Federal Reserve Bulletin, 1990-04

VOLUME 76 • NUMBER 4 • APRIL 1990 FEDERAL RESERVE V BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 187 INDUSTRIAL PRODUCTION: 1989 and Finance of the House Committee on DEVELOPMENTS AND HISTORICAL Energy and Commerce, February 21, 1990. REVISION 215 Alan Greenspan, Chairman, Board of Gov- The Federal Reserve Board has completed ernors, in conjunction with the Monetary the first comprehensive revision since 1985 Policy Report to the Congress, discusses of its index of industrial production, which monetary policy actions and plans in the now uses 1987 instead of 1977 as its refer- context of both the current and projected ence period. This article reviews the recent state of the economy and longer-term obperformance of the industrial sector in light jectives and the strategy for achieving of the new data; presents highlights of the them; he also addresses some issues raised revision; and