 2,965 2,316 2,222 2,169 1,995 1,635 1,903 2,110 1,828 1,878 1,567 1,226 13 Commercial paper 17,135 22,927 31,807 34,167 31,188 32,291 32,277 27,286 32,864 31,288 33,421 31,857 Futures contracts 14 Treasury bills 3,233 2,627 2,525 2,797 1,900 2,523 1,606 2,254 2,578 2,713 3,567 1,788 15 Treasury coupons 8,963 9,695 9,603 10,334 9,308 5,838 10,303 6,532 5,334 5,769 6,733 6,773 16 Federal agency securities 5 1 8 20 7 3 10 0 0 6 5 2 Forward transactions 17 U.S. Treasury securities 2,029 2,095 2,130 2,163 2,009 1,859 1,440 2,373 1,305 1,221 3,372 1,789 18 Federal agency securities 9,290 8,008 9,486 10,561 10,894 9,536 10,750 6,150 9,884 13,212 10,135 5,709 1. Transactions are market purchases and sales of securities as reported to the securities, nondealer departments of commercial banks, foreign banking agencies, Federal Reserve Bank of New York by the U.S. government securities dealers on and the Federal Reserve System. its published list of primary dealers. 4. Futures contracts are standardized agreements arranged on an organized Averages for transactions are based on the number of trading days in the period. exchange in which parties commit to purchase or sell securities for delivery at a The figures exclude allotments of, and exchanges for, new U.S. Treasury future date. securities, redemptions of called or matured securities, purchases or sales of 5. Forward transactions are agreements arranged in the over-the-counter securities under repurchase agreement, reverse repurchase (resale), or similar market in which securities are purchased (sold) for delivery after 5 business days contracts. from the date of the transaction for Treasury securities (Treasury bills, notes, and 2. Data for immediate transactions do not include forward transactions. bonds) or after 30 days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic NonfinancialS tatistics • March 1990 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1989 1989 IItteemm 11998877 11998888 11998899 Oct. Nov/ Dec. Nov. 29r Dec. 6 Dec. 13 Dec. 20 Dec. 27 Positions Net immediate2 1 U.S. Treasury securities -6,216 -22,765 -5,938 10,654r 17,160 25,256 16,790 23,866 23,329 27,240 26,448 2 Bills 4,317 2,238 7,835 19,152' 22,529 26,829 24,419 26,211 26,749 29,911 24,106 3 Other within 1 year 1,557 -2,236 -1,528 -1,646 -1,276 -1,171 -1,091 -887 -852 -1,106 -1,702 4 1-5 years 649 -3,020 2,340 9,664r 10,545 12,424 8,656 11,050 9,942 10,561 17,619 5 5-10 years -6,564 -9,663 -8,133 -10,499 -8,995 -7,230 -9,351 -6,640 -7,155 -6,623 -7,877 6 Over 10 years -6,174 -10,084 -6,452 -6,017' -5,642 -5,595 -5,843 -5,868 -5,355 -5,504 -5,698 7 Federal agency securities 31,911 28,230 31,912 36,265r 35,449 35,922 31,403 32,700 37,615 37,788 35,231 8 Certificates of deposit 88,,118888 7,300 6,674 7,123' 7,003 6,884 6,580 7,121 7,197 6,848 6,849 9 Bankers acceptances 33,,666600 2,486 2,089 2,105 1,925 1,728 1,830 2,259 2,109 1,258 1,364 10 Commercial paper 7,4% 6,152 8,242 9,055 7,650 8,151 7,583 8,875 8,069 8,114 8,191 Futures positions 11 Treasury bills -3,373 -2,210 -4,599 -7,459 -9,455 -10,140 -10,425 -11,781 -11,624 -9,907 -8,278 12 Treasury coupons 5,988 6,224 -2,919 -9,302 -11,364 -11,022 -10,772 -10,264 -10,907 -13,006 -10,748 13 Federal agency securities -95 0 14 68 25 30 1 1 31 36 43 Forward positions 14 U.S. Treasury securities -1,211 346 -545 1,380 -109 -144 1,310 649 114 -22 52 15 Federal agency securities -18,817 -16,348 -16,878 -15,367 -17,372 -16,523 -14,703 -15,993 -19,513 -16,799 -14,438 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 126,709 136,327 156,848 164,478 153,281 129,595 160,730 149,612 150,482 142,593 131,535 17 Term 148,288 177,477 223,566 233,888 242,133 200,542 231,768 212,603 221,256 220,594 230,344 Repurchase agreements 18 Overnight and continuing 170,763 172,695 217,235 242,486 227,507 211,236 245,546 229,821 241,158 240,487 221,690 19 Term 121,270 137,056 178,362 193,445 218,527 165,061 201,010 180,957 184,035 181,824 182,633 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 July Aug. Sept. Oct. Nov. 1 Federal and federally sponsored agencies 293,905 307,361 341,386 381,498 411,874 411,979 408,591 409,113 412,234 2 Federal agencies 36,390 36,958 37,981 35,668 36,453 36,453 36,584 36,378 35,855 3 Defense Department 71 33 13 8 7 7 7 7 7 4 Export-Import Bank2,3 15,678 14,211 11,978 11,033 11,014 11,014 10,990 10,990 10,990 5 Federal Housing Administration 115 138 183 150 245 255 295 301 308 6 Government National Mortgage Association participation certificates5 2,165 2,165 1,615 0 0 0 0 00 00 7 Postal Service6... 1,940 3,104 6,103 6,142 6,445 6,445 6,445 6,445 6,445 8 Tennessee Valley Authority 16,347 17,222 18,089 18,335 18,742 18,732 18,847 18,635 18,105 9 United States Railway Association 74 85 0 0 0 0 0 0 0 10 Federally sponsored agencies7 257,515 270,553 303,405 345,830 375,421 375,526 372,007 372,735 376,379 11 Federal Home Loan Banks 74,447 88,752 115,725 135,834 151,487 149,269 143,578 140,854 138,229 12 Federal Home Loan Mortgage Corporation 11,926 13,589 17,645 22,797 25,690 27,165 26,738 25,097 27,018 13 Federal National Mortgage Association 93,896 93,563 97,057 105,459 109,926 110,155 111,507 111,776 115,774 14 Farm Credit Banks8 68,851 62,478 55,275 53,127 53,158 53,511 54,015 54,029 54,131 15 Student Loan Marketing Association 8,395 12,171 16,503 22,073 26,813 27,079 27,126 27,440 27,688 16 Financing Corporation 0 0 1,200 5,850 7,500 7,500 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation 0 0 0 690 847 847 847 847 847 18 Resolution Funding Corporation 0 0 0 0 0 0 0 4,522 4,522 MEMO 19 Federal Financing Bank debt13 153,373 157,510 152,417 142,850 138,814 137,690 136,092 135,841 135,213 Lending to federal and federally sponsored agencies 20 Export-Import Bank 15,670 14,205 11,972 11,027 11,008 11,008 10,984 1100,,998844 1100,,998844 21 Postal Service6 1,690 2,854 5,853 5,892 6,195 6,195 6,195 6,195 6,195 22 Student Loan Marketing Association 5,000 4,970 4,940 4,910 4,910 4,910 4,910 4,880 4,880 23 Tennessee Valley Authority 14,622 15,797 16,709 16,955 17,362 17,352 17,467 17,255 16,725 24 United States Railway Association 74 85 0 0 0 0 0 0 0 Other Lending14 25 Farmers Home Administration 64,234 65,374 59,674 58,496 54,911 54,611 53,311 5533,,331111 53,311 26 Rural Electrification Administration 20,654 21,680 21,191 19,246 19,257 19,270 19,275 19,233 19,249 27 Other 31,429 32,545 32,078 26,324 25,171 24,344 23,950 23,983 23,869 1. Consists of mortgages assumed by the Defense Department between 1957 shown on line 21. and 1963 under family housing and homeowners assistance programs. 10. The Financing Corporation, established in August 1987 to recapitalize the 2. Includes participation certificates reclassified as debt beginning Oct. 1,1976. Federal Savings and Loan Insurance Corporation, undertook its first borrowing in 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. October 1987. 4. Consists of debentures issued in payment of Federal Housing Administration 11. The Farm Credit Financial Assistance Corporation (established in January insurance claims. Once issued, these securities may be sold privately on the 1988 to provide assistance to the Farm Credit System) undertook its first securities market. borrowing in July 1988. 5. Certificates of participation issued before fiscal 1969 by the Government 12. The Resolution Funding Corporation, established by the Financial Institu- National Mortgage Association acting as trustee for the Farmers Home Admin- tions Reform, Recovery, and Enforcement Act of 1989, undertook its first istration; Department of Health, Education, and Welfare; Department of Housing borrowing in October 1989. and Urban Development; Small Business Administration; and the Veterans 13. Includes FFB purchases of agency assets and guaranteed loans; the latter Administration. contain loans guaranteed by numerous agencies with the guarantees of any 6. Off-budget. particular agency being generally small. The Farmers Home Administration item 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- consists exclusively of agency assets, while the Rural Electrification Administratures. Some data are estimated. tion entry contains both agency assets and guaranteed loans. 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, 14. The FFB, which began operations in 1974, is authorized to purchase or sell shown in line 17. obligations issued, sold, or guaranteed by other federal agencies. Since FFB 9. Before late 1981, the Association obtained financing through the Federal incurs debt solely for the purpose of lending to other agencies, its debt is not Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is included in the main portion of the table in order to avoid double counting. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • March 1990 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1989 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998866 11998877 11998888 May June July Aug. Sept. Oct. Nov/ Dec. 1 All issues, new and refunding1 147,011 102,407 114,522 7,435 13,775 8,735 9,824 10,818 9,075 9,564 12,456 Type of issue 2 General obligation 46,346 30,589 30,312 2,342 4,960 3,789 2,199 3,500 3,273 3,328 1,930 3 Revenue 100,664 71,818 84,210 5,093 8,815 4,946 7,625 7,318 5,802 6,237 10,526 Type of issuer 4 State 14,474 10,102 8,830 392 1,989 970 694 764 1,330 930 885 5 Special district and statutory authority 89,997 65,460 74,409 4,979 8,033 4,868 7,027 7,567 4,770 5,473 8,657 6 Municipalities, counties, and townships 42,541 26,845 31,193 2,064 3,753 2,897 2,103 2,487 2,975 3,161 2,914 7 Issues for new capital, total 83,492 56,789 79,665 5,938 10,078 6,816 6,612 7,470 7,266 7,777 9,412 Use of proceeds 8 Education 12,307 9,524 15,021 1,024 2,678 998 1,302 1,639 1,006 1,058 1,292 9 Transportation 7,246 3,677 6,825 748 576 500 556 976 280 675 622 10 Utilities and conservation 14,594 7,912 8,4% 467 1,058 551 813 622 718 1,137 2,173 11 Social welfare 11,353 11,106 19,027 1,376 1,509 1,632 1,553 1,242 1,803 1,441 2,292 12 Industrial aid 6,190 7,474 5,624 361 329 440 447 381 345 444 966 13 Other purposes 31,802 18,020 24,672 1,962 3,928 2,695 1,941 2,610 3,114 3,022 2,067 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 1989 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998866 11998877 11998888 Apr. May June July Aug. Sept. Oct.' Nov. 1 All issues1 424,737 392,171' 408,803' 14,405 21,471 24,450 17,734' 14,895' 14,409' 24,267' 20,240 2 Bonds2 356,304 325,663' 351,002' 13,396 19,662 21,622 12,680' 12,860' 12,136' 20,587' 16,000 Type of offering 3 Public, domestic 232,742 209,279 200,124' 11,471 17,756 18,714 11,26C 12,044' 10,936' 19,479' 14,000 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 42,801 24,308 23,178 1,925 1,906 2,908 1,420 816 1,200 1,108' 2,000 Industry group 6 Manufacturing 90,788 61,666 70,348' 1,457 7,715 3,252' 2,776' 2,665' 2,177' 3,438' 3,214 7 Commercial and miscellaneous 41,909 49,327 61,620' 843 2,162 1,649' 1,331 1,090 1,393 1,830' 1,112 8 Transportation 10,322' 11,974 9,976 100 150 480 0 423 0 831 272 9 Public utility 31,074r 23,004 19,318 1,695 385 2,936 1,173 705' 1,058' 1,738' 927 10 Communication 16,441 7,340 5,951' 453 122 4 300 358 308 632 812 11 Reed estate and financial 165,770 172,351 183,787' 8,848 9,128 13,302 7,099 7,619 7,201' 12,118' 9,663 12 Stocks2 68,433 66,508 57,802 1,009 1,809 2,828 5,054 2,035 2,273 3,680 4,240 Type 13 Preferred 11,514 10,123 6,544 495 306 335 920 1,013 519 570 160 14 Common 50,316 43,225 35,911 514 1,503 2,493 4,134 1,023 1,754 3,110 4,080 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 7,608 155 299 630 593 393 193 190 378 17 Commercial and miscellaneous 10,617 12,888 8,449 282 115 512 438 343 155 728 498 18 Transportation 2,427 2,439 1,535 169 39 0 0 0 0 50 0 19 Public utility 4,020 4,322 1,898 0 192 125 25 137 709 465 211 20 Communication 1,825 1,458 515 93 280 25 29 20 0 0 0 21 Real estate and financial 34,517 31,521 37,798 310 884 1,536 3,969 1,020 1,195 2,214 3,153 1. Figures which represent gross proceeds of issues maturing in more than one 3. Data are not available on a monthly basis. Before 1987, annual totals include year, are principal amount or number of units multiplied by offering price. underwritten issues only. Excludes secondary offerings, employee stock plans, investment companies other SOURCES. IDD Information Services, Inc., the Board of Governors of the than closed-end, intracorporate transactions, equities sold abroad, and Yankee Federal Reserve System, and before 1989, the U.S. Securities and Exchange bonds. Stock data include ownership securities issued by limited partnerships. Commission. 2. Monthly data include only public offerings. 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 1989 IItteemm 11998877 11998888 Apr. May June July Aug. Sept. Oct/ Nov. INVESTMENT COMPANIES1 1 Sales of own shares2 381,260 271,237 25,496 24,661 25,817 25,330 26,800 23,911 23,872 23,618 2 Redemptions of own shares3 314,252 267,451 26,183 22,483 22,562 20,053 22,262 21,499 21,702 19,719 3 Net sales 67,008 3,786 -687 2,178 3,255 5,277 4,538 2,412 2,170 3,899 4 Assets4 453,842 472,297 497,329 509,781 515,814 535,910 539,553 539,814 534,922 550,130 5 Cash position5 38,006 45,090 48,788 49,177 48,428 47,888 47,209 47,163 46,146 48,428 6 Other 415,836 427,207 448,541 460,604 467,386 488,022 492,344 492,651 488,776 501,702 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 Q4 Q1 Q2 Q3 Q4 QI Q2 Q3 1 Corporate profits with inventory valuation and capital consumption adjustment 282.1 298.7 328.6 308.2 318.1 325.3 330.9 340.2 316.3 307.8 295.2 2 Profits before tax 221.6 266.7 306.8 276.2 288.8 305.3 314.4 318.8 318.0 296.0 275.0 3 Profits tax liability 106.3 124.7 137.9 127.3 129.0 138.4 141.2 143.2 144.4 134.9 122.6 4 Profits after tax 115.3 142.0 168.9 148.9 159.9 166.9 173.2 175.6 173.6 161.1 152.4 5 Dividends 91.3 98.7 110.4 102.8 105.7 108.6 112.2 115.2 118.5 120.9 123.3 6 Undistributed profits 24.0 43.3 58.5 46.1 54.2 58.3 61.1 60.4 55.1 40.2 29.1 7 Inventory valuation 6.7 -18.9 -25.0 -20.4 -20.7 -28.8 -30.4 -20.1 -38.3 -21.0r n.a/ 8 Capital consumption adjustment 53.8 50.9 46.8 52.4 49.9 48.9 46.9 41.5 36.6 32.3 26.5 •Trade and services are no longer being reported separately. They are included in Commercial and other, line 10. 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment A Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1988 1989 1990 IInndduussttrryy 11998888'' 11998899 1199990011 Q2 Q3 Q4 Ql Q2 Q3 Q41 Ql1 1 Total nonfarm business 430.17 475.18 505.49r 427.54 435.61 442.11 459.47 470.86 484.93 485.45 503.46 Manufacturing 2 Durable goods industries 77.75 83.05 83.22' 77.38 79.15 80.56 81.26 82.97 85.66 82.30 86.84 3 Nondurable goods industries 86.79 100.11 106.94' 85.24 89.62 92.76 93.96 98.57 102.00 105.90 106.92 Nonmanufacturing 4 Mining 12.57 12.50 12.01r 13.15 12.53 12.38 12.15 12.70 12.59 12.58 12.23 Transportation 5 Railroad 77..2211 8.12 11..11%%'' 66..9999 6.84 7.45 8.02 7.37 8.16 8.93 7.91 6 Air 7.00 9.50 lO^ 6.91 8.09 7.69 7.04 9.49 12.48 8.99 10.12 7 Other 7.15 7.62 8.03' 7.05 7.08 6.89 8.07 7.40 7.89 7.13 8.58 Public utilities 8 Electric 31.75 33.96 34.32' 31.31 32.07 33.69 33.69 35.34 33.73 33.07 35.47 9 Gas and other . 14.63 16.10 15.82'' 14.49 14.61 15.04 17.12 16.67 15.84 14.79 16.42 10 Commercial and other 185.32 204.22 226.78r 185.21 185.61 185.65 198.15 200.36 206.59 211.76 218.97 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 Financial Statistics • March 1990 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period 1988 1989 AAccccoouunntt 11998855 11998866 11998877 Ql Q2 Q3 Q4 Ql Q2 Q3 ASSETS Accounts receivable, gross2 1 Consumer 111.9 134.7 141.1 141.5 144.4 146.3 146.2 140.2 144.9 147.2 2 Business 157.5 173.4 207.4 219.7 224.0 223.3 236.5 243.1 250.5 248.8 i Real estate 28.0 32.6 39.5 41.4 42.5 43.1 43.5 45.4 47.4 48.9 4 Total 297.4 340.6 388.1 402.6 410.9 412.7 426.2 428.7 442.8 444.9 Less: 5 Reserves for unearned income 39.2 41.5 45.3 46.8 46.3 48.4 50.0 50.9 52.1 53.7 6 Reserves for losses 4.9 5.8 6.8 6.8 6.8 7.1 7.3 7.4 7.5 7.8 7 Accounts receivable, net 253.3 293.3 336.0 348.9 357.8 357.3 368.9 370.4 383.2 383.5 8 Al) other 45.3 58.6 58.3 60.1 70.5 68.7 72.4 75.1 81.5 83.1 9 Total assets 298.6 351.9 394.2 409.1 428.3 426.0 441.3 445.5 464.6 466.6 LIABILITIES 10 Bank loans 18.0 18.6 16.4 14.9 13.3 11.9 15.4 11.6 12.2 12.3 11 Commercial paper 99.2 117.8 128.4 125.2 131.6 129.4 142.0 147.9 149.2 114477..44 Debt 12 Other short-term 12.7 17.5 28.0 n.a. n.a. n.a. n.a. n.a. n.a. 13 Long-term 94.4 117.5 137.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 Due to parent n.a. n.a. n.a. 49.0 51.4 51.5 50.6 56.8 59.7 60.4 15 Not elsewhere classified n.a. n.a. n.a. 132.4 139.8 139.3 137.9 113344..55 141.3 146.1 16 All other liabilities 41.5 44.1 52.8 56.1 58.7 58.9 59.8 5588..11 63.5 60.4 17 Capital, surplus, and undivided profits 32.8 36.4 31.5 31.5 33.5 34.9 35.6 36.6 38.7 40.0 18 Total liabilities and capital 298.6 351.9 394.2 409.1 428.3 426.0 441.3 445.5 464.6 466.6 1. Components may not add to totals because of rounding. 2. Excludes pools of securitized assets. 1.52 DOMESTIC FINANCE COMPANIES Business Credit Outstanding and Net Change1 Millions of dollars, seasonally adjusted 1989 Type 11998866 11998877 11998888 June July Aug. Sept. Oct. Nov. 1 Total 172,060 205,810 234,529 249,322 251,126 253,822 258,851 259,083 257,930 Retail financing of installment sales 2 Automotive 26,015 35,782 36,548 39,042 39,183 39,355 39,258 38,952 38,187 3 Equipment 23,112 25,170 28,298 27,773 28,128 29,039 29,639 29,594 29,568 4 Pools of securitized assets2 n.a. n.a. n.a. 807 769 793 755 715 739 Wholesale 5 Automotive 23,010 30,507 33,300 34,021 33,233 33,566 37,243 35,210 33,537 6 Equipment 5,348 5,600 5,983 6,165 6,244 6,497 6,602 6,843 6,933 7 All other 7,033 8,342 9,341 9,862 10,001 9,990 9,957 9,927 9,895 8 Pools of securitized assets2 n.a. n.a. n.a. 0 0 0 0 0 0 Leasing 9 Automotive 19,827 21,952 24,673 26,515 26,701 26,739 26,865 27,442 27,547 10 Equipment 38,179 43,335 57,455 63,370 64,086 64,186 65,170 66,787 67,677 11 Pools of securitized assets2 n.a. n.a. n.a. 796 887 990 948 1,199 1,093 12 Loans on commercial accounts receivable and factored commercial accounts receivable 15,978 18,078 17,796 19,302 19,989 20,098 19,611 19,487 18,892 13 All other business credit 13,557 17,043 21,134 21,669 21,904 22,571 22,804 22,926 23,861 Net change (during period) 14 Total 15,763 33,750 22,662 3,462 1,803 2,697 5,029 232 -1,153 Retail financing of installment sales 15 Automotive 5,355 9,767 766 226 141 172 -97 -305 -765 16 Equipment 629 2,058 1,384 135 354 911 600 -45 -25 17 Pools of securitized assets n.a. n.a. n.a. -39 -38 24 -38 -40 24 Wholesale 18 Automotive -978 7,497 2,793 -513 -788 332 3,677 -2,033 -1,673 19 Equipment 780 252 226 69 79 253 104 242 90 2 2 1 0 P A o ll o o ls t h o e f r securitized assets2 n. 2 a 2 . 4 n 1, . 3 a 0 . 9 n. 9 a 9 . 9 -68 0 13 0 9 -11 0 -32 0 -30 0 -32 0 Leasing 22 Automotive 3,552 2,125 2,721 504 187 38 126 577 105 2 2 3 4 P E o q o u l i s p m of e n se t curitized assets2 3 n , . 4 a 1 . 1 5 n , . 1 a 5 . 6 9 n , . 9 a 6 . 2 2, - 3 2 4 8 8 71 9 6 1 1 9 0 9 3 - 9 4 8 2 4 1,6 2 1 5 8 1 -1 8 0 9 6 0 25 Loans on commercial accounts receivable and factored commercial accounts receivable 213 2,100 -282 530 687 109 -487 -124 -595 26 All other business credit 2,576 3,486 4,091 298 235 667 234 122 934 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 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov. Dec. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms 1 Purchase price (thousands of dollars) 137.0 150.0 159.6 150.5 174.5 160.8 160.6 153.1 152.8 162.7 2 Amount of loan (thousands of dollars) 100.5 110.5 117.0 111.0 125.3 119.4 118.6 111.3 110.4 119.9 3 Loan/price ratio (percent) 75.2 75.5 74.5 75.2 73.8 75.6 75.3 73.2 73.0 74.4 4 Maturity (years) 27.8 28.0 28.1 27.8 28.6 28.3 28.4 27.3 27.1 27.9 5 Fees and charges (percent of loan amount) 2.26 2.19 2.06 1.91 2.42 2.31 2.14 1.95 1.81 2.18 6 Contract rate (percent per year) 8.94 8.81 9.76 10.09 10.06 9.83 9.87 9.77 9.78 9.70 Yield (percent per year) / OTS series 9.31 9.18 10.11 10.42 10.48 10.22 10.24 10.11 10.09 10.07 8 HUD series4 10.17 10.30 10.22 10.04 9.70 10.05 10.04 9.79 9.72 9.75 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 10.16 10.49 n.a. 10.08 9.61 9.95 9.94 9.73 9.69 9.71 10 GNMA securities6 9.43 9.83 n.a. 9.75 9.55 9.48 9.47 9.21 9.07 n.a. Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 95,030 101,329 104,974 103,309 104,421 105,8% 107,052 108,180 109,076 110,721 12 FHA/VA-insured 21,660 19,762 19,640 19,586 19,630 19,589 19,608 19,843 19,953 20,283 13 Conventional 73,370 81,567 85,335 83,723 84,791 86,307 87,444 88,337 89,123 90,438 Mortgage transactions (during period) 14 Purchases 20,531 23,110 22,518 1,862 2,091 2,724 2,223 2,267 2,376 2,982 Mortgage commitments7 15 Contracted (during period) 25,415 23,435 27,409 2,573 2,513 2,842 2,328 2,963 2,536 2,495 16 Outstanding (end of period) 4,886 2,148 n.a. 5,236 5,648 5,755 5,865 6,548 6,645 n.a. FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 12,802 15,105 n.a. 20,121 20,533 21,024 20,650 21,342 n.a. n.a. 18 FHA/VA 686 620 n.a. 585 585 589 540 588 n.a. n.a. 19 Conventional 12,116 14,485 n.a. 19,535 19,948 20,435 20,110 20,755 n.a. n.a. Mortgage transactions (during period) 20 Purchases 76,845 44,077 n.a. 7,392 5,720 7,283 7,889 7,884 n.a. n.a. 21 Sales 75,082 39,780 72,932 6,551 5,180 6,650 8,050 7,058 7,059 8,526 Mortgage commitments9 22 Contracted (during period) 71,467 66,026 n.a. 7,948 6,608 5,705 7,708 7,555 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 • March 1990 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1988 1989 Type of holder, and type of property 11998866 11998877 11998888 Q3 Q4 Q1 Q2 Q3P 1 All holders 2,618,324 2,977,293 3,268,285 3,189,132 3,268,285 3,328,824 3,391,259 3,453,883 2 1- to 4-family 1,719,673 1,959,607 2,189,475 2,134,225 2,189,475 2,230,006 2,281,317 2,331,196 3 Multifamily 247,831 273,954 290,355 284,675 290,355 296,139 297,860 302,121 4 Commercial 555,039 654,863 701,652 683,207 701,652 716,695 725,341 733,988 5 Farm 95,781 88,869 86,803 87,025 86,803 85,984 86,741 86,578 6 Selected financial institutions 1,507,944 1,704,560 1,874,967 1,833,800 1,874,967 1,905,052 1,932,154 1,950,634 7 Commercial banks 502,534 591,369 669,160 650,799 669,160 688,662 715,049 737,979 8 1- to 4-family 235,814 276,270 314,283 307,041 314,283 324,681 338,872 349,739 9 Multifamily 31,173 33,330 34,131 33,960 34,131 34,172 34,954 36,075 10 Commercial 222,799 267,340 305,242 294,398 305,242 313,941 324,878 335,2% 11 Farm 12,748 14,429 15,504 15,400 15,504 15,868 16,345 16,869 12 Savings institutions3 777,967 860,467 929,647 914,280 929,647 936,091 933,694 927,982 13 1- to 4-family 559,067 602,408 678,263 665,294 678,263 682,658 684,828 680,572 14 Multifamily 97,059 106,359 111,302 109,287 111,302 112,507 110,009 109,353 15 Commercial 121,236 150,943 139,416 139,029 139,416 140,255 138,201 137,406 16 Farm 605 757 666 670 666 671 656 651 17 Life insurance companies 193,842 212,375 232,639 225,627 232,639 234,910 236,160 235,767 18 1- to 4-family 12,827 13,226 15,284 14,917 15,284 12,690 12,745 13,045 19 Multifamily 20,952 22,524 23,562 23,139 23,562 24,636 25,103 25,913 20 Commercial 149,111 166,722 184,124 178,166 184,124 188,073 188,756 187,208 21 Farm 10,952 9,903 9,669 9,405 9,669 9,511 9,556 9,601 22 Finance companies 33,601 40,349 43,521 43,094 43,521 45,389 47,251 48,906 23 Federal and related agencies 203,800 192,721 200,570 198,027 200,570 199,847 201,909 206,503 24 Government National Mortgage Association.. 889 444 26 64 26 26 24 23 25 1- to 4-family 47 25 26 51 26 26 24 23 26 Multifamily 842 419 0 13 0 0 0 0 27 Farmers Home Administration 48,421 43,051 42,018 41,836 42,018 41,780 40,711 41,117 28 1- to 4-family 21,625 18,169 18,347 18,268 18,347 18,347 18,391 18,405 29 Multifamily 7,608 8,044 8,513 8,349 8,513 8,615 8,778 8,916 30 Commercial 8,446 6,603 5,343 5,300 5,343 5,101 3,885 4,366 31 Farm 10,742 10,235 9,815 9,919 9,815 9,717 9,657 9,430 32 Federal Housing and Veterans Administration 5,047 5,574 5,973 5,666 5,973 6,075 6,424 5,853 33 1- to 4-family 2,386 2,557 2,672 2,432 2,672 2,550 2,827 2,730 34 Multifamily 2,661 3,017 3,301 3,234 3,301 3,525 3,597 3,123 35 Federal National Mortgage Association 97,895 96,649 103,013 102,453 103,013 101,991 103,309 107,052 36 1- to 4-family 90,718 89,666 95,833 95,417 95,833 94,727 95,714 99,168 37 Multifamily 7,177 6,983 7,180 7,036 7,180 7,264 7,595 7,884 38 Federal Land Banks 39,984 34,131 32,115 32,566 32,115 31,261 31,467 30,943 39 1- to 4-family 2,353 2,008 1,890 1,917 1,890 1,839 1,851 1,821 40 Farm 37,631 32,123 30,225 30,649 30,225 29,422 29,616 29,122 41 Federal Home Loan Mortgage Corporation .. 11,564 12,872 17,425 15,442 17,425 18,714 19,974 21,515 42 1- to 4-family 10,010 11,430 15,077 13,322 15,077 16,192 17,305 18,493 43 Multifamily 1,554 1,442 2,348 2,120 2,348 2,522 2,669 3,022 44 Mortgage pools or trusts6 565,428 718,297 810,887 782,802 810,887 839,684 861,827 898,388 45 Government National Mortgage Association.. 262,697 317,555 340,527 333,177 340,527 348,622 353,154 361,291 46 1- to 4-family 256,920 309,806 331,257 324,573 331,257 337,563 341,951 349,830 47 Multifamily 5,777 7,749 9,270 8,604 9,270 11,059 11,203 11,461 48 Federal Home Loan Mortgage Corporation .. 171,372 212,634 226,406 220,684 226,406 234,695 242,789 256,8% 49 1- to 4-family 166,667 205,977 219,988 214,195 219,988 228,389 236,404 250,123 50 Multifamily 4,705 6,657 6,418 6,489 6,418 6,306 6,385 6,773 51 Federal National Mortgage Association 97,174 139,960 178,250 167,170 178,250 188,071 196,501 208,894 52 1- to 4-family 95,791 137,988 172,331 162,228 172,331 181,352 188,774 200,302 53 Multifamily 1,383 1,972 5,919 4,942 5,919 6,719 7,727 8,592 54 Farmers Home Administration 348 245 104 106 104 96 85 78 55 1- to 4-family 142 121 26 27 26 24 23 22 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 132 63 38 38 38 34 26 22 58 Farm 74 61 40 41 40 38 36 34 59 Individuals and others7 341,152 361,715 381,861 374,503 381,861 384,241 395,369 398,358 60 1- to 4-family 197,868 201,704 215,077 209,784 215,077 215,379 225,059 226,788 61 Multifamily 66,940 75,458 78,411 77,502 78,411 78,814 79,840 81,009 62 Commercial 53,315 63,192 67,489 66,276 67,489 69,291 69,595 69,690 63 Farm 23,029 21,361 20,884 20,941 20,884 20,757 20,875 20,871 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 1989 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998877 Mar. Apr. May June July Aug. Sept. Oct/ Nov. Amounts outstanding (end of period) 1 Total 607,721 659,507 691,162 693,911 698,132 700,849 700,344 703,001 704,371 707,562 711,799 By major holder 2 Commercial banks 282,910 318,925 318,242 320,458 323,363 324,438 323,621 326,135 327,327 330,746 333322,,330000 3 Finance companies 140,281 145,180 143,070 144,378 145,523 146,055 145,488 144,386 144,188 141,273 141,440 4 Credit unions 80,087 86,118 88,514 89,330 89,890 90,073 89,852 90,016 89,892 89,856 90,035 5 Retailers 40,975 43,498 41,300 41,301 41,323 41,649 41,798 41,989 42,221 42,319 42,554 6 Savings institutions 59,851 62,099 62,735 61,919 61,311 59,920 60,092 59,229 59,883 58,890 57,967 7 Gasoline companies 3,618 3,687 3,682 3,787 3,897 4,017 3,936 3,976 3,886 3,804 3,772 8 Pools of securitized assets4 n.a. n.a. 33,619 32,737 32,826 34,696 35,557 37,270 36,974 40,675 43,731 By major type of credit 9 Automobile 265,976 281,174 288,850 289,654 290,741 290,192 288,526 288,533 287,754 288,747 228899,,226666 10 Commercial banks 109,201 123,259 123,062 123,878 125,118 125,592 124,881 126,597 126,759 128,238 128,635 11 Credit unions 40,351 41,326 42,211 42,510 42,687 42,684 42,624 42,747 42,733 42,761 42,891 12 Finance companies 98,195 97,204 89,567 90,268 90,976 91,184 90,213 89,439 88,317 84,814 84,707 13 Savings institutions 18,228 19,385 19,231 18,866 18,566 18,032 17,972 17,603 17,990 17,692 17,415 14 Pools of securitized assets n.a. n.a. 14,779 14,132 13,395 12,700 12,835 12,147 11,955 15,243 15,619 Revolving 153,884 174,792 182,831 184,500 186,502 189,622 191,028 194,398 195,302 196,379 199,191 16 Commercial banks 99,119 117,572 112,553 114,130 115,407 115,561 115,967 117,012 117,868 118,801 119,335 17 Retailers 36,389 38,692 36,489 36,497 36,504 36,814 36,963 37,134 37,355 37,435 37,639 18 Gasoline companies 3,618 3,687 3,682 3,787 3,897 4,017 3,936 3,976 3,886 3,804 3,772 19 Savings institutions 10,367 10,151 10,860 10,918 11,008 10,951 11,176 11,206 11,183 10,998 10,826 20 Credit unions 4,391 4,691 4,947 5,035 5,109 5,162r 5,192 5,244 5,279 5,319 5,372 21 Pools of securitized assets n.a. n.a. 14,299 14,134 14,578 17,117 17,795 19,827 19,731 20,021 22,247 27 Mobile home 26,387 25,744 24,168 23,993 23,952 23,685 23,630 22,938 22,991 22,947 22,523 23 Commercial banks 9,220 8,974 8,844 8,836 8,878 8,847 8,830 8,808 8,788 8,724 8,942 24 Finance companies 7,762 7,186 5,687 5,659 5,684 5,674 5,624 5,100 5,087 5,272 4,783 25 Savings institutions 9,406 9,583 9,637 9,498 9,390 9,163 9,176 9,030 9,116 8,951 8,797 26 Other 161,475 177,798 195,314 195,763 196,936 197,349 197,161 197,132 198,324 199,490 200,818 77 Commercial banks 65,370 69,120 73,783 73,614 73,960 74,438 73,944 73,718 73,912 74,983 75,389 28 Finance companies 34,324 40,790 47,816 48,451 48,863 49,197 49,650 49,847 50,784 51,187 51,950 29 Credit unions 35,344 40,102 41,357 41,785 42,094 42,228 42,036 42,025 41,880 41,776 41,772 30 Retailers 4,586 4,807 4,811 4,804 4,819 4,834 4,835 4,855 4,866 4,884 4,914 31 Savings institutions 21,850 22,981 23,006 22,638 22,347 21,773 21,769 21,390 21,593 21,249 20,929 32 Pools of securitized assets4 n.a. n.a. 4,541 4,471 4,853 4,879 4,927 5,296 5,288 5,411 5,865 Net change (during period) 33 Total 35,674 51,786 3,765 2,749 4,221 2,717 -505 2,657 1,371 3,191 4,236 By major holder 34 Commercial banks 19,884 36,015 -181 2,216 2,904 1,076 -817 2,514 1,192 3,418 1,555 35 Finance companies 6,349 4,899 -349 1,309 1,145 532 -567 -1,102 -198 -2,915 167 36 Credit unions 3,853 6,031 701 815 560 184 -222 164 -124 -36 179 37 Retailers 1,568 2,523 247 2 21 326 149 192 231 98 235 38 Savings institutions 3,689 2,248 -375 -815 -609 -1,390 172 -863 654 -993 -923 39 Gasoline companies 332 69 6 104 110 120 -81 39 -89 -82 -33 40 Pools of securitized assets4 n.a. n.a. 3,716 -882 89 1,870 861 1,713 -296 3,701 3,056 By major type of credit 41 Automobile 18,663 15,198 82 804 1,087 -549 -1,667 7 -779 993 519 42 Commercial banks 7,919 14,058 79 816 1,239 474 -711 1,716 162 1,479 397 43 Credit unions 1,916 975 247 300 177 -3 -60 123 -14 28 130 44 Finance companies 5,639 -991 778 701 708 208 -970 -775 -1,122 -3,503 -107 45 Savings institutions 3,188 1,157 -233 -366 -300 -533 -61 -369 387 -298 -277 46 Pools of securitized assets n.a. n.a. -789 -647 -737 -695 135 -688 -192 3,288 376 47 Revolving 16,871 20,908 4,261 1,670 2,002 3,120 1,406 3,370 904 1,076 2,813 48 Commercial banks 12,188 18,453 848 11,,557766 1,277 154 405 1,045 856 933 534 49 Retailers 1,866 2,303 232 88 7 310 149 171 221 80 205 50 Gasoline companies 332 69 6 104 110 120 -81 39 -89 -82 -33 51 Savings institutions 1,771 -216 138 58 90 -57 225 30 -22 -185 -172 52 Credit unions 715 300 81 88 74 53r 30 52 35 40 53 53 Pools of securitized assets n.a. n.a. 2,957 -165 444 2,539 678 2,032 -96 290 2,226 54 Mobile home -968 -643 -1,824 -174 -41 -267 -56 -692 53 -44 -424 55 Commercial banks 192 -246 -131 -7 42 -31 -18 -22 -20 -64 219 56 Finance companies -1,052 -576 -1,621 -28 25 -10 -50 -524 -13 185 -489 57 Savings institutions -107 177 -72 -140 -108 -227 12 -146 86 -165 -154 58 Other 1,108 16,323 1,246 449 1,173 413 -189 -29 1,192 1,166 1,329 59 Commercial banks -415 3,750 -977 -169 346 478 -494 -226 194 1,071 405 60 Finance companies 1,761 6,466 494 635 412 334 453 197 937 403 763 61 Credit unions 1,221 4,758 374 428 309 133 -191 -11 -145 -104 -4 62 Retailers -297 221 16 -7 15 16 0 21 11 18 30 63 Savings institutions -1,162 1,131 -208 -368 -291 -574 -5 -379 203 -344 -320 64 Pools of securitized assets4 n.a. n.a. 1,548 -70 382 26 48 369 -8 123 454 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 DomesticN onfinancialS tatistics • March 1990 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1989 IItteemm 11998866 11998877 11998888 May June July Aug. Sept. Oct. Nov. INTEREST RATES Commercial banks2 1 48-month new car 11.33 10.45 10.85 12.44 n.a. n.a. 12.13 n.a. n.a. 11.94 2 24-month personal 14.82 14.22 14.68 15.65 n.a. n.a. 15.45 n.a. n.a. 15.42 3 120-month mobile home 13.99 13.38 13.54 14.35 n.a. n.a. 14.13 n.a. n.a. 13.97 4 Credit card 18.26 17.92 17.78 18.11 n.a. n.a. 18.07 n.a. n.a. 18.07 Auto finance companies 5 New car 9.44 10.73 12.60 11.80 11.96 11.94 12.22 12.42 13.04 13.27 6 Used car 15.95 14.60 15.11 16.45 16.45 16.37 16.31 16.22 16.17 16.09 OTHER TERMS4 Maturity (months) 7 New car 50.0 53.5 56.2 52.7 53.0 52.9 52.9 53.1 54.4 55.1 8 Used car 42.6 45.2 46.7 46.6 46.5 46.4 46.2 46.2 45.8 45.6 Loan-to-value ratio 9 New car 91 93 94 91 91 91 90 88 88 89 10 Used car 97 98 98 97 97 97 96 96 96 96 Amount financed (dollars) 11 New car 10,665 11,203 11,663 11,973 12,065 12,108 11,949 11,841 11,965 12,279 12 Used car 6,555 7,420 7,824 7,908 7,921 7,988 7,874 7,856 7,904 8,063 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. 1988 1989 Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 750.7 846.3 831.1 693.2 767.0 728.2 827.2 754.4 758.3 792.2 658.9 688.1 By sector and instrument 2 U.S. government 198.8 223.6 215.0 144.9 157.5 211.6 113.7 162.5 142.1 199.9 70.9 149.0 3 Treasury securities 199.0 223.7 214.7 143.4 140.0 212.0 106.0 141.6 100.5 201.1 65.8 149.1 4 Agency issues and mortgages -.2 -.1 .4 1.5 17.4 -.5 7.7 20.9 41.6 -1.2 5.1 -.2 5 Private domestic nonfinancial sectors 551.9 622.7 616.1 548.3 609.6 516.6 713.4 592.0 616.3 592.3 588.0 539.1 6 Debt capital instruments 320.0 451.4 460.3 458.5 462.6 386.5 561.0 463.9 438.9 427.8 394.1 412.6 7 Tax-exempt obligations 51.0 135.4 22.7 34.1 34.0 29.1 37.9 34.8 34.3 29.3 20.6 32.6 8 Corporate bonds 46.1 73.8 121.3 99.9 120.9 118.8 143.9 115.9 104.9 111.6 138.5 113.6 9 Mortgages 222.8 242.2 316.3 324.5 307.7 238.7 379.2 313.2 299.7 286.9 234.9 266.4 10 Home mortgages 136.7 156.8 218.7 234.9 229.1 170.7 300.7 231.0 214.0 205.2 186.1 191.9 11 Multifamily residential 25.2 29.8 33.5 24.4 18.9 24.2 14.7 19.5 17.3 27.2 8.1 21.3 12 Commercial 62.2 62.2 73.6 71.6 61.7 48.5 65.4 65.4 67.7 58.8 38.7 53.2 13 Farm -1.2 -6.6 -9.5 -6.4 -2.1 -4.7 -1.6 -2.6 .7 -4.4 2.1 .0 14 Other debt instruments 231.9 171.3 155.8 89.7 147.0 130.1 152.4 128.1 177.3 164.5 193.9 126.5 15 Consumer credit 81.6 82.5 58.0 32.9 51.1 43.7 51.9 35.5 73.1 34.8 46.0 30.9 16 Bank loans n.e.c 66.3 38.6 66.7 10.8 38.4 20.8 58.8 7.3 66.6 23.1 29.9 21.6 17 Open market paper 21.7 14.6 -9.3 2.3 11.6 2.4 6.8 17.1 20.0 44.1 44.9 20.4 18 Other 62.2 35.6 40.5 43.8 45.9 63.2 34.8 68.1 17.6 62.5 73.1 53.6 19 By borrowing sector 551.9 622.7 616.1 548.3 609.6 516.6 713.4 592.0 616.3 592.3 588.0 539.1 20 State and local governments 28.1 90.9 36.2 33.6 29.8 23.4 37.0 28.1 30.6 29.7 27.7 29.5 21 Households 231.5 284.6 289.2 271.9 287.9 230.2 346.7 291.6 283.3 263.1 227.1 254.8 22 Nonfinancial business 292.3 247.2 290.7 242.8 291.8 263.0 329.7 272.3 302.4 299.4 333.3 254.9 23 Farm -.4 -14.5 -16.3 -10.6 -7.5 -12.7 -3.3 -2.2 -11.8 -2.2 .3 2.8 24 Nonfarm noncorporate 123.2 129.3 103.2 107.9 91.9 85.2 83.6 100.5 98.2 91.1 70.0 81.7 25 Corporate 169.6 132.4 203.7 145.5 207.5 190.5 249.4 174.0 216.0 210.6 263.0 170.4 26 Foreign net borrowing in United States 8.4 1.2 9.7 4.9 6.9 4.8 5.4 4.1 13.3 -1.1 -3.9 28.7 27 Bonds 3.8 3.8 3.1 7.4 6.9 14.2 2.6 5.9 5.1 3.2 11.1 9.1 28 Bank loans n.e.c -6.6 -2.8 -1.0 -3.6 -1.8 1.7 -3.3 .0 -5.7 4.9 1.7 .0 29 Open market paper 6.2 6.2 11.5 2.1 9.6 .7 6.5 10.3 21.0 12.1 -8.1 20.4 30 U.S. government loans 5.0 -6.0 -3.9 -1.0 -7.8 -11.8 -.4 -12.1 -7.1 -21.4 -8.6 -.9 31 Total domestic plus foreign 759.1 847.5 840.9 698.1 773.9 733.0 832.6 758.5 771.7 791.1 655.0 716.8 Financial sectors 32 Total net borrowing by financial sectors 150.7 201.3 318.9 315.0 264.2 242.5 263.9 232.1 318.3 394.4 123.4 152.5 By instrument 33 U.S. government related 74.9 101.5 187.9 185.8 137.5 128.8 104.3 144.4 172.5 216.1 105.8 137.4 34 Sponsored credit agency securities 30.4 20.6 15.2 30.2 44.9 59.5 11.1 46.5 62.3 84.9 12.5 10.0 35 Mortgage pool securities 44.4 79.9 173.1 156.4 92.6 69.3 93.1 97.8 110.1 131.2 93.3 127.4 36 Loans from U.S. government .0 1.1 -.4 -.8 .0 .0 .0 .0 .0 .0 .0 .0 37 Private financial sectors 75.9 99.7 131.0 129.2 126.7 113.7 159.6 87.7 145.8 178.3 17.6 15.1 38 Corporate bonds 34.3 50.9 82.9 78.9 51.7 60.0 71.1 32.5 43.0 52.7 31.4 26.4 39 Mortgages .4 .1 .1 .4 .3 -.1 .1 -.1 1.2 .3 .0 .0 40 Bank loans n.e.c 1.4 2.6 4.0 -3.3 1.4 5.9 5.7 -5.6 -.3 3.0 .3 4.1 41 Open market paper 24.0 32.0 24.2 28.8 53.6 38.5 70.5 35.1 70.4 53.2 2.8 28.2 42 Loans from Federal Home Loan Banks 15.7 14.2 19.8 24.4 19.7 9.4 12.3 25.8 31.4 69.1 -16.9 -43.7 By sector 43 150.7 201.3 318.9 315.0 264.2 242.5 263.9 232.1 318.3 394.4 123.4 152.5 44 Sponsored credit agencies 30.4 21.7 14.9 29.5 44.9 59.5 11.1 46.5 62.3 84.9 12.5 10.0 45 Mortgage pools 44.4 79.9 173.1 156.4 92.6 69.3 93.1 97.8 110.1 131.2 93.3 127.4 46 Private financial sectors 75.9 99.7 131.0 129.2 126.7 113.7 159.6 87.7 145.8 178.3 17.6 15.1 47 Commercial banks 7.3 -4.9 -3.6 7.1 -3.9 -16.7 -1.6 -.9 3.7 -13.4 -.9 7.5 48 Bank affiliates 16.1 16.6 15.2 14.3 5.2 -8.8 22.4 6.1 .8 6.4 6.5 6.7 49 Savings and loan associations 17.2 17.3 20.9 19.6 19.9 10.0 19.1 24.1 26.3 71.3 -16.2 -43.9 50 Mutual savings banks 1.2 1.5 4.2 8.1 1.9 2.3 1.1 .5 3.8 -2.8 -1.1 -2.9 51 Finance companies 24.0 57.2 54.5 40.3 67.0 78.4 85.4 40.7 63.6 78.4 32.8 43.2 52 REITs .8 .5 1.0 .8 4.1 5.4 1.7 -5.9 15.0 -.9 -2.2 -1.4 53 SCO Issuers 9.3 11.5 39.0 39.1 32.5 43.0 31.5 23.1 32.5 39.3 -1.4 5.9 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic NonfinancialS tatistics • March 1990 1.57—Continued 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 11998888 Q1 Q2 Q3 Q4 Q1 Q2 Q3 All sectors 54 Total net borrowing 909.8 1,048.8 1,159.8 1,013.2 1,038.1 975.5 1,096.5 990.6 1,089.9 1,185.4 778.4 869.3 55 U.S. government securities 273.8 324.2 403.4 331.5 294.9 340.4 218.0 306.8 314.6 416.0 176.7 286.4 56 State and local obligations 51.0 135.4 22.7 34.1 34.0 29.1 37.9 34.8 34.3 29.3 20.6 32.6 57 Corporate and foreign bonds 84.3 128.4 207.3 186.3 179.5 193.0 217.6 154.3 153.0 167.5 181.1 149.2 58 Mortgages 223.1 242.2 316.4 324.9 308.0 238.6 379.3 313.1 300.8 287.2 234.9 266.4 59 Consumer credit 81.6 82.5 58.0 32.9 51.1 43.7 51.9 35.5 73.1 34.8 46.0 30.9 60 Bank loans n.e.c 61.1 38.3 69.7 3.8 38.0 28.3 61.2 1.7 60.7 31.1 31.9 25.8 61 Open market paper 51.9 52.8 26.4 33.2 74.9 41.6 83.9 62.5 111.5 109.4 39.6 69.0 62 Other loans 82.9 45.0 56.1 66.5 57.8 60.8 46.8 81.8 42.0 110.2 47.5 9.1 63 MEMO: U.S. government, cash balance 6.3 14.4 .0 -7.9 10.4 47.6 1.2 10.6 -17.9 -22.5 43.7 -7.5 Totals net of changes in U.S. government cash balances 64 Net borrowing by domestic nonfinancial 744.4 831.9 831.2 701.1 756.6 680.6 825.9 743.8 776.3 814.7 615.2 695.6 65 Net borrowing by U.S. government 192.5 209.3 215.0 152.8 147.1 164.0 112.5 151.8 160.0 222.4 27.2 156.4 External corporate equity funds raised in United States 66 Total net share issues -36.0 20.1 90.5 14.3 -117.9 -101.0 -133.7 -73.5 -163.5 -163.5 -48.7 -64.7 67 Mutual funds 29.3 84.4 159.0 71.6 -.7 -9.5 -6.6 1.5 11.9 3.6 24.0 50.0 68 All other -65.3 -64.3 -68.5 -57.3 -117.2 -91.5 -127.0 -75.0 -175.4 -167.1 -72.7 -114.6 69 Nonfinancial corporations -74.5 -81.5 -80.8 -76.5 -130.5 -95.0 -140.0 -92.0 -195.0 -180.0 -105.0 -145.0 70 Financial corporations 8.2 13.5 11.1 21.4 12.4 2.4 19.0 14.6 13.5 9.4 17.1 17.1 71 Foreign shares purchased in United States .9 3.7 1.2 -2.1 .9 1.1 -6.0 2.4 6.1 3.6 15.2 13.3 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. 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998844 11998855 11998866 11998877 11998888 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1 Total funds advanced in credit markets to domestic nonfinancial sectors 750.7 846.3 831.1 693.2 767.0 728.2 827.2 754.4 758.3 792.2 658.9 688.1 By public agencies and foreign 2 Total net advances 157.6 202.0 314.0 262.8 237.6 278.6 185.5 196.9 289.3 348.7 26.7 267.4 3 U.S. government securities 38.9 45.9 69.4 70.1 85.0 153.2 43.3 24.1 119.6 97.6 -102.4 117.1 4 Residential mortgages 56.5 94.6 170.1 153.2 104.0 88.9 107.9 98.1 121.2 133.3 106.6 149.0 5 FHLB advances to thrifts 15.7 14.2 19.8 24.4 19.7 9.4 12.3 25.8 31.4 69.1 -16.9 -43.7 6 Other loans and securities 46.6 47.3 54.7 15.1 28.8 27.1 22.1 49.0 17.1 48.7 39.4 45.0 Total advanced, by sector 7 U.S. government 17.1 17.8 9.7 -7.9 -4.9 -7.0 -7.6 4.3 -9.3 2.8 3.1 5.2 8 Sponsored credit agencies 74.3 103.5 187.2 183.4 129.6 114.3 105.7 130.1 168.5 221.4 15.6 165.6 9 Monetary authorities 8.4 18.4 19.4 24.7 10.5 2.7 5.0 15.5 18.9 5.2 -3.9 -30.7 10 Foreign 57.9 62.3 97.8 62.7 102.3 168.6 82.5 47.0 111.2 119.3 11.9 127.2 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools 74.9 101.5 187.9 185.8 137.5 128.8 104.3 144.4 172.5 216.1 105.8 137.4 12 Foreign 8.4 1.2 9.7 4.9 6.9 4.8 5.4 4.1 13.3 -1.1 -3.9 28.7 Private domestic funds advanced 13 Total net advances 676.3 747.0 714.8 621.1 673.8 583.2 751.3 705.9 654.8 658.4 734.1 586.8 14 U.S. government securities 234.9 278.2 333.9 261.4 209.9 187.2 174.7 282.8 195.0 318.4 279.1 169.3 15 State and local obligations 51.0 135.4 22.7 34.1 34.0 29.1 37.9 34.8 34.3 29.3 20.6 32.6 16 Corporate and foreign bonds 35.1 40.8 84.2 87.5 104.4 126.5 126.2 91.7 73.0 89.4 132.3 103.4 17 Residential mortgages 105.3 91.8 82.0 106.1 144.0 106.0 207.5 152.3 110.1 99.2 87.5 64.2 18 Other mortgages and loans 265.6 214.8 211.8 156.5 201.2 143.8 217.2 170.1 273.7 191.3 197.7 173.6 19 LESS: Federal Home Loan Bank advances 15.7 14.2 19.8 24.4 19.7 9.4 12.3 25.8 31.4 69.1 -16.9 -43.7 Private financial intermediation 20 Credit market funds advanced by private financial institutions 585.8 579.9 744.0 560.8 558.2 617.4 553.7 427.5 634.1 568.6 544.3 342.2 21 Commercial banking 169.2 186.0 197.5 136.8 155.3 87.9 194.5 118.4 220.5 120.6 158.6 132.9 22 Savings institutions 154.7 87.9 107.6 136.8 120.5 96.0 134.9 157.0 94.2 62.2 -73.1 -154.2 23 Insurance and pension funds 121.8 154.4 174.6 210.9 194.9 257.4 182.7 150.5 189.1 228.3 182.5 156.0 24 Other finance 140.1 151.6 264.2 76.3 87.4 176.1 41.6 1.7 130.3 157.6 276.2 207.4 25 Sources of funds 585.8 579.9 744.0 560.8 558.2 617.4 553.7 427.5 634.1 568.6 544.3 342.2 26 Private domestic deposits and RPs 322.6 214.3 262.6 144.1 219.2 305.5 102.0 191.9 277.4 166.5 213.4 282.7 27 Credit market borrowing 75.9 99.7 131.0 129.2 126.7 113.7 159.6 87.7 145.8 178.3 17.6 15.1 28 Other sources 187.3 265.9 350.4 287.5 212.3 198.2 292.1 147.9 210.9 223.8 313.3 44.3 29 Foreign funds 8.8 19.7 12.9 43.7 9.3 -60.6 94.5 -42.1 45.5 -28.4 -16.0 10.6 30 Treasury balances 4.0 10.3 1.7 -5.8 7.3 44.2 -16.3 5.6 -4.1 -21.6 26.6 -6.4 31 Insurance and pension reserves 124.0 131.9 149.3 176.1 186.8 190.1 184.0 109.8 263.3 133.0 151.5 88.7 32 Other, net 50.5 104.1 186.5 73.6 8.8 24.4 29.9 74.5 -93.8 140.8 151.2 -48.6 Private domestic nonfinancial investors 33 Direct lending in credit markets 166.4 266.8 101.8 189.6 242.3 79.5 357.2 366.2 166.5 268.1 207.5 259.7 34 U.S. government securities 111.4 157.8 60.9 100.0 149.3 119.6 103.2 225.7 148.7 211.1 123.2 137.4 35 State and local obligations 27.1 37.7 -21.7 45.6 33.9 19.7 37.2 56.4 22.3 35.7 -11.4 22.6 36 Corporate and foreign bonds -4.1 4.2 39.3 24.1 2.6 -39.6 61.4 -5.8 -5.7 -15.4 32.8 21.2 37 Open market paper 7.8 47.5 5.4 6.6 37.2 -14.5 98.6 77.4 -12.6 67.1 19.5 43.4 38 Other 24.2 19.6 17.9 13.3 19.3 -5.8 56.8 12.5 13.9 -30.3 43.4 35.1 39 Deposits and currency 326.1 224.6 283.0 160.2 221.8 313.5 110.0 215.7 248.2 211.2 231.1 273.2 40 Currency 8.6 12.4 14.4 19.0 14.7 10.7 13.8 29.3 5.1 19.3 12.6 11.4 41 Checkable deposits 30.2 41.9 95.0 -3.0 12.3 3.6 -30.5 -21.4 97.3 -54.5 -83.0 35.4 42 Small time and savings accounts 150.7 138.5 120.6 76.0 122.2 199.5 130.5 72.7 86.0 26.4 117.4 119.1 43 Money market fund shares 49.0 8.9 38.3 27.2 22.8 57.6 -21.0 -3.5 58.1 51.1 111.8 124.3 44 Large time deposits 82.9 7.4 -11.4 26.7 40.8 16.9 -3.5 137.0 12.7 111.9 39.8 -15.4 45 Security RPs 9.8 17.7 20.2 17.2 21.2 27.9 26.5 7.0 23.3 31.6 27.5 19.4 46 Deposits in foreign countries -5.1 -2.1 5.9 -2.8 -12.1 -2.7 -5.9 -5.5 -34.4 25.5 5.1 -20.9 47 Total of credit market instruments, deposits, and currency 492.5 491.4 384.8 349.8 464.2 393.0 467.2 581.9 414.7 479.4 438.6 532.9 48 Public holdings as percent of total 20.8 23.8 37.3 37.6 30.7 38.0 22.3 26.0 37.5 44.1 4.1 37.3 49 Private financial intermediation (in percent) 86.6 77.6 104.1 90.3 82.8 105.9 73.7 60.6 96.8 86.4 74.1 58.3 50 Total foreign funds 66.7 82.0 110.7 106.4 111.7 108.1 177.0 4.9 156.7 90.9 -4.1 137.8 MEMO: Corporate equities not included above 51 Total net issues -36.0 20.1 90.5 14.3 -117.9 -101.0 -133.7 -73.5 -163.5 -163.5 -48.7 -64.7 52 Mutual fund shares 29.3 84.4 159.0 71.6 -.7 -9.5 -6.6 1.5 11.9 3.6 24.0 50.0 53 Other equities -65.3 -64.3 -68.5 -57.3 -117.2 -91.5 -127.0 -75.0 -175.4 -167.1 -72.7 -114.6 54 Acquisitions by financial institutions 15.8 45.6 53.7 21.4 5.4 -34.4 .2 25.5 30.1 -6.5 -6.5 3.8 55 Other net purchases -51.8 -25.5 36.8 -7.1 -123.3 -66.5 -133.9 -99.1 -193.6 -157.0 -42.2 -68.4 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 • March 1990 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1988 1989 Transaction category, sector iy<s4 lyoj I70O 198/ Ql Q2 Q3 Q4 Ql Q2 Q3 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 5,951.8 6,795.1 7,631.2 8,335.0 8,477.0 8,686.9 8,875.4 9,105.6 9,258.7 9,428.4 9,604.5 By sector and instrument 4 3 2 U. T A S r . g e e g a n o s c v u y e r r y i n s s m s e u e c e n u s t r a it n ie d s mortgages 1 1 , , 3 3 7 7 3 6 3 . . . 4 8 4 1 1, , 5 6 9 0 3 7 0 . . . 3 1 4 1 1, , 8 8 1 1 3 1 5 . . . 6 7 4 1 1, , 9 9 5 6 5 5 0 . . . 2 2 3 2 1 , , 0 9 0 9 3 5 8 . . . 2 1 0 2 2 , , 0 0 2 1 7 2 5 . . . 3 0 3 2 2, , 0 0 5 6 1 1 3 2 . . . 7 9 2 2 2 , , 1 0 1 9 2 7 5 2 . . . 8 2 6 2 2 , , 1 1 5 3 2 5 3 2 . . . 7 3 4 2 2 , , 1 1 6 4 2 5 2 3 . . . 7 1 6 2 2, , 1 2 8 0 2 0 4 3 . . . 7 3 5 5 Private domestic nonfinancial sectors 4,575.1 5,194.7 5,815.8 6,374.7 6,473.8 6,664.7 6,811.5 6,987.8 7,103.0 7,262.7 7,400.2 6 7 8 De T C b a o t x r c p - a e o p x r i e a t m a te l p i b t n o s o n t b r d l u i s g m a e t n io t n s s 3,0 5 4 3 6 2 8 9 0 . . . 0 2 0 3,4 6 5 5 8 4 5 5 2 . . . 5 5 9 3,9 6 6 5 7 6 9 7 4 . . . 1 2 5 4,4 7 7 2 6 1 4 8 3 . . . 1 2 0 4,5 7 7 1 1 9 1 8 3 . . . 1 0 8 4,6 7 8 5 2 2 2 9 7 . . . 8 6 2 4,7 7 8 8 4 5 6 2 8 . . . 1 0 8 4,9 7 8 0 5 8 2 9 5 . . . 1 8 0 4,9 7 9 7 6 1 4 9 2 . . . 7 2 9 5,0 7 9 7 4 6 8 7 9 . . . 3 5 3 5,1 7 9 8 8 7 7 0 5 . . . 8 3 9 9 Mortgages 2,048.8 2,287.1 2,614.2 2,950.7 2,999.1 3,095.7 3,177.2 3,257.3 3,301.6 3,361.6 3,431.6 10 Home mortgages 1,336.2 1,490.2 1,720.8 1,943.1 1,978.0 2,055.3 2,118.0 2,174.2 2,214.8 2,263.4 2,316.7 11 Multifamily residential 183.6 213.0 246.2 270.0 273.0 276.6 281.0 286.8 292.6 294.4 299.3 12 Commercial 416.5 478.1 551.4 648.7 660.2 676.0 691.1 709.6 708.2 717.0 728.9 13 Farm 112.4 105.9 95.8 88.9 88.0 87.8 87.0 86.8 86.0 86.7 86.6 1 1 1 1 1 4 5 8 6 7 Ot C O B O he a o t p r h n n e e k s n d r u e l m m b o t a a e n r r in k s c s e r n t t r e . u p d e. m a i c t p e e n r t s 1, 4 5 5 5 0 5 3 1 5 3 7 6 9 8 . . . . . 1 1 5 3 2 1, 6 4 7 5 0 7 4 0 9 1 9 2 2 2 . . . . . 3 8 7 2 6 1, 6 6 4 8 5 6 5 5 7 9 2 6 8 9 . . . . . 8 1 4 9 6 1, 6 9 6 5 9 7 4 6 1 2 6 3 4 6 . . . . . 7 7 8 3 0 1, 6 6 5 9 3 6 7 8 6 2 3 8 2 8 . . . . . 1 5 8 3 9 2,0 7 6 5 1 0 7 8 4 2 5 7 7 1 . . . . . 8 8 0 2 2 2,0 7 6 5 2 2 8 8 4 9 1 7 0 0 . . . . . 4 7 2 3 2 2,0 7 5 7 8 4 8 5 0 5 3 5 4 2 . . . . . 7 7 4 0 6 2,1 7 7 5 2 4 9 1 6 3 5 6 7 5 . . . . . 8 1 1 0 6 2,1 7 7 5 1 8 6 8 2 1 4 3 1 9 0 . . . . . 3 5 8 0 1 2,2 7 7 5 1 1 7 8 3 1 2 5 9 4 3 . . . . . 4 5 3 5 1 2 1 0 9 By S t b a o t r e r o a w nd in l g o c s a e l c t g o o r v ernments 4,5 3 7 8 5 3 . . 1 0 5,1 4 9 7 4 3 . . 7 9 5,8 5 1 1 5 0 . . 8 1 6,3 5 7 4 4 3 . . 7 7 6,4 5 7 4 3 7 . . 8 1 6,6 5 6 5 4 6 . . 7 0 6,8 5 1 6 1 5 . . 5 7 6,9 5 8 7 7 3 . . 8 5 7,1 5 0 7 3 8. . 5 0 7,2 5 6 8 2 4 . . 7 8 7,4 5 0 9 0 5 . . 2 1 2 2 2 2 2 1 5 2 3 4 N H o o C N F n u a o o f s r i r n e n m p h f a a o o n r r l c m a d i t s a e l n o b n u c s o in rp es o s r ate 2 2 1 , , , 1 0 2 7 1 7 1 1 6 8 3 8 6 9 7 . . . . . 9 9 2 0 9 2 2 1 , , , 2 4 3 8 1 9 2 5 9 7 5 5 3 8 3 . . . . . 5 6 3 4 4 2 2 1 1 , , , , 7 5 5 0 1 1 9 5 0 5 1 4 5 1 6 . . . . . 8 8 0 6 6 2 2 1 1 , , , , 8 9 7 1 1 6 6 1 0 4 4 6 1 9 5 . . . . . 5 5 6 4 5 2 3 1 1 , , , , 9 0 7 1 1 0 2 5 3 4 0 6 3 1 1 . . . . . 7 7 0 0 3 2 3 1 1 , , , , 9 1 8 1 1 9 1 2 5 4 0 8 2 1 3 . . . . . 7 2 5 9 9 3 3 1 1 , , , , 0 1 8 1 1 6 7 6 7 4 1 8 7 2 3 . . . . . 3 3 5 6 6 3 3 1 1 , , , , 2 1 9 2 1 6 1 5 0 3 9 2 2 5 7 . . . . . 5 3 4 0 6 3 3 1 1 , , , , 2 3 9 2 1 0 1 5 2 3 5 9 4 9 5 . . . . . 1 6 0 0 9 2 3 3 1 , , , , 0 2 4 2 1 2 6 1 4 3 7 5 2 5 9 . . . . . 0 5 3 5 9 2 3 3 1 , , , , 0 3 4 2 1 6 3 6 6 4 6 6 9 1 0 . . . . . 6 1 0 6 7 26 Foreign credit market debt held in United States 233.6 234.7 236.4 242.9 244.6 245.9 246.1 249.6 249.9 249.0 255.3 27 Bonds 68.0 71.8 74.9 82.3 86.1 86.0 87.4 89.2 90.5 92.2 94.5 3 2 2 0 8 9 B O U a p .S n e . k n g l m o o v a a e n r r k s n e n m t . p e en . a c p t e l r o ans 1 3 2 0 7 0 7 . . . 7 8 1 1 3 2 0 3 7 1 . . . 9 9 1 9 3 2 7 7 6 . . . 1 4 9 9 2 4 6 3 1 . . . 1 3 2 9 4 2 3 2 2 . . . 1 5 8 4 9 2 3 4 2 . . . 5 0 4 4 8 2 6 9 2 . . . 3 8 7 8 2 5 8 1 0 . . . 1 5 9 8 2 5 3 4 1 . . . 0 9 6 2 5 8 2 2 1 . . . 7 7 4 2 5 8 7 0 2 . . . 5 4 9 31 Total domestic plus foreign 6,185.4 7,029.9 7,867.6 8,578.0 8,721.6 8,932.8 9,121.5 9,355.3 9,508.7 9,677.4 9,859.7 Financial sectors 32 Total credit market debt owed by financial sectors 1,010.2 1,213.2 1,563.6 1,885.5 1,926.0 2,000.5 2,058.2 2,149.7 2,258.7 2,298.9 2,336.7 By instrument 33 U.S. government related 531.2 632.7 844.2 1,026.5 1,050.6 1,076.9 1,116.3 1,164.0 1,209.0 1,235.8 1,273.8 34 Sponsored credit agency securities 237.2 257.8 273.0 303.2 313.5 317.9 328.5 348.1 364.3 369.0 370.4 35 Mortgage pool securities 289.0 368.9 565.4 718.3 732.1 754.0 782.8 810.9 839.7 861.8 898.4 36 Loans from U.S. government 5.0 6.1 5.7 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 37 Private financial sectors 479.0 580.5 719.5 859.0 875.4 923.6 941.9 985.7 1,049.7 1,063.1 1,062.9 38 Corporate bonds 153.0 204.5 287.4 366.3 380.5 397.9 406.4 418.0 458.2 465.8 472.8 39 Mortgages 2.5 2.7 2.7 3.1 3.1 3.1 3.1 3.4 3.5 3.5 3.5 40 Bank loans n.e.c 29.5 32.1 36.1 32.8 31.7 34.3 32.9 34.2 32.2 33.8 34.7 4 4 2 1 L O o p a e n n s m fr a o r m ke t F e p d a e p r e a r l Home Loan Banks. 2 7 1 4 9. . 5 6 2 8 5 8 2 . . 8 4 2 1 8 0 4 8 . . 6 6 3 1 2 3 3 3. . 1 8 3 1 3 2 0 9 . . 6 5 3 1 5 3 3 4 . . 4 8 3 1 5 4 8 1 . . 0 6 3 1 7 5 7 2. . 8 4 3 1 9 6 2 3. . 8 0 3 1 9 6 8 1 . . 3 9 4 1 0 5 0 1. . 1 9 43 Total, by sector 1,010.2 1,213.2 1,563.6 1,885.5 1,926.0 2,000.5 2,058.2 2,149.7 2,258.7 2,298.9 2,336.7 4 4 4 5 M Sp o o r n tg so a r g e e d p c o r o e l d s it agencies 2 2 8 4 9 2 . . 0 2 2 3 6 6 3 8 . . 9 9 2 5 7 6 8 5 . . 7 4 7 3 1 0 8 8 . . 3 2 3 73 1 2 8 . . 1 5 3 7 2 5 2 4 . . 9 0 7 3 8 3 2 3 . . 8 5 8 3 1 53 0 . . 1 9 3 83 6 9 9 . . 7 3 3 86 7 1 4 . . 8 0 3 8 7 9 5 8 . . 4 4 4 4 7 6 Pr C iv o a m te m fi e n r a c n ia c l i a b l a s n e k c s to rs 4 8 7 4 9 . . 1 0 5 7 8 9 0 . . 2 5 7 7 1 5 9 . . 6 5 8 8 5 2 9 . . 7 0 8 7 7 6 5 . . 4 4 9 7 2 7 3 . . 2 6 9 7 4 6 1 . . 6 9 9 7 8 8 5 . . 8 7 1,0 7 4 3 9 . . 3 7 1,0 7 6 4 3 . . 5 1 1,0 7 6 5 2 . . 8 9 48 Bank affiliates 89.5 106.2 116.8 131.1 131.0 136.3 136.3 136.2 140.0 141.2 141.5 49 Savings and loan associations 81.6 98.9 119.8 139.4 135.3 141.9 148.1 159.3 170.1 167.9 156.8 50 Mutual savings banks 2.9 4.4 8.6 16.7 17.1 17.6 18.1 18.6 17.8 17.7 17.6 51 Finance companies 203.0 261.2 328.1 378.8 393.0 419.8 427.7 445.8 463.8 478.0 486.3 52 REITs 4.3 5.6 6.5 7.3 8.7 9.1 7.6 11.4 11.1 10.6 10.3 53 SCO issuers 13.5 25.0 64.0 103.1 113.9 121.8 127.5 135.7 173.5 173.1 174.6 All sectors 54 Total credit market debt 7,195.7 8,243.1 9,431.2 10,463.4 10,647.5 10,933.4 11,179.7 11,504.9 11,767.4 11,976.3 12,196.4 55 U.S. government securities.. 1,902.8 2,227.0 2,653.8 2,981.8 3,048.8 3,094.2 3,175.2 3,276.7 3,359.7 3,396.5 3,473.1 56 State and local obligations... 520.0 655.5 679.1 713.2 718.1 727.2 746.1 759.8 764.7 769.3 780.3 57 Corporate and foreign bonds 690.1 819.2 1,026.4 1,212.7 1,260.4 1,313.7 1,352.5 1,392.2 1,461.6 1,505.5 1,543.2 58 Mortgages 2,051.4 2,289.8 2,617.0 2,953.8 3,002.2 3,098.8 3,180.3 3,260.7 3,305.1 3,365.0 3,435.1 59 Consumer credit 519.3 601.8 659.8 692.7 688.9 705.8 721.2 743.7 745.0 761.0 775.3 60 Bank loans n.e.c 613.4 652.7 719.1 720.3 722.7 744.0 743.3 758.3 771.4 786.2 792.0 61 Open market paper 305.7 358.5 384.9 438.8 446.7 475.3 484.6 513.6 543.1 561.1 571.4 62 Other loans 592.9 638.6 691.1 750.2 759.7 774.5 776.6 799.8 816.8 831.7 826.0 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. 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998844 11998855 11998866 11998877 Ql Q2 Q3 Q4 Ql Q2 Q3 1 Total funds advanced in credit markets to domestic nonfinancial sectors 5,951.8 6,795.1 7,631.2 8,335.0 8,477.0 8,686.9 8,875.4 9,105.6 9,258.7 9,428.4 9,604.5 By public agencies and foreign 2 Total held 1,257.7 1,460.5 1,794.7 2,044.9 2,099.4 2,151.3 2,191.8 2,266.4 2,332.1 2,345.1 2,414.3 3 U.S. government securities 377.9 423.8 493.2 563.3 595.7 610.1 613.3 648.3 666.2 644.6 670.7 4 Residential mortgages 423.5 518.2 712.3 862.0 880.6 906.1 934.9 966.0 995.3 1,020.5 1,062.6 5 FHLB advances to thrifts 74.6 88.8 108.6 133.1 129.5 134.8 141.6 152.8 163.8 161.9 151.1 6 Other loans and securities 381.6 429.7 480.5 486.6 493.6 500.3 502.1 499.3 506.9 518.1 529.8 7 Total held, by type of lender 1,257.7 1,460.5 1,794.7 2,044.9 2,099.4 2,151.3 2,191.8 2,266.4 2,332.1 2,345.1 2,414.3 8 U.S. government 228.2 246.7 253.3 238.0 237.1 235.8 226.3 216.9 213.9 215.2 216.9 9 Sponsored credit agencies and mortgage pools ... 556.3 659.8 869.8 1,048.9 1,068.0 1,095.6 1,132.9 1,178.6 1,223.5 1,228.9 1,275.3 10 Monetary authority 167.6 186.0 205.5 230.1 224.9 229.7 230.8 240.6 235.4 238.4 227.6 11 Foreign 305.6 367.9 466.1 527.9 569.5 590.2 601.9 630.3 659.3 662.6 694.5 Agency and foreign debt not in line 1 12 Sponsored credit agencies and mortgage pools ... 531.2 632.7 844.2 1,026.5 1,050.6 1,076.9 1,116.3 1,164.0 1,209.0 1,235.8 1,273.8 13 Foreign 233.6 234.7 236.4 242.9 244.6 245.9 246.1 249.6 249.9 249.0 255.3 Private domestic holdings 14 Total private holdings 5,458.9 6,202.1 6,917.1 7,559.5 7,672.7 7,858.4 8,045.9 8,252.8 8,385.5 8,568.1 8,719.2 15 U.S. government securities 1,524.9 1,803.2 2,160.6 2,418.5 2,453.1 2,484.1 2,561.9 2,628.4 2,693.5 2,751.9 2,802.3 16 State and local obligations 520.0 655.5 679.1 713.2 718.1 727.2 746.1 759.8 764.7 769.3 780.3 17 Corporate and foreign bonds 476.8 517.6 601.3 689.6 722.2 752.9 775.7 794.0 817.6 849.3 875.1 18 Residential mortgages 1,096.5 1,185.1 1,254.7 1,351.1 1,370.4 1,425.9 1,464.1 1,494.9 1,512.2 1,537.3 1,553.5 19 Other mortgages and loans 1,915.3 2,129.7 2,330.0 2,520.1 2,538.5 2,603.3 2,639.6 2,728.4 2,761.3 2,822.2 2,859.1 20 LESS: Federal Home Loan Bank advances 74.6 88.8 108.6 133.1 129.5 134.8 141.6 152.8 163.8 161.9 151.1 Private financial intermediation 21 Credit market claims held by private financial institutions 4,699.6 5,283.1 6,025.7 6,604.6 6,732.0 6,891.0 7,003.5 7,168.1 7,298.7 7,458.7 7,543.1 22 Commercial banking 1,791.9 1,978.9 2,176.3 2,313.1 2,327.1 2,382.6 2,421.6 2,468.4 2,490.9 2,538.2 2,580.2 23 Savings institutions 1,100.7 1,191.2 1,297.9 1,445.5 1,453.6 1,495.9 1,538.8 1,571.3 1,566.7 1,557.3 1,522.8 24 Insurance and pension funds 1,215.3 1,369.7 1,544.3 1,755.2 1,810.6 1,859.0 1,899.1 1,950.2 1,996.7 2,046.5 2,083.7 25 Other finance 591.7 743.4 1,007.1 1,090.7 1,140.7 1,153.5 1,144.0 1,178.1 1,244.4 1,316.7 1,356.5 26 Sources of funds 4,699.6 5,283.1 6,025.7 6,604.6 6,732.0 6,891.0 7,003.5 7,168.1 7,298.7 7,458.7 7,543.1 27 Private domestic deposits and RPs 2,715.6 2,930.0 3,188.4 3,324.8 3,404.2 3,432.6 3,474.2 3,554.2 3,587.8 3,644.5 3,710.6 28 Credit market debt 479.0 580.5 719.5 859.0 875.4 923.6 941.9 985.7 1,049.7 1,063.1 1,062.9 29 Other sources 1,504.9 1,772.7 2,117.9 2,420.8 2,452.4 2,534.8 2,587.4 2,628.1 2,661.1 2,751.0 2,769.6 30 Foreign funds -14.1 5.6 18.6 62.2 45.9 62.3 51.9 71.6 61.9 51.0 53.7 31 Treasury balances 15.5 25.8 27.5 21.6 23.5 32.6 34.2 29.0 13.5 34.4 32.4 32 Insurance and pension reserves 1,160.8 1,289.4 1,427.9 1,597.2 1,647.9 1,693.8 1,729.2 1,771.2 1,802.6 1,833.7 1,853.9 33 Other, net 342.6 451.8 643.9 739.6 735.2 746.1 772.1 756.4 783.0 831.9 829.6 Private domestic nonfinancial investors 34 Credit market claims 1,238.4 1,499.5 1,610.8 1,813.9 1,816.1 1,891.0 1,984.4 2,070.5 2,136.6 2,172.6 2,239.0 35 U.S. government securities 659.5 814.7 899.1 992.0 1,005.2 1,022.1 1,086.1 1,143.5 1,175.0 1,196.3 1,239.6 36 Tax-exempt obligations 194.2 231.9 211.2 256.8 257.6 270.1 289.0 303.7 307.2 308.2 312.4 37 Corporate and foreign bonds 33.1 38.0 77.8 102.2 97.7 105.7 107.1 100.8 137.0 136.4 150.0 38 Open market paper 83.5 131.0 136.4 160.7 151.9 179.9 188.7 201.0 213.0 221.7 221.4 39 Other 268.0 283.8 286.2 302.3 303.7 313.3 313.6 321.5 304.3 309.9 315.5 40 Deposits and currency 2,895.8 3,120.4 3,399.2 3,553.9 3,628.0 3,662.4 3,704.4 3,785.9 3,822.8 3,887.9 3,945.9 41 Currency 159.6 171.9 186.3 205.4 204.0 209.9 213.4 220.1 220.7 226.4 225.0 42 Checkable deposits 380.6 422.5 517.4 514.0 495.4 510.3 496.1 525.4 492.8 496.4 497.3 43 Small time and savings accounts 1,693.4 1,831.9 1,948.3 2,017.1 2,084.9 2,110.9 2,131.1 2,150.4 2,164.7 2,186.7 2,219.0 44 Money market fund shares 218.5 227.3 265.6 292.8 318.4 306.1 303.6 315.6 340.3 359.9 389.2 45 Large time deposits 332.5 339.9 328.5 355.2 353.7 349.1 384.7 396.0 415.9 423.1 421.2 46 Security RPs 90.6 108.3 128.5 145.7 151.9 156.2 158.6 166.9 174.1 178.4 183.9 47 Deposits in foreign countries 20.6 18.5 24.5 23.7 19.9 19.9 16.8 11.6 14.3 17.0 10.3 48 Total of credit market instruments, deposits, and currency 4,134.2 4,619.9 5,010.0 5,367.8 5,444.2 5,553.5 5,688.8 5,856.4 5,959.4 6,060.4 6,184.9 49 Public holdings as percent of total 20.3 20.8 22.8 23.8 24.1 24.1 24.0 24.2 24.5 24.2 24.5 50 Private financial intermediation (in percent) 86.1 85.2 87.1 87.4 87.7 87.7 87.0 86.9 87.0 87.1 86.5 51 Total foreign funds 291.5 373.5 484.7 590.2 615.3 652.5 653.8 701.9 721.2 713.6 748.1 MEMO: Corporate equities not included above 52 Total market value 2,157.9 2,823.9 3,360.6 3,325.0 3,504.0 3,622.7 3,577.6 3,620.3 3,731.6 4,072.3 4,296.0 53 Mutual fund shares 136.7 240.2 413.5 460.1 479.2 486.8 478.1 478.3 486.3 514.8 538.5 54 Other equities 2,021.2 2,583.7 2,947.1 2,864.9 3,024.8 3,136.0 3,099.5 3,142.0 3,245.3 3,557.5 3,757.5 55 Holdings by financial institutions 615.6 800.0 972.1 1,013.8 1,112.6 1,170.0 1,167.1 1,200.4 1,277.7 1,395.7 1,523.6 56 Other holdings 1,542.3 2,023.9 2,388.4 2,311.2 2,391.3 2,452.8 2,410.5 2,419.9 2,453.9 2,676.6 2,772.4 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 2Aine 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 • March 1990 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1989 MMeeaassuurree 11998877 11998888 11998899 Apr. May June July Aug. Sept. Oct.' Nov.' Dec. 1 Industrial production 129.8 137.2 n.a. 141.7 141.6 142.0 141.9 142.5 142.3' 141.8 142.3 142.8 Market groupings 2 Products, total 138.3 145.9 n.a. 151.6 151.7 152.5 151.8 152.5 152.4' 151.5 152.3 153.6 3 Final, total 136.8 144.3 n.a. 150.2 150.4 151.2 150.2 151.1 150.8' 149.4 150.1 151.6 4 Consumer goods 127.7 133.9 n.a. 139.5 139.2 139.9 138.7 139.3 139.0' 139.9 139.8 140.6 5 Equipment 148.8 158.2 n.a. 164.3 165.4 166.1 165.5 166.8 166.5' 162.0 163.7 166.1 6 Intermediate 143.3 151.5 n.a. 156.5 156.3 157.0 157.5 157.5 157.8' 158.9 160.1 160.5 7 Materials 118.3 125.3 n.a. 128.2 127.9 127.7 128.3 128.8 128.6' 128.6 128.6 128.2 Industry groupings 8 Manufacturing 134.6 142.8 n.a. 148.0 148.1 148.7 148.5 149.2 148.8' 148.0 148.6 148.8 Capacity utilization (percent)2 9 Manufacturing 81.1 83.5 84.0 84.5 84.3 84.4 84.0 84.2 83.7 83.1 83.2 83.1 10 Industrial materials industries 80.5 83.7 83.7 84.2 83.8 83.6 83.7 83.9 83.6' 83.5 83.3 82.8 11 Construction contracts (1982 = 100)3 163.8 160.8 159.4 163.0 159.0 157.0 163.0 160.0 175.0 165.0 158.0 160.0 12 Nonagricultural employment, total4 123.9 128.0 131.6 131.1 131.3 131.7 131.9 132.0 132.3 132.4 132.6 132.8 13 Goods-producing, total 101.5 103.7 105.3 105.5 105.5 105.4 105.4 105.5 105.2 105.2 105.2 104.9 14 Manufacturing, total 96.7 98.6 99.6 99.9 99.9 99.8 99.8 99.8 99.4 99.2 99.1 99.0 15 Manufacturing, production- worker ... 91.9 93.9 94.8 95.0 95.0 94.8 94.8 94.8 94.2 94.1 93.9 93.9 16 Service-producing 133.3 138.2 142.7 141.8 142.2 142.7 143.0 143.1 143.6 143.8 144.1 144.5 17 Personal income, total 235.0 252.8 275.5 272.9 273.5 274.8 276.4 277.3 277.9 280.3 282.9 284.2 18 Wages and salary disbursements 226.3 244.4 264.8 261.7 262.0 263.8 266.1 266.7 268.5 271.4 271.6 273.3 19 Manufacturing 183.8 196.5 207.3 205.7 205.8 207.0 207.5 208.8 208.8 211.1 208.9 209.8 20 Disposable personal income 232.4 252.1 274.0 269.6 271.7 273.8 275.4 276.1 276.5 278.7 281.6 282.7 21 Retail sales® 210.8 225.1 237.5 235.5 237.4 237.3 239.1 241.3 242.0 238.9 240.1 240.6 Prices7 22 Consumer (1982-84 = 100) 113.6 118.3 124.0 123.1 123.8 124.1 124.4 ' 124.6 125.0 125.6 125.9 126.1 23 Producer finished goods (1982 = 100) ... 105.4 108.0 113.5 113.0 114.2 114.3 114.1 113.4' 113.5 114.8 114.8 115.3 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 (July 7. Data without seasonal adjustment, as published in Monthly Labor Review. 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. 1989 CCaatteeggoorryy 11998877'' 11998888'' 11998899 May June July Aug. Sept. Oct.' Nov.' Dec. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 185,010 186,837 188,601 188,377 188,518 188,672 188,808 188,948 189,096 189,238 189,381 2 Labor force (including Armed Forces)1 122,122 123,893 126,077 125,747' 126,30c 126,202' 126,28C 126,245' 126,373 126,709 126,762 3 Civilian labor force 119,865 121,669 123,869 123,551' 124,111' 124,013' 124,070' 124,023' 124,148 124,488 124,546 Employment 4 Nonagncultural industries 109,232 111,800 114,142 113,995'' 114,404' 114,2W 114,275' 114,20c 114,388 114,676 114,691 5 Agriculture 3,208 3,169 3,199 3,137' 3,138' 3,217' 3,275' 3,2W 3,197 3,160 3,197 Unemployment 6 Number 7,425 6,701 6,528 6,419' 6,569' 6,577' 6,52C 6,604' 6,563 6,652 6,658 7 Rate (percent of civilian labor force) 6.2 5.5 5.3 5.2 5.3 5.3' 5.3' 5.3 5.3 5.3 5.3 8 Not in labor force 62,888 62,944 62,524 62,630' 62,218' 62,470' 62,528' 62,703' 62,723 62,529 62,619 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 102,200 105,584 108,573 108,310 108,607 108,767 108,887 109,096 109,171 109,393 109,535 10 Manufacturing 19,024 19,403 19,611 19,667 19,650 19,649 19,644 19,559 19,537 19,510 19,485 11 Mining 717 721 722 722 715 706 729 730 731 737 736 12 Contract construction 4,967 5,125 5,302 5,283 5,283 5,314 5,321 5,325 5,335 5,360 5,322 13 Transportation and public utilities 5,372 5,548 5,703 5,700 5,716 5,736 5,618 5,709 5,729 5,745 5,818 14 Trade 24,327 25,139 25,807 25,750 25,781 25,823 25,877 25,896 25,957 26,022 26,024 15 Finance 6,547 6,676 6,814 6,790 6,808 6,815 6,836 6,852 6,851 6,872 6,885 16 Service 24,236 25,600 26,889 26,711 26,931 26,973 27,058 27,159 27,188 27,321 27,405 17 Government 17,010 17,372 17,726 17,687 17,723 17,751 17,804 17,866 17,843 17,826 17,860 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1984 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • March 1990 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1989 1989 Series Qlr Q2' Q3' Q4 Qlr Q2' Q3r Q4 Qlr Q2r Q3r Q4 Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 140.7 141.8 142.2 142.3 167.5 168.7 169.9 84.0 84.1 83.7 83.2 2 Mining 101.8 102.0 102.7 103.9 125.1 124.7 124.3 123.8 81.3 81.8 82.6 83.9 116.0 115.7 113.9 118.0 141.0 141.4 141.7 142.0 82.3 81.8 80.4 83.1 3 Utilities 147.0 148.3 148.8 148.S 174.3 175.7 177.2 178.7 84.4 84.4 84.0 83.1 4 Manufacturing 127.8 127.6 128.8 128.5 146.5 147.8 149.1 150.4 87.3 86.4 86.4 85.5 5 Primary processing 158.6 160.8 160.9 160.4 191.0 192.6 194.2 195.8 83.0 83.5 82.9 81.9 6 Advanced processing 127.6 127.9 128.6 128.5 151.7 152.6 153.5 154.4 84.1 83.9 83.8 83.2 7 Materials 138.6 139.0 140.4 138.6 170.1 171.3 172.5 173.7 81.5 81.1 81.4 79.8 98.4 96.0 97.8 92.9 110.2 110.6 111.0 111.4 83.8 81.4 82.3 78.0 8 Durable goods 136.3 137.1 137.9 138.6 152.7 154.2 155.8 157.4 89.3 88.9 88.5 88.1 191 MTeextatill em, aptaepreiarl,s and chemical 139.2 139.8 141.1 141.5 153.5 155.3 157.0 158.8 90.7 90.0 89.8 89.1 1102 NondPuarpaebrl e goods 148.4 146.1 149.8 154.0 155.8 157.6 96.4 93.8 95.1 13 Chemical 145.4 145.7 146.5 161.4 163.7 165.9 90.1 89.0 88.3 14 Energy materials 100.7 100.7 99.8 101.8 118.4 118.3 118.1 118.0 85.0 85.1 84.5 86.3 Previous cycle Latest cycle 1988 1989 High Low High Low Dec. Apr/ May' June' July' Aug/ Sept/ Oct/ Nov/ Dec. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 84.3 84.2 84.0 84.0 83.7 83.9 83.6 83.1 83.1 83.3 1 1 6 7 M Ut i i n li i t n ie g s .. . 9 9 2 5 . . 8 6 8 8 2 7 . . 9 8 8 9 8 5 . . 5 2 7 7 8 6 . . 0 9 8 83 2 . . 6 0 8 8 2 2 . . 9 0 8 81 1 . . 8 8 8 81 0 . . 5 8 8 82 0 . . 1 5 8 82 0 . . 4 0 8 8 0 3 . . 8 4 8 8 1 4 . . 7 0 8 8 4 1 . . 3 3 8 8 3 6 . . 4 3 18 Manufacturing 87.7 69.9 86.5 68.0 84.4 84.5 84.3 84.4 84.0 84.2 83.7 83.1 83.2 2 1 0 9 A Pr d im va a n r c y e d p r p o r c o e c s e s s i s n in g g .. . . 8 9 6 1 . . 0 9 7 6 1 8 . . 1 3 8 8 5 9 . . 1 1 6 6 9 5 . . 5 0 8 8 2 7 . . 8 9 8 86 3 . . 8 5 8 8 3 6 . . 4 2 8 8 3 6 . . 5 2 8 86 2 . . 7 9 8 8 3 6 . . 2 6 8 85 2 . . 8 6 8 8 1 6 . . 7 2 8 85 1 . . 7 9 8 82 4 . . 2 5 21 Materials 92.0 70.5 89.1 68.5 84.9 84.2 83.8 83.6 83.7 83.9 83.6 83.5 83.3 2 2 2 2 3 5 2 4 N D o u T M n r e a d e x b u t t a l r i e l l a e g b m , o l p e a o t a d g e p r s o e i o a r d l , s s a n . d .. 9 9 9 1 1 9 . . . 1 8 2 6 6 6 7 6 4 . . . 1 7 4 9 8 8 8 3 9 . . . 6 1 8 4 6 7 5 0 0 . . . 7 9 7 8 8 82 9 4 . . . 1 8 6 8 8 8 1 9 3 . . . 3 2 6 8 8 79 8 1 . . . 8 7 0 8 8 8 1 8 0 . . . 1 7 6 8 8 8 1 2 9 . . . 3 3 2 8 8 8 8 1 2 . . . 8 7 7 8 8 81 7 1 . . . 9 5 2 8 8 8 8 1 0 . . . 3 7 3 8 8 7 8 7 0 . . . 1 2 0 7 8 7 7 5 9. . . 1 8 0 2 2 6 7 P C a h c p e h e m e r m ic i a c l a l 9 9 9 2 8 2 . . . 8 5 4 7 6 6 4 0 4 . . . 8 6 4 9 8 8 9 7 7 . . . 4 3 9 6 7 68 3 9 . . . 8 5 9 9 9 91 0 8 . . . 3 7 4 9 9 9 4 0 0 . . . 5 1 7 9 8 8 3 9 8 . . . 2 6 4 9 8 8 3 9 8 . . . 7 8 5 9 9 8 0 5 9 . . . 6 0 5 9 9 8 0 5 8 . . . 1 1 6 9 8 8 5 8 6 . . . 1 8 7 9 8 8 6 9 7 . . . 3 4 4 8 8 9 9 5 7 . . . 1 8 2 28 Energy materials. 94.6 86.9 94.0 82.3 86.5 86.0 85.5 83.8 83.9 84.3 85.4 86.1 86.1 86.6 1. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly high 1973; monthly low 1975. inside front cover. 3. Monthly highs 1978 through 1980; monthly lows 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A49 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1977 1988 1989 „ pro- 1989 por- avg. tion Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept/ Oct/ Nov.'' Dec/ Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 140.4 140.8 140.5 140.7 141.7 141.6 142.0 141.9 142.5 142.3 141.8 142.3 142.8 2 Products 57.72 149.4 150.1 150.0 150.5 151.6 151.7 152.5 151.8 152.5 152.4 151.5 152.3 153.6 3 Final products 44.77 147.7 148.2 148.6 148.9 150.2 150.4 151.2 150.2 151.1 150.8 149.4 150.1 151.6 4 Consumer goods 25.52 138.2 138.5 138.7 138.4 139.5 139.2 139.9 138.7 139.3 139.0 139.9 139.8 140.6 5 Equipment 19.25 160.4 161.1 161.6 162.8 164.3 165.4 166.1 165.5 166.8 166.5 162.0 163.7 166.1 6 Intermediate products 12.94 155.0 156.6 155.1 156.1 156.5 156.3 157.0 157.5 157.5 157.8 158.9 160.1 160.5 7 Materials 42.28 128.3 128.1 127.4 127.3 128.2 127.9 127.7 128.3 128.8 128.6 128.6 128.6 128.2 Consumer goods 8 Durable consumer goods 6.89 131.9 131.5 131.6 130.1 132.2 131.2 130.8 127.3 128.7 127.9 127.6 126.8 127.7 9 Automotive products 2.98 134.5 132.5 131.6 128.9 131.7 128.6 125.6 120.2 122.3 120.6 118.9 119.3 121.9 10 Autos and trucks 1.79 138.0 135.6 133.1 128.3 131.7 127.4 123.3 114.6 119.3 117.1 113.1 114.8 118.3 11 Autos, consumer 1.16 105.1 99.6 96.0 95.0 98.8 96.0 91.4 81.2 86.4 92.7 91.5 84.3 84.2 12 Trucks, consumer .63 199.1 202.3 201.9 190.0 192.8 185.5 182.5 176.7 180.5 162.4 153.3 171.2 181.7 13 Auto parts and allied goods 1.19 129.3 127.9 129.4 129.8 131.7 130.4 129.1 128.7 126.7 125.9 127.6 126.2 127.4 14 Home goods 3.91 130.0 130.7 131.6 131.1 132.6 133.3 134.8 132.7 133.5 133.4 134.2 132.5 132.1 15 Appliances, A/C and TV 1.24 151.0 151.0 153.9 151.6 151.7 151.3 155.6 148.1 152.1 151.9 151.7 145.0 142.5 16 Appliances and TV 1.19 150.0 149.5 153.0 152.3 152.5 151.4 155.0 147.0 149.4 148.3 147.3 142.3 17 Carpeting and furniture .96 140.5 141.1 141.3 140.7 142.8 144.3 143.1 141.3 139.8 139.9 142.0 142.7 18 Miscellaneous home goods 1.71 108.9 110.1 110.1 110.9 113.0 114.1 115.0 116.8 116.6 116.5 117.2 117.8 19 Nondurable consumer goods 18.63 140.5 141.1 141.4 141.4 142.2 142.1 143.3 142.8 143.2 143.1 144.4 144.6 145.4 20 Consumer staples 15.29 148.9 149.4 149.7 149.9 150.7 150.7 151.9 151.4 152.0 151.8 153.4 153.8 155.0 21 Consumer foods and tobacco 7.80 144.5 144.8 144.3 143.3 144.7 144.7 145.7 144.2 145.6 145.9 147.2 148.1 22 Nonfood staples 7.49 153.6 154.2 155.4 156.9 156.9 156.9 158.4 158.9 158.7 157.9 160.0 159.7 162.8 23 Consumer chemical products 2.75 186.8 187.6 187.8 188.9 187.3 189.1 191.0 193.1 192.5 187.9 192.6 191.5 24 Consumer paper products 1.88 169.0 174.2 177.0 180.4 180.9 180.9 183.6 183.0 184.7 186.6 187.1 189.0 25 Consumer energy 2.86 111.6 109.1 110.1 110.7 112.0 110.1 110.7 110.4 109.2 110.3 110.8 110.1 115.2 26 Consumer fuel 1.44 96.3 96.7 95.0 95.6 97.3 93.6 95.6 97.0 96.0 95.7 96.1 94.9 27 Residential utilities 1.42 127.1 121.7 125.4 126.1 127.0 127.0 126.1 124.0 122.7 125.1 125.8 Equipment 28 Business and defense equipment 18.01 166.2 167.1 167.9 168.9 170.3 171.5 172.0 171.3 172.5 172.1 167.4 169.2 171.9 29 Business equipment 14.34 162.6 163.8 165.0 166.3 167.8 169.1 169.6 168.5 169.9 169.6 165.2 167.2 169.9 30 Construction, mining, and farm 2.08 74.6 74.3 75.6 76.9 77.6 76.3 74.8 73.0 72.1 74.7 75.2 75.8 76.9 31 Manufacturing 3.27 137.0 136.3 137.8 138.6 139.7 140.9 142.8 143.8 143.5 143.1 142.9 142.7 142.9 32 Power 1.27 91.8 92.8 92.7 93.0 93.6 93.3 92.5 92.8 94.2 93.8 95.0 94.7 95.3 33 Commercial 5.22 248.9 252.4 254.3 257.6 260.1 263.2 264.5 263.8 265.6 265.1 259.6 264.0 264.8 34 Transit 2.49 124.9 125.7 125.2 123.9 124.8 125.3 124.8 120.1 124.4 122.2 107.7 110.2 122.6 35 Defense and space equipment 3.67 180.5 180.0 179.3 178.7 179.9 180.7 181.1 182.0 182.7 182.1 176.0 176.9 179.6 Intermediate products 36 Construction supplies 5.95 141.4 142.3 139.5 139.3 140.2 140.2 141.2 142.2 141.5 140.9 142.5 143.9 142.9 37 Business supplies 6.99 166.7 168.8 168.4 170.4 170.4 170.0 170.4 170.6 171.2 172.3 172.8 173.9 38 General business supplies 5.67 173.8 175.9 175.4 177.4 177.9 177.3 177.9 177.8 178.8 180.1 180.4 181.7 39 Commercial energy products 1.31 135.8 138.2 138.3 140.3 138.0 138.2 138.4 139.6 138.1 138.5 140.0 140.3 Materials 40 Durable goods materials 20.50 139.0 139.4 138.6 137.9 139.0 138.7 139.4 139.9 140.9 140.4 139.2 139.0 137.7 41 Durable consumer parts 4.92 112.5 111.7 112.1 110.7 110.8 111.8 111.6 109.9 111.9 110.7 108.3 108.0 105.0 42 Equipment parts 5.94 174.1 175.2 175.2 175.3 176.9 177.1 177.5 179.1 180.0 179.6 177.7 179.4 179.7 43 Durable materials n.e.c 9.64 130.9 131.5 129.7 128.8 130.0 128.9 130.0 131.0 131.6 131.4 131.2 129.9 128.6 44 Basic metal materials 4.64 99.8 100.8 98.4 95.9 98.0 94.4 95.5 97.7 98.4 97.4 96.7 92.0 90.0 45 Nondurable goods materials 10.09 136.3 137.1 135.9 136.0 137.1 136.8 137.3 138.5 138.3 136.7 138.5 138.6 138.7 46 Textile, paper, and chemical materials 7.53 139.1 139.9 138.6 139.0 140.3 139.1 140.0 141.8 141.5 140.0 141.5 141.5 141.5 47 Textile materials 1.52 110.0 112.1 110.7 111.8 114.6 116.4 117.2 116.4 117.0 115.6 115.7 115.0 48 Pulp and paper materials 1.55 150.3 150.4 147.5 147.3 146.7 145.2 146.5 149.1 149.9 150.5 153.0 152.7 49 Chemical materials 4.46 145.1 145.7 145.0 145.4 146.8 144.7 145.5 147.9 147.0 144.6 146.3 146.6 50 Miscellaneous nondurable materials ... 2.57 128.0 129.1 128.0 127.2 127.8 129.9 129.4 129.0 128.9 127.3 129.8 51 Energy materials 11.69 102.6 100.5 100.5 101.0 101.7 101.1 99.1 99.1 99.5 100.9 101.6 101.7 102.2 52 Primary energy 7.57 107.6 105.2 104.4 103.7 104.1 104.6 103.0 103.2 104.2 105.6 106.7 106.6 53 Converted fuel materials 4.12 93.3 92.0 93.3 96.1 97.4 94.7 92.0 91.6 91.0 92.2 92.2 92.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • March 1990 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1977 1989 Groups c S o I d C e pr t o io p n or - a 1 v 98 g 9 . Dec. Jan. Feb. Mar. Apr. May June July Aug. Sept/ Oct/ Nov.p Dec Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities . 15.79 108.9 107.2 106.8 107.5 107.9 107.2 106.3 106.6 106.5 107.7 108.6 2 Mining 9.83 104.9 103.0 100.9 101.5 102.4 102.0 101.5 102.1 102.4 103.5 104.2 3 Utilities 5.96 115.4 114.0 116.5 117.5 117.1 115.6 114.3 114.0 113.3 114.5 115.9 4 Manufacturing 84.21 146.3 147.2 146.8 147.0 148.0 148.1 148.7 148.5 149.2 148.8 148.0 5 Nondurable 35.11 147.1 148.5 148.1 148.6 149.6 149.5 150.5 150.8 151.1 151.1 152.2 6 Durable 49.10 145.7 146.2 145.9 145.8 146.9 147.1 147.4 146.8 147.8 147.2 145.0 Mining 7 Metal 10 .50 111.9 106.9 98.6 98.1 96.8 94.0 101.2 106.2 103.7 104.3 104.6 8 Coal 11.12 1.60 155.1 144.7 134.7 137.7 145.5 137.1 129.2 130.2 135.4 144.2 144.4 9 Oil and gas extraction 13 7.07 88.9 88.9 89.5 89.6 89.1 90.5 90.6 90.8 90.3 90.0 90.6 10 Stone and earth minerals . 14 .66 149.4 150.8 142.5 143.5 144.5 146.6 150.2 152.1 151.5 148.8 151.3 Nondurable manufactures 11 Foods 7.96 145.8 146.6 146.3 145.4 146.6 147.2 147.9 147.3 148.3 148.8 150.1 12 Tobacco products .62 107.0 105.0 104.7 101.5 109.2 105.9 104.2 97.1 99.9 97.3 96.6 13 Textile mill products 2.29 117.9 120.2 119.4 119.7 122.5 123.6 123.8 123.5 123.2 123.2 123.0 14 Apparel products 2.79 108.8 110.2 110.2 109.9 111.3 111.5 111.9 111.4 111.1 111.2 110.8 15 Paper and products 3.15 151.7 153.8 151.7 151.7 150.7 150.1 150.2 152.4 152.8 153.4 155.2 16 Printing and publishing 4.54 188.0 193.0 194.6 198.5 200.1 199.0 200.5 199.9 200.6 203.1 203.8 17 Chemicals and products 8.05 158.1 159.0 158.5 159.2 159.3 158.2 159.9 162.2 161.5 159.3 161.5 18 Petroleum products 2.40 98.0 98.0 96.3 97.0 97.3 96.9 97.9 98.3 97.7 98.4 98.1 19 Rubber and plastic products . 2.80 177.5 175.9 175.0 176.4 178.0 180.5 182.3 182.3 183.6 184.2 185.8 20 Leather and products .53 60.2 62.9 62.9 61.2 61.4 60.3 60.5 60.8 60.2 60.4 60.1 Durable manufactures 21 Lumber and products 24 2.30 143.0 139.9 132.8 133.4 135.1 135.5 137.2 136.9 136.5 135.7 137.6 22 Furniture and fixtures 25 1.27 165.4 166.3 164.8 165.8 168.0 170.2 170.8 169.0 168.0 167.6 167.9 23 Clay, glass, and stone products .. 32 2.72 125.1 126.6 125.4 125.5 124.7 123.9 123.9 122.9 123.9 123.4 123.7 24 Primary metals 33 5.33 90.0 93.2 91.1 88.4 90.1 87.2 87.3 89.2 90.3 89.2 88.9 25 Iron and steel 331.2 3.49 77.6 82.2 79.1 75.9 77.0 73.2 72.9 75.4 75.9 75.4 76.4 26 Fabricated metal products. 34 6.46 125.1 124.5 124.5 123.8 123.1 124.8 125.2 125.4 125.5 124.4 124.2 27 Nonelectrical machinery .. 35 9.54 177.8 178.7 180.8 183.0 184.7 186.5 187.5 186.7 187.8 188.2 184.9 28 Electrical machinery 36 7.15 180.9 180.9 181.7 181.6 182.2 181.6 181.9 181.4 183.7 182.7 181.8 29 Transportation equipment 37 9.13 136.8 136.7 136.4 134.8 136.4 135.5 134.2 131.3 133.2 131.9 123.8 30 Motor vehicles and parts 371 5.25 125.5 124.9 123.4 120.4 122.0 119.7 116.4 110.4 114.2 112.7 110.1 31 Aerospace and miscellaneous transportation equipment.. 372 -6.9 3.87 152.2 152.7 154.0 154.4 155.9 157.1 158.4 159.6 159.0 157.9 142.4 32 Instruments 38 2.66 159.1 161.0 161.3 161.8 163.0 164.3 165.7 166.0 164.1 163.1 163.4 33 Miscellaneous manufactures 39 1.46 111.0 111.8 107.6 110.0 114.5 114.7 117.1 119.6 118.5 119.2 121.7 Utilities 34 Electric . Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,855.5 1,875.3 1,885.1 1,879.2 1,878.0 1,893.9 1.885.5 1,868.0 1,875.4 1,874.8 1,874.3 36 Final 405.7 1,426.3 1,442.1 1,447.5 1,449.6 1,442.8 1,460.4 1.449.6 1,430.0 1,438.1 1,436.5 1,431.3 37 Consumer goods 272.7 918.4 934.4 935.6 934.3 928.0 939.4 928.5 915.5 919.9 917.7 924.0 38 Equipment 133.0 507.9 507.7 511.9 515.2 514.8 521.1 521.1 514.5 518.2 518.8 507.3 39 Intermediate 111.9 429.3 433.2 437.7 429.6 435.3 433.5 435.9 438.0 437.3 438.3 443.0 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 (July A major revision of the industrial production index and the capacity 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. 1989 IItteemm 11998866 11998877 11998888 Feb. Mar. Apr. May June July Aug.' Sept/ Oct/ Nov. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,750 1,535 1,456 1,403 1,230 1,334 1,347 1,308 1,281 1,328 1,319 1,356 1,342 2 1-family 1,071 1,024 994 989 870 954 905 874 906 927 946 961 979 3 2-or-more-family 679 511 462 414 360 380 442 434 375 401 373 395 363 4 Started 1,805 1,621 1,488 1,465 1,409 1,343 1,308 1,406 1,420 1,329 1,264 1,423 1,342 5 1-family 1,180 1,146 1,081 1,029 981 1,029 977 972 1,026 990 971 1,023 1,003 6 2-or-more-family 626 474 407 436 428 314 331 434 394 339 293 400 339 7 Under construction, end of period1 . 1,074 987 919 951 942 924 911 914 918 902 893 897 888 8 1-family 583 591 570 594 586 579 572 572 576 565 566 566 563 9 2-or-more-family 490 397 350 357 356 345 339 342 342 337 327 331 325 10 Completed 1,756 1,669 1,530 1,610 1,459 1,552 1,442 1,355 1,372 1,439 1,368 1,318 1,451 11 1-family 1,120 1,123 1,085 1,189 1,050 1,115 1,041 964 965 1,040 960 990 1,045 12 2-or-more-family 636 546 445 421 409 437 401 391 407 399 408 328 406 13 Mobile homes shipped 244 233 218 212 207 198 205 202 178 194 185 191 191 Merchant builder activity in 1-family units 14 Number sold 748 672 675 621 555 607 653 647 738 723 642 648 710 15 Number for sale, end of period 357 365 366 375 377 377 380 377 369 364 366 366 365 Price (thousands of dollars)2 Median 16 Units sold 92.2 104.7 113.3 118.0 123.0 116.7 119.0 122.8 116.0 122.9 119.0 123.0 127.0 17 Units sold 112.2 127.9 139.0 145.3 149.0 144.7 145.1 153.6 140.3 158.6 149.7 147.6 155.9 EXISTING UNITS (1-family) 18 Number sold 3,566 3,530 3,594 3,480 3,400 3,400 3,210 3,360 3,330 3,480 3,520 3,480 3,590 Price of units sold (thousands of dollars) 19 Median 80.3 85.6 89.2 91.9 92.0 92.9 92.6 93.4 96.7 94.8 94.3 92.6 9933..22 20 Average 98.3 106.2 112.5 117.8 116.1 118.0 118.0 118.8 122.1 120.8 118.4 117.2 118.3 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 387,043 397,721 409,663 416,597 416,779 411,891 416,540 412,523 410,269r 416,279 416,176 415,631 421,692 22 Private 315,313 320,108 328,738 333,169 338,065 332,537 330,591 329,035 328,785' 331,884 329,564 330,183 330,281 23 Residential 187,147 194,656 198,101 200,454 202,083 200,735 196,984 194,229 195,165' 194,393 192,765 193,158 194,381 24 Nonresidential, total 128,166 125,452 130,637 132,715 135,982 131,802 133,607 134,806 133,620' 137,491 136,799 137,025 135,900 Buildings 25 Industrial 13,747 13,707 14,931 15,098 15,698 16,245 15,945 16,302 16,424' 17,526 17,927 17,825 18,063 26 Commercial 56,762 55,448 58,104 58,749 60.653 55,581 56,796 57,434 56,640' 57,680 57,132 58,154 56,741 27 Other 13,216 15,464 17,278 17,484 17,634 16,645 17,343 17,179 16,768' 18,455 17,962 17,392 17,972 28 Public utilities and other 44,441 40,833 40,324 41,384 41,997 43,331 43,523 43,891 43,788' 43,830 43,778 43,654 43,124 29 Public 71,727 77,612 80,922 83,428 78,714 80,420 85,130 81,914 81,484' 84,395 86,612 85,448 91,411 30 Military 3,868 4,327 3,579 3,433 3,740 2,054 3,870 4,324 3,194' 3,779 4,916 3,342 3,988 31 Highway 22,971 25,343 28,524 27,936 26,091 27,772 27,432 27,321 26,128 27,367 27,581 26,406 29,288 32 Conservation'and development... 4,646 5,162 4,474 4,742 4,210 3,068 6,053 4,699 4,567' 4,708 4,906 5,343 4,878 33 Other 40,242 42,780 44,345 47,317 44,673 47,526 47,775 45,570 47,595' 48,541 49,209 50,357 53,257 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 • March 1990 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 1989 1989 DDDeeeccc... 11998888 11998899 111999888999 DDeecc.. DDeecc.. Mar. June Sept. Dec. Aug. Sept. Oct. Nov. Dec. CONSUMER PRICES2 (1982-84=100) 1 AU items 4.4 4.6 6.1 5.7 1.6 5.2 .0 .2 .5 .4 .4 126.1 2 Food 5.2 5.6 8.2 5.6 2.9 5.8 .2 .2 .4 .6 .5 127.4 J Energy items .5 5.1 10.2 24.8 -13.4 2.2 -2.0 -.9 .6 -.1 .0 93.2 4 All items less food and energy 4.7 4.4 5.2 3.8 3.1 5.3 .2 .2 .5 .4 .4 131.5 5 Commodities 4.0 2.7 4.1 2.0 .7 4.1 -.3 .4 .6 .2 .2 121.2 6 Services 5.0 5.3 5.9 4.3 4.5 6.0 .3 .2 .4 .5 .5 137.5 PRODUCER PRICES (1982=100) 7 Finished goods 4.0 4.8 10.2 5.8 -.3 4.3 -.4 .8' .4 -.1 .7 115.3 8 Consumer foods 5.7 5.0 13.1 -1.3 -1.3 10.9 .3 -,5R 1.4 .8 .5 120.9 9 Consumer energy -3.6 9.6 41.0 31.8 -16.8 -7.1 -7.3 6.5 .2 -3.3 1.4 64.9 1 1 0 1 O Ca th p e it r a l c o e n q s u u ip m m er e n g t o ods 4 3 . . 8 6 4 3 . . 5 7 4 5. . 4 6 4 5. . 7 5 2 4 . . 6 8 4 1 . . 5 0 ..6y' . ,8 4 R ' -.3 .2 . . 0 3 . . 9 2 1 1 2 2 6 0. . 7 6 12 Intermediate materials3 5.3 2.6 8.7 2.9 -1.1 -.4 -.4' .4 .1 -.1 -.1 112.0 13 Excluding energy 7.2 .9 5.5 .3 -.7 -1.3 -.R .2' .1 .0 -.4 119.7 Crude materials 14 Foods 14.2 2.6 16.9 -17.8 -2.2 17.1 \.r -1.3' -.6 1.7 3.0 112.3 15 Energy -9.5 17.9 48.3 23.6 -6.5 12.6 -6.8' 3.7' .5 .3 2.2 78.5 16 Other 7.5 -3.8 10.3 -9.3 -.6 -14.3 .8 .3 .3 -2.3 -1.8 131.7 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds. rental equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A53 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1988 1989 AAccccoouunntt 11998877 11998888 11998899 Q4 Ql Q2 Q3 Q4 GROSS NATIONAL PRODUCT 1 Total 4,524.3 4,880.6 5,233.2 5,017.3 5,113.1 5,201.7 5,281.0 5,337.0 By source 2 Personal consumption expenditures 3,010.8 3,235.1 3,470.3 3,324.0 3,381.4 3,444.1 3,508.1 3,547.5 3 Durable goods 421.0 455.2 473.6 467.4 466.4 471.0 486.1 471.0 4 Nondurable goods 998.1 1,052.3 1,122.6 1,078.4 1,098.3 1,121.5 1,131.4 1,139.1 5 Services 1,591.7 1,727.6 1,874.1 1,778.2 1,816.7 1,851.7 1,890.6 1,937.5 6 Gross private domestic investment 699.9 750.3 777.1 752.8 769.6 775.0 779.1 784.8 '/ Fixed investment 670.6 719.6 747.7 734.1 742.0 747.6 751.7 749.6 8 Nonresidential 444.3 487.2 512.5 495.8 503.1 512.5 519.6 514.8 9 Structures 133.8 140.3 145.1 142.5 144.7 142.4 146.2 147.1 10 Producers' durable equipment 310.5 346.8 367.4 353.3 358.5 370.1 373.4 367.7 11 Residential structures 226.4 232.4 235.2 238.4 238.8 235.1 232.1 234.8 12 Change in business inventories 29.3 30.6 29.4 18.7 27.7 27.4 27.4 35.2 13 Nonfarm 30.5 34.2 25.2 40.8 19.1 23.6 19.8 38.3 14 Net exports of goods and services -112.6 -73.7 -50.9 -70.8 -54.0 -50.6 -45.1 -53.8 15 Exports 448.6 547.7 624.4 579.7 605.6 626.1 628.5 637.3 16 Imports 561.2 621.3 675.2 650.5 659.6 676.6 673.6 691.1 17 Government purchases of goods and services 926.1 968.9 1,036.7 1,011.4 1,016.0 1,033.2 1,038.9 1,058.6 18 Federal 381.6 381.3 404.1 406.4 399.0 406.0 402.7 408.8 19 State and local 544.5 587.6 632.5 604.9 617.0 627.2 636.2 649.8 By major type of product 20 Final sales, total 4,495.0 4,850.0 5,203.8 4,998.7 5,085.4 5,174.3 5,253.6 5,301.8 21 Goods 1,785.2 1,931.9 2,073.6 1,987.4 2,030.9 2,079.1 2,096.3 2,087.9 22 Durable 777.6 863.6 911.6 888.5 894.7 905.2 930.1 916.5 23 Nondurable 1,007.6 1,068.3 1,161.9 1,098.9 1,136.2 1,173.9 1,166.2 1,171.3 24 Services 2,304.5 2,499.2 2,700.7 2,570.0 2,620.8 2,667.5 2,728.1 2,786.2 25 Structures 434.6 449.5 459.0 459.9 461.3 455.1 456.6 462.9 26 Change in business inventories 29.3 30.6 29.4 18.7 27.7 27.4 27.4 35.2 27 Durable goods 22.0 25.0 14.6 32.0 22.0 6.0 5.2 25.0 28 Nondurable goods 7.2 5.6 14.9 -13.3 5.7 21.4 22.2 10.2 MEMO 29 Total GNP in 1982 dollars 3,853.7 4,024.4 4,142.6 4,069.4 4,106.8 4,132.5 4,162.9 4,168.1 NATIONAL INCOME 30 Total 3,665.4 3,972.6 4,265.0 4,097.4 4,185.2 4,249.6 4,287.3 n.a. 31 Compensation of employees 2,690.0 2,907.6 3,145.4 2,997.2 3,061.7 3,118.2 3,171.9 3,230.1 32 Wages and salaries 2,249.4 2,429.0 2,632.0 2,505.1 2,560.7 2,608.8 2,654.7 2,704.0 33 Government and government enterprises 419.2 446.5 476.9 456.3 466.9 473.5 480.2 487.1 34 Other 1,830.1 1,982.5 2,155.1 2,048.9 2,093.8 2,135.3 2,174.5 2,216.9 35 Supplement to wages and salaries 440.7 478.6 513.4 492.0 501.0 509.4 517.2 526.1 36 Employer contributions for social insurance 227.8 249.7 265.1 255.6 259.7 263.4 266.6 270.7 37 Other labor income 212.8 228.9 248.3 236.5 241.3 246.0 250.7 255.3 38 Proprietors' income1 311.6 327.8 352.2 328.3 359.3 355.5 343.3 350.9 39 Business and professional1 270.0 288.0 305.9 296.3 300.3 304.2 307.2 312.0 40 Farm1 41.6 39.8 46.3 32.0 59.0 51.3 36.1 38.8 41 Rental income of persons2 13.4 15.7 8.0 16.1 11.8 9.8 5.4 5.1 42 Corporate profits1 298.7 328.6 298.2 340.2 316.3 307.8 295.2 n.a. 43 Profits before tax3 266.7 306.8 287.3 318.8 318.0 296.0 275.0 n.a. 44 Inventory valuation adjustment -18.9 -25.0 -18.5 -20.1 -38.3 -20.7 -6.3 -8.9 45 Capital consumption adjustment 50.9 46.8 29.4 41.5 36.6 32.3 26.5 22.4 46 Net interest 351.7 392.9 461.1 415.7 436.1 458.4 471.5 478.4 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 Domestic Nonfinancial Statistics • March 1990 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1988 1989 AAccccoouunntt 11998877 11998888 1989 Q4 Q1 Q2 Q3 Q4 PERSONAL INCOME AND SAVING 1 Total personal income 3,777.6 4,064.5 4,428.7 4,185.2 4,317.8 4,400.3 4,455.9 4,540.9 2 Wage and salary disbursements 2,249.4 2,429.0 2,632.0 2,505.1 2,560.7 2,608.8 2,654.7 2,704.0 3 Commodity-producing industries 649.9 696.3 738.3 714.7 726.6 733.7 742.6 750.4 4 Manufacturing 490.3 524.0 553.0 538.1 546.3 549.9 555.7 559.9 5 Distributive industries 531.9 571.9 615.1 587.5 598.8 610.8 619.4 631.2 6 Service industries 648.3 714.4 801.7 746.7 768.4 790.8 812.4 835.3 7 Government and government enterprises 419.2 446.5 476.9 456.3 466.9 473.5 480.2 487.1 8 Other labor income 212.8 228.9 248.3 236.5 241.3 246.0 250.7 255.3 9 Proprietors' income 311.6 327.8 352.2 328.3 359.3 355.5 343.3 350.9 10 Business and professional 270.0 288.0 305.9 296.3 300.3 304.2 307.2 312.0 11 Farm1 41.6 39.8 46.3 32.0 59.0 51.3 36.1 38.8 12 Rental income of persons 13.4 15.7 8.0 16.1 11.8 9.8 5.4 5.1 92.0 102.2 112.4 106.4 109.4 111.4 113.2 115.7 14 Personal interest income 523.2 571.1 657.8 598.6 629.0 655.1 667.8 679.5 15 Transfer payments 548.2 584.7 632.1 593.8 616.4 626.8 636.4 649.0 16 Old-age survivors, disability, and health insurance benefits ... 282.9 300.5 325.2 304.0 316.9 322.9 327.9 333.0 17 LESS: Personal contributions for social insurance 172.9 194.9 214.2 199.6 210.0 213.0 215.4 218.5 18 EQUALS: Personal income 3,777.6 4,064.5 4,428.7 4,185.2 4,317.8 4,400.3 4,455.9 4,540.9 19 LESS: Personal tax and nontax payments 571.7 586.6 648.7 597.8 628.3 652.6 649.1 665.0 20 EQUALS: Disposable personal income 3,205.9 3,477.8 3,780.0 3,587.4 3,689.5 3,747.7 3,806.8 3,875.9 21 LESS: Personal outlays 3,104.1 3,333.1 3,573.7 3,424.0 3,483.8 3,547.0 3,611.7 3,652.2 22 EQUALS: Personal saving 101.8 144.7 206.3 163.4 205.7 200.7 195.1 223.7 MEMO Per capita (1982 dollars) 23 Gross national product 15,793.9 16,332.8 16,650.3 16,455.3 1166,,556666..44 1166,,662299..88 1166,,771111..88 1166,,668855..77 24 Personal consumption expenditures 10,302.0 10,545.5 10,725.5 10,625.6 10,653.5 10,678.9 10,799.3 10,765.8 25 Disposable personal income 10,970.0 11,337.0 11,681.0 11,466.0 11,625.0 11,622.0 11,717.0 11,761.0 26 Saving rate (percent) 3.2 4.2 5.5 4.6 5.6 5.4 5.1 5.8 GROSS SAVING 27 Gross saving 553.8 642.4 700.7 647.4 693.5 695.8 709.9 n.a. 28 Gross private saving 663.8 738.6 805.6 769.3 792.1 793.7 809.7 n.a. 29 Personal saving 101.8 144.7 206.3 163.4 205.7 200.7 195.1 223.7 30 Undistributed corporate profits 75.3 80.3 47.1 81.7 53.4 52.0 49.3 n.a. 31 Corporate inventory valuation adjustment -18.9 -25.0 -18.5 -20.1 -38.3 -20.7 -6.3 -8.9 Capital consumption allowances 303.1 321.7 -344.8 332299..77 333355..22 333399..77 --334499..99 --335544..55 33 Noncorporate 183.6 191.9 -207.4 194.4 197.8 201.3 -215.3 -215.1 34 Government surplus, or deficit (-), national income and product accounts -110.1 -96.1 -104.9 -121.9 -98.7 --9977..99 --9999..88 n.a. -161.4 -145.8 -149.9 -167.6 -147.5 -145.4 -144.7 n.a. 36 State and local 51.3 49.7 45.0 45.7 48.8 47.5 44.9 n.a. 37 Gross investment 549.0 632.8 677.4 630.8 669.3 677.5 684.3 678.3 38 Gross private domestic 699.9 750.3 777.1 752.8 769.6 775.0 779.1 784.8 39 Net foreign -150.9 -117.5 -99.8 -122.0 -100.3 -97.5 -94.8 -106.5 40 Statistical discrepancy -4.7 -9.6 -23.4 -16.6 -24.1 -18.3 -25.5 -25.5 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 Q3 Q4 Ql Q2 Qy Balance on current account --113333,,224499 -143,700 -126,548 -32,340 -28,677 -30,390 -32,084 -22,687 Not seasonally adjusted -36,926 -28,191 -25,994 -31,888 -27,718 Merchandise trade balance -145,058 -159,500 -127,215 -30,339 -32,019 -28,378 -27,554 -27,751 Merchandise exports 223,367 250,266 319,251 80,604 83,729 87,919 91,423 91,569 Merchandise imports -368,425 -409,766 -446,466 -110,943 -115,748 -116,297 -118,977 -119,320 Military transactions, net -4,577 -2,856 -4,606 -1,006 -1,604 -1,498 -1,518 -968 Investment income, net 60,629 71,151 61,974 12,806 21,329 15,527 13,400 21,096 Other service transactions, net 10,517 10,585 17,702 4,971 5,475 5,428 5,977 7,077 Remittances, pensions, and other transfers .. -4,049 -4,063 -4,279 -1,088 -1,090 -1,186 -1,011 -1,099 U.S. government grants (excluding military) . -11,730 -10,149 -10,377 -2,288 -3,928 -2,340 -1,857 -2,557 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) -2,024 997 2,999 1,961 3,413 1,049 -309 644 12 Change in U.S. official reserve assets (increase, -). 312 9,149 -3,566 -7,380 2,271 -4,000 -12,095 -5,996 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -246 -509 474 -35 173 -188 68 -211 15 Reserve position in International Monetary Fund. 1,501 2,070 1,025 202 307 316 -159 337 16 Foreign currencies -942 7,588 -5,064 -7,547 1,791 -4,128 -12,004 -6,122 17 Change in U.S. private assets abroad (increase, -). -97,953 -86,363 -81,544 -32,467 -38,332 -28,367 12,781 -41,804 18 Bank-reported claims -59,975 -42,119 -54,481 -26,229 -30,916 -22,132 27,238 -20,702 19 Nonbank-reported claims -7,396 5,201 -1,684 255 4,569 1,835 -2,954 20 U.S. purchase of foreign securities, net -4,271 -5,251 -7,846 -1,592 -3,047 -2,568 -5,737 -10,138 21 U.S. direct investments abroad, net -26,311 -44,194 -17,533 -4,901 -8,938 -5,502 -5,766 -10,964 22 Change in foreign official assets in United States (increase, +) 35,594 45,193 38,882 -2,234 10,589 7,477 -5,201 11,246 23 U.S. Treasury securities 34,364 43,238 41,683 -3,769 11,897 4,634 -9,738 12,068 24 Other U.S. government obligations -1,214 1,564 1,309 572 697 721 -97 190 25 Other U.S. government liabilities 2,141 -2,520 -1,284 -232 -232 -304 417 -547 26 Other U.S. liabilities reported by U.S. banks3 1,187 3,918 -331 1,703 -1,036 1,974 3,620 -1,117 27 Other foreign official assets -884 -1,007 -2,495 -508 -737 452 597 652 28 Change in foreign private assets in United States (increase, +) , 186,011 172,847 180,417 48,413 70,170 52,529 3,412 61,236 29 U.S. bank-reported liabilities^ 79,783 89,026 68,832 23,291 32,223 13,261 -21,422 25,688 30 U.S. nonbank-reported liabilities -2,641 2,450 6,558 2,350 2,702 2,852 -361 31 Foreign private purchases of U.S. Treasury securities, net 3,809 -7,643 20,144 3,422 5,336 8,590 2,252 13,034 32 Foreign purchases of other U.S. securities, net 70,969 42,120 26,448 7,454 6,871 8,665 9,676 11,082 33 Foreign direct investments in United States, net 34,091 46,894 58,435 11,896 23,038 19,161 13,267 11,432 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 11,308 1,878 -10,641 24,047 -19,434 1,702 33,496 -2,639 36 Owing to seasonal adjustments -4,556 4,431 4,127 -2,311 -5,115 37 Statistical discrepancy in recorded data before seasonal adjustment 11,308 1,878 -10,641 28,603 -23,865 -2,425 35,807 2,476 MEMO Changes in official assets 38 U.S. official reserve assets (increase, —) 312 9,149 -3,566 -7,380 2,271 -4,000 -12,095 -5,996 39 Foreign official assets in United States (increase, +) excluding line 25 33,453 47,713 40,166 -2,002 10,821 7,781 -5,618 11,793 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22 above) -9,327 -9,956' -3,109 -459 672 7,143 433 3,776 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 96 53 92 7 40 12 13 15 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. 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 • March 1990 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1989 IItteemm 11998866 11998877 11998888 May June July Aug. Sept/ Oct/ Nov." 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 227,158 254,073 322,426 30,455 31,286 30,468 30,562 30,680 31,034 30,192 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 365,438 406,241 440,952 40,534 39,293 38,709 40,662 39,194 41,283 40,689 Trade balance 3 Customs value -138,279 -152,169 -118,526 -10,079 -8,007 -8,241 -10,101 -8,513 -10,249 -10,498 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 June July Aug. Sept. Oct. Nov/ Dec/ 1 Total 43,186 48,511 45,798 60,502 63,462 62,364 68,418 70,560 70,560 74,609 2 Gold stock, including Exchange Stabilization Fund 11,090 11,064 11,078 11,063 11,066 11,066 11,065 11,062 11,060 11,059 3 Special drawing rights2,3 7,293 8,395 10,283 9,034 9,340 9,240 9,487 9,473 9,751 9,951 4 Reserve position in International Monetary Fund 11,947 11,730 11,349 8,888 9,055 8,644 8,786 8,722 9,047 9,048 5 Foreign currencies4 12,856 17,322 13,088 31,517 34,001 33,413 39,080 41,552 42,702 44,551 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 BANKS' Millions of dollars, end of period 1989 AAsssseettss 11998866 11998877 11998888 June July Aug. Sept. Oct. Nov. Dec. 1 Deposits 287 244 347 275 371 265 325 252 307 589 Assets held in custody i 2 U.S. Treasury securities 155,835 195,126 232,547 229,914 233,170 238,007 235,597 230,804 231,059 224,911 3 Earmarked gold3 14,048 13,919 13,636 13,545 13,530 13,516 13,506 13,460 13,458 13,456 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 1989 AAsssseett aaccccoouunntt 11998866 11998877 11998888 May June July Aug. Sept. Oct. Nov. All foreign countries 1 Total, all currencies 456,628 518,618 505,595r 521,436 523,674 534,200 522,489 520,845 533,641 549,126 2 Claims on United States 114,563 138,034 169,111 177,987 177,445 179,615 177,299 182,440 184,505' 193,215 3 Parent bank 83,492 105,845 129,856 134,026 132,380 133,135 134,479 142,339 145,034' 152,021 4 Other banks in United States 13,685 16,416 14,918 13,040 14,218 15,744 15,225 14,164 14,248' 15,405 5 Nonbanks 17,386 15,773 24,337 30,921 30,847 30,736 27,595 25,937 25,223' 25,789 6 Claims on foreigners 312,955 342,520 299,728 302,808 303,720 310,426 299,265 289,996 300,814' 306,291 7 Other branches of parent bank 96,281 122,155 107,179 116,506 115,913 117,438 108,893 104,683 110,684' 113,732 8 Banks 105,237 108,859 96,932 94,042 94,902 95,621 92,465 90,510 93,357 95,249 9 Public borrowers 23,706 21,832 17,163 16,095 16,709 16,948 16,656 16,215 16,721 16,139 10 Nonbank foreigners 87,731 89,674 78,454 76,165 76,196 80,419 81,251 78,588 80,052 81,171 11 Other assets 29,110 38,064 36,756' 40,641 42,509 44,159 45,925 48,409 48,322' 49,620 12 Total payable in U.S. dollars 317,487 350,107 357,573' 366,315 367,562 371,851 369,287 359,924 369,898' 380,948 13 Claims on United States 110,620 132,023 163,456 169,796 169,520 171,041 170,497 174,628 176,228' 185,408 14 Parent bank 82,082 103,251 126,929 128,771 127,352 128,063 130,168 137,481 139,224' 147,104 15 Other banks in United States 12,830 14,657 14,167 11,909 13,207 14,734 14,688 13,217 13,597 14,648 16 Nonbanks 15,708 14,115 22,360 29,116 28,961 28,244 25,641 23,930 23,407' 23,656 17 Claims on foreigners 195,063 202,428 177,685 177,308 180,013 181,441 177,911 164,461 171,691' 171,506 18 Other branches of parent bank 72,197 88,284 80,736 86,625 88,874 90,077 83,036 77,858 83,945' 82,265 19 Banks 66,421 63,707 54,884 49,793 50,627 49,913 50,885 46,786 47,349 49,045 20 Public borrowers 16,708 14,730 12,131 11,282 11,815 11,616 11,774 11,646 11,579 11,446 21 Nonbank foreigners 39,737 35,707 29,934 29,608 28,697 29,835 32,216 28,171 28,818 28,750 22 Other assets 11,804 15,656 16,432' 19,211 18,029 19,369 20,879 20,835 21,979' 24,034 United Kingdom 23 Total, all currencies 140,917 158,695 156,835 155,532 153,968 161,882 158,860 157,673 164,155 166,003 24 Claims on United States 24,599 32,518 40,089 39,599 38,014 42,147 41,914 40,085 42,424' 44,662 25 Parent bank 19,085 27,350 34,243 35,642 33,763 37,713 38,031 36,046 38,938 40,743 26 Other banks in United States 1,612 1,259 1,123 1,243 1,125 1,121 1,112 1,265 1,200 1,303 27 Nonbanks 3,902 3,909 4,723 2,714 3,126 3,313 2,771 2,774 2,286' 2,616 28 Claims on foreigners 109,508 115,700 106,388 104,504 103,773 106,586 102,231 102,097 106,430 105,612 29 Other branches of parent bank 33,422 39,903 35,625 35,537 34,948 35,440 32,392 32,611 35,252 35,071 30 Banks 39,468 36,735 36,765 37,412 37,357 36,519 36,073 37,146 38,048 36,468 31 Public borrowers 4,990 4,752 4,019 3,627 3,599 3,788 3,586 3,265 3,346 3,172 32 Nonbank foreigners 31,628 34,310 29,979 27,928 27,869 30,839 30,180 29,075 29,784 30,901 33 Other assets 6,810 10,477 10,358 11,429 12,181 13,149 14,715 15,491 15,301' 15,729 34 Total payable in U.S. dollars 95,028 100,574 103,503 101,612 99,028 103,512 104,036 99,238 106,869 106,727 35 Claims on United States 23,193 30,439 38,012 36,675 34,990 38,506 39,135 37,108 39,715' 41,506 36 Parent bank 18,526 26,304 33,252 34,119 32,059 36,041 36,375 34,537 37,404 39,199 37 Other banks in United States 1,475 1,044 964 862 844 821 1,007 1,017 951 966 38 Nonbanks 3,192 3,091 3,796 1,694 2,087 1,644 1,753 1,554 1,360' 1,341 39 Claims on foreigners 68,138 64,560 60,472 58,395 58,746 59,137 57,706 55,340 59,389 57,029 40 Other branches of parent bank 26,361 28,635 28,474 26,036 26,541 27,955 25,368 25,542 28,084 26,969 41 Banks 23,251 19,188 18,494 18,458 18,745 17,080 18,298 17,612 18,275 16,963 42 Public borrowers 3,677 3,313 2,840 2,737 2,606 2,702 2,679 2,521 2,553 2,404 43 Nonbank foreigners 14,849 13,424 10,664 11,164 10,854 11,400 11,361 9,665 10,477 10,693 44 Other assets 3,697 5,575 5,019 6,542 5,292 5,869 7,195 6,790 7,765' 8,192 Bahamas and Caymans 45 Total, all currencies 142,592 160,321 170,639 173,137 171,780 172,789 165,401 164,684 164,836 172,762 46 Claims on United States 78,048 85,318 105,320 111,823 109,800 107,831 106,693 111,043 109,910 115,373 47 Parent bank 54,575 60,048 73,409 73,627 70,735 67,417 69,404 76,426 75,900 79,941 48 Other banks in United States 11,156 14,277 13,145 10,807 12,116 13,712 13,294 12,141 12,059' 13,185 49 Nonbanks 12,317 10,993 18,766 27,389 26,949 26,702 23,995 22,476 21,951' 22,247 50 Claims on foreigners 60,005 70,162 58,393 53,984 54,537 57,135 50,808 45,962 47,214 49,063 51 Other branches of parent bank 17,296 21,277 17,954 21,962 22,324 24,462 16,802 14,688 16,961 17,086 52 Banks 27,476 33,751 28,268 21,184 21,202 21,591 20,688 20,162 19,579 21,641 53 Public borrowers 7,051 7,428 5,830 5,280 5,540 5,405 5,407 5,435 5,289 5,340 54 Nonbank foreigners 8,182 7,706 6,341 5,558 5,471 5,677 7,911 5,677 5,385 4,9% 55 Other assets 4,539 4,841 6,926 7,330 7,443 7,823 7,900 7,679 7,712 8,326 56 Total payable in U.S. dollars 136,813 151,434 163,518 166,869 165,676 167,259 160,821 160,274 159,643 167,182 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 • March 1990 3.14—Continued Liability account 1986 1987 May July Aug. Sept. Oct. All foreign countries 57 Total, all currencies 456,628 518,618 505,595' 521,436 523,674 534,200 522,489 520,845 533,641 549,126 58 Negotiable CDs 31,629 30,929 28,511 29,425 28,116 28,882 29,524 26,679 26,776 26,555 59 To United States 152,465 161,390 185,577 178,852' 179,902' 177,739' 177,542' 183,203' 183,576' 190,472 60 Parent bank 83,394 87,606 114,720 110,579 113,395 110,326 110,917 121,003 123,229' 128,739 61 Other banks in United States 15,646 20,355 14,737 13,564 12,951 13,323 13,269 13,015 11,476 11,179 62 Nonbanks 53,425 53,429 56,120 54,709' 53,556' 54,090' 53,356' 49,185' 48,871' 50,554 63 To foreigners 253,775 304,803 270,923 288,260' 289,559' 301,389' 288,566' 283,435' 294,486' 302,316 64 Other branches of parent bank 95,146 124,601 111,267 121,135 118,950 119,571 113,752' 104,853' 114,180' 116,016 65 Banks 77,809 87,274 72,842 72,897' 74,209' 80,069' 75,589' 77,618' 75,758' 80,668 66 Official institutions 17,835 19,564 15,183 17,795 17,559 18,846 17,591 17,349 19,361 18,937 67 Nonbank foreigners 62,985 73,364 71,631 76,433' 78,841' 82,903' 81,634' 83,615' 85,187' 86,695 68 Other liabilities 18,759 21,496 20,584' 24,899 26,097 26,190 26,857 27,528 28,803 29,783 69 Total payable in U.S. dollars 336,406 361,438 367,483 376,474 378,331 381,879 379,771 371,301 384,495' 393,001 70 Negotiable CDs 28,466 26,768 24,045 25,411 24,129 24,914 25,483 22,927 22,260 22,539 71 To United States 144,483 148,442 173,190 166,165' 167,261' 163,804' 166,041' 170,512' 171,458' 179,313 72 Parent bank 79,305 81,783 107,150 102,643 105,074 100,726 103,3% 112,255 115,314' 121,914 73 Other banks in United States . 14,609 18,951 13,468 11,944 11,537 11,845 11,964 11,837 10,273 9,881 74 Nonbanks 50,569 47,708 52,572 51,578' 50,65c 51,233' 50,681' 46,42C 45,871' 47,518 75 To foreigners 156,806 177,711 160,766 173,197' 175,349' 180,972' 175,27C 165,321' 177,703' 177,413 76 Other branches of parent bank 71,181 90,469 84,021 90,123 90,850 91,713 87,123' 77,987' 85,781' 83,520 77 Banks 33,850 35,065 28,493 29,561' 29,682' 31,215' 31,939' 30,232' 31,986' 32,775 78 Official institutions 12,371 12,409 8,224 9,255 9,852 11,176 10,680 10,195 11,445 11,712 79 Nonbank foreigners 39,404 39,768 40,028 44,258' 44,965' 46,868' 45,528' 46,907' 48,491' 49,406 80 Other liabilities 6,651 8,517 9,482 11,701 11,592 12,189 12,977 12,541 13,074 13,736 United Kingdom 81 Total, all currencies 140,917 158,695 156,835 155,532 153,968 161,882 158,860 157,673 164,155 166,003 82 Negotiable CDs 27,781 26,988 24,528 25,539 24,396 25,342 25,905 23,122 23,152 22,837 83 To United States 24,657 23,470 36,784 30,867 30,013 29,954 31,551 31,076 34,181 33,192 84 Parent bank 14,469 13,223 27,849 20,329 22,037 19,885 21,841 24,013 25,061 25,138 85 Other banks in United States 2,649 1,536 2,037 1,720 1,648 1,852 1,767 1,687 2,002 1,464 86 Nonbanks 7,539 8,711 6,898 8,818 6,328 8,217 7,943 5,376 7,118 6,590 87 To foreigners 79,498 98,689 86,026 88,985 88,381 94,335 88,661 91,101 93,700 96,711 88 Other branches of parent bank 25,036 33,078 26,812 26,867 24,974 26,556 24,326 24,769 26,936 26,660 89 Banks 30,877 34,290 30,609 30,925 31,066 33,047 30,790 31,330 30,688 33,179 90 Official institutions 6,836 11,015 7,873 8,946 8,650 9,586 8,868 8,878 10,132 9,723 91 Nonbank foreigners 16,749 20,306 20,732 22,247 23,691 25,146 24,677 26,124 25,944 27,149 92 Other liabilities 8,981 9,548 9,497 10,141 11,178 12,251 12,743 12,374 13,122 13,263 93 Total payable in U.S. dollars 99,707 102,550 105,907 104,356 101,742 105,700 106,915 102,361 110,358 109,169 94 Negotiable CDs 26,169 24,926 22,063 23,568 22,324 23,132 23,679 21,156 20,433 20,715 95 To United States 22,075 17,752 32,588 26,554 25,401 24,618 27,232 26,592 30,433 29,284 96 Parent bank 14,021 12,026 26,404 18,545 19,556 16,909 19,580 21,588 23,247 23,350 97 Other banks in United States . 2,325 1,308 1,752 1,368 1,393 1,477 1,502 1,511 1,835 1,232 98 Nonbanks 5,729 4,418 4,432 6,641 4,452 6,232 6,150 3,493 5,351 4,702 99 To foreigners 48,138 55,919 47,083 49,006 48,491 52,179 49,913 48,557 52,902 52,321 100 Other branches of parent bank 17,951 22,334 18,561 18,030 16,467 18,388 17,060 16,673 18,926 16,925 101 Banks 15,203 15,580 13,407 13,930 13,545 14,173 13,578 12,331 13,177 13,687 102 Official institutions 4,934 7,530 4,348 4,796 5,579 6,131 5,825 5,532 6,605 6,754 103 Nonbank foreigners 10,050 10,475 10,767 12,250 12,900 13,487 13,450 14,021 14,194 14,955 104 Other liabilities 3,325 3,953 4,173 5,228 5,526 5,771 6,091 6,056 6,590 6,849 Bahamas and Caymans 105 Total, all currencies 142,592 160,321 170,639 173,137 171,780 172,789 165,401 164,684 164,836 172,762 106 Negotiable CDs 847 885 953 872 696 717 691 669 669 671 107 To United States 106,081 113,950 122,332 120,206' 117,781' 116,294' 113,179' 117,611' 114,701' 121,253 108 Parent bank 49,481 53,239 62,894 64,908 61,642 61,263 58,765 64,859 66,292 70,339 109 Other banks in United States 11,715 17,224 11,494 10,398 10,034 10,197 10,076 10,026 8,088 8,438 110 Nonbanks 44,885 43,487 47,944 44,900' 46,105' 44,834' 44,338' 42,726' 40,321' 42,476 111 To foreigners 34,400 43,815 45,161 48,958' 50,433' 52,848' 48,712' 43,818' 46,906' 47,289 112 Other branches of parent ban 12,631 19,185 23,686 26,478 27,763 29,085 25,770' 20,678' 23,086' 23,880 113 Banks 8,617 10,769 8,336 8,227' 8,318' 8,308' 8,613' 8,802' 8,985' 8,442 114 Official institutions 2,719 1,504 1,074 1,164 1,102 1,223 1,081 928 1,003 1,131 115 Nonbank foreigners 10,433 12,357 12,065 13,089' 13,25(y 14,232' 13,248' 13,410' 13,832' 13,836 116 Other liabilities 1,264 1,671 2,193 3,101 2,870 2,930 2,819 2,586 2,560 3,549 117 Total payable in U.S. dollars .. 138,774 152,927 162,950 166,954 165,593 166,988 160,800 160,133 160,028 167,835 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 1989 IItteemm 11998877 11998888 May June July Aug. Sept. Oct. Nov." 1 Total1 259,556 299,782r 306,569' 302,299' 307,516' 317,591' 314,782' 315,118' 315,085 By type 2 Liabilities reported by banks in the United States 31,838 31,5^ 38,185' 37,490' 39,216' 38,171' 36,393' 42,148' 39,203 3 U.S. Treasury bills and certificates3 88,829 103,722 9911,,779988 87,190 87,734 88,325 86,350 81,465 82,474 U.S. Treasury bonds and notes 4 Marketable 122,432 149,056 160,013 160,462 163,281 173,238 174,037 173,047 174,733 5 Nonmarketable4 300 523 542 545 549 553 557 561 564 6 U.S. securities other than U.S. Treasury securities 16,157 14,962 16,031 16,612' 16,736' 17,304' 17,445' 17,897' 18,111 By area 7 Western Europe 124,620 125,097 126,264' 122,670' 126,533' 134,232 133,694' 133,922' 137,382 8 Canada 4,961 9,584 9,938 9,604 9,424 9,560 8,989 8,609 9,066 9 Latin America and Caribbean 8,328 10,099 6,091 5,925 7,166 7,986 9,511 10,074 10,221 10 Asia 116,098 145,608r 156,180' 155,454' 155,786' 157,197' 154,315' 154,084' 149,503 11 Africa 1,402 1,369 1,182 1,271 949 810 867 910 1,019 12 Other countries 4,147 7,501 6,371 6,830 7,113 7,257 6,849 6,959 7,329 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 Dec. Mar.' June' Sept. 1 Banks' own liabilities 15,368 29,702 55,438 74,980' 76,545 69,067 72,560 2 Banks' own claims 16,294 26,180 51,271 68,983 72,904 62,758 70,715' 3 Deposits 8,437 14,129 18,861 25,100 25,938 23,845 23,983 4 Other claims 7,857 12,052 32,410 43,884 46,966 38,913 46,731' 5 Claims of banks' domestic customers 580 2,507 551 364 376 723 2,558 1. Data on claims exclude foreign currencies held by U.S. monetary author- 2. Assets owned by customers of the reporting bank located in the United ities. States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • March 1990 3.17 LIABILITIES TO FOREIGNERS Reported by Banks in the United States1 Payable in U.S. dollars Millions of dollars, end of period 1989 Holder and type of liability 11998866 11998877 11998888 May June' July Aug. Sept.' Oct.' Nov." 1 All foreigners 540,996 618,874 685,339' 678,480' 673,402 665,330' 679,994' 694,304 701,035 723,141 2 Banks' own liabilities 406,485 470,070 514,532' 512,755' 511,877 503,147' 516,883' 530,517 540,383 560,752 3 Demand deposits 23,789 22,383 21,863 21,930' 21,223 21,363' 19,718 21,550 21,089 21,657 4 Time deposits 130,891 148,374 152,164' 154,169' 153,783 149,753' 155,494' 157,273 162,100 165,184 5 Other. 42,705 51,677 51,366' 59,073' 60,916 64,303' 63,732' 56,157 65,437 65,914 6 Own foreign offices 209,100 247,635 289,138' 277,583' 275,955 267,728' 277,939' 295,536 291,757 307,997 7 Banks' custody liabilities5 134,511 148,804 170,807' 165,725 161,524 162,184 163,111 163,787 160,652 162,389 8 U.S. Treasury bills and certificates6 90,398 101,743 115,056 102,734 98,893 99,365 99,683 99,209 95,278 96,355 9 Other negotiable and readily transferable instruments 15,417 16,776 16,426 18,541 17,077 16,893 17,260 17,091 16,741 16,116 10 Other 28,696 30,285 39,325' 44,451 45,555 45,925 46,168 47,487 48,633 49,918 11 Nonmonetary international and regional organizations8 5,807 4,464 3,224 3,415 3,817 4,240 4,418 4,945 6,316 6,337 12 Banks' own liabilities 3,958 2,702 2,527 2,980 2,895 2,716 3,402 3,347 4,280 5,019 13 Demand deposits 199 124 71 76 32 41 66 89 53 62 14 Time deposits 2,065 1,538 1,183 1,202 1,454 918 1,079 1,702 1,615 1,446 15 Other 1,693 1,040 1,272 1,702 1,409 1,756 2,257 1,555 2,613 3,512 1 1 6 7 Ba U nk .S s . ' T cu r s e t a o s d u y ry l i b a i b ll i s li t a ie n s d 5 certificates6 1,8 2 4 5 9 9 1,7 2 6 6 1 5 69 5 8 7 43 9 5 5 9 1 2 8 2 1 1,5 34 2 5 4 1,0 1 1 0 6 7 1,59 8 8 4 2,0 5 3 6 6 8 1,3 32 1 1 8 18 Other negotiable and readily transferable instruments 1,590 1,497 641 305 731 1,179 909 1,479 1,454 996 19 Other 0 0 0 35 10 0 1 35 14 0 20 Official institutions9 103,569 120,667 135,241' 129,983' 124,680 126,951' 126,496' 122,743 123,613 121,676 21 Banks' own liabilities 25,427 28,703 27,109' 31,886' 32,167 34,132' 33,238' 31,615 37,111 34,272 22 Demand deposits 2,267 1,757 1,917' 1,761 1,801 1,959' 1,625 2,026 2,057 2,118 23 Time deposits 10,497 12,843 9,767' 11,180' 10,033 10,072' 8,837 8,994 11,877 11,200 24 Other 12,663 14,103 15,425' 18,945' 20,332 22,101' 22,776' 20,595 23,177 20,954 2 2 5 6 Ba U nk .S s . ' T cu r s e t a o s d u y ry l i b a i b ll i s li t a ie n s d 5 certificates6 7 75 8 , , 6 1 5 4 0 2 9 8 1 8 , , 9 8 6 2 5 9 1 1 0 0 8 3 , , 1 7 3 2 2 2 9 9 8 1 , , 0 7 9 9 7 8 9 8 2 7 , , 5 1 1 9 3 0 9 8 2 7 , , 8 7 1 3 8 4 9 8 3 8 , , 2 32 5 5 8 9 8 1 6 , , 1 3 2 5 7 0 8 81 6 , , 4 5 6 0 5 2 8 8 7 2 , , 4 4 0 7 4 4 27 Other negotiable and readily transferable instruments 2,347 2,990 4,130 6,114 5,080 4,821 4,735 4,588 4,734 4,805 28 Other 145 146 280 185 244 263 198 189 303 125 29 Banks10 351,745 414,280 459,523' 455,183' 452,396 443,172' 457,463' 476,027 477,952 501,912 30 Banks' own liabilities 310,166 371,665 409,501' 400,564' 3%,662 387,306' 400,975' 415,761 416,766 439,580 31 Unaffiliated foreign banks 101,066 124,030 120,362' 122,981' 120,707 119,578' 123,036' 120,225 125,009 131,582 32 Demand deposits 10,303 10,898 9,948' 11,172' 9,677 10,145 9,101 10,695 9,884 10,756 33 Time deposits 64,232 79,717 80,189' 78,517' 77,874 75,166' 80,603' 80,789 83,327 86,690 34 Other . 26,531 33,415 30,226' 33,293' 33,156 34,267' 33,333' 28,741 31,798 34,136 35 Own foreign offices 209,100 247,635 289,138' 277,583' 275,955 267,728' 277,939' 295,536 291,757 307,997 3 3 6 7 Ba U nk .S s . ' T cu r s e t a o s d u y ry l i b ab ill il s i t a ie n s d 5 certificates6 4 9 1, , 5 9 7 8 9 4 42 9 , , 6 1 1 3 5 4 5 7 0 , , 6 0 0 22 2 ' 54 7 , , 6 1 1 1 9 4 5 7 5 , , 7 7 5 3 9 4 55 7 , , 8 6 6 7 5 4 5 7 6 , ,4 8 8 3 8 8 60 9 , , 2 0 6 3 5 2 6 9 1 , , 2 1 5 8 1 6 6 9 2 , , 4 3 9 3 9 2 38 Other negotiable and readily transferable instruments7 5,165 5,392 5,725 5,686 5,314 5,326 5,284 5,095 4,770 4,446 39 Other 26,431 28,089 36,694' 41,819 42,662 42,866 43,365 46,138 47,165 48,388 40 Other foreigners 79,875 79,463 87,351' 89,898' 92,509 90,968' 91,617' 90,590 93,154 93,215 41 Banks' own liabilities 66,934 67,000 75,396' 77,324' 80,153 78,992' 79,268' 79,793 82,226 81,881 42 Demand deposits 11,019 9,604 9,928 8,921 9,714 9,218 8,926 8,739 9,095 8,721 43 Time deposits 54,097 54,277 61,025 63,270' 64,422 63,596' 64,975' 65,787 65,281 65,848 44 Other 1,818 3,119 4,443' 5,133' 6,018 6,179' 5,367' 5,267 7,849 7,312 4 4 5 6 Ba U nk .S s . ' T cu r s e t a o s d u y ry l i b a i b ll i s li t a ie n s d 5 certificates6 1 4 2 , , 5 9 0 4 6 1 1 3 2 , , 5 4 1 6 5 3 1 3 1 , , 6 9 7 5 5 6 1 3 2 , , 7 5 2 7 5 4 1 3 2 , , 7 3 6 5 3 5 1 3 1 , , 6 9 1 7 2 6 1 3 2 , , 4 3 1 4 3 9 1 3 0 , , 7 7 4 9 3 6 1 3 0 , , 9 9 9 2 3 8 1 4 1 , , 0 3 6 3 1 4 47 Other negotiable and readily transferable instruments 6,315 6,898 5,929 6,436 5,952 5,566 6,332 5,929 5,783 5,869 48 Other 2,120 2,050 2,351 2,412 2,639 2,797 2,604 1,125 1,152 1,405 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 7,496 7,314 6,425 5,625 5,337 5,261 5,199 5,237 5,160 4,799 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 1989 AArreeaa aanndd ccoouunnttrryy 11998866 11998877 11998888 May June July Aug. Sept. Oct.' Nov." 1 Total 540,996 618,874 685,339r 678,480' 673,402' 665,33C 679,994' 694,304' 701,035 723,141 2 Foreign countries 535,189 614,411 682,115'' 675,064' 669,585' 661,091' 675,576' 689,359' 694,719 716,804 3 Europe 180,556 234,641 231,912'' 223,353' 222,164' 222,146' 226,366' 222,040' 232,219 240,938 4 Austria 1,181 920 1,155 1,405 1,508' 1,417 1,404 1,345 1,193 1,489 5 Belgium-Luxembourg 6,729 9,347 10,022 8,826' 8,631' 8,949 9,286 10,158' 10,841 10,306 6 Denmark 482 760 2,200r 1,642 1,179 1,348 1,956 1,265 1,280 1,794 7 Finland 580 377 285' 433' 451' 436' 460 519' 464 577 8 France 22,862 29,835 24,777' 24,203' 23,868' 22,290 24,864 23,031' 23,868 25,920 9 Germany 5,762 7,022 6,772 7,801' 9,363' 8,875' 7,651 8,345 8,700 9,017 10 Greece 700 689 672 1,172 889 862 828 797 847 1,024 11 Italy 10,875 12,073 14,599 12,532' 13,965' 12,892 14,597 14,542' 14,220 14,643 12 Netherlands 5,600 5,014 5,316 5,870 4,875 5,029 5,106 4,989' 5,415 7,039 13 Norway 735 1,362 1,559 1,479 1,485 1,522 1,453 1,698 1,342 1,952 14 Portugal 699 801 903 996' 1,100' 1,419 1,945 2,206 2,291 2,248 15 Spain 2,407 2,621 5,494 5,424' 5,09C 5,910 5,390 5,277 4,986 4,888 16 Sweden 884 1,379 1,284' 1,552 1,478 1,248 2,002 1,680' 1,663 1,920 17 Switzerland 30,534 33,766 34,199' 28,453' 28,811' 28,581 28,931 29,001' 29,552 31,492 18 Turkey 454 703 1,012 785 737 1,053 1,022 1,085' 1,199 1,397 19 United Kingdom 85,334 116,852 111,811' 107,742' 103,173' 105,310' 104,055' 102,210' 106,749 108,432 20 Yugoslavia 630 710 529 520' 558 604 691 774 858 1,016 21 Other Western Europe1 3,326 9,798 8,598 11,889' 14,342' 13,667' 13,824 12,312' 15,820 14,733 22 U.S.S.R 80 32 138 193 164 175 201 244 338 286 23 Other Eastern Europe 702 582 591 435 499 559 699 562 593 764 24 Canada 26,345 30,095 21,062' 18,353 17,514 17,472 16,958 17,960 16,670 18,161 25 Latin America and Caribbean 210,318 220,372 271,146' 275,60c 271,445' 266,403' 275,557' 284,9%' 282,999 293,407 26 Argentina 4,757 5,006 7,804 6,459 6,320 7,397 8,047 8,446 8,068 7,693 27 Bahamas 73,619 74,767 86,863 90,95c 82,312' 84,526 90,317 90,622 93,119 96,273 28 Bermuda 2,922 2,344 2,621 2,451 2,321' 2,269 2,209 2,124 2,458 2,549 29 Brazil 4,325 4,005 5,314' 5,307' 5,004' 5,396 5,539 5,892 6,079 6,433 30 British West Indies 72,263 81,494 113,840' 116,491' 121,385' 113,243' 115,87C 122,677' 117,395 124,799 31 Chile 2,054 2,210 2,936 2,988 2,690' 2,683 2,739 2,765 3,013 3,116 32 Colombia 4,285 4,204 4,374 4,033 4,127 4,235 4,365 4,199 4,887 4,680 33 Cuba 7 12 10 15 10 9 10 14 10 15 34 Ecuador 1,236 1,082 1,379 1,285 1,351 1,411 1,376 1,363 1,342 1,324 35 Guatemala 1,123 1,082 1,195 1,232 1,251 1,297 1,279 1,293 1,276 1,289 36 Jamaica 136 160 269 188 294 227 231 233 206 189 37 Mexico 13,745 14,480 15,185 14,060 14,27C 13,705' 13,769 14,981 14,641 13,851 38 Netherlands Antilles 4,970 4,975 6,420 6,072 6,316 6,434 6,071 6,062' 5,950 6,243 39 Panama 6,886 7,414 4,353 4,453' 4,278 4,357 4,400 4,424 4,393 4,355 40 Peru 1,163 1,275 1,671 1,724 1,761 1,770 1,778 1,828 1,901 1,922 41 Uruguay 1,537 1,582 1,898 2,344 2,429 2,152 2,121 2,340 2,214 2,314 42 Venezuela 10,171 9,048 9,147 9,417' 9,423' 9,500 9,398 9,520 9,550 9,799 43 Other 5,119 5,234 5,868 6,130' 5,903 5,790 6,039 6,213 6,495 6,563 44 108,831 121,288 147,838' 114477,,339933'' 114488,,444499'' 114444,,110066'' 114455,,991177'' 115533,,556644'' 115500,,774488 115500,,442255 China 45 Mainland 1,476 1,162 1,895' 1,652 1,432 1,522 1,700 1,804 1,985 1,635 46 Taiwan 18,902 21,503 26,058 26,931' 27,025 27,128' 25,427 24,119 22,402 21,359 47 Hong Kong 9,393 10,180 12,248' 12,215 12,134' 11,346 12,268 12,292 12,124 11,895 48 India 674 582 699 1,009 812 871 940 875 836 989 49 Indonesia 1,547 1,404 1,180 1,306 1,232 1,0% 1,042 1,042 1,144 1,300 50 Israel 1,892 1,292 1,461 1,103 1,088 1,058 953 1,041 2,221 1,081 51 Japan 47,410 54,322 74,015' 70,505' 71,198' 68.70C 71,028' 78,824 73,361 74,657 52 Korea 1,141 1,637 2,541 3,166 3,047 3,556 2,907 3,037 3,099 3,359 53 Philippines 1,866 1,085 1,163 991 984 936 1,083 1,055 1,148 1,242 54 Thailand 1,119 1,345 1,236 1,162 1,274 1,254 1,776 1,430 1,686 1,887 55 Middle-East oil-exporting countries 12,352 13,988 12,083 13,505 13,612 12,368 12,524 13,021' 13,450 13,574 56 Other 11,058 12,788 13,260' 13,851 14,612' 14,271 14,270 15,024' 17,293 17,448 57 Africa 4,021 3,945 3,991 3,802 3,904 3,618 3,265 3,536 3,486 3,747 58 Egypt 706 1,151 911 702 748 738 549 574 577 633 59 Morocco 92 194 68 68 67 66 72 % 71 75 60 South Africa 270 202 437 324 188 231 201 246 220 291 61 Zaire 74 67 85 92 98 92 87 81 71 60 62 Oil-exporting countries 1,519 1,014 1,017 879 1,100 942 897 1,036 1,046 1,143 63 Other 1,360 1,316 1,474 1,737 1,702 1,548 1,459 1,502 1,501 1,546 64 Other countries 5,118 4,070 6,165 6,563 6,108 7,346 7,513 7,262' 8,597 10,126 65 Australia 4,196 3,327 5,293 5,700 5,192 6,620 6,721 6,518' 8,046 9,433 66 All other 922 744 872 863 916 726 792 744 551 692 67 Nonmonetary international and regional organizations 5,807 4,464 3,224 3,415 3,817' 4,240 4,418 4,945 6,316 6,337 68 International 4,620 2,830 2,503 2,456 3,030' 2,881 3,084 3,390 4,998 5,201 69 Latin American regional 1,033 1,272 589 564 613 %1 690 1,201 919 586 70 Other regional6 154 362 133 395 175 397 644 353 400 551 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 • March 1990 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 1989 AArreeaa aanndd ccoouunnttrryy 11998866 11998877 11998888 May June' July' Aug.' Sept.' Oct.' Nov." 1 Total 444,745 459,877 491,165' 491,219' 491,103 481,051 488,861 499,388 514,552 534,211 2 Foreign countries 441,724 456,472 489,094r 487,437' 487,626 477,264 485,737 4%,466 511,850 531,537 3 Europe 107,823 102,348 116,928' 112,957' 112,201 106,459 107,359 111,180 113,432 111,948 4 Austria 728 793 483' 764 809 854 549 480 580 569 5 Belgium-Luxembourg 7,498 9,397 8,515r 8,441' 7,781 7,558 7,510 7,404 7,510 6,605 6 Denmark 688 717 483' 476' 774 562 768 557 513 609 7 Finland 987 1,010 1,065 1,280 1,175 1,395 1,401 1,233 1,707 1,179 8 France 11,356 13,548 13,243 16,108' 15,575 16,008 16,415 16,249 16,391 15,972 9 Germany 1,816 2,039 2,329' 3,965' 3,695 3,461 3,316 3,463 3,371 2,657 10 Greece 648 462 433 595 632 602 624 634 650 700 11 Italy 9,043 7,460 7,936 5,639' 6,813 5,994 5,494 6,043 5,577 5,717 12 Netherlands 3,296 2,619 2,541' 3,197' 2,032 1,957 1,454 1,994 1,899 2,259 13 Norway 672 934 455 567 667 796 665 644 647 635 14 Portugal 739 477 261' 291' 328 283 264 252 258 275 15 Spain 1,492 1,853 1,823 2,209 2,190 2,092 1,738 1,684 1,733 1,836 16 Sweden 1,964 2,254 1,977 2,158 1,946 2,003 2,046 2,286 2,087 2,555 17 Switzerland 3,352 2,718 3,895 3,975 5,485 4,123 4,479 5,018 4,522 4,940 18 Turkey , 1,543 1,680 1,233 910 886 891 960 1,028 1,021 1,044 19 United Kingdom 58,335 50,823 65,706' 58,077' 56,844 53,464 54,809 57,187 59,840 59,906 20 Yugoslavia 1,835 1,700 1,390 1,366 1,359 1,406 1,346 1,338 1,373 1,281 71 619 1,152 966 1 161 974 1 247 1 504 22 U.S.S.R 345 389 1,255 1,155 1,212 1,227 U456 1,574 1,453 11,,008800 23 Other Eastern Europe 948 852 754 8^ 838 810 819 799 794 888844 24 Canada 21,006 25,368 18,889 16,075' 16,236 14,493 15,073 14,763 13,800 16,176 25 Latin America and Caribbean 208,825 214,789 214,264' 218,320' 219,855 217,371 216,073 219,948 219,974 231,742 26 Argentina 12,091 11,996 11,826 11,381 10,840 10,705 10,730 10,460 10,442 10,273 27 Bahamas 59,342 64,587 66,954' 70,552 66,611 70,488 68,113 70,906 71,422 78,609 28 Bermuda 418 471 483 449 391 463 522 1,104 804 847 29 Brazil 25,716 25,897 25,735 25,785 25,675 25,824 25,597 24,999 25,075 24,432 30 British West Indies 46,284 50,042 55,888' 58,326' 65,359 59,670 61,493 63,543 62,802 68,239 31 Chile 6,558 6,308 5,217 5,266 4,863 4,793 4,803 4,707 4,601 4,496 32 Colombia 2,821 2,740 2,944 22,,660000 22,,558833 2,525 22,,550044 22,,447777 22,,880000 22,,778844 33 Cuba 0 1 1 11 11 9 11 11 11 11 34 Ecuador 2,439 2,286 2,075 1,944 1,895 1,933 1,918 1,905 1,864 1,858 3 3 5 6 J G a u m a a te ic m a a 4 la4 1 1 9 4 8 0 1 18 4 8 4 2 1 1 9 2 8 2 2 6 0 5 7 2 2 0 8 1 6 2 1 7 8 0 9 2 20 7 3 2 2 1 8 9 2 6 2 1 7 88 0 2 1 6 9 0 0 37 Mexico 30,698 29,532 24,637 24,052' 23,703 23,369 23,169 22,813 22,751 23,281 38 Netherlands Antilles 1,041 980 1,306' 978' 1,179 1,159 1,022 1,103 1,133 1,022 39 Panama 5,436 4,744 2,521' 2,453' 2,423 2,320 2,030 1,834 1,837 1,792 40 Peru 1,661 1,329 1,013 938 874 867 870 823 851 849 41 Uruguay 940 963 910 832 896 854 866 899 903 902 42 Venezuela 11,108 10,843 10,733 10,600 10,569 10,269 10,024 10,064 10,269 10,119 43 Other Latin America and Caribbean 1,936 1,738 1,612' 1,691' 1,503 1,665 1,936 1,833 1,960 1,787 44 96,126 106,096 113300,,888811'' 113311,,663344'' 113300,,559900 113300,,336699 113377,,668877 114400,,770044 115533,,775533 115588,,991122 China Mainland 787 968 762 952 920 644 575 615 594 610 46 Taiwan 2,681 4,592 4,184 3,718' 4,058 3,949 3,356 3,331 2,831 2,677 47 Hong Kong 8,307 8,218 10,143' 8,855 8,557 8,153 8,800 10,358 10,052 10,441 48 India 321 510 560 411 537 477 547 638 617 637 49 Indonesia 723 580 674 690 671 645 614 615 685 655 50 Israel 1,634 1,363 1,136 1,047' 1,021 964 911 859 1,185 758 51 Japan 59,674 68,658 90,149' 93,504' 91,103 91,806 96,118 97,699 110,444 114,658 52 Korea 7,182 5,148 5,213' 5,332' 5,608 5,774 6,007 5,686 5,713 5,846 53 Philippines 2,217 2,071 1,876 1,810 1,763 1,607 1,543 1,617 1,549 1,478 54 Thailand 578 496 848' 974' 1,056 1,060 1,117 1,203 1,058 1,076 55 Middle East oil-exporting countries 4,122 4,858 6,213 5,522 6,550 5,550 8,879 8,581 8,357 8,750 56 Other Asia 7,901 8,635 9,122 8,818 8,745 9,741 9,221 9,502 10,669 11,324 57 Africa 4,650 4,742 5,718 6,083' 6,075 6,066 6,032 6,028 5,763 6,009 58 Egypt 567 521 507 541 534 577 494 501 475 471 59 Morocco 598 542 511 538 531 518 535 524 538 547 60 South Africa 1,550 1,507 1,681 1,753 1,746 1,702 1,713 1,709 1,679 1,686 61 Zaire 28 15 17 19 17 17 16 20 15 16 62 Oil-exporting countries 694 1,003 1,523 1,504 1,503 1,587 1,608 1,629 1,546 1,641 63 Other 1,213 1,153 1,479 1,728' 1,744 1,664 1,666 1,645 1,510 1,648 64 Other countries 3,294 3,129 2,413' 2,368' 2,670 2,505 3,512 3,843 5,129 6,750 65 Australia 1,949 2,100 1,520' 1,170' 1,307 1,518 2,499 3,078 4,301 6,174 66 All other 1,345 1,029 894 1,198' 1,363 987 1,013 765 828 576 67 Nonmonetary international and regional organizations 3,021 3,404 2,071 3,782 3,477 3,787 3,124 2,922 2,701 2,675 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 1989 TTyyppee ooff ccllaaiimm 11998866 11998877 11998888'' Mayr June' Julyr Aug/ Sept/ Oct/ Nov.p 1 Total 444444477777778888888,,,,,,,666666655555550000000 444444499999997777777,,,,,,,666666633333335555555 555555533333338888888,,,,,,,666666688888889999999 555555544444440000000,,,,,,,666666633333334444444 555555555555551111111,,,,,,,555555544444443333333 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444444444444444444,,,,,,,777777744444445555555 444444455555559999999,,,,,,,888888877777777777777 444444499999991111111,,,,,,,111111166666665555555 491,219 444444499999991111111,,,,,,,111111100000003333333 481,051 488,861 444444499999999999999,,,,,,,333333388888888888888 514,552 534,211 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666664444444,,,,,,,000000099999995555555 66666664444444,,,,,,,666666600000005555555 66666662222222,,,,,,,666666655555558888888 64,276 66666663333333,,,,,,,111111166666664444444 62,832 62,765 66666662222222,,,,,,,000000055555551111111 63,384 61,742 44 OOwwnn ffoorreeiiggnn ooffffiicceess 222222211111111111111,,,,,,,555555533333333333333 222222222222224444444,,,,,,,777777722222227777777 222222255555557777777,,,,,,,444444433333336666666 257,514 222222255555558888888,,,,,,,555555544444448888888 248,987 252,281 222222266666665555555,,,,,,,777777788888886666666 276,422 296,552 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222222222222,,,,,,,999999944444446666666 111111122222227777777,,,,,,,666666600000009999999 111111122222229999999,,,,,,,444444422222225555555 130,269 111111122222228888888,,,,,,,222222299999995555555 128,919 132,478 111111133333331111111,,,,,,,111111122222224444444 131,228 133,827 66 DDeeppoossiittss 55555557777777,,,,,,,444444488888884444444 66666660000000,,,,,,,666666688888887777777 66666665555555,,,,,,,888888899999998888888 67,331 66666668888888,,,,,,,111111177777777777777 68,888 72,576 77777772222222,,,,,,,666666655555554444444 72,229 75,599 77 OOtthheerr 66666665555555,,,,,,,444444466666662222222 66666666666666,,,,,,,999999922222222222222 66666663333333,,,,,,,555555522222227777777 62,937 66666660000000,,,,,,,111111111111119999999 60,031 59,903 55555558888888,,,,,,,444444477777770000000 59,000 58,228 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444446666666,,,,,,,111111177777771111111 44444442222222,,,,,,,999999933333336666666 44444441111111,,,,,,,666666644444446666666 39,160 44444441111111,,,,,,,000000099999995555555 40,313 41,336 44444440000000,,,,,,,444444422222228888888 43,517 42,090 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 33333333333333,,,,,,,999999900000005555555 33333337777777,,,,,,,777777755555558888888 44444447777777,,,,,,,555555522222224444444 44444449999999,,,,,,,555555533333331111111 55555552222222,,,,,,,111111155555554444444 4444444,,,,,,,444444411111113333333 3333333,,,,,,,666666699999992222222 8888888,,,,,,,222222288888889999999 11111111111111,,,,,,,111111155555553333333 11111111111111,,,,,,,222222255555559999999 11 Negotiable and readily transferable 22222224444444,,,,,,,000000044444444444444 22222226666666,,,,,,,666666699999996666666 22222225555555,,,,,,,777777700000000000000 22222222222222,,,,,,,000000011111117777777 22222224444444,,,,,,,222222288888886666666 12 Outstanding collections and other 5555555,,,,,,,444444444444448888888 7777777,,,,,,,333333377777770000000 11111113333333,,,,,,,555555533333335555555 11111116666666,,,,,,,333333366666662222222 11111116666666,,,,,,,666666600000009999999 13 MEMO: Customer liability on 22222225555555,,,,,,,777777700000006666666 22222223333333,,,,,,,111111100000007777777 11111119999999,,,,,,,555555599999996666666 11111116666666,,,,,,,888888811111110000000 11111112222222,,,,,,,888888822222228888888 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States .... 43,984 40,909' 45,568 49,639 46,740 48,485 49,575 46,671 43,619 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 Dec/ Mar/ June' Sept. 1 227,903 232,295 235,130 233,184 231,686 231,374 236,519 By borrower 2 Maturity of 1 year or less2 160,824 160,555 163,997 172,634 168,608 167,307 169,300 3 Foreign public borrowers 26,302 24,842 25,889 26,562 24,479 23,759 24,223 4 All other foreigners 134,522 135,714 138,108 146,071 144,129 143,548 145,078 5 Maturity over 1 year 67,078 71,740 71,133 60,550 63,078 64,067 67,219 6 Foreign public borrowers 34,512 39,103 38,625 35,291 37,935 38,108 41,852 7 All other foreigners 32,567 32,637 32,507 25,259 25,142 25,959 25,367 By area Maturity of 1 year or less 8 Europe 56,585 61,784 59,027 55,909 57,741 58,340 52,421 9 Canada 6,401 5,895 5,680 6,282 5,119 5,693 6,206 10 Latin America and Caribbean 63,328 56,271 56,535 57,991 53,268 50,605 52,219 11 Asia ; 27,966 29,457 35,919 46,224 45,727 45,303 51,187 1? Africa 3,753 2,882 2,833 3,337 3,610 3,601 3,510 n All other3 2,791 4,267 4,003 2,891 3,143 3,765 3,757 Maturity of over 1 year 14 Europe 7,634 6,737 6,6% 4,666 4,508 4,664 8,862 15 Canada 1,805 1,925 2,661 1,922 2,309 2,592 2,459 16 Latin America and Caribbean 50,674 56,719 53,817 47,547 49,790 50,107 48,628 17 Asia 4,502 4,043 3,830 3,613 3,699 3,823 4,214 18 Africa 1,538 1,539 1,747 2,301 2,292 2,408 2,472 19 Mother3 926 777 2,381 501 480 472 584 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 • March 1990 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 Sept. Dec. Mar. June Sept. Dec. Mar. June Sept. 1 Total 389.1 386.5 387.9 382.4 371.4 352.2 354.3 346.8 345.9r 339.2r 344.6r 2 G-10 countries and Switzerland 147.0 156.6 154.8 159.7 156.8 151.0 148.9 153.1 145.7 144.7 145.7r 3 Belgium-Luxembourg 9.4 8.4 8.1 10.0 9.1 9.2 9.5 9.0 8.6 7.8 6.9 4 France 12.3 13.6 13.6 13.7 11.8 10.9 10.3 10.5 11.2 10.8 11.1 5 Germany 10.5 11.6 10.5 12.6 11.8 10.6 9.2 10.3 10.2 10.6 10.4 6 Italy 9.7 9.0 6.8 7.5 7.4 6.3 5.6 6.8 5.2 6.1 6.8 7 Netherlands 3.8 4.6 4.8 4.1 3.3 3.2 2.9 2.7 2.8 2.8 2.4 8 Sweden 2.8 2.4 2.6 2.1 2.1 1.9 1.9 1.8 2.3 1.8 2.0 9 Switzerland 4.4 5.8 5.4 5.6 5.1 5.6 5.2 5.4 5.1 5.4r 6.1 10 United Kingdom 63.3 70.9 72.0 68.8 71.7 70.4 67.6 66.2 65.3r 64.2' 63.3r 1111 Canada 6.8 5.2 4.6 5.5 4.7 5.3 4.9 5.0 4.0 5.1 5.9 1122 Japan 24.1 25.1 26.4 29.8 29.7 27.6 31.8 35.3 30.9 30.1 30.8 13 Other developed countries 30.3 26.1 26.3 26.4 26.4 24.0 23.0 21.0 21.0 21. Y 20.9r 14 Austria 1.6 1.7 1.8 1.9 1.6 1.6 1.6 1.5 11..44 1.7 11..55'' 15 Denmark 2.4 1.7 1.6 1.7 1.4 1.1 1.2 1.1 11..11 1.4 11..11 16 Finland 1.6 1.4 1.4 1.2 1.0 1.2 1.3 1.1 1.0 1.0 1.1 17 Greece 2.6 2.3 1.9 2.0 2.3 2.1 2.1 1.8 2.1 2.3 2.3 18 Norway 2.9 2.4 2.0 2.2 1.9 1.9 2.0 1.8 1.6 1.8 1.4 19 Portugal 1.3 .9 .9 .6 .5 .4 .4 .4 .4 .6 .4 20 Spain 5.8 5.8 7.4 8.0 8.9 7.2 6.3 6.2 6.6 6.2 66..99 21 Turkey 2.0 2.0 1.9 2.0 2.0 1.8 1.6 1.5 11..33 l.lr 11..11 22 Other Western Europe 2.0 1.5 1.6 1.6 1.9 1.7 1.9 1.3 11..11 1.1 1.0 23 South Africa 3.2 3.0 2.9 2.9 2.8 2.8 2.7 2.4 2.2 2.1 2.1 24 Australia 5.0 3.4 2.9 2.4 2.0 2.2 1.8 1.8 2.4 1.9 2.r 25 OPEC countries3 21.5 19.4 19.2 17.4 17.6 17.0 17.9 16.6 16.2 16.0 16.2 26 Ecuador 2.1 2.2 2.1 1.9 1.9 1.8 1.8 1.7 1.6 1.5 1.5 27 Venezuela 9.0 8.7 8.3 8.1 8.1 8.0 7.9 7.9 7.9 7.5 7.3 28 Indonesia 3.0 2.5 2.0 1.9 1.8 1.8 1.8 1.7 1.7 1.9 2.0 29 Middle East countries 5.4 4.3 5.0 3.6 3.9 3.5 4.6 3.4 3.3 3.4 3.5 30 African countries 2.0 1.8 1.8 1.9 1.9 1.9 1.9 1.9 1.7 1.6 1.9 31 Non-OPEC developing countries 105.0 99.6 98.0 97.8 94.4 91.8 87.2 85.3 85.4 83.1 80.8 Latin America 32 Argentina 8.9 9.5 9.4 9.5 9.6 9.5 9.3 9.0 8.4 7.9 7.6 33 Brazil 25.5 25.3 25.1 24.7 23.8 23.7 22.4 22.4 22.7 22.0 20.8 34 Chile 7.0 7.1 7.1 6.9 6.6 6.4 6.3 5.6 5.7 5.1 4.9 35 Colombia 2.6 2.1 2.0 2.0 2.0 2.2 2.1 2.1 1.9 1.7 1.6 36 Mexico 24.3 24.0 24.7 23.5 22.4 21.1 20.4 18.8 18.0 17.5 17.0 37 1.8 1.4 1.2 1.1 1.1 .9 .8 .8 .7 .6 .6 38 Other Latin America 3.5 3.1 2.8 2.8 2.8 2.6 2.5 2.6 2.7 2.6r 2.9 Asia China 39 Mainland .5 .4 .3 .3 .4 .4 .2 .3 .5 .3 .3 40 Taiwan 4.5 4.9 6.0 8.2 6.1 4.9 3.2 3.7 4.9 5.2 5.0 41 India 1.2 1.2 1.9 1.9 2.1 2.3 2.0 2.1 2.6 22..44 2.7 42 Israel 1.6 1.5 1.3 1.0 1.0 1.0 1.0 1.2 .9 ..88 .7 43 Korea (South) 9.3 6.7 5.0 5.0 5.7 5.9 6.0 6.1 6.1 6.6 6.5 44 Malaysia 2.4 2.1 1.6 1.5 1.5 1.5 1.7 1.6 1.7 1.6 1.7 45 Philippines 5.7 5.4 5.4 5.2 5.1 4.9 4.7 4.5 4.4 4.4 4.0 46 Thailand 1.4 .9 .7 .7 1.0 1.1 1.2 1.1 11..00 11..00 1.3 47 Other Asia 1.0 .7 .7 .7 .7 .8 .8 .9 ..88 ..88 1.0 Africa 4488 Egypt 1.0 .7 .6 .6 .5 .6 .5 .4 .5 .6 ..55 49 Morocco .9 .9 .9 .9 .9 .9 .8 .9 .9 .9 ..88 5 5 0 1 Z O a th ir e e r Africa4 1 . . 1 9 1 . . 1 6 1 . . 1 3 1 . . 0 3 1 . . 1 2 1 . . 1 2 1 . . 0 2 11 .. .. 00 11 11.. .. 11 00 11 .. .. 00 11 1 . . 0 0 52 Eastern Europe 4.4 3.5 3.6 3.2 3.1 3.3 3.1 3.6 3.5 3.4 33..55rr 53 U.S.S.R .1 .1 .4 .3 .3 .4 .4 .7 .7 .6 ..88 54 Yugoslavia 2.4 2.0 1.9 1.8 1.9 1.9 1.8 1.8 11..77 11..77 1.7 55 Other 1.9 1.4 1.2 1.1 1.0 1.0 1.0 1.1 11..11 11..11 i.r 56 Offshore banking centers 64.0 61.5 63.7 54.5 51.5 43.0 47.3 44.2r 48.5r 43.1 48.7r 51 Bahamas 21.5 22.4 25.7 17.3 15.9 8.9 12.9 11.0r 1155..88 11.0 11.2' 58 Bermuda .7 .6 .6 .6 .8 1.0 .9 .9 11..11 .7 1.3 59 Cayman Islands and other British West Indies 12.2 12.3 11.9 13.5 11.6 10.3 11.9 12.9 12.0r 10.8 15.r 60 Netherlands Antilles 2.2 1.8 1.2 1.2 1.3 1.2 1.2 1.0 .9 .9 1.0 bl Panama 6.0 4.0 3.7 3.7 3.2 3.0 22..66rr 2.5r 22..22'' 11..99 11..55 62 Lebanon .1 .1 .1 .1 .1 .1 ..11 .1 ..11 ..11 ..11 63 Hong Kong 11.5 11.1 12.3 11.2 11.3 11.6 10.5 9.6 9.6 10.4 10.7 64 Singapore 9.8 9.2 8.1 7.0 7.4 6.9 7.0 6.1 6.8 7.3 7.8 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 16.9 19.8 22.3 23.2 21.5 22.2 26.7 22.6 25.1 27.4 28.4' 1. The banking offices covered by these data are the U.S. offices and foreign from $50 million to $150 million equivalent in total assets, the threshold now branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks. applicable to all reporting branches. Offices not covered include (1) U.S. agencies and branches of foreign banks, and 3. This group comprises the Organization of Petroleum Exporting Countries (2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are shown individually, other members of OPEC (Algeria, Gabon, Iran, Iraq, Kuwait, adjusted to exclude the claims on foreign branches held by a U.S. office or another Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates), and Bahrain and foreign branch of the same banking institution. The data in this table combine Oman (not formally members of OPEC). foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims 4. Excludes Liberia. of U.S. offices in table 3.18 (excluding those held by agencies and branches of 5. Includes Canal Zone beginning December 1979. foreign banks and those constituting claims on own foreign branches). 6. Foreign branch claims only. 2. Beginning with June 1984 data, reported claims held by foreign branches 7. Includes New Zealand, Liberia, and international and regional organizahave been reduced by an increase in the reporting threshold for "shell" branches tions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Nonbank-Reported Data A65 3.22 LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1988 1989 Type, and area or country 11998855 11998866 11998877'' June Sept. Dec. Mar. June' Sept." 1 Total 27,825 25,587 28,302 30,154r 32,405' 33,624' 37,440' 36,967 34,711 2 Payable in dollars 24,296 21,749 22,785 24,852' 27,176' 28,037' 31,649' 31,894 29,850 3 Payable in foreign currencies . 3,529 3,838 5,517 5,302 5,229 5,586 5,790 5,073 4,861 By type 4 Financial liabilities 13,600 12,133 12,424 13,934r 15,079' 15,118' 17,532' 16,920 15,857 5 Payable in dollars 11,257 9,609 8,643 10,274r 11,485' 11,250' 13,452' 13,060 11,998 6 Payable in foreign currencies 2,343 2,524 3,781 3,660 3,594 3,868 4,080 3,860 3,859 7 Commercial liabilities 14,225 13,454 15,878 16,220' 17,325' 18,506' 19,908' 20,047 18,854 8 Trade payables 6,685 6,450 7,305 6,768 6,480 6,454 7,009' 6,339 6,436 9 Advance receipts and other lial 7,540 7,004 8,573 9,452' 10,845' 12,052' 12,899' 13,708 12,418 10 Payable in dollars 13,039 12,140 14,142 14,578r 15,691' 16,788' 18,197' 18,834 17,852 11 Payable in foreign currencies 1,186 1,314 1,737 1,642 1,635 1,718 1,711 1,213 1,002 By area or country Financial liabilities 12 Europe 7,700 7,917 8,320 9,071' 10,497' 9,912' 12,511' 11,217 10,188 13 Belgium-Luxembourg 349 270 213 282 339 289 320 357 308 14 France 857 661 382 371 372 267 249 274 258 15 Germany 376 368 551 544' 690' 749' 741' 838 807 16 Netherlands 861 542 866 862 996 879 933 834 853 17 Switzerland 610 646 558 638 687 1,163 954 936 839 18 United Kingdom 4,305 5,140 5,557 6,201 7,243 6,418 9,121 7,799 6,928 19 Canada 839 399 360 412 431 650 616 544 599 20 Latin America and Caribbean 3,184 1,944 1,189 1,448 1,057 1,239 677 1,216 1,334 21 Bahamas 1,123 614 318 250 238 184 189 165 204 22 Bermuda 4 4 0 0 0 0 0 0 0 23 Brazil 29 32 25 0 0 0 0 0 0 24 British West Indies 1,843 1,146 778 1,154 812 645 471 621 698 25 Mexico 15 22 13 26 2 1 15 17 4 26 Venezuela 3 0 0 0 0 0 0 0 0 27 Asia 1,815 1,805 2,451 2,928 3,088 3,313' 3,722 3,842 3,635 28 Japan 1,198 11,,339988 2,042 2,331 2,435 2,563 2,950 3,082 2,887 29 Middle East oil-exporting countries . 82 88 8 11 4 3 1 12 2 30 Africa 12 1 4 2 3 1 5 3 4 0 1 1 1 1 0 3 2 2 31 Oil-exporting countries 50 67 100 74 3 2 2 97 97 32 All other4 Commercial liabilities 4,074 4,446 5,516 5,755' 6,688 7,348' 7,944' 7,865 7,989 33 Europe 62 101 132 147 206 170 134 117 138 34 Belgium-Luxembourg 453 352 426 408 438 459 579' 549 773 35 France 607 715 909 791 1,185 1,699 1,372' 1,190 1,195 36 Germany 364 424 423 508 647 591 670' 689 549 37 Netherlands 379 385 559 482 486 417 458' 458 415 38 Switzerland 976 1,341 1,599 1,804' 2,110 2,063 2,585' 2,709 2,728 39 United Kingdom 40 Canada 1,449 1,405 1,301 1,167 1,109 1,218 1,163' 1,132 1,195 41 Latin America and Caribbean 1,088 924 864 1,035 997 1,118 1,267' 1,669 1,091 42 Bahamas 12 32 18 61 19 49 35 34 27 43 Bermuda 77 156 168 272 222 286 426 388 305 44 Brazil 58 61 46 54 58 95 103' 541 113 45 British West Indies 44 49 19 28 30 34 31 42 30 46 Mexico 430 217 189 233 177 179 198' 182 191 47 Venezuela 212 216 162 140 204 177 179 185 140 48 Asia 6,046 5,080 6,565 6,286' 6,638' 6,916' 7,329' 6,970 6,859 49 Japan - j 1,799 2,042 2,578 2,659 2,763 3,091 3,059' 2,712 2,639 50 Middle East oil-exporting countries 1 2,829 1,679 1,964 1,320 1,298 1,386 1,526 1,431 1,426 51 Africa 587 619 574 626 477 578 706 768 650 52 Oil-exporting countries 238 197 135 115 106 202 272 253 246 53 All other4 982 980 1,057 1,351' 1,415 1,328 1,499' 1,643 1,071 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 Baihrain, 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 • March 1990 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1988 1989 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998855 11998866 11998877 June Sept.' Dec.' Mar.' June' Sept." 1 Total 28,876 36,265 30,964 37,924r 38,465 33,574 31,667 33,833 32,272 2 Payable in dollars 26,574 33,867 28,502 35,828' 35,967 31,252 29,371 31,727 30,027 3 Payable in foreign currencies 2,302 2,399 2,462 2,097' 2,498 2,323 2,296 2,106 2,245 By type 4 Financial claims 18,891 26,273 20,363 26,537'' 27,341 21,638 19,743 21,774 19,550 3 Deposits 15,526 19,916 14,903 19,75C 19,383 15,906 14,838 17,043 13,191 6 Payable in dollars 14,911 19,331 13,775 18,964' 18,370 14,820 13,942 16,131 12,277 7 Payable in foreign currencies 615 585 1,128 786r 1,013 1,086 896 911 914 8 Other financial claims 3,364 6,357 5,460 6,787' 7,958 5,732 4,905 4,731 6,359 9 Payable in dollars 2,330 5,005 4,646 5,892' 7,016 5,001 4,012 4,016 5,520 10 Payable in foreign currencies 1,035 1,352 814 895 942 731 893 716 840 11 Commercial claims 9,986 9,992 10,600 11,387' 11,123 11,937 11,924 12,059 12,722 12 Trade receivables 8,696 8,783 9,535 10,347' 10,124 10,858 10,660 10,857 11,348 13 Advance payments and other claims 1,290 1,209 1,065 1,040'' 1,000 1,079 1,265 1,202 1,375 14 Payable in dollars 9,333 9,530 10,081 10,971' 10,581 11,432 11,417 11,581 12,231 13 Payable in foreign currencies 652 462 519 415 543 505 507 479 491 By area or country Financial claims 16 Europe 6,929 10,744 9,531 11,580'' 10,719 10,051 9,208 8,629 7,947 17 Belgium-Luxembourg 10 41 7 16 49 10 11 155 166 18 France 184 138 332 181 278 224 230 191 209 19 Germany 223 116 102 168 123 138 180 218 147 20 Netherlands 161 151 350 335 356 344 383 290 292 21 Switzerland 74 185 65 105 84 215 203 70 123 22 United Kingdom 6,007 9,855 8,467 10,498' 9,503 8,768 7,890 7,390 6,750 23 Canada 3,260 4,808 2,844 2,917' 3,612 2,339 2,210 2,606 2,414 24 Latin America and Caribbean 7,846 9,291 7,012 10,952' 11,862 8,142 7,233 9,340 8,309 25 Bahamas 2,698 2,628 1,994 4,176 4,069 1,857 2,172 1,880 1,684 26 Bermuda 6 6 7 87 188 19 25 125 56 27 Brazil 78 86 63 46 44 47 49 78 70 28 British West Indies 4,571 6,078 4,433 6,142' 7,098 5,733 4,566 6,848 6,111 29 Mexico 180 174 172 146 133 151 117 114 105 30 Venezuela 48 21 19 27 27 21 25 31 36 31 Asia 731 1,317 879 971' 1,027 830 951 1,082 779 32 Japan 475 999 605 647' 737 561 627 630 440 33 Middle East oil-exporting countries2 4 7 8 5 5 5 8 8 7 34 Africa 103 85 65 60 95 106 89 80 75 33 Oil-exporting countries3 29 28 7 9 9 10 8 8 8 36 All other4 21 28 33 58 26 170 52 37 27 Commercial claims 37 Europe 3,533 3,725 4,180 4,713r 4,313 5,016 4,930 4,934 5,196 38 Belgium-Luxembourg 175 133 178 158 172 177 201 201 208 39 France 426 431 650 687r 544 673 760 775 848 40 Germany 346 444 562 774r 615 612 646 642 666 41 Netherlands 284 164 133 172 146 208 158 194 179 42 Switzerland 284 217 185 262 183 322 249 220 217 43 United Kingdom 898 999 1,073 1,107r 1,191 1,306 1,283 1,355 1,463 44 Canada 1,023 934 936 939' 979 975 1,114 1,181 1,228 45 Latin America and Caribbean 1,753 1,857 1,930 2,067 2,104 2,229 2,103 2,083 2,110 46 Bahamas 13 28 19 13 12 36 34 14 10 47 Bermuda 93 193 170 174 161 229 234 236 270 48 Brazil 206 234 226 232 234 298 277 313 223 49 British West Indies 6 39 26 25 22 21 23 29 32 30 Mexico 510 412 368 411 463 457 477 428 497 31 Venezuela 157 237 283 304 266 226 211 228 187 52 Asia 2,982 2,755 2,915 2,992r 3,028 2,954 3,097 3,115 3,424 33 Japan 1,016 881 1,158 l,169r 967 934 1,038 990 1,173 34 Middle East oil-exporting countries2 638 563 450 446 437 441 421 423 397 55 Africa 437 500 401 425 425 435 386 401 388 36 Oil-exporting countries3 130 139 144 136 137 122 95 111 79 57 All other4 257 222 238 251' 274 328 294 345 377 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 1989 Transactions, and area or country 1987 1988 J N a o n v .- . May June' July' Aug.' Sept.' Oct.' Nov.p U.S. corporate securities STOCKS 1 Foreign purchases 249,122 181,185 197,556 17,913' 24,316 17,122 22,112 19,595 22,350 13,819 2 Foreign sales 232,849 183,185 186,609 16,849' 20,646 15,087 20,942 17,047 20,988 15,037 3 Net purchases, or sales (-) 16,272 -2,000 10,948 l,064r 3,670 2,035 1,171 2,548 1,363 -1,218 4 Foreign countries 16,321 -1,825 11,145 1,066' 3,688 2,052 1,154 2,599 1,340 -1,217 5 Europe 1,932 -3,350 486 -293 418 779 -98 1,461 -107 -1,698 6 France 905 -281 -445 -123 -15 75 -251 -5 -265 -2% 7 Germany -70 218 -824 -215 -155 -79 -238 -65 -117 -119 8 Netherlands 892 -535 158 -75' 131 12 -63 37 226 -54 9 Switzerland -1,123 -2,243 -3,028 -293 -114 -23 -333 64 -244 -510 10 United Kingdom 631 -954 3,315 495' 329 546 773 894 -34 -739 11 Canada 1,048 1,087 -401 -75 168 8 14 -265 -140 -134 12 Latin America and Caribbean 1,318 1,238 3,519 391 166 109 250 602 149 -85 13 Middle East' -1,360 -2,474 3,461 206 1,679 456 554 110 112 303 14 Other Asia 12,896 1,365 3,537 784 1,201 729 423 631 1,138 342 15 Japan 11,365 1,922 3,400 763 1,215 626 424 611 975 309 16 Africa 123 188 122 -1 16 2 22 24 -6 19 17 Other countries 365 121 421 55' 40 -30 -11 38 193 37 18 Nonmonetary international and regional organizations -48 -176 -197 -2 -18 -17 17 -52 23 -1 BONDS2 19 Foreign purchases 105,856 86,381' 106,726 8,343' 10,855 10,045 10,944 8,603 10,930 11,100 20 Foreign sales 78,312 58,417' 76,%5 8,783' 9,185 7,552 9,361 6,857 6,772 6,667 21 Net purchases, or sales (—) 27,544 27,964r 29,762 -440' 1,670 2,494 1,583 1,746 4,158 4,433 22 Foreign countries 26,804 28,506' 29,469 -563' 1,542 2,516 1,607 1,740 4,106 4,421 23 Europe 21,989 17,239' 18,463 -55 2,132 1,976 -138 1,400 1,986 2,713 24 France 194 143 366 93 6 121 -35 78 -41 -14 25 Germany 33 1,344 -206 -170 -162 -53 -121 -33 113 -117 26 Netherlands 269 1,514 809 9 395 -22 % 28 30 143 27 Switzerland 1,587 505 112 -114 -110 81 -201 -27 74 54 28 United Kingdom 19,770 13,084' 16,153 665 1,881 1,937 -9 1,311 1,711 1,928 29 Canada 1,2% 711 908 59 -188 79 76 155 175 -86 30 Latin America and Caribbean 2,857 1,931 3,180 136 271 300 63 233 247 529 31 Middle East' -1,314 -178 -437 -93' -619 19 44 20 140 -80 32 Other Asia 2,021 8,900 7,107 -615 -59 35 1,574 -108 1,553 1,343 33 Japan 1,622 7,686 4,603 -722 -209 -44 1,167 -179 1,263 1,045 34 Africa 16 -8 29 0 1 3 5 -3 0 8 35 Other countries -61 -89 219 5 4 103 -17 42 4 -7 36 Nonmonetary international and regional organizations 740 -542 292 122 128 -22 -24 6 53 12 Foreign securities 37 Stocks, net purchases, or sales (-)3 1,081 - l^ -11,679 -1,306' -2,100 -808 -1,706 -648 -1,345 -921 38 Foreign purchases 95,458 75,356' 93,406 7,792' 9,124 7,640 9,489 8,473 10,309 9,406 39 Foreign sales 94,377 77,315' 105,085 9,098' 11,225 8,448 11,195 9,121 11,654 10,327 40 Bonds, net purchases, or sales (-) -7,946 -7,434' -5,438 -110' -1,506 -1,406 1,005 -1.845 -615 520 41 Foreign purchases 199,089 218,521' 215,509 17,293' 21,061 20,222 24,106 18,325 21,266 20,487 42 Foreign sales 207,035 225,955' 220,948 17,403' 22,567 21,628 23,101 20,170 21,881 19,966 43 Net purchases, or sales (—), of stocks and bonds .... -6,865 —9,393r -17,117 -1,416' -3,607 -2,214 -701 -2,493 -1,960 -401 44 Foreign countries -6,757 -9,873' -17,084 -1,620' -3,407 -2,366 -887 -1,926 -1,622 -478 45 Europe -12,101 -7,864' -17,852 -1,537' -3,945 -2,534 -860 -2,099 -2,487 -186 46 Canada -4,072 -3,747' -3,098 -555 -705 -697 -250 -201 924 -325 47 Latin America and Caribbean 828 1,384 700 -90 27 -75 314 -61 183 -102 48 9,299 979' 3,472 722' 1,262 921 327 412 -232 3 49 Africa 89 -54 38 13 3 12 -4 -3 12 13 50 Other countries -800 -571' -344 -173' -49 8 -414 26 -21 119 51 Nonmonetary international and regional organizations -108 480 -33 203 -200 152 186 -568 -338 77 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, abroad. Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). 3. As a result of the merger of a U.S. and U.K. company in July 1989, the 2. Includes state and local government securities, and securities of U.S. former stockholders of the U.S. company received $5,453 million in shares of the government agencies and corporations. Also includes issues of new debt securi- new combined U.K. company. This transaction is not reflected in the data above. ties sold abroad by U.S. corporations organized to finance direct investments Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • March 1990 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1989 1989 Country or area 1987 1988 Jan.- Nov. May June July' Aug.' Sept.' Oct.' Nov/ Transactions, net purchases or sales (—) during period1 1 Estimated total2 25,587 48,832r 53,443 7,043 -5,202 -1,317 21,979 4,616 -2,150 8,196 2 Foreign countries2 30,889 48,170' 52,976 5,518' -5,322' -761 22,409 5,698 -3,404 8,312 3 Europe2 23,716 14,3^ 33,471 4,498 -1,305 4,357 15,191 2,494 -2,268 4,260 4 Belgium-Luxembourg 653 923 1,138 88 13 82 413 216 90 210 5 Germany2 13,330 -5,268 6,187 -179 -1,106 2,622 2,503 510 137 1,666 6 Netherlands -913 -356 -750 -638 -674 100 1,304 302 -1,200 54 7 Sweden 210 -323 859 -69 647 110 241 -50 140 -232 8 Switzerland2 1,917 -1,074 1,452 -83 378 -361 -748 374 -187 -780 9 United Kingdom 3,975 9,64C 18,810 3,873 -133 1,024 9,863 339 -1,049 3,799 10 Other Western Europe 4,563 10,786 5,773 1,511 -423 786 1,614 802 -199 -481 11 Eastern Europe -19 -10 4 -5 -6 -5 0 0 0 26 12 Canada 4,526 3,761 457 157 -478 -533 1,028 -373 150 375 13 Latin America and Caribbean -2,192 713 1,380 -179 643 839 -280 23 -1,439 1,372 14 Venezuela 150 -109 347 0 1 71 120 29 72 163 15 Other Latin America and Caribbean -1,142 1,130 318 -78 -14 104 217 -506 34 576 16 Netherlands Antilles -1,200 -308 716 -101 656 665 -617 500 -1,545 634 17 Asia 4,488 27,603' 16,707 1,732' -5,581' -4,941 7,121 2,857 -101 1,646 18 Japan 868 21,750' 3,429 1,646 -7,780 -5,360 3,009 2,402 1,330 1,085 19 Africa -56 -13 76 -3 66 -5 -48 0 13 9 20 All other 407 1,786 -687 1,332 -478 -602 697 240 650 21 Nonmonetary international and regional organizations -5,302 661 467 1,525' 12C -557 -431 -1,082 1,254 -116 22 International -4,387 1,106 137 1,340 -253 -546 -576 -719 1,158 -143 23 Latin America regional 3 -31 231 70 191 3 75 -228 160 0 Memo 24 Foreign countries2 30,889 48,170' 52,976 5,518' -5,322' -761 22,409 5,698 -3,404 8,312 25 Official institutions 31,064 26,624 25,677 -1,068 449 2,819 9,957 799 -990 1,686 26 Other foreign -176 21,546' 27,299 6,586' -5,772' -3,580 12,452 4,900 -2,414 6,627 Oil-exporting countries 27 Middle East' -3,142 1,963 8,786 -300' 667' 435 3,681 695 -2,183 28 Africa4 16 1 -1 0 0 0 0 0 0 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria. notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A69 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on Jan. 31, 1990 Rate on Jan. 31, 1990 Rate on Jan. 31, 1990 Country Country Country Month Month Month Percent effective Percent effective effective Austria.. 6.0 June 1989 France 10.0 Dec. 1989 Norway 8.0 June 1983 Belgium . 10.25 Oct. 1989 Germany, Fed. Rep. of. 6.0 Oct. 1989 Switzerland .... 6.0 Oct. 1989 Brazil ... 49.0 Mar. 1981 Italy 13.5 Mar. 1989 United Kingdom2 Canada.. 12.29 Jan. 1990 Japan 4.25 Dec. 1989 Venezuela Denmark 10.5 Oct. 1989 Netherlands 7.0 Oct. 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 11998877 11998888 11998899 July Aug. Sept. Oct. Nov. Dec. Jan. 1 Eurodollars 7.07 7.85 9.16 8.85 8.71 8.85 8.67 8.42 8.39 8.22 2 United Kingdom 9.65 10.28 13.87 13.91 13.86 13.99 15.03 15.07 15.07 15.13 3 Canada 8.38 9.63 12.20 12.24 12.30 12.32 12.29 12.35 12.34 12.24 4 Germany 3.97 4.28 7.04 7.00 6.99 7.37 8.08 8.22 8.06 8.22 5 Switzerland 3.67 2.94 6.83 6.92 7.01 7.42 7.63 7.68 8.14 9.35 6 Netherlands 5.24 4.72 7.28 7.07 7.15 7.53 8.08 8.40 8.47 8.82 7 France 8.14 7.80 9.27 9.05 8.95 9.20 9.89 10.41 10.71 11.19 8 Italy 11.15 11.04 12.44 12.46 12.52 12.40 12.63 12.67 12.83 12.88 9 Belgium 7.01 6.69 8.65 8.46 8.44 8.66 9.51 9.81 10.03 10.48 10 Japan 3.87 3.96 4.73 4.71 4.80 4.88 5.25 5.71 5.80 6.02 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 • March 1990 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1989 1990 CCoouunnttrryy//ccuurrrreennccyy 11998877 11998888 11998899 Aug. Sept. Oct. Nov. Dec. Jan. 1 Australia/dollar2 70.137 78.409 79.186 76.345 77.271 77.421 78.295 78.586 78.111 2 Austria/schilling 12.649 12.357 13.236 13.570 13.733 13.140 12.860 12.241 11.904 3 Belgium/franc 37.358 36.785 39.409 40.310 40.841 39.197 38.403 36.544 35.451 4 Canada/dollar 1.3259 1.2306 1.1842 1.1758 1.1828 1.1749 1.1697 1.1613 1.1720 5 China, P.R./yuan 3.7314 3.7314 3.7673 3.7314 3.7314 3.7314 3.7314 4.1825 4.7339 6 Denmark/krone 6.8478 6.7412 7.3210 7.4938 7.5872 7.2781 7.1138 6.7610 6.5620 7 Finland/markka 4.4037 4.1933 4.2963 4.3504 4.4219 4.2817 4.2619 4.1231 4.0080 8 France/franc 6.0122 5.9595 6.3802 6.5085 6.5855 6.3339 6.2225 5.9391 5.7568 9 Germany/deutsche mark 1.7981 1.7570 1.8808 1.9268 1.9502 1.8662 1.8300 1.7378 1.6914 10 Greece/drachma 135.47 142.00 162.60 166.26 169.03 165.88 164.97 160.32 157.68 11 Hong Kong/dollar 7.7986 7.8072 7.8008 7.8078 7.8078 7.8081 7.8140 7.8102 7.8116 12 India/rupee 12.943 13.900 16.213 16.609 16.745 16.819 16.925 16.932 16.963 13 Ireland/punt2 148.79 152.49 141.80 138.43 136.71 142.50 144.73 151.65 156.31 14 Italy/lira 1,297.03 1,302.39 1,372.28 1,384.24 1,404.18 1,369.24 1,343.83 1,291.93 1,261.87 15 Japan/yen 144.60 128.17 138.07 141.49 145.07 142.21 143.53 143.69 144.98 16 Malaysia/ringgit 2.5186 2.6190 2.7079 2.6825 2.6980 2.6945 2.7028 2.7032 2.7041 17 Netherlands/guilder 2.0264 1.9778 2.1219 2.1726 2.1992 2.1072 2.0652 1.9619 1.9073 18 New Zealand/dollar2 59.328 65.560 59.354 59.217 59.144 55.937 56.301 59.458 60.220 19 Norway/krone 6.7409 6.5243 6.9131 7.0480 7.1264 6.9502 6.9010 6.7021 6.5462 20 Portugal/escudo 141.20 144.27 157.53 161.15 163.36 159.08 157.65 152.34 149.17 21 Singapore/dollar 2.1059 2.0133 1.9511 1.9604 1.9769 1.9622 1.9588 1.9183 1.8873 22 South Africa/rand 2.0385 2.2773 2.6215 2.7247 2.7882 2.6403 2.6295 2.5679 2.5532 23 South Korea/won 825.94 734.52 674.29 671.13 672.73 673.86 674.94 677.66 686.18 24 Spain/peseta 123.54 116.53 118.44 120.64 122.14 118.77 116.58 112.24 109.71 25 Sri Lanka/rupee 29.472 31.820 35.947 36.276 39.572 40.018 40.017 40.018 40.018 26 Sweden/krona 6.3469 6.1370 6.4559 6.5481 6.6103 6.4580 6.4306 6.2920 6.1776 27 Switzerland/franc 1.4918 1.4643 1.6369 1.6605 1.6865 1.6302 1.6189 1.5686 1.5175 28 Taiwan/dollar 31.753 28.636 26.407 25.685 25.737 25.739 26.029 26.139 26.081 29 Thailand/baht 25.775 25.312 25.725 25.912 26.012 25.868 25.877 25.778 25.745 30 United Kingdom/pound 163.98 178.13 163.82 159.47 157.15 158.74 157.26 159.65 165.12 MEMO 31 United States/dollar3 96.94 92.72 98.60 100.44 101.87 98.92 97.99 94.88 93.00 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 Reserve 2. Value in U.S. cents. Bulletin, vol. 64, August 1978, p. 700). 3. Index of weighted-average exchange value of U.S. dollar against the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) . . . Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other po- "U.S. government securities" may include guaranteed litical subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables, details do not add to totals because also include not fully guaranteed issues) as well as direct of rounding. STATISTICAL RELEASES—List Published Semiannually, with Latest Bulletin Reference Issue Page Anticipated schedule of release dates for periodic releases December 1989 A84 SPECIAL TABLES—Published Irregularly, with Latest Bulletin Reference Title and Date Issue Page Assets and liabilities of commercial banks December 31, 1988 August 1989 A78 March 31, 1989 December 1989 A72 June 30, 1989 January 1990 A72 September 30, 1989 February 1990 ALL Terms of lending at commercial banks February 1989 June 1989 A84 May 1989 March 1990 A73 August 1989 November 1989 A73 November 1989 March 1990 A79 Assets and liabilities of U.S. branches and agencies of foreign banks December 31, 1988 June 1989 A90 March 31, 1989 August 1989 A84 June 30, 1989 November 1989 A78 September 30, 1989 March 1990 A84 Pro forma balance sheet and income statements for priced service operations March 31, 1988 August 1988 A70 March 31, 1989 September 1989 A72 June 30, 1989 February 1990 A78 September 30, 1989 March 1990 A88 Digitized for FRASER http://fraseSr.sptelocuiiaslf edta.obrgle/ s begin on page A73. Federal Reserve Bank of St. Louis

Financial Markets A73 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-5, 1989'A A. Commercial and Industrial Loans Weighted Loan rate (percent) Loans MMoosstt AAmmoouunntt ooff AAvveerraaggee made PPaarrttiiccii-- common Characteristic (tho lo u a s n a s n ds (tho s u iz sa e nds mmaattuurriittyy22 WWeeiigghhtteedd Standard IInntteerr-- co uu m nndd m ee i rr t pp lo aa a ttii n oo s nn pricing of dollars) of dollars) Days e a ff v e e c r t a i g v e e 3 error4 q r u a a n r g t e il 5 e (p m er e c n en t t) (percent) rate6 ALL BANKS 1 Overnight7 9,048,047 4,504 * 10.98 .08 10.65-11.14 65.8 16.6 Fed funds 2 One month and under 6,517,757 579 17 11.37 .14 10.68-11.66 77.4 10.6 Domestic 3 Fixed rate 4,632,654 742 17 11.19 .10 10.68-11.46 72.7 9.3 Domestic 4 Floating rate 1,885,103 375 18 11.80 .24 10.71-13.24 89.2 13.7 Prime 5 Over one month and under a year . 9,429,494 112 137 12.24 .16 11.17-13.24 75.9 15.0 Prime 6 Fixed rate 4,583,393 115 107 11.75 .21 10.74-12.62 72.4 16.5 Other 7 Floating rate 4,846,101 110 166 12.70 .12 12.02-13.42 79.3 13.6 Prime 8 Demand8 19,009,291 279 * 12.34 .12 11.40-13.24 81.5 7.2 Prime 9 Fixed rate 1,961,921 574 * 11.14 .14 10.58-11.49 88.6 13.3 Domestic 10 Floating rate 17,047,370 264 * 12.47 .13 12.01-13.24 80.7 6.4 Prime 11 Total short term 44,004,589 266 57 11.89 .14 10.84-12.75 76.5 11.3 Prime 12 Fixed rate (thousands of dollars) .. 20,140,462 390 32 11.22 .10 10.65-11.52 71.0 14.7 Fed funds 13 1-24 254,916 7 97 13.53 .16 12.64-14.63 20.8 .3 Other 14 25-49 136,808 32 116 13.47 .22 12.96—13.97 25.4 .0 Other 15 50-99 209,946 66 138 13.12 .19 12.36-14.20 44.0 .0 Prime 16 100-499 473,757 218 129 12.62 .12 12.00-13.39 46.2 1.9 Prime 17 500-999 397,907 637 102 11.90 .15 11.07-12.19 80.0 7.5 Prime 18 1000 and over 18,667,128 6,518 25 11.10 .06 10.65-11.38 72.8 15.6 Fed funds 19 Floating rate (thousands of dollars) 23,864,126 210 123 12.46 .13 11.83-13.24 81.1 8.5 Prime 20 1-24 535,104 10 169 13.67 .11 12.96—14.37 75.3 1.4 Prime 21 25-49 588,253 34 165 13.47 .09 12.75-14.17 79.1 4.1 Prime 22 50-99 1,004,307 67 159 13.24 .07 12.68-13.80 82.5 2.7 Prime 23 100-499 3,911,973 199 154 13.01 .05 12.19-13.52 84.2 6.0 Prime 24 500-999 1,960,014 669 173 12.76 .08 12.13-13.24 87.7 7.9 Prime 25 1000 and over 15,864,476 4,624 101 12.16 .14 11.09-13.24 79.7 9.9 Prime Months 26 Total long term 4,188,833 228 46 12.76 .10 12.11-13.65 65.2 8.0 Prime 27 Fixed rate (thousands of dollars) .. 907,193 106 45 12.13 .30 10.86-13.30 62.1 • 19.6 None 28 1-99 143,759 18 36 13.16 .20 12.68-14.17 12.1 .2 Other 29 100-499 66,851 221 61 13.00 .27 11.79-13.80 44.5 1.6 Other 30 500-999 61,846 705 43 11.45 .61 10.25-13.65 55.8 9.3 None 31 1000 and over 634,737 3,863 46 11.88 .54 10.81-12.68 76.0 26.9 Foreign 32 Floating rate (thousands of dollars) 3,281,640 336 46 12.94 .11 12.13-13.65 66.0 4.8 Prime 33 1-99 171,887 25 49 13.74 .12 13.10-14.37 27.4 1.2 Prime 34 100-499 426,840 218 48 13.23 .13 12.68-13.80 48.4 17.4 Prime 35 500-999 176,796 674 48 12.71 .21 12.13-13.31 69.7 9.2 Prime 36 1000 and over 2,506,117 4,548 46 12.85 .16 12.13-13.65 71.4 2.6 Prime Loan rate (percent) DDaayyss rnme rate Effective3 Nominal9 LOANS MADE BELOW PRIME" 37 Overnight7 8,510,957 6,992 10.89 10.34 11.50 64.2 16.6 38 One month and under 5,347,703 2,429 16 10.% 10.42 11.51 77.6 9.8 39 Over one month and under a year 3,996,237 344 97 11.00 10.50 11.57 83.8 18.1 40 Demand8 5,658,433 2,064 * 10.90 10.42 11.52 64.9 6.3 41 Total short term 23,513,329 1,323 27 10.93 10.40 11.52 70.7 12.8 42 Fixed rate 17,225,971 1,446 23 10.91 10.39 11.51 71.2 16.1 43 Floating rate 6,287,358 1,071 54 10.% 10.44 11.55 69.5 3.6 Months 44 Total long term 972,541 391 42 11.18 10.78 11.67 82.8 16.2 45 Fixed rate 459,540 291 46 10.% 10.60 11.59 75.4 17.3 46 Floating rate .. 513,002 565 39 11.37 10.94 11.74 89.5 15.3 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • March 1990 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-5, 19891—Continued A. Commercial and Industrial Loans—Continued Weighted Loan rate (percent) Loans Amount of Average average made Partici- Characteristic (tho lo u a s n a s n ds (tho s u iz sa e n ds maturity2 Weighted Standard Inter- co u m nd m e i r t - p lo a a ti n o s n of dollars) of dollars) average quartile ment (percent) Days effective3 range5 (percent) LARGE BANKS 1 Overnight7 7,378,179 6,680 10.99 10.59-11.18 63.1 2 One month and under 5,118,295 3,067 17 11.26 10.68-11.54 78.3 12.8 3 Fixed rate 3,798,187 4,085 18 11.17 10.68-11.44 72.8 10.8 4 Floating rate 1,320,108 1,786 16 11.51 10.46-12.19 94.4 18.5 5 Over one month and under a year . 5,448,135 818 112 11.81 10.79-13.03 82.0 20.2 6 Fixed rate 3,157,624 1,448 92 11.43 10.61-12.08 80.4 23.3 7 Floating rate 2,290,511 512 139 12.33 11.47-13.25 84.3 16.0 8 Demand8 11,829,673 603 12.11 10.95-13.10 75.5 6.5 9 Fixed rate 1,220,780 2,130 11.19 10.68-11.51 86.9 7.2 10 Floating rate 10,608,893 557 12.22 11.09-13.24 74.2 6.5 11 Total short term 29,774,281 1,025 39 11.63 10.75-12.19 74.1 13.4 12 Fixed rate (thousands of dollars) .. 15,554,686 3,252 25 11.14 10.65-11.42 70.8 17.3 13 1-24 10,587 10 94 13.13 12.57-14.20 26.5 .1 14 25-49 11,775 33 82 13.07 12.55-13.73 23.0 .0 15 50-99 21,443 67 67 12.98 12.47-13.65 47.7 .3 16 100-499 143,711 223 55 12.53 11.74-13.31 69.8 3.7 17 500-999 189,945 656 45 11.91 11.21-12.47 82.7 5.3 18 1000 and over 15,177,225 7,222 25 11.11 10.65-11.39 70.8 17.7 19 Floating rate (thousands of dollars) 14,219,5% 586 94 12.17 11.09-13.24 77.7 9.1 20 1-24 86,602 11 156 13.49 12.68-14.37 79.1 .4 21 25-49 124,038 34 161 13.34 12.68-13.88 79.8 .8 22 50-99 251,191 67 151 13.23 12.55-13.80 82.1 1.0 23 100-499 1,311,132 210 142 12.88 12.13-13.31 85.8 3.9 24 500-999 840,066 669 147 12.70 12.13-13.24 90.1 9.1 25 1000 and over 11,606,566 6,360 85 12.00 10.88-13.10 75.8 10.0 Months 26 Total long term 2,358,090 1,153 12.69 .18 11.87-13.65 84.8 4.7 27 Fixed rate (thousands of dollars) .. 443,239 1,177 11.81 .58 10.62-12.17 85.8 13.9 28 1-99 4,949 23 13.70 .24 12.50-14.94 30.3 .0 29 100-499 14,705 228 12.97 .15 11.79-13.95 24.4 .0 30 500-999 15,900 782 12.31 1.12 11.46-13.66 73.4 16.0 31 1000 and over 407,684 5,409 11.73 1.08 10.44-12.03 89.2 14.5 32 Floating rate (thousands of dollars) 1,914,851 1,147 12.89 .20 12.13-13.65 84.6 2.6 33 1-99 28,490 32 13.79 .21 12.68-14.37 70.8 1.4 34 100-499 107,171 223 12.89 .16 12.13-13.52 77.5 8.4 35 500-999 79,081 697 12.67 .44 12.01-13.51 83.2 7.7 36 1000 and over 1,700,110 8,663 12.89 .25 12.13-13.65 85.3 2.0 Loan rate (percent) Days Effective3 Nominal9 LOANS MADE BELOW PRIME" 37 Overnight7 6,860,977 8,039 10.89 10.34 11.50 60.9 20.0 38 One month and under 4,464,955 6,140 10.97 10.43 11.50 76.5 10.5 39 Over one month and under a year 3,240,337 4,263 10.92 10.42 11.50 85.5 20.4 40 Demand8 4,585,870 4,950 10.88 10.42 11.50 58.0 3.2 41 Total short term 19,152,139 5,862 10.91 10.39 11.50 68.0 13.9 42 Fixed rate 13,739,303 5,947 10.92 10.40 11.50 68.9 18.1 43 Floating rate 5,412,836 5,655 10.90 10.38 11.50 65.8 3.1 Months 44 Total long term 663,859 3,156 11.03 90.9 45 Fixed rate 294,376 3,184 11.03 10.72 11.50 86.2 19.1 46 Floating rate 369,482 3,134 11.03 10.68 11.50 94.7 6.5 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 4.23—Continued A. Commercial and Industrial Loans—Continued Weighted Loan rate (percent) Loans MMoosstt Amount of AAvveerraaggee average made PPaarrttiiccii-- common Characteristic ( o t f h o ll d oo u o aa s l nn l a a ss n r d s) s ( o t f h o d s u o iz s ll a e a n r d s) s mmaa D ttuu ay rrii s tt yy22 WW e a ff v ee e e ii c gg r t hh a i g tt v ee e e dd 3 Standard q r II u a nn a n tt r ee g t rr e i -- l 5 e ( c p o uu m e m nn r e c dd m n e ee n t i rr t t - ) (p pp l e o aa r a tt c ii n e oo n s nn t ) p r r a ic t i e n 6 g OTHER BANKS 1 Overnight7 1,669,868 1,847 * 10.92 .12 10.65-11.00 77.7 2.2 Fed funds 2 One month and under 1,399,462 146 18 11.74 .13 10.86-12.69 74.0 2.6 Prime 3 Fixed rate 834,467 157 16 11.26 .16 10.72-11.61 72.1 2.6 None 4 Floating rate 564,995 132 22 12.46 .24 11.62-13.25 76.9 2.5 Prime 5 Over one month and under a year .... 3,981,359 52 172 12.83 .07 12.13-13.47 67.6 8.0 Prime 6 Fixed rate 1,425,769 38 140 12.46 .14 11.23-13.31 54.8 1.6 Prime 7 Floating rate 2,555,590 65 191 13.04 .05 12.19-13.60 74.7 11.6 Prime 8 Demand8 7,179,618 148 * 12.71 .10 12.13-13.24 91.5 8.2 Prime 9 Fixed rate 741,141 261 * 11.05 .20 10.58-11.33 91.2 23.4 Domestic 10 Floating rate 6,438,478 141 * 12.90 .09 12.13-13.31 91.5 6.4 Prime 11 Total short term 14,230,307 104 101 12.44 .13 11.43-13.24 81.5 6.9 Prime 12 Fixed rate (thousands of dollars) 4,585,777 98 56 11.48 .12 10.65-11.92 71.5 5.6 Fed funds 13 1-24 244,330 7 97 13.55 .19 12.64-14.65 20.6 .3 Other 14 25-49 125,033 32 119 13.51 .31 12.96-14.00 25.7 .0 Other 15 50-99 188,503 66 146 13.13 .18 12.36-14.20 43.6 .0 Prime 16 100-499 330,046 215 160 12.66 .13 12.01-13.65 35.9 1.1 Prime 17 500-999 207,962 620 152 11.90 .15 11.06-12.12 77.5 9.5 Prime 18 1000 and over 3,489,903 4,578 27 11.03 .06 10.65-11.21 81.2 6.6 Fed funds 19 Floating rate (thousands of dollars)... 9,644,531 108 156 12.90 .07 12.13-13.37 86.2 7.5 Prime 20 1-24 448,502 9 170 13.70 .09 12.96-14.37 74.5 1.6 Prime 21 25-49 464,214 34 165 13.51 .07 12.96-14.20 78.9 4.9 Prime 22 50-99 753,116 66 160 13.25 .04 12.68-13.80 82.6 3.2 Prime 23 100-499 2,600,841 194 158 13.08 .03 12.26-13.65 83.4 7.1 Prime 24 500-999 1,119,948 669 185 12.81 .13 12.13-13.24 86.0 7.1 Prime 25 1000 and over 4,257,909 2,651 140 12.59 .20 12.13-13.24 90.6 9.5 Prime Months 26 Total long term 1,830,743 112 44 12.86 .11 12.13-13.52 39.9 12.3 Prime 27 Fixed rate (thousands of dollars) .. 463,954 56 37 12.44 .20 11.13-13.59 39.5 25.0 None 28 1-99 138,809 18 35 13.14 .34 12.68-14.09 11.4 .2 Other 29 100-499 52,146 219 62 13.01 .54 11.71-13.80 50.1 2.0 Other 30 500-999 45,947 681 38 11.16 .70 10.25-13.65 49.7 7.0 None 31 1000 and over 227,052 2,553 31 12.14 .32 10.86-13.59 52.2 49.1 None 32 Floating rate (thousands of dollars) 1,366,789 169 46 13.00 .11 12.13-13.52 40.0 8.0 Prime 33 1-99 ' 143,397 23 51 13.73 .09 13.10-14.37 18.7 1.2 Prime 34 100-499 319,669 216 48 13.34 .16 12.68-13.92 38.6 20.4 Prime 35 500-999 97,715 657 46 12.75 .22 12.13-13.24 58.7 10.4 Prime 36 1000 and over 806,007 2,271 45 12.76 .17 12.13-13.37 42.1 3.9 Prime Loan rate (percent) DDaayyss rnme rate Effective3 Nominal9 LOANS MADE BELOW PRIME 37 Overnight7 1,649,980 4,534 * 10.88 10.33 11.50 78.0 2.3 38 One month and under 882,748 599 15 10.92 10.38 11.57 83.3 6.0 39 Over one month and under a year 755,900 70 99 11.35 10.81 11.88 76.6 7.8 40 Demand8 1,072,562 591 * 10.96 10.45 11.59 94.4 19.3 41 Total short term 4,361,190 301 27 10.99 10.45 11.60 82.9 8.2 42 Fixed rate 3,486,668 363 18 10.90 10.36 11.55 80.4 8.4 43 Floating rate 874,522 178 83 11.36 10.80 11.82 92.8 7.2 Months 44 Total long term 308,683 135 33 11.51 10.94 12.02 65.4 25.1 45 Fixed rate 165,164 111 37 10.84 10.37 11.74 56.1 14.0 46 Floating rate .. 143,519 182 28 12.27 11.61 12.35 76.1 37.8 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Special Tables • March 1990 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-5, 19891—Continued B. Construction and Land Development Loans1 Loan rate (percent) AAmmoouunntt ooff AAvveerraaggee WWeeiigghhtteedd LLooaannss mmaaddee PPaarrttiiccii-- CChhaarraacctteerriissttiicc (( oo tt ff hh ll dd oo oo uu oo aa ll ss nn ll aa aa ss nn rr dd ss)) ss (( oo tt ff hh oo dd ss uu oo iizz ll ss ll ee aa aa nn rr dd ss)) ss (( mm mm aavv aa oo ee tt nn rr uu tt aa rr hh gg iitt ss ee yy )) 33 e W a ff v e e e i c g r t a h i g v te e e d 4 St e a r n r d or a 5 r d q r I u a n a n t r e g t r e i - l 6 e ccoo (( mm pp uu ee mm nn rrcc dd iitt ee ee mm nn rr tt ee )) nn tt ((pp pp ll ee oo aa rr aa tt cc ii nn ee oo nn ss nn tt )) ALL BANKS 1 Total 2,741,952 163 7 12.60 .11 12.06-13.24 93.2 32.2 2 Fixed rate (thousands of dollars) 978,562 270 3 11.89 .25 11.51-12.13 93.4 37.3 3 1-24 15,089 7 18 13.58 .34 12.47-14.37 51.8 .1 4 25-49 17,117 34 19 14.22 .41 12.68-14.93 94.4 .0 5 50-99 22,590 72 19 12.70 .28 12.13-13.52 55.7 1.7 6 100-499 67,082 168 27 12.94 .43 12.13-14.93 85.4 2.3 7 500 and over 856,685 8,658 1 11.71 .28 11.46-12.06 95.7 42.3 8 Floating rate (thousands of dollars) ... 1,763,389 134 9 12.99 .09 12.68-13.24 93.1 29.4 Y 1-24 77,455 9 10 13.65 .09 13.03-14.17 88.0 1.4 10 25-49 64,934 34 12 13.21 .07 12.68-13.65 90.7 1.7 li 50-99 75,801 68 15 13.42 .10 12.96-13.88 81.8 13.4 12 100-499 285,173 217 16 13.24 .05 12.96—13.52 82.9 9.5 li 500 and over 1,260,027 3,000 8 12.85 .09 12.55-13.19 96.5 37.9 By type of construction 14 Single family 408,552 41 12 13.38 .11 12.96-13.80 84.1 4.4 15 Multifamily 113,521 116 8 13.43 .16 12.96-13.77 93.8 3.3 16 Nonresidential 2,219,879 375 6 12.41 .13 11.51-12.82 94.8 38.8 LARGE BANKS13 1 Total 2,035,329 1,019 5 12.35 .10 11.51-12.68 96.6 41.5 2 Fixed rate (thousands of dollars) 858,141 4,036 2 11.70 .26 11.46-12.06 95.3 42.4 i 1-24 643 11 20 12.29 .35 11.85-12.91 64.1 .0 4 25-49 832 34 12 11.98 .46 11.71-12.68 66.5 .0 5 50-99 * * * * * * * 6 100-499 5,884 226 15 11.93 .46 11.41-12.46 58.7 26.6 7 500 and over 849,880 9,591 1 11.70 .32 11.46-12.06 95.7 42.7 8 Floating rate (thousands of dollars) ... 1,177,188 660 8 12.81 .13 12.55-12.96 97.6 40.9 9 1-24 5,581 11 11 13.37 .11 12.96-13.80 89.1 3.3 10 25-49 10,947 35 16 13.33 .09 12.96-13.80 89.6 3.9 11 50-99 17,660 71 14 13.23 .14 12.68-13.63 96.1 6.7 12 100-499 109,892 233 17 13.13 .08 12.68-13.52 96.4 11.9 13 500 and over 1,033,107 4,209 8 12.77 .15 12.55-12.96 97.9 45.1 By type of construction 14 Single family 103,199 184 11 13.13 .09 12.96-13.24 80.4 5.7 15 Multifamily 27,288 144 8 13.59 .23 13.24-13.80 84.5 2.9 16 Nonresidential 1,904,902 1,528 5 12.28 .08 11.51-12.68 97.7 44.0 OTHER BANKS 1 Total 706,623 48 14 13.32 .06 12.96-13.80 83.3 5.2 2 Fixed rate (thousands of dollars) 120,422 35 23 13.20 .33 12.13-14.93 79.6 ..33 3 1-24 14,466 6 18 13.64 .48 12.51-14.37 51.2 ..11 4 25-49 16,285 34 20 14.33 .63 13.24-14.93 95.8 .0 5 50-99 21,688 72 19 12.74 .41 12.13-14.17 56.4 1.8 6 100-499 61,198 164 32 13.04 .77 12.13-14.93 88.0 .0 7 500 and over * * * * * * 8 Floating rate (thousands of dollars) ... 586,201 52 12 13.34 .03 12.96—13.80 84.0 6.2 9 1-24 71,873 9 10 13.68 .14 13.03-14.20 88.0 1.3 10 25-49 53,987 34 11 13.19 .11 12.26-13.65 90.9 1.2 11 50-99 58,141 68 15 13.48 .14 12.96-13.88 77.4 15.4 12 100-499 175,281 208 15 13.30 .07 12.96-13.80 74.5 8.0 13 500 and over 226,919 1,300 11 13.26 .07 12.96-13.77 90.3 5.2 By type of construction 14 Single family 305,353 33 12 13.47 .21 12.96-13.88 85.3 4.0 15 Multifamily 86,293 109 8 13.38 .23 12.96-13.77 96.7 3.4 16 Nonresidential 314,977 67 18 13.15 .12 12.68-13.80 77.7 6.9 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 4.23—Continued C. Loans to Farmers12 Size class of loans (thousands) Characteristic All sizes $1-9 $10-24 $25-49 $50-99 $100-249 ALL BANKS 1 Amount of loans (thousands of dollars). $ 1,294,324 $ 146,990 $ 184,720 $ 130,554 $ 208,631 $ 252,758 2 Number of loans 62,312 40,498 12,617 3,838 3,059 1,713 3 Weighted average maturity (months) .. 8.9 8.0 9.4 9.1 12.7 8.1 4 Weighted average interest rate (percent)3 12.86 13.05 12.85 12.99 13.18 13.33 5 Standard error .56 .35 .33 .28 .48 .41 6 Interquartile range 12.21-13.52 12.59-13.80 12.27-13.56 12.19-13.52 12.47-14.09 12.60-13.53 By purpose of loan I Feeder livestock 12.92 13.74 12.81 12.68 13.37 13.15 8 Other livestock 12.79 13.30 13.38 12.97 12.98 * 9 Other current operating expenses 12.89 12.87 12.73 13.07 13.38 13.77 10 Farm machinery and equipment 13.18 13.41 13.07 * * * II Farm real estate 12.06 13.56 13.03 * * * 12 Other 12.89 13.65 13.11 13.73 13.22 13.18 Percentage of amount of loans 13 With floating rates 51.8 57.1 46.9 53.4 46.3 49.5 14 Made under commitment 54.0 53.3 45.9 45.9 46.1 48.6 By purpose of loan 15 Feeder livestock 17.4 6.9 9.4 14.9 16.3 22.4 16 Other livestock 9.2 6.4 9.1 16.6 6.4 * 17 Other current operating expenses 55.9 71.8 67.0 56.1 52.0 45.4 18 Farm machinery and equipment 2.8 6.9 5.4 * * * 19 Farm real estate 4.6 1.7 3.5 * * * 20 Other 10.1 6.2 5.5 8.0 14.7 12.9 LARGE BANKS12 1 Amount of loans (thousands of dollars). $ 381,270 $ 13,317 $ 21,522 $ 22,474 $ 30,525 $ 58,342 2 Number of loans 6,482 3,235 1,460 657 465 386 3 Weighted average maturity (months) .. 9.3 7.6 9.5 10.5 8.7 12.6 4 Weighted average interest rate (percent)' 12.78 13.92 13.68 13.52 13.23 13.22 5 Standard error .53 .30 .28 .17 .41 .26 6 Interquartile range 12.13-13.52 13.24-14.45 13.03-14.37 13.03-14.17 12.75-13.80 12.75-13.65 By purpose of loan 7 Feeder livestock 12.65 13.13 13.29 12.83 13.07 13.06 8 Other livestock 12.68 14.12 13.51 14.02 * * 9 Other current operating expenses 13.18 13.98 13.68 13.59 13.35 13.35 10 Farm machinery and equipment 13.61 13.65 13.72 * * * 11 Farm real estate 11.29 14.70 13.60 * * * 12 Other 12.60 13.86 13.79 13.49 13.08 13.31 Percentage of amount of loans 13 With floating rates 81.1 89.4 91.4 92.7 90.4 90.1 14 Made under commitment 84.0 84.2 84.6 86.7 82.7 90.5 By purpose of loan 15 Feeder livestock 28.8 5.7 5.2 11.1 18.5 27.3 16 Other livestock 7.9 4.0 2.3 6.8 * * 17 Other current operating expenses 37.5 71.3 66.8 54.4 44.0 32.1 18 Farm machinery and equipment 1.7 3.6 4.6 * * * 19 Farm real estate 5.3 1.4 2.9 * * * 20 Other 18.9 14.0 18.4 24.4 30.1 30.1 OTHER BANKS12 1 Amount of loans (thousands of dollars). $ 913,054 $ 133,673 $ 163,198 $ 108,080 $ 178,107 $ 194,415 2 Number of loahs 5555,,883300 37,263 11,157 3,181 2,595 1,326 3 Weighted average maturity (months) • • 88..88 8.0 9.4 8.9 13.2 7.4 4 Weighted average interest rate (percent) 12.89 12.97 12.74 12.88 13.18 13.37 5 Standard error .15 .17 .16 .22 .24 .31 6 Interquartile range5 12.24-13.50 12.55-13.80 12.26-13.45 12.11-13.31 12.47-14.45 12.60-13.53 By purpose of loan 7 Feeder livestock 13.19 13.79 12.78 12.65 13.43 * 8 Other livestock 12.83 13.25 13.38 12.89 * * 9 Other current operating expenses — 12.82 12.76 12.60 12.% 13.37 13.85 10 Farm machinery and equipment 13.08 13.40 13.00 * * * 11 Farm real estate 12.44 * * * * * 12 Other 13.25 13.59 12.68 * * For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Special Tables • March 1990 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, May 1-5, 19891—Continued C. Loans to Farmers12—Continued Size class of loans (thousands) Characteristic $250 All sizes $1-9 $10-24 $25-49 $50-99 $100-249 and over Percentage of amount of loans 13 With floating rates 39.6 53.9 41.1 45.2 38.7 37.3 * 14 Made under commitment 41.4 50.2 40.8 37.4 39.9 36.0 * By purpose of loan 15 Feeder livestock 12.7 7.1 10.0 15.7 15.9 * * 16 Other livestock 9.7 6.6 10.0 18.6 * * * 17 Other current operating expenses 63.5 71.9 67.1 56.4 53.4 49.4 * 18 Farm machinery and equipment 3.2 7.2 5.5 19 Farm real estate 4.4 * * * 20 Other 6.5 5.5 3.8 • •Note. These data should have appeared in the November 1989 issue but were 5. The interquartile range shows the interest rate range that encompasses the inadvertently replaced with August 7-11, 1989 data. middle 50 percent of the total dollar amount of loans made. *Fewer than 10 sample loans. 6. The most common base rate is that rate used to price the largest dollar 1. The survey of terms of bank lending to business collects data on gross loan volume of loans. Base pricing rates include the prime rate (sometimes referred to extensions made during the first full business week in the mid-month of each as a bank's "basic" or "reference" rate); the federal funds rate; domestic money quarter by a sample of 340 commercial banks of all sizes. A subsample of 250 market rates other than the federal funds rate; foreign money market rates; and banks also report loans to farmers. The sample data are blown up to estimate the other base rates not included in the foregoing classifications. lending terms at all insured commercial banks during that week. The estimated 7. Overnight loans are loans that mature on the following business day. terms of bank lending are not intended for use in collecting the terms of loans 8. Demand loans have no stated date of maturity. extended over the entire quarter or residing in the portfolios of those banks. 9. Nominal (not compounded) annual interest rates are calculated from survey Mortgage loans, purchased loans, foreign loans, and loans of less than $1,000 are data on the stated rate and other terms of the loan and weighted by loan size. excluded from the survey. 10. The prime rate reported by each bank is weighted by the volume of loans As of Dec. 31, 1988, assets of most of the large banks were at least $6.0 billion. extended and then averaged. For all insured banks total assets averaged $220 million. 11. The proportion of loans made at rates below prime may vary substantially 2. Average maturities are weighted by loan size and exclude demand loans. from the proportion of such loans outstanding in banks' portfolios. 3. Effective (compounded) annual interest rates are calculated from the stated 12. Among banks reporting loans to farmers (Table B), most "large banks" rate and other terms of the loan and weighted by loan size. (survey strata 1 to 2) had over $20 million in farm loans, and most "other banks" 4. The chances are about two out of three that the average rate shown would (survey strata 3 to 5) had farm loans below $20 million. differ by less than this amount from the average rate that would be found by a The survey of terms of bank lending to farmers now includes loans secured by complete survey of lending at all banks. farm real estate. In addition, the categories describing the purpose of farm loans have now been expanded to include "purchase or improve farm real estate." In previous surveys, the purpose of such loans was reported as "other." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 19891 A. Commercial and Industrial Loans Weighted Loan rate (percent) Loans MMoosstt Amount of Average aavveerraaggee made Partici- common Characteristic ( o t f h o l d o u o a s l n l a a s n r d s) s ( o t f h o d s u o iz s ll a e a n r d s) s mmaa D tt a uu y rrii s tt yy22 WW e a ff v ee e e ii c gg r t hh a i g tt v ee e e dd 3 St e a r n r d o a r r 4 d q r II u a nn a n tt r ee g t rr e i -- l 5 e ( c p o u e m m n r e c d m n e e n t i r t t - ) (p p l e o a r a t c i n e o n s n t ) pricing ALL BANKS 1 Overnight7 13,762,089 5,861 * 9.56 .41 9.21-9.73 54.7 8.7 Other 2 One month and under 7,774,661 806 19 10.17 .10 9.52-10.56 84.2 8.8 Domestic 3 Fixed rate 4,832,909 983 21 10.18 .08 9.61-10.34 79.6 11.8 Domestic 4 Floating rate 2,941,751 623 16 10.15 .20 9.33-11.02 91.8 4.0 Domestic 5 Over one month and under a year . 9,856,562 138 153 11.11 .17 10.03-12.13 80.8 14.0 Prime 6 Fixed rate 4,307,635 130 131 10.72 .18 9.86-11.66 75.9 13.0 Other 7 Floating rate 5,548,927 145 170 11.42 .16 10.38-12.19 84.6 14.7 Prime 8 Demand8 12,651,826 217 * 11.24 .14 10.47-12.19 86.8 6.4 Prime 9 Fixed rate 1,869,578 419 * 10.09 .27 9.25-10.52 78.0 11.7 Domestic 10 Floating rate 10,782,248 200 * 11.44 .15 11.02-12.40 88.4 5.4 Prime 11 Total short term 44,045,138 311 53 10.50 .16 9.46-11.30 75.0 9.2 Prime 12 Fixed rate (thousands of dollars) .. 24,769.253 554 30 9.92 .14 9.31-10.23 65.0 10.3 Other 13 1-24 221,280 7 111 12.67 .15 11.84-13.44 24.0 1.6 Other 14 25-49 125,337 33 120 12.46 .18 12.00-12.89 28.0 .1 Prime 15 50-99 209,130 66 146 12.01 .24 11.50-13.12 18.2 6.6 Prime 16 100-499 527,537 207 76 11.56 .18 10.73-12.68 44.2 3.3 Prime 17 500-999 437,327 697 79 10.60 .14 9.96-11.07 55.6 5.7 Other 18 1000 and over 23,248,642 7,752 26 9.81 .13 9.28-10.07 66.7 10.7 Other 19 Floating rate (thousands of dollars) 19,275,885 199 117 11.24 .15 10.26-12.19 87.8 7.9 Prime 20 1-24 469,932 10 153 12.64 .09 12.01-13.24 73.8 .6 Prime 21 25-49 501,634 34 146 12.45 .05 11.85-13.24 79.5 1.6 Prime 22 50-99 921,658 66 160 12.26 .05 11.57-12.75 82.2 3.6 Prime 23 100-499 3,432,317 203 153 11.95 .06 11.07-12.64 85.3 6.2 Prime 24 500-999 1,577,865 673 156 11.58 .06 11.02-12.15 90.7 9.4 Prime 25 1000 and over 12,372,478 4,727 100 10.82 .15 9.73-11.67 89.4 9.0 Prime Months 26 Total long term 5,180,184 260 43 11.36 .15 10.92-12.19 74.2 12.2 Prime 27 Fixed rate (thousands of dollars) .. 910,099 114 49 10.68 .29 9.37-11.63 54.1 .9 Other 28 1-99 153,314 22 41 12.28 .23 11.57-13.23 15.8 .3 Other 29 100-499 126,685 181 46 12.08 .18 11.30-12.75 23.9 3.2 Prime 30 500-999 38,287 670 76 11.32 .19 10.97-12.13 39.1 .0 Other 31 1000 and over 591,813 4,339 50 9.93 .24 9.33-10.98 71.4 .7 Other 32 Floating rate (thousands of dollars) 4,270,086 359 41 11.51 .15 11.02-12.19 78.5 14.6 Prime 33 1-99 207,194 25 52 12.48 .12 11.85-13.24 52.2 2.4 Prime 34 100-499 520,021 206 38 12.23 .16 11.30-12.68 65.2 11.2 Prime 35 500-999 376,052 628 41 11.89 .13 11.07-12.75 66.8 12.9 Prime 36 1000 and over 3,166,819 4,987 41 11.28 .12 10.92-12.13 83.8 16.1 Prime Loan rate (percent) DDaayyss Prime rate Effective3 Nominal9 LOANS MADE BELOW PRIME11 37 Overnight7 ••'. 13,280,063 7,900 * 9.48 9.06 10.50 53.8 8.9 38 One month and under 6,097,250 2,836 17 9.77 9.34 10.51 86.7 7.6 39 Over one month and under a year 4,347,067 548 134 9.87 9.47 10.57 91.0 16.1 40 Demand8 3,726,833 1,264 * 9.68 9.29 10.54 79.0 10.2 41 Total short term 27,451,213 1,865 30 9.64 9.22 10.52 70.4 9.9 42 Fixed rate 21,452,877 2,339 22 9.61 9.19 10.51 64.7 10.7 43 Floating rate 5,998,335 1,081 70 9.73 9.32 10.55 90.8 7.1 Months 44 Total long term 1,402,820 541 45 9.79 9.40 10.63 82.8 12.0 45 Fixed rate 528,022 282 44 9.57 9.23 10.62 73.0 14.3 46 Floating rate .. 874,798 1,210 46 9.92 9.51 10.63 88.7 10.6 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Special Tables • March 1990 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 1989'—Continued A. Commercial and Industrial Loans—Continued Weighted Loan rate (percent) Loans Amount of Average average made Partici- Characteristic (tho lo u a s n a s n ds (tho s u iz sa e nds maturity2 Weighted Standard Inter- co u m nd m er it - p lo a a ti n o s n of dollars) of dollars) average quartile ment (percent) Days effective3 range5 (percent) LARGE BANKS 1 Overnight7 11,804,163 8,363 9.56 9.21-9.74 47.6 10.1 2 One month and under 6,223,515 4,567 19 10.07 9.49-10.24 85.3 7.1 3 Fixed rate 3,992,273 5,795 22 10.13 9.54-10.31 80.5 9.2 4 Floating rate 2,231,241 3,311 13 9.95 9.01-10.22 93.8 3.4 5 Over one month and under a year . 5,911,897 1,053 150 10.72 9.92-11.66 90.5 18.6 6 Fixed rate 2,899,355 3,685 132 10.35 9.86-10.89 88.7 18.5 7 Floating rate 3,012,542 624 167 11.08 10.12-12.13 92.3 18.8 8 Demand8 7,851,684 438 11.01 9.96-12.13 82.8 7.5 9 Fixed rate 1,235,547 685 9.97 9.12-10.50 69.8 16.0 10 Floating rate 6,616,137 411 11.20 10.54-12.19 85.3 5.9 11 Total short term 31,791,258 1,209 10.23 9.38-11.02 71.7 10.5 12 Fixed rate (thousands of dollars) .. 19,928,382 4,254 26 9.82 9.28-10.10 61.5 11.5 13 1-24 8,623 10 100 12.02 11.50-12.50 26.7 .0 14 25-49 10,820 32 76 11.70 11.50-12.13 34.5 .0 15 50-99 20,247 66 126 11.59 11.02-12.50 38.2 .0 16 100-499 141,106 227 57 10.93 10.33-11.50 66.6 7.3 17 500-999 187,140 678 30 10.59 9.73-11.25 70.1 6.1 18 1000 and over 19,560,445 8,455 26 9.80 9.28-10.06 61.5 11.6 19 Floating rate (thousands of dollars) 11,862,876 549 102 10.94 9.83-12.01 88.7 8.7 20 1-24 82,720 11 148 12.33 11.57-13.24 76.7 .5 21 25-49 103,240 34 152 12.31 11.57-12.96 84.8 1.0 22 50-99 222,580 66 146 12.10 11.35-12.68 87.4 2.0 23 100-499 1,092,501 208 164 11.75 11.02-12.19 89.6 4.2 2 2 5 4 5 1 0 00 0 0 -9 a 9 n 9 d over 9,7 6 3 3 0 1 , ,5 3 0 3 3 2 5,8 67 0 1 0 1 % 53 1 10 1 . . 7 5 5 7 1 9 1 . . 6 0 8 2 - - 1 1 1 2 . . 6 1 3 9 9 8 1 8 . .6 2 7 9 . . 1 6 Months 26 Total long term 3,397,972 1,116 11.04 10.12-12.01 27 Fixed rate (thousands of dollars) .. 513,629 1,346 9.89 9.20-10.22 28 1-99 5,231 25 12.28 11.57-13.31 25.6 2.7 29 100-499 12,841 217 11.66 10.75-12.68 45.3 .0 30 500-999 10,995 599 11.39 10.73-12.13 52.0 .0 31 1000 and over 484,561 5,113 9.79 9.20-10.22 70.3 32 Floating rate (thousands of dollars) 2,884,343 1,083 11.25 10.68-12.13 89.4 15.8 33 1-99 38,540 37 12.44 11.57-12.96 79.9 4.4 34 100-499 208,403 230 11.90 11.02-12.55 85.7 11.5 35 500-999 168,373 668 11.73 11.02-12.19 84.4 15.8 36 1000 and over 2,469,027 5,486 11.14 10.41-12.13 90.2 16.3 Loan rate (percent) Days Prime rate" Effective3 Nominal9 LOANS MADE BELOW PRIME1 37 Overnight7 11,325,433 9,380 9.47 9.05 10.50 46.2 10.5 38 One month and under 5,185,025 7,563 17 9.76 9.33 10.50 86.7 5.3 39 Over one month and under a year . 3,350,076 5,168 131 9.84 9.45 10.50 92.3 19.2 40 Demand8 2,918,581 3,163 9.68 9.29 10.50 74.2 11.7 41 Total short term 22,779,114 6,576 27 9.62 9.20 10.50 65.8 10.7 42 Fixed rate 17,847,501 7,285 9.60 9.19 10.50 59.2 11.8 43 Floating rate 4,931,613 4,863 9.68 9.27 10.50 89.6 6.7 Months 44 Total long term 1,147,113 4,041 9.65 9.29 10.50 45 Fixed rate 403,745 3,362 9.41 9.11 10.50 79.2 17.6 46 Floating rate 743,369 4,540 9.79 9.39 10.50 92.3 4.4 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 4.23—Continued A. Commercial and Industrial Loans—Continued Weighted Loan rate (percent) Loans Amount of Average EEVVCCffEEJJCC made Partici- Characteristic (tho lo u a s n a s n ds (tho s u iz sa e nds mmaattuurriittyy22 WWeeiigghhtteedd Standard IInntteerr-- co u m nd m er it p lo a a ti n o s n of dollars) of dollars) Days e a f v fe e c r t a i g v e e 3 error4 q r u a a n r g t e il 5 e (p m er e c n en t t) (percent) OTHER BANKS 1 Overnight7 1,957,926 2,090 * 9.55 .83 9.33-9.69 97.8 .0 2 One month and under 1,551,146 187 20 10.59 .05 9.76-11.07 80.0 15.5 3 Fixed rate 840,636 199 17 10.42 .08 9.81-10.71 75.4 23.8 4 Floating rate 710,510 175 22 10.79 .19 9.48-11.07 85.4 5.6 5 Over one month and under a year . 3,944,665 60 158 11.69 .14 11.02-12.68 66.1 7.0 6 Fixed rate 1,408,280 44 129 11.47 .16 9.85-12.67 49.5 1.7 7 Floating rate 2,536,386 76 174 11.82 .14 11.02-12.68 75.3 9.9 8 Demand8 4,800,143 119 * 11.62 .06 11.02-12.55 93.4 4.6 9 Fixed rate 634,032 239 * 10.30 .51 9.33-10.88 94.1 3.3 10 Floating rate 4,166,111 no * 11.83 .06 11.07-12.55 93.3 4.8 11 Total short term 12,253,880 106 88 11.18 .11 9.81-12.19 83.6 6.0 12 Fixed rate (thousands of dollars) .. 4,840,871 121 47 10.36 .20 9.42-11.07 79.4 5.0 13 1-24 212,657 7 111 12.70 .10 11.90-13.47 23.9 1.6 14 25-49 114,516 33 120 12.53 .15 12.06-13.03 27.4 .1 15 50-99 188,883 66 146 12.06 .45 11.57-13.24 16.1 7.3 16 100-499 386,431 201 80 11.79 .16 10.73-12.75 36.1 1.8 17 500-999 250,186 711 108 10.61 .21 9.97-11.07 44.8 5.3 18 1000 and over 3,688,197 5,380 27 9.90 .26 9.35-10.07 94.3 5.6 19 Floating rate (thousands of dollars) 7,413,009 98 141 11.72 .10 11.02-12.55 86.4 6.6 20 1-24 387,212 10 153 12.71 .06 12.13-13.31 73.1 0.7 21 25-49 398,394 34 145 12.49 .06 11.85-13.24 78.2 1.7 22 50-99 699,078 66 162 12.31 .05 11.63-12.75 80.5 4.0 23 100-499 2,339,816 200 150 12.04 .07 11.30-12.68 83.3 7.1 24 500-999 946,362 675 158 11.59 .11 11.05-12.15 90.3 11.0 25 1000 and over 2,642,146 2,811 120 11.08 .20 10.44-11.85 92.4 6.8 Months 26 Total long term 1,782,213 106 44 11.96 .10 11.20-12.68 51.2 9.6 27 Fixed rate (thousands of dollars) .. 3%,470 52 52 11.70 .26 11.02-12.75 34.9 1.1 28 1-99 148,082 21 41 12.28 .40 11.57-13.23 15.4 .2 29 100-499 113,844 178 46 12.12 .23 11.35-12.96 21.5 3.6 30 500-999 27,292 704 89 11.29 .24 10.97-11.99 33.9 .0 31 1000 and over 107,251 2,578 65 10.54 .30 9.80-11.35 76.2 .0 32 Floating rate (thousands of dollars) 1,385,743 150 42 12.04 .18 11.25-12.68 55.9 12.1 33 1-99 168,654 24 56 12.49 .12 11.91-13.24 45.9 1.9 34 100-499 311,618 192 38 12.46 .28 11.57-12.% 51.5 11.0 35 500-999 207,678 600 42 12.01 .24 11.25-12.75 52.6 10.5 36 1000 and over 697,792 3,773 40 11.76 .11 11.07-12.19 61.3 15.4 Loan rate (percent) DDaayyss Prime rate Effective3 Nominal9 LOANS MADE BELOW PRIME11 37 Overnight7 '. 1,954,630 4,127 * 9.54 9.12 10.50 97.8 .0 38 One month and under 912,225 623 15 9.85 9.40 10.55 86.3 20.5 39 Over one month and under a year 9%,991 137 146 9.98 9.56 10.78 86.5 5.6 40 Demand8 808,252 399 * 9.70 9.27 10.70 %.l 4.7 41 Total short term 4,672,098 415 42 9.72 9.29 10.61 92.8 6.0 42 Fixed rate 3,605,376 536 23 9.65 9.22 10.55 91.8 5.3 43 Floating rate 1,066,722 235 123 9.98 9.55 10.79 %.2 8.6 Months 44 Total long term 255,707 111 45 10.39 9.9! 11.20 60.9 25.1 45 Fixed rate 124,278 71 55 10.09 9.63 11.00 52.7 3.5 46 Floating rate .. 131,430 235 36 10.67 10.16 11.39 68.6 45.4 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Special Tables • March 1990 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, November 6-10, 19891—Continued B. Loans to Farmers12 Size class of loans (thousands) Characteristic All sizes $1-9 $10-24 $25-49 $50-99 $100-249 an $ d 2 5 o 0 v er ALL BANKS 1 Amount of loans (thousands of dollars) $ 1,132,505 $ 110,182 $ 154,326 $ 197,356 $ 158,728 $ 205,328 $ 306,586 2 i N W u e m ig b h e te r d o f a v lo e a ra n g s e maturity (months)2 49,3 8 9 . 1 0 28,9 6 9 . 7 9 10,4 6 4 .9 6 55,,66 88 88 .. 55 88 2,3 9 1 .0 6 11,,33 88 55 ..11 77 5 8 9 .0 0 4 Weighted average interest rate (percent)3 12.16 12.70 12.53 12.51 12.04 12.25 11.95 6 5 I S n ta te n r d q a u r a d r t e il r e r o r r a nge5 11.50-12. . 7 5 5 0 12.19-13. . 2 4 1 4 12.01-13. . 0 2 5 0 11.96-13. . 0 2 3 3 11.56-12. . 6 2 9 3 11.67-12. . 8 2 4 8 11.02-12. . 0 5 8 8 By purpose of loan 7 Feeder livestock 12.20 12.69 12.65 12.60 12.26 12.28 11.48 8 Other livestock 12.19 13.03 12.80 12.65 12.63 12.53 11.55 9 Other current operating expenses 12.08 12.63 12.45 12.45 11.53 12.18 11.39 10 Farm machinery and equipment 12.37 12.94 12.16 12.28 * 11 Farm real estate 12.26 12.23 12.61 12.22 11.17 * * 12 Other 12.16 12.81 12.34 12.20 12.50 12.01 11.97 Percentage of amount of loans 13 With floating rates 62.5 45.1 44.0 54.6 57.5 73.4 78.6 14 Made under commitment 55.9 42.0 40.4 51.1 41.8 62.7 74.5 By purpose of loan 15 Feeder livestock 29.1 13.1 23.4 35.9 38.5 31.0 27.1 lb Other livestock 17.2 10.1 13.8 19.4 13.2 8.2 28.3 17 Other current operating expenses 37.1 61.8 50.8 29.3 33.2 33.9 30.7 18 Farm machinery and equipment 2.9 7.8 4.6 5.1 19 Farm real estate 5.1 2.1 2.1 7.6 3.6 * * 20 Other 8.6 5.1 5.3 2.7 9.7 18.3 8.3 LARGE BANKS12 1 Amount of loans (thousands of dollars) $ 500,097 $ 15,226 $ 29,809 $ 44,387 $ 48,331 $ 107,771 $ 254,674 3 2 N W u e m ig b h e te r d o f a v lo e a ra n g s e maturity (months)2 9,0 7 1 .5 8 3,9 6 2 .9 0 1,9 7 8 .6 9 1,2 9 5 .0 1 7 7 1 .2 1 7 7 0 .5 8 4 7 4 .4 0 4 Weighted average interest rate (percent)3 11.77 12.74 12.49 12.31 12.18 11.97 11.38 5 Standard error .48 .43 .16 .21 .14 .16 .53 6 Interquartile range 11.07-12.47 12.19-13.31 12.01-12.96 11.91-12.75 11.63-12.70 11.42-12.47 11.02-12.01 By purpose of loan 7 Feeder livestock 11.76 12.58 12.54 12.43 12.06 11.90 11.33 8 Other livestock 11.33 12.87 12.64 12.78 12.30 11.14 9 Other current operating expenses 11.82 12.70 12.47 12.25 12.23 12.01 11.39 10 Farm machinery and equipment 12.32 13.30 12.13 * * 11 Farm real estate 11.79 12.23 12.33 11.99 11.48 * * 12 Other 12.09 12.88 12.51 11.97 12.40 11.92 12.03 Percentage of amount of loans 1 1 3 4 W Ma it d h e f l u o n a d ti e n r g c r o a m te m s itment 8 8 0 5 . . 7 7 8 7 5 9 . . 5 4 8 7 6 5 . . 2 3 8 7 8 3 . . 7 5 8 7 7 7 . . 4 4 9 8 2 9 . . 1 4 8 7 2 9 . . 1 6 By purpose of loan 15 Feeder livestock 27.7 13.0 25.1 37.2 28.2 31.9 25.4 16 Other livestock 14.9 5.0 6.9 5.3 3.4 25.4 17 Other current operating expenses 38.7 60.9 47.0 42.5 40.7 35.2 36.9 18 Farm machinery and equipment 1.4 5.0 3.0 * * 19 Farm real estate 4.1 2.1 3.7 3.0 6.6 * * 20 Other 13.1 14.1 14.3 9.9 19.2 24.5 7.5 OTHER BANKS12 1 Amount of loans (thousands of dollars) $ 632,408 $ 94,956 $ 124,516 $ 152,969 $ 110,397 $ 97,557 » 2 i N W u e m ig b h e te r d o f a v lo e a ra n g s e maturity (months)2 40,3 8 7 .3 4 25,0 6 7 .9 8 8,4 6 5 .8 7 44,,44 88 33 ..88 44 1,6 9 0 .6 5 6 8 5 .6 0 * * 4 5 We S i t g a h n t d e a d r d a v e e r r r a o g r e 4 interest rate (percent)3 12 . . 1 4 2 6 12 . . 0 7 7 0 12. . 5 1 4 0 12. . 5 0 7 9 11. . 9 1 9 7 12. . 5 2 5 3 * * 6 Interquartile range 11.97-13.03 12.19-13.16 12.01-13.10 12.00-13.10 10.88-12.68 11.91-12.89 * By purpose of loan / Feeder livestock 12.53 12.71 12.68 12.66 12.31 * * 8 Other livestock 12.72 13.04 12.82 12.64 * * * 9 Other current operating expenses 12.30 12.62 12.44 12.55 11.11 * * 10 Farm machinery and equipment 12.39 12.90 12.17 * * * * 11 Farm real estate 12.52 12.22 * 12.24 * * * 12 Other 12.29 12.76 * * * * For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 4.23—Continued B. Loans to Farmers12—Continued Size class of loans (thousands) Characteristic All sizes $1-9 $10-24 $25-49 $50-99 $100-249 an $ d 2 5 o 0 v er Percentage of amount of loans 13 With floating rates 44.2 38.6 33.9 44.7 44.5 52.7 14 Made under commitment 36.3 36.0 32.0 44.6 26.3 33.3 * By purpose of loan 15 Feeder livestock 30.1 13.1 23.0 35.5 43.0 16 Other livestock 19.1 10.9 15.5 23.5 * * * 17 Other current operating expenses 35.9 62.0 51.7 25.5 30.0 * * 18 Farm machinery and equipment 4.0 8.3 5.0 * * * 19 Farm real estate 5.9 2.1 9.0 * * 20 Other 5.0 3.6 * * * * * *Fewer than 10 sample loans. 6. The most common base rate is that rate used to price the largest dollar 1. The survey of terms of bank lending to business collects data on gross loan volume of loans. Base pricing rates include the prime rate (sometimes referred to extensions made during the first full business week in the mid-month of each as a bank's "basic" or "reference" rate); the federal funds rate; domestic money quarter by a sample of 340 commercial banks of all sizes. A subsample of 250 market rates other than the federal funds rate; foreign money market rates; and banks also report loans to farmers. The sample data are blown up to estimate the other base rates not included in the foregoing classifications. lending terms at all insured commercial banks during that week. The estimated 7. Overnight loans are loans that mature on the following business day. terms of bank lending are not intended for use in collecting the terms of loans 8. Demand loans have no stated date of maturity. extended over the entire quarter or residing in the portfolios of those banks. 9. Nominal (not compounded) annual interest rates are calculated from survey Mortgage loans, purchased loans, foreign loans, and loans of less than $1,000 are data on the stated rate and other terms of the loan and weighted by loan size. excluded from the survey. 10. The prime rate reported by each bank is weighted by the volume of loans As of Dec. 31, 1988, assets of most of the large banks were at least $6.0 billion. extended and then averaged. For all insured banks total assets averaged $220 million. 11. The proportion of loans made at rates below prime may vary substantially 2. Average maturities are weighted by loan size and exclude demand loans. from the proportion of such loans outstanding in banks' portfolios. 3. Effective (compounded) annual interest rates are calculated from the stated 12. Among banks reporting loans to farmers (Table B), most "large banks" rate and other terms of the loan and weighted by loan size. (survey strata 1 to 2) had over $20 million in farm loans, and most "other banks" 4. The chances are about two out of three that the average rate shown would (survey strata 3 to 5) had farm loans below $20 million. differ by less than this amount from the average rate that would be found by a The survey of terms of bank lending to farmers now includes loans secured by complete survey of lending at all banks. farm real estate. In addition, the categories describing the purpose of farm loans 5. The interquartile range shows the interest rate range that encompasses the have now been expanded to include "purchase or improve farm real estate." In middle 50 percent of the total dollar amount of loans made. previous surveys, the purpose of such loans was reported as "other." Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Special Tables • March 1990 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19891 Millions of dollars All states2 New York California Illinois Item in T c I l B o u t F d a i s l n g o IB nl F y s in T c I l B o u t F d a s i l n g o IB nl F y s inc T I l B o u t F d a s i l n g o IB nl F y s inc T I l B o u t F d a i s l n g o IB nl F y s 1 Total assets4 561,461 264,602 414,924 210,081 78,029 28,788 41,394 16,091 2 Claims on nonrelated parties 504,359 214,215 372,026 170,991 70,893 22,972 40,955 14,812 3 Cash and balances due from depository institutions 144,548 123,285 120,685 102,570 9,858 8,939 12,168 10,651 4 Cash items in process of collection and unposted debits 836 0 783 0 31 0 5 00 5 Currency and coin (U.S. and foreign) 23 n.a. 17 n.a. 2 n.a. 1 n.a. 6 Balances with depository institutions in United States .. 80,380 61,522 67,035 50,963 5,419 4,686 7,114 5,638 7 U.S. branches and agencies of other foreign banks (including their IBFs) 70,469 58,428 59,005 48,274 4,840 4,544 6,171 5,431 8 Other depository institutions in United States (including their IBFs) 9,911 3,095 8,030 2,689 579 142 943 206 9 Balances with banks in foreign countries and with foreign central banks 62,579 61,763 52,244 51,608 4,371 4,253 5,014 5,013 10 Foreign branches of U.S. banks 1,741 1,700 1,091 1,050 593 593 50 50 11 Other banks in foreign countries and foreign central banks 60,838 60,062 51,153 50,558 3,778 3,660 4,964 4,963 12 Balances with Federal Reserve Banks 730 n.a. 607 n.a. 35 n.a. 34 n.a. 13 Total securities and loans 283,392 78,364 188,429 58,131 50,962 12,477 26,470 3,590 14 Total securities, book value 35,113 11,338 29,194 9,193 3,901 1,511 1,258 544 15 U.S. Treasury 5,559 n.a. 5,122 n.a. 188 n.a. 188 n.a. 16 Obligations of U.S. government agencies and corporations 44,,990099 n.a. 44,,775588 n.a. 110011 n.a. 1100 n.a. 17 Other bonds, notes, debentures and corporate stock (including state and local securities) 24,645 11,338 19,314 9,193 3,612 1,511 1,060 544 18 Federal funds sold and securities purchased under agreements to resell 20,139 3,760 18,779 3,310 642 305 349 114 19 U.S. branches and agencies of other foreign banks 11,038 2,240 10,075 1,789 565 305 283 114 20 Commercial banks in United States 5,160 12 4,951 12 68 0 24 0 21 Other 3,941 1,508 3,752 1,508 9 0 42 0 22 Total loans, gross 248,491 67,067 159,368 48,975 47,115 10,969 25,228 3,048 73 Less: Unearned income on loans 213 41 133 37 55 2 16 2 24 Equals: Loans, net 248,278 67,026 159,236 48,938 47,061 10,967 25,212 3,046 Total loans, gross, by category 75 Real estate loans 28,033 347 15,333 213 7,238 128 33,,112288 00 26 Loans to depository institutions 57,553 33,208 40,301 20,574 10,693 8,004 4,161 2,603 27 Commercial banks in United States (including IBFs) 33,464 11,528 23,578 5,992 6,598 4,002 3,019 1,474 28 U.S. branches and agencies of other foreign banks ... 29,348 10,984 20,279 5,681 6,253 3,778 2,555 1,464 29 Other commercial banks in United States 4,116 544 3,299 310 345 224 464 10 30 Other depository institutions in United States (including IBFs) 111 3 55 3 50 0 5 0 31 Banks in foreign countries 23,979 21,677 16,669 14,579 4,045 4,002 1,137 1,129 37. Foreign branches of U.S. banks 499 367 430 299 42 42 25 25 33 Other banks in foreign countries 23,480 21,310 16,239 14,281 4,003 3,960 1,111 1,104 34 Other financial institutions 7,480 857 5,403 658 981 157 541 28 35 Commercial and industrial loans 130,972 15,780 78,675 13,409 25,878 1,708 16,998 330 36 U.S. addressees (domicile) 109,947 193 62,169 90 23,111 94 16,537 9 37 Non-U.S. addressees (domicile) 21,026 15,586 16,506 13,319 2,767 1,614 460 320 38 Acceptances of other banks 1,346 15 833 15 432 0 10 0 39 U.S. banks 283 4 229 4 40 0 0 0 40 Foreign banks 1,063 11 603 11 392 0 10 0 41 Loans to foreign governments and official institutions (including foreign central banks) 18,023 16,629 15,037 13,881 1,023 972 132 88 42 Loans for purchasing or carrying securities (secured and unsecured) 2,745 79 1,944 79 880000 0 0 00 43 All other loans 2,339 152 1,843 145 70 0 259 0 44 All other assets 56,281 8,805 44,133 6,981 9,431 1,250 1,968 458 45 Customers' liability on acceptances outstanding 31,092 n.a. 23,324 n.a. 6,805 n.a. 718 n.a. 46 U.S. addressees (domicile) 21,633 n.a. 14,587 n.a. 6,265 n.a. 711 n.a. 47 Non-U.S. addressees (domicile) 9,459 n.a. 8,737 n.a. 539 n.a. 8 n.a. 48 Other assets including other claims on nonrelated parties 25,189 8,805 20,809 6,981 2,626 1,250 1,249 458 49 Net due from related depository institutions 57,103 50,388 42,898 39,089 7,136 5,816 439 1,279 50 Net due from head office and other related depository institutions 57,103 n.a. 42,898 n.a. 7,136 n.a. 439 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions n.a. 50,388 n.a. 39,089 n.a. 55,,881166 n.a. 11,,227799 52 Total liabilities4 561,461 264,602 414,924 210,081 78,029 28,788 41,394 16,091 53 Liabilities to nonrelated parties 484,914 232,388 370,349 186,115 70,822 26,744 26,715 11,245 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A85 4.30—Continued Millions of dollars All states2 New York California Illinois IItteemm Total IBFs Total IBFs Total IBFs Total IBFs exc I l B u F d s in g only exc I l B u F d s in g only exc I l B u F d s in g only exc I l B u F d s in g only 54 Total deposits and credit balances 76,085 183,336 63,033 160,512 3,382 9,746 3,460 7,014 55 Individuals, partnerships, and corporations 60,514 15,577 49,204 10,107 2,640 335 2,791 69 56 U.S. addressees (domicile) 46, J98 312 40,730 288 962 0 1,916 24 57 Non-U.S. addressees (domicile) 13,616 15,265 8,474 9,820 1,678 335 875 45 58 Commercial banks in United States (including IBFs)... 10,859 64,142 9,551 55,417 619 4,856 652 3,535 59 U.S. branches and agencies of other foreign banks .. 4,617 56,257 4,024 48,300 6 4,326 561 3,332 60 Other commercial banks in United States 6,242 7,885 5,528 7,117 613 530 91 203 61 Banks in foreign countries 1,534 94,775 1,392 86,476 42 4,489 1 3,391 62 Foreign branches of U.S. banks 175 6,903 155 5,859 20 482 0 557 63 Other banks in foreign countries 1,360 87,872 1,237 80,617 22 4,007 1 2,834 64 Foreign governments and official institutions (including foreign central banks) 1,065 8,072 938 7,746 24 67 2 20 65 All other deposits and credit balances 1,328 7/0 1,233 767 31 0 2 0 66 Certified and official checks 785 n. a. 714 n a. 26 n.a. 12 n a. 67 Transaction accounts and credit balances (excluding IBFs) 7,561 6,477 266 247 68 Individuals, partnerships, and corporations 4,874 3,978 223 231 69 U.S. addressees (domicile) 3,578 3,044 179 225 70 Non-U.S. addressees (domicile) 1,296 935 44 6 71 . Commercial banks in United States (including IBFs)... 254 245 2 0 72 U.S. branches and agencies of other foreign banks .. 59 58 0 0 73 Other commercial banks in United States 195 n.a. 187 n a. 2 n.a. 0 n.a. 74 Banks in foreign countries 871 804 10 1 75 Foreign branches of U.S. banks 14 14 0 0 76 Other banks in foreign countries 856 789 10 1 77 Foreign governments and official institutions (including foreign central banks) 507 475 2 1 78 All other deposits and credit balances 271 261 3 1 79 Certified and official checks 785 714 26 12 80 Demand deposits (included in transaction accounts and credit balances) 6,570 5,712 197 237 81 Individuals, partnerships, and corporations 4,267 3,587 156 222 82 U.S. addressees (domicile) 3,168 2,741 133 216 83 Non-U.S. addressees (domicile) 1,099 846 24 5 84 Commercial banks in United States (including IBF)s... 131 126 1 0 85 U.S. branches and agencies of other foreign banks .. 17 16 0 0 86 Other commercial banks in United States 113 n.a. 110 n.a. 1 n.a. 0 n.a. 87 Banks in foreign countries 748 686 10 1 88 Foreign branches of U.S. banks 14 14 0 0 89 Other banks in foreign countries 733 671 10 1 90 Foreign governments and official institutions (including foreign central banks) 463 431 2 1 91 All other deposits and credit balances 177 168 2 1 92 Certified and official checks 785 714 26 12 93 Non-transaction accounts (including MMDAs, excluding IBFs) 68,523 56,556 3,116 3,213 94 Individuals, partnerships, and corporations 55,640 45,226 2,417 2,560 95 U.S. addressees (domicile) 43,320 37,686 784 1,690 96 Non-U.S. addressees (domicile) 12,320 7,539 1,634 869 97 Commercial banks in United States (including IBFs)... 10,605 9,306 617 652 98 U.S. branches and agencies of other foreign banks .. 4,558 3,966 6 561 99 Other commercial banks in United States 6,048 n.a. 5,340 n.a. 611 n.a. 91 n.a. 100 Banks in foreign countries 664 588 32 0 101 Foreign branches of U.S. banks 161 >41 20 0 102 Other banks in foreign countries 503 448 12 0 103 Foreign governments and official institutions (including foreign central banks) 559 463 22 1 104 All other deposits and credit balances 1,056 972 28 1 105 IBF deposit liabilities 183,336 160,512 9,746 7,014 106 Individuals, partnerships, and corporations 15,577 10,107 335 69 107 U.S. addressees (domicile) 312 288 0 24 108 Non-U.S. addressees (domicile) 15,265 9,820 335 45 109 Commercial banks in United States (including IBFs)... 64,142 55,417 4,856 3,535 110 U.S. branches and agencies of other foreign banks .. 56,257 48,300 4,326 3,332 111 Other commercial banks in United States n.a. 7,885 n.a. 7,117 n.a. 530 n.a. 203 112 Banks in foreign countries 94,775 86,476 4,489 3,391 113 Foreign branches of U.S. banks 6,903 5,859 482 557 114 Other banks in foreign countries 87,872 80,617 4,007 2,834 115 Foreign governments and official institutions 116 All ( o in th c e lu r d d in e g p o f s o i r ts e ig a n n d c e c n r t e r d a i l t b b a a n la k n s c ) es 8,0 n 72 o 7,7 76 4 7 6 6 0 7 2 0 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Special Tables • March 1990 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, September 30, 19891—Continued Millions of dollars All states2 New York California Illinois IItteemm inc T I l B o u t F d a i s l n g o IB nl F y s inc T I l B o u t F d a i s l n g o IB nl F y s inc T I l B o u t F d a i s l n g o IB nl F y s inc T I l B o u t F d a i s l n g o IB nl F y s 117 Federal funds purchased and securities sold under agreements to repurchase 51,026 4,680 36,880 2,568 10,503 1,725 3,105 327 118 U.S. branches and agencies of other foreign banks 13,707 2,100 8,811 868 4,169 1,055 602 168 119 Other commercial banks in United States 18,487 748 11,420 285 5,078 453 1,712 10 170 Other 18,832 1,832 16,650 1,414 1,256 217 792 148 121 Other borrowed money 118,785 36,493 67,775 16,721 36,714 14,208 10,918 3,545 12.2 Owed to nonrelated commercial banks in United States (including IBFs) 72,225 14,795 37,000 4,111 26,447 8,443 6,709 1,291 m Owed to U.S. offices of nonrelated U.S. banks 30,901 1,910 18,337 835 8,264 792 3,756 115 124 Owed to U.S. branches and agencies of nonrelated foreign banks 41,324 12,884 18,663 3,275 18,183 7,651 2,953 1,176 125 Owed to nonrelated banks in foreign countries 20,219 19,369 11,088 10,307 5,783 5,740 2,270 2,254 126 Owed to foreign branches of nonrelated U.S. banks ... 2,543 2,459 1,172 1,089 947 946 302 302 127 Owed to foreign offices of nonrelated foreign banks.... 17,676 16,910 9,916 9,218 4,836 4,794 1,968 1,952 128 Owed to others 26,341 2,329 19,687 2,304 4,484 25 1,938 0 129 All other liabilites 55,682 7,879 42,148 6,314 10,477 1,065 2,218 360 130 Branch or agency liability on acceptances executed and outstanding 33,490 n.a. 23,581 n. a. 8,185 n. a. 1,218 n.a. 131 Other liabilities to nonrelated parties 22,193 7,879 18,567 6,314 2,292 1,065 1,001 360 132 Net due to related depository institutions5 76,547 32,215 44,575 23,965 7,207 2,044 14,679 4,846 133 Net due to head office and other related depository institutions 76,547 n.a. 44,575 n.a. 7,207 n. a. 14,679 n.a. 134 Net due to establishing entity, head office, and other related depository institutions n.a. 32,215 n.a. 23,965 n.a. 2,044 n.a. 4,846 MEMO 135 Non-interest bearing balances with commercial banks in United States 2,178 5 1,948 5 96 0 71 0 136 Holding of commercial paper included in total loans 998 733 219 45 137 Holding of own acceptances included in commercial and industrial loans 3,378 1,913 1,190 134 138 Commercial and industrial loans with remaining maturity of one year or less 68,788 38,913 14,325 9,413 139 Predetermined interest rates 39,366 n.a. 20,541 n.a. 10,291 n. a. 5,135 n.a. 140 Floating interest rates 29,422 18,372 4,034 4,278 141 Commercial and industrial loans with remaining maturity of more than one year 62,185 39,762 11,553 7,585 142 Predetermined interest rates 20,468 13,826 3,667 2,309 143 Floating interest rates 41,717 25,937 7,886 5,276 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A87 4.30—Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c I l B o u t F d a s i l n g o IB nl F y s ex T c I l B o u t F d a s i l n g o IB nl F y s ex T c I l B o u t F d a s i l n g o IB nl F y s ex T c I l B o u t F d a s i l n g o IB nl F y s 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd ccccrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnnaaaallll aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 89,969 1 77,373 t 3,551 t 3,577 1 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 50,385 42,436 2,165 1,618 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 12,906 n1.a. 10,628 677 n1.a. 1,430 n1.a. 111144447777 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee n1.a. wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss ........ 26,679 24,309 710 530 All states2 New York California Illinois in T c I l B o u t F d a i s l n g o IB nl F y s inc T I l B o u t F d a i s l n g o IB nl F y s inc T I l B o u t F d a s i l n g o IB nl F y s inc T I l B o u t F d a s i l n g o IB nl F y s 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 34,269 10,898 28,708 8,865 3,549 1,399 1,254 544 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn 66,939 n.a. 37,549 n.a. 24,129 n.a. 3,973 n.a. oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 531 0 253 0 127 0 53 0 111155550000 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, that no IBF data re reported for that item, either because the item is not an eligible "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign IBF asset or liability or because that level of detail is not reported for IBFs. From Banks." Details may not add to totals because of rounding. This form was first December 1981 through September 1985, IBF data were included in all applicable used for reporting data as of June 30, 1980, and was revised as of December 31, items reported. 1985. From November 1972 through May 1980, U.S. branches and agencies of 4. Total assets and total liabilities include net balances, if any, due from or due foreign banks had filed a monthly FR 886a report. Aggregate data from that report to related banking institutions in the United States and in foreign countries (see were available through the Federal Reserve statistical release G. 11, last issued on footnote 5). On the former monthly branch and agencyu report, available through July 10, 1980. Data in this table and in the G.ll tables are not strictly comparable the G.ll statistical release, gross balances were included in total assets and total because of differences in reporting panels and in definitions of balance sheet liabilities. Therefopre, total asset and total liability figures in this table are not items. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. "Related banking institutions" includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of the bank, the bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent International Banking Facilities (IBFs). As of December 31, 1985 data for IBFs holding company (including subsidiaries owned both directly and indirectly). are reported in a separate column. These data are either included in or excluded 6. In some cases two or more offices of a foreign bank within the same from the total columns as indicated in the headings. The notation "n.a." indicates metropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A88 Special Tables • March 1990 4.31 Pro forma balance sheet for priced services of the Federal Reserve System1 Millions of dollars Item September 30, 1989 September 30, 1988 Short-term assets2 Imputed reserve requirement on clearing balances 217.9 214.3 Investment in marketable securities 1,598.1 1,571.7 Receivables 55.1 54.7 Materials and supplies 6.6 6.1 Prepaid expenses 18.6 19.5 Items in process of collection 3,243.7 3,999.5 Total short-term assets 5,140.0 5,865.8 Long-term assets3 Premises 285.1 267.2 Furniture and equipment 122.0 124.3 Leases and leasehold improvements 6.1 5.7 Prepaid pension costs 48.4 20.8 Total long-term assets 461.6 418.0 Total assets 5,601.6 6,283.7 Short-term liabilities Clearing balances and balances arising from early credit of uncollected items 2,199.9 2,748.5 Deferred available items 2,859.7 3,037.1 Short-term debt 80.3 80.2 Total short-term liabilities 5,140.0 5,865.8 Long-term liabilities Obligations under capital leases 1.2 1.2 Long-term debt 131.0 125.9 Total long-term liabilities 132.2 127.1 Total liabilities 5,272.2 5,992.9 Equity 329.4 290.9 Total liabilities and equity4 5,601.6 6,283.7 1. Details may not sum to totals because of rounding. collected for government agencies; and items associated with providing fixed 2. The imputed reserve requirement on clearing balances and investment in availability or credit prior to receipt and processing of items. The cost base for marketable securities reflect the Federal Reserve's treatment of clearing balances providing services that must be recovered under the Monetary Control Act maintained on deposit with Reserve Banks by depository institutions. For includes the cost of float (the difference between the value of gross CIPC and the presentation of the balance sheet and the income statement, clearing balances are value of deferred availability items) incurred by the Federal Reserve during the reported in a manner comparable to the way correspondent banks report period, valued at the federal funds rate. The amount of float, or net CIPC, compensating balances held with them by respondent institutions. That is, represents the portion of gross CIPC that involves a financing cost. respondent balances held with a correspondent are subject to a reserve require- 3. Long-term assets on the balance sheet have been allocated to priced services ment established by the Federal Reserve. This reserve requirement must be with the direct determination method, which uses the Federal Reserve's Planning satisfied with either vault cash or with nonearning balances maintained at a and Control System (PACS) to ascertain directly the value of assets used solely in Reserve Bank. Following this model, clearing balances maintained with Reserve priced services operations and to apportion the value of jointly used assets Banks for priced service purposes are subjected to imputed reserve requirements. between priced services and nonpriced services. Also, long-term assets include an Therefore, a portion of the clearing balances held with the Federal Reserve is estimate of the assets of the Board of Governors directly involved in the classified on the asset side of the balance sheet as required reserves and is development of priced services. reflected in a manner similar to vault cash and due from bank balances normally Long-term assets include amounts for capital leases and leasehold improveshown on a correspondent bank's balance sheet. The remainder of clearing ments and for prepaid pension costs associated with priced services. Effective balances is assumed to be available for investment. For these purposes, the January 1, 1987, the Federal Reserve Banks implemented Financial Accounting Federal Reserve assumes that all such balances are invested in three-month Standards Board Statement No. 87, Employer's Accounting for Pensions. Treasury bills. 4. A matched-book capital structure has been used for those assets that are not The account "items in the process of collection" (CIPC) represents the gross "self-financing" in determining liability and equity amounts. Short-term assets amount of Federal Reserve CIPC as of the balance sheet date, stated on a basis are financed with short-term debt. Long-term assets are financed with long-term comparable with a commercial bank. Adjustments have been made for intra- debt and equity in a proportion equal to the ratio of long-term debt to equity for System items that would otherwise be double-counted on a consolidated Federal the bank holding companies used in the model for the private sector adjustment Reserve balance sheet; items associated with nonpriced items, such as items factor (PSAF). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank Reported Data A89 4.32 Pro forma income statement for priced services of the Federal Reserve System1 Millions of dollars Quarter ending September 30 IItteemm 1989 1988 Income services provided to depository institutions2 178.7 165.9 Production expenses3 138.2 114.2 Income from operations 40.5 51.6 Imputed costs4 Interest on float 9.6 10.0 Interest on debt 12.6 12.1 Sales taxes 1.9 2.0 FDIC insurance .4 24.5 .4 24.5 Income from operations after imputed costs 16.0 27.1 Other income and expenses5 Investment income 37.4 34.6 Earnings credits 35.0 _2.4 32.6 2.0 Income before income taxes 18.4 29.1 Imputed income taxes6 6.2 9.4 Net income 12.2 19.7 MEMO Targeted return on equity6 8.2 8.2 Nine months ending June 30 1989 1988 Income services provided to depository institutions2 536.5 493.6 Production expenses3 441.3 376.3 Income from operations 95.1 117.3 Imputed costs4 Interest on float 33.0 21.6 Interest on debt 21.1 28.3 Sales taxes 5.6 6.3 FDIC insurance J.2 Ji0.9 1.2 57.4 Income from operations after imputed costs 34.2 59.9 Other income and expenses5 Investment income 116.3 90.1 Earnings credits 109.3 J7.0 85.1 5.0 Income before income taxes 41.2 64.9 Imputed income taxes6 18^3 23.6 Net income 22.9 41.3 MEMO Targeted return on equity6 24.6 24.6 1. The income statement reflects income and expenses for priced services. through adjustments to the institution's reserve or clearing balance or by valuing Included in these amounts are the imputed costs of float, imputed financing costs, the float at the federal funds rate and billing the institution directly. and the income related to clearing balances. Float recovered through per-item fees is valued at the federal funds rate and has Details may not add to totals because of rounding. been added to the cost base subject to recovery in the second quarter of 1989 2. Income represents charges to depository institutions for priced services. Total float 721.2 This income is realized through one of two methods: direct charges to an Unrecovered float 48.9 institution's account or charges against accumulated earnings credits. Income Float subject to recovery 672.3 includes charges for per-item fees, fixed fees, package fees, explicitly priced float, Sources of float recovery account maintenance fees, shipping and insurance fees, and surcharges. Income on clearing balances 80.7 3. Production expenses include direct, indirect, and other general administra- As of adjustments 279.5 tive expenses of the Federal Reserve Banks for providing priced services. Also Direct charges 85.8 included are the expenses of staff members of the Board of Governors working Per-item fees 226.3 directly on the development of priced services, which amounted to $0.4 million in Also included in imputed costs is the interest on debt assumed necessary to the third quarter and $1.3 million in the first nine months for both 1989 and 1988. finance priced-service assets and the sales taxes and FDIC insurance assessment 4. Imputed float costs represent the value of float to be recovered, either that the Federal Reserve would have paid had it been a private-sector firm. explicitly or through per-item fees, during the period. Float costs include those for 5. Other income and expenses consist of income on clearing balances and the checks, book-entry securities, noncash collection, ACH, and wire transfers. cost of earnings credits granted to depository institutions on their clearing The following table depicts the daily average recovery of float by the Federal balances. Income on clearing balances represents the average coupon-equivalent Reserve Banks for the second quarter of 1989. In the table, unrecovered float yield on three-month Treasury bills applied to the total clearing balance mainincludes that generated by services to government agencies or by other central tained, adjusted for the effect of reserve requirements on clearing balances. bank services. Expenses for earnings credits are derived by applying the average federal funds Float recovered through income on clearing balances represents increased rate to the required portion of the clearing balances, adjusted for the net effect of investable clearing balances as a result of reducing imputed reserve requirements reserve requirements on clearing balances. through the use of a deduction for float for cash items in process of collection 6. Imputed income taxes are calculated at the effective tax rate derived from a when calculating the reserve requirement. This income then reduces the float model consisting of the 25 largest bank holding companies. The targeted return on required to be recovered through other means. equity represents the after-tax rate of return on equity that the Federal Reserve As-of adjustments and direct charges refer to midweek closing float and would have earned had it been a private business firm, based on the bank holding interterritory check float, which may be recovered from depositing institutions company model. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A90 Federal Reserve Board of Governors ALAN GREENSPAN, Chairman MARTHA R. SEGER MANUEL H. JOHNSON, Vice Chairman WAYNE D. ANGELL OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director BOB STAHLY MOORE, Special Assistant to the Board CHARLES J. SIEGMAN, Senior Associate Director DAVID H. HOWARD, Deputy Associate Director ROBERT F. GEMMILL, Staff Adviser LEGAL DIVISION DONALD B. ADAMS, Assistant Director PETER HOOPER III, Assistant Director 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 DAVID J. STOCKTON, Associate Director WILLIAM W. WILES, Secretary MARTHA BETHEA, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary PETER A. TINSLEY, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary MYRON L. KWAST, Assistant Director PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director DIVISION OF CONSUMER JOYCE K. ZICKLER, Assistant Director LEVON H. GARABEDIAN, Assistant Director AND COMMUNITY AFFAIRS (A dministration) GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director DIVISION OF MONETARY AFFAIRS ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director BRIAN F. MADIGAN, Assistant Director DIVISION OF BANKING RICHARD D. PORTER, Assistant Director SUPERVISION AND REGULATION NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM TAYLOR, Staff Director DON E. KLINE, Associate Director OFFICE OF THE INSPECTOR GENERAL FREDERICK M. STRUBLE, Associate Director WILLIAM A. RYBACK, Deputy Associate Director BRENT L. BOWEN, Inspector General STEPHEN C. SCHEMERING, Deputy Associate Director BARRY R. SNYDER, Assistant Inspector General RICHARD SPILLENKOTHEN, Deputy Associate Director HERBERT A. BIERN, Assistant Director JOE M. CLEAVER, Assistant Director ROGER T. COLE, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A91 and Official Staff EDWARD W. KELLEY, JR. JOHN P. LA WARE OFFICE OF OFFICE OF STAFF DIRECTOR FOR STAFF DIRECTOR FOR MANAGEMENT FEDERAL RESERVE BANK ACTIVITIES S. DAVID FROST, Staff Director THEODORE E. ALLISON, Staff Director EDWARD T. MULRENIN, Assistant Staff Director WILLIAM SCHNEIDER, Special Assignment: Project Director, National Information Center DIVISION OF FEDERAL RESERVE PORTIA W. THOMPSON, Equal Employment Opportunity BANK OPERATIONS Programs Officer CLYDE H. FARNSWORTH, JR., Director DIVISION OF HUMAN RESOURCES DAVID L. ROBINSON, Associate Director MANAGEMENT C. WILLIAM SCHLEICHER, JR., Associate Director BRUCE J. SUMMERS, Associate Director DAVID L. SHANNON, Director CHARLES W. BENNETT, Assistant Director JOHN R. WEIS, Associate Director JACK DENNIS, JR., Assistant Director ANTHONY V. DIGIOIA, Assistant Director EARL G. HAMILTON, Assistant Director JOSEPH H. HAYES, JR., Assistant Director JOHN H. PARRISH, Assistant Director FRED HOROWITZ, Assistant Director LOUISE L. ROSEMAN, Assistant Director FLORENCE M. YOUNG, Assistant Director OFFICE OF THE CONTROLLER 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 DAY W. RADEBAUGH, JR., Assistant Director ELIZABETH B. RIGGS, Assistant Director DIVISION OF APPLICATIONS DEVELOPMENT AND STATISTICAL SERVICES WILLIAM R. JONES, Director RICHARD C. STEVENS, Assistant Director ROBERT J. ZEMEL, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

92 Federal Reserve Bulletin • March 1990 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL W. LEE HOSKINS JOHN P. LAWARE EDWARD G. BOEHNE MANUEL H. JOHNSON MARTHA R. SEGER ROBERT H. BOYKIN EDWARD W. KELLEY, JR. GARY H. STERN ALTERNATE MEMBERS ROBERT P. BLACK SILAS KEEHN JAMES H. OLTMAN ROBERT P. FORRESTAL ROBERT T. PARRY STAFF DONALD L. KOHN, Secretary and Economist RICHARD W. LANG, Associate Economist NORMAND R.V. BERNARD, Assistant Secretary DAVID E. LINDSEY, Associate Economist GARY P. GILLUM, Deputy Assistant Secretary LARRY J. PROMISEL, Associate Economist J. VIRGIL MATTINGLY, JR., General Counsel ARTHUR J. ROLNICK, Associate Economist ERNEST T. PATRIKIS, Deputy General Counsel HARVEY ROSENBLUM, Associate Economist MICHAEL J. PRELL, Economist CHARLES J. SIEGMAN, Associate Economist EDWIN M. TRUMAN, Economist THOMAS D. SIMPSON, Associate Economist JOHN M. DAVIS, 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 WALTER J. CONNOLLY, JR., First District B. KENNETH WEST, Seventh District WILLARD C. BUTCHER, Second District DAN W. MITCHELL, Eighth District TERRENCE A. LARSEN, Third District LLOYD P. JOHNSON, Ninth District THOMAS H. O'BRIEN, Fourth District JORDAN L. HAINES, Tenth District FREDERICK DEANE, JR., Fifth District VACANCY, 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

A93 and Advisory Councils CONSUMER ADVISORY COUNCIL WILLIAM E. ODOM, Dearborn, Michigan, Chairman JAMES W. HEAD, Berkeley, California, Vice Chairman GEORGE H. BRAASCH, Oakbrook, Illinois KATHLEEN E. KEEST, Boston, Massachusetts, BETTY TOM CHU, Arcadia, California A. J. (JACK) KING, Kalispell, Montana CLIFF E. COOK, Tacoma, Washington COLLEEN D. MCCARTHY, Kansas City, Missouri JERRY D. CRAFT, Atlanta, Georgia MICHELLE S. MEIER, Washington, D.C. DONALD C. DAY, Boston, Massachusetts LINDA K. PAGE, Columbus, Ohio R.B. (JOE) DEAN, JR., Columbia, South Carolina BERNARD F. PARKER, JR., Detroit, Michigan WILLIAM C. DUNKELBERG, Philadelphia, Pennsylvania SANDRA PHILLIPS, Pittsburgh, Pennsylvania JAMES FLETCHER, Chicago, Illinois VINCENT P. QUAYLE, Baltimore, Maryland GEORGE C. GALSTER, Wooster, Ohio CLIFFORD N. ROSENTHAL, New York, New York E. THOMAS G ARM AN, Blacksburg, Virginia ALAN M. SILBERSTEIN, New York, New York DEBORAH B. GOLDBERG, Washington, D.C. RALPH E. SPURGIN, Columbus, Ohio MICHAEL M. GREENFIELD, St. Louis, Missouri NANCY HARVEY STEORTS, Dallas, Texas ROBERT A. HESS, Washington, D.C. DAVID P. WARD, Chester, New Jersey BARBARA KAUFMAN, San Francisco, California LAWRENCE WINTHROP, Portland, Oregon THRIFT INSTITUTIONS ADVISORY COUNCIL DONALD B. SHACKELFORD, Columbus, Ohio, President MARION O. SANDLER, Oakland, California, Vice President CHARLOTTE CHAMBERLAIN, Los Angeles, California ELLIOTT K. KNUTSON, Seattle, Washington DAVID L. HATFIELD, Kalamazoo, Michigan JOHN WM. LAISLE, Oklahoma City, Oklahoma LYNN W. HODGE, Greenwood, South Carolina PHILIP E. LAMB, Springfield, Massachusetts ADAM A. JAHNS, Chicago, Illinois JOHN A. PANCETTI, New York, New York H. C. KLEIN, Jacksonville, Arkansas CHARLES B. STUZIN, Miami, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A94 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SER- Federal Reserve Regulatory Service, $250.00 per year. VICES, MS-138, Board of Governors of the Federal Reserve Each Handbook, $90.00 per year. System, Washington, D.C. 20551 or telephone (202) 452- THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A 3244. When a charge is indicated, payment should accom- MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. pany request and be made payable to the Board of Governors WELCOME TO THE FEDERAL RESERVE. March 1989. 14 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. December 1986. 264 pp. $10.00 each. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- TIONS. 1984. 120 pp. ANNUAL REPORT. ANNUAL REPORT: BUDGET REVIEW, 1988-89. CONSUMER EDUCATION PAMPHLETS FEDERAL RESERVE BULLETIN. Monthly. $25.00 per year or $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. Series on the Structure of the Federal Reserve System 1986. 1987. 288 pp. $15.00 per copy. The Board of Governors of the Federal Reserve System 1987. 1988. 272 pp. $15.00 per copy. The Federal Open Market Committee 1988. 1989. 256 pp. $25.00 per copy. Federal Reserve Bank Board of Directors SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- Federal Reserve Banks RIES OF CHARTS. Weekly. $30.00 per year or $.70 each in Organization and Advisory Committees the United States, its possessions, Canada, and Mexico. A Consumer's Guide to Mortgage Lock-Ins Elsewhere, $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Settlement Costs THE FEDERAL RESERVE ACT and other statutory provisions A Consumer's Guide to Mortgage Refinancing affecting the Federal Reserve System, as amended Making Deposits: When Will Your Money Be Available? through August 1988. 608 pp. $10.00 When Your Home is on the Line: What You Should Know About Home Equity Lines of Credit REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- ERAL RESERVE SYSTEM. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each volume $2.25; 10 or more of same volume to one PAMPHLETS FOR FINANCIAL INSTITUTIONS address, $2.00 each. Short pamphlets on regulatory compliance, primarily suit- INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; able for banks, bank holding companies, and creditors. 10 or more to one address, $1.25 each. FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; up- Limit of 50 copies dated at least monthly. (Requests must be prepaid.) Consumer and Community Affairs Handbook. $75.00 per The Board of Directors' Opportunities in Community Reinyear. vestment Monetary Policy and Reserve Requirements Handbook. The Board of Directors' Role in Consumer Law Compliance $75.00 per year. Combined Construction/Permanent Loan Disclosure and Securities Credit Transactions Handbook. $75.00 per year. Regulation Z The Payment System Handbook. $75.00 per year. Community Development Corporations and the Federal Re- Federal Reserve Regulatory Service. 3 vols. (Contains all serve three Handbooks plus substantial additional material.) Construction Loan Disclosures and Regulation Z $200.00 per year. Finance Charges Under Regulation Z Rates for subscribers outside the United States are as How to Determine the Credit Needs of Your Community follows and include additional air mail costs: Regulation Z: The Right of Rescission Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A95 The Right to Financial Privacy Act 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANK- Signature Rules in Community Property States: Regulation B ING MARKETS, by James V. Houpt. May 1988. 47 pp. Signature Rules: Regulation B 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR Timing Requirements for Adverse Action Notices: Regula- THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. tion B Porter, and David H. Small. April 1989. 28 pp. What An Adverse Action Notice Must Contain: Regulation B 158. THE ADEQUACY AND CONSISTENCY OF MARGIN RE- Understanding Prepaid Finance Charges: Regulation Z QUIREMENTS IN THE MARKETS FOR STOCKS AND DERIV- ATIVE PRODUCTS, by Mark J. Warshawsky with the assistance of Dietrich Earnhart. September 1989. 23 pp. STAFF STUDIES: Summaries Only Printed in the Bulletin Studies and papers on economic and financial subjects that REPRINTS OF BULLETIN ARTICLES are of general interest. Requests to obtain single copies of Most of the articles reprinted do not exceed 12 pages. the full text or to be added to the mailing list for the series may be sent to Publications Services. Limit of 10 copies Staff Studies 114-145 are out of print. Foreign Experience with Targets for Money Growth. 10/83. Intervention in Foreign Exchange Markets: A Summary of 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF Ten Staff Studies. 11/83. BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by A Financial Perspective on Agriculture. 1/84. Thomas F. Brady. November 1985. 25 pp. Survey of Consumer Finances, 1983. 9/84. 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- Bank Lending to Developing Countries. 10/84. DEXES OF THE MONETARY AGGREGATES, by Helen T. Survey of Consumer Finances, 1983: A Second Report. Farr and Deborah Johnson. December 1985. 42 pp. 12/84. 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE Union Settlements and Aggregate Wage Behavior in the ECONOMIC RECOVERY TAX ACT: SOME SIMULATION 1980s. 12/84. RESULTS, by Flint Brayton and Peter B. Clark. Decem- The Thrift Industry in Transition. 3/85. ber 1985. 17 pp. A Revision of the Index of Industrial Production. 7/85. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN Financial Innovation and Deregulation in Foreign Industrial BANKING BEFORE AND AFTER ACQUISITION, by Stephen Countries. 10/85. A. Rhoades. April 1986. 32 pp. Recent Developments in the Bankers Acceptance Market. 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: 1/86. A REEXAMINATION AND AN APPLICATION, by John T. The Use of Cash and Transaction Accounts by American Rose and John D. Wolken. May 1986. 13 pp. Families. 2/86. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRIC- Financial Characteristics of High-Income Families. 3/86. ING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Prices, Profit Margins, and Exchange Rates. 6/86. Alice P. White, Paul F. O'Brien, and Mary M. Agricultural Banks under Stress. 7/86. McLaughlin. January 1987. 30 pp. Foreign Lending by Banks: A Guide to International and 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A U.S. Statistics. 10/86. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Recent Developments in Corporate Finance. 11/86. April 1987. 18 pp. Measuring the Foreign-Exchange Value of the Dollar. 6/87. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Changes in Consumer Installment Debt: Evidence from the Alice P. White. September 1987. 14 pp. 1983 and 1986 Surveys of Consumer Finances. 10/87. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF PRO- Home Equity Lines of Credit. 6/88. POSED CEILINGS ON CREDIT CARD INTEREST RATES, by U.S. International Transactions in 1988. 5/89. Glenn B. Canner and James T. Fergus. October 1987. Mutual Recognition: Integration of the Financial Sector in the 26 pp. European Community. 9/89. 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. The Activities of Japanese Banks in the United Kingdom and Warshawsky. November 1987. 25 pp. in the United States, 1980-88. 2/90. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A96 Index to Statistical Tables References are to pages A3-A89 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20, 76, 81 Turnover, 15 Assets and liabilities (See also Foreigners) Depository institutions Banks, by classes, 18-20 Reserve requirements, 8 Domestic finance companies, 36 Reserves and related items, 3,4, 5, 12 Federal Reserve Banks, 10 Deposits (See also specific types) Financial institutions, 26 Banks, by classes, 3, 18-20, 21 Foreign banks, U.S. branches and agencies, 21, 84-87 Federal Reserve Banks, 4, 10 Automobiles Turnover, 15 Consumer installment credit, 39, 40 Discount rates at Reserve Banks and at foreign central Production, 49, 50 banks and foreign countries (See Interest rates) Discounts and advances by Reserve Banks (See Loans) BANKERS acceptances, 9, 23, 24 Dividends, corporate, 35 Bankers balances, 18-20. (See also Foreigners) Bonds (See also U.S. government securities) New issues, 34 EMPLOYMENT, 47 Rates, 24 Eurodollars, 24 Branch banks, 21, 57, 84-87 Business activity, nonfinancial, 46 Business expenditures on new plant and equipment, 35 FARM mortgage loans, 38 Business loans (See Commercial and industrial loans) Federal agency obligations, 4, 9, 10, 11, 31, 32 Federal credit agencies, 33 CAPACITY utilization, 48 Federal finance Capital accounts Debt subject to statutory limitation, and types and Banks, by classes, 18 Federal Reserve Banks, 10 ownership of gross debt, 30 Central banks, discount rates, 69 Receipts and outlays, 28, 29 Certificates of deposit, 24 Treasury financing of surplus, or deficit, 28 Commercial and industrial loans Treasury operating balance, 28 Commercial banks, 16, 19, 73-83, 84-85 Federal Financing Bank, 28, 33 Weekly reporting banks, 19-21 Federal funds, 6, 17, 19, 20, 21, 24, 28 Commercial banks Federal Home Loan Banks, 33 Assets and liabilities, 18-20, 73-83 Federal Home Loan Mortgage Corporation, 33, 37, 38 Commercial and industrial loans, 16, 18, 19, 20, 21, Federal Housing Administration, 33, 37, 38 73-83 Federal Land Banks, 38 Federal National Mortgage Association, 33, 37, 38 Consumer loans held, by type and terms, 39, 40 Federal Reserve Banks Loans sold outright, 19 Condition statement, 10 Nondeposit funds, 17 Discount rates (See Interest fates) Real estate mortgages held, by holder and property, 38 U.S. government securities held, 4, 10, 11, 30 Terms of lending 73-83 Federal Reserve credit, 4, 5, 10, 11 Time and savings deposits, 3 Federal Reserve notes, 10 Commercial paper, 23, 24, 36 Federal Reserve System Condition statements (See Assets and liabilities) Balance sheet for priced services, 88 Construction, 46, 51 Condition statement for priced services, 89 Consumer installment credit, 39, 40 Federal Savings and Loan Insurance Corporation insured Consumer prices, 46, 48 Consumption expenditures, 53, 54 institutions, 26 Corporations Federally sponsored credit agencies, 33 Nonfinancial, assets and liabilities, 35 Finance companies Profits and their distribution, 35 Assets and liabilities, 36 Security issues, 34, 67 Business credit, 36 Cost of living (See Consumer prices) Loans, 39, 40 Credit unions, 26, 39. (See also Thrift institutions) Paper, 23, 24 Currency and coin, 18 Financial institutions Currency in circulation, 4, 13 Loans to, 19, 20, 21 Customer credit, stock market, 25 Selected assets and liabilities, 26 Float, 4, 89 DEBITS to deposit accounts, 15 Flow of funds, 41, 43, 44, 45 Debt (See specific types of debt or securities) Foreign banks, assets and liabilities of U.S. branches and Demand deposits agencies, 21, 84-87 Banks, by classes, 18-21 Foreign currency operations, 10 Ownership by individuals, partnerships, and Foreign deposits in U.S. banks, 4, 10, 19, 20 corporations, 22 Foreign exchange rates, 70 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A97 Foreign trade, 56 Producer prices, 46, 52 Foreigners Production, 46, 49 Claims on, 57, 59, 62, 63, 64, 66 Profits, corporate, 35 Liabilities to, 20, 56, 57, 59, 60, 65, 67, 68 REAL estate loans GOLD Banks, by classes, 16, 19, 20, 38 Certificate account, 10 Financial institutions, 26 Stock, 4, 56 Terms, yields, and activity, 37 Government National Mortgage Association, 33, 37, 38 Type of holder and property mortgaged, 38 Gross national product, 53 Repurchase agreements, 6, 17, 19, 20, 21 Reserve requirements, 8 HOUSING, new and existing units, 51 Reserves Commercial banks, 18 INCOME and expenses, Federal Reserve System, 88-89 Depository institutions, 3, 4, 5, 12 Income, personal and national, 46, 53, 54 Federal Reserve Banks, 10 Industrial production, 46, 49 U.S. reserve assets, 56 Installment loans, 39, 40 Residential mortgage loans, 37 Insurance companies, 26, 30, 38 Retail credit and retail sales, 39, 40, 46 Interest rates Bonds, 24 SAVING Commercial banks, 73-83 Flow of funds, 41, 43, 44, 45 Consumer installment credit, 40 National income accounts, 53 Federal Reserve Banks, 7 Savings and loan associations, 26, 38, 39, 41. (See also Foreign central banks and foreign countries, 69 Thrift institutions) Money and capital markets, 24 Savings banks, 26, 38, 39 Mortgages, 37 Savings deposits (See Time and savings deposits) Prime rate, 23 Securities (See also specific types) International capital transactions of United States, 55-69 Federal and federally sponsored credit agencies, 33 International organizations, 59, 60, 62, 65, 66 Foreign transactions, 67 Inventories, 53 New issues, 34 Investment companies, issues and assets, 35 Prices, 25 Investments (See also specific types) Special drawing rights, 4, 10, 55, 56 Banks, by classes, 18, 19, 20, 21, 26 State and local governments Commercial banks, 3, 16, 18-20, 38 Deposits, 19, 20 Federal Reserve Banks, 10, 11 Holdings of U.S. government securities, 30 Federal Reserve System, 88-89 New security issues, 34 Financial institutions, 26, 38 Ownership of securities issued by, 19, 20, 26 Rates on securities, 24 LABOR force, 47 Stock market, selected statistics, 25 Life insurance companies (See Insurance companies) Stocks (See also Securities) Loans (See also specific types) New issues, 34 Banks, by classes, 18-20 Prices, 25 Commercial banks, 3, 16, 18-20, 73-83 Student Loan Marketing Association, 33 Federal Reserve Banks, 4, 5, 7, 10, 11 Federal Reserve System, 88-89 TAX receipts, federal, 29 Financial institutions, 26, 38 Thrift institutions, 3. (See also Credit unions and Savings Insured or guaranteed by United States, 37, 38 and loan associations) Time and savings deposits, 3, 13, 17, 18, 19, 20, 21 MANUFACTURING Trade, foreign, 56 Capacity utilization, 48 Treasury cash, Treasury currency, 4 Production, 48, 50 Treasury deposits, 4, 10, 28 Margin requirements, 25 Treasury operating balance, 28 Member banks (See also Depository institutions) UNEMPLOYMENT, 47 Federal funds and repurchase agreements, 6 U.S. government balances Reserve requirements, 8 Commercial bank holdings, 18, 19, 20 Mining production, 50 Treasury deposits at Reserve Banks, 4, 10, 28 Mobile homes shipped, 51 U.S. government securities Monetary and credit aggregates, 3, 12 Bank holdings, 18-20, 21, 30 Money and capital market rates, 24 Dealer transactions, positions, and financing, 32 Money stock measures and components, 3, 13 Federal Reserve Bank holdings, 4, 10, 11, 30 Mortgages (See Real estate loans) Foreign and international holdings and transactions, 10, Mutual funds, 35 30, 68 Mutual savings banks (See Thrift institutions) Open market transactions, 9 Outstanding, by type and holder, 26, 30 NATIONAL defense outlays, 29 Rates, 24 National income, 53 U.S. international transactions, 55-69 Utilities, production, 50 OPEN market transactions, 9 VETERANS Administration, 37, 38 PERSONAL income, 54 Prices WEEKLY reporting banks, 19-21 Consumer and producer, 46, 52 Wholesale (producer) prices, 46, 52 Stock market, 25 Prime rate, 23 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A98 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 Richard N. Cooper Richard F. Syron Richard L. Taylor 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 To be announced Charles A. Cerino1 Pittsburgh 15230 Robert P. Bozzone Harold J. Swart1 RICHMOND* 23219 Hanne M. Merriman Robert P. Black Anne Marie Whittemore Jimmie R. Monhollon Baltimore 21203 John R. Hardesty, Jr. Robert D. McTeer, Jr.1 Charlotte 28230 William E. Masters Albert D. Tinkelenberg1 Culpeper Communications John G. Stoides1 and Records Center 22701 ATLANTA 30303 Larry L. Prince Robert P. Forrestal Edwin A. Huston Jack Guynn Donald E. Nelson Birmingham 35283 A. G. Trammell Fred R. Herr1 Jacksonville 32231 Lana Jane Lewis-Brent James D. Hawkins1 Miami 33152 Robert D. Apelgren James T. Curry III Nashville 37203 Victoria B. Jackson Melvyn K. Purcell New Orleans 70161 Caroline G. Theus Robert J. Musso CHICAGO* 60690 Marcus Alexis Silas Keehn Charles S. McNeer Daniel M. Doyle Detroit 48231 Phyllis E. Peters Roby L. Sloan1 ST. LOUIS 63166 H. Edwin Trusheim Thomas C. Melzer Robert H. Quenon James R. Bowen Little Rock 72203 L. Dickson Flake John F. Breen1 Louisville 40232 Raymond M. Burse Howard Wells Memphis 38101 Katherine H. Smythe Ray Laurence MINNEAPOLIS 55480 Michael W. Wright Gary H. Stern Delbert W. Johnson Thomas E. Gainor Helena 59601 J. Frank Gardner John D. Johnson KANSAS CITY 64198 Fred W. Lyons, Jr. Roger Guffey Burton A. Dole, Jr. Henry R. Czerwinski Denver 80217 Barbara B. Grogan Kent M. Scott Oklahoma City 73125 John F. Snodgrass David J. France Omaha 68102 Herman Cain Harold L. Shewmaker DALLAS 75222 Bobby R. Inman Robert H. Boykin Hugh G. Robinson William H.Wallace Tony J. Salvaggio1 El Paso 79999 Donald G. Stevens Sammie C. Clay Houston 77252 Andrew L. Jefferson, Jr. Robert Smith, III1 San Antonio 78295 Roger R. Hemmingshaus Thomas H. Robertson SAN FRANCISCO 94120 Robert F. Erburu Robert T. Parry Carolyn S. Chambers Carl E. Powell Los Angeles 90051 Yvonne B. Burke Thomas C. Warren2 Portland 97208 William A. Hilliard Angelo S. Carella1 Salt Lake City 84125 Don M. Wheeler E. Ronald Liggett1 Seattle 98124 Bruce R. Kennedy Gerald R. Kelly1 *Additional offices of these Banks are located at Lewiston, Maine 04240; Windsor Locks, Connecticut 06096; Cranford, New Jersey 07016; Jericho, New York 11753; Utica at Oriskany, New York 13424; Columbus, Ohio 43216; Columbia, South Carolina 29210; Charleston, West Virginia 25311; Des Moines, Iowa 50306; Indianapolis, Indiana 46204; and Milwaukee, Wisconsin 53202. 1. Senior Vice President. 2. Executive Vice President. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A99 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories mm V. ttte l*V ? Helena Miiinnnneeaappoolliiss^^ ) (%) V'J^ 0 11 j jf ©l \ ^'""yo^P^^iw** ' I wfL ®1 /*"<' •*<' -. _ i ! fU^r"rSmwASiB* * I I . ifibn / V UmphisN^lHi t-l1 T little Ro1 ck IB irm\W rt>o <*$ ^ ant J® Hons tout San /Inronio Irfi-i —/ ALASKA •••••••••• BHDbBM mBBBBSSBBBm^ • H I H1 HK9HL flHBBHHHi 7 / jy • • • H H lH 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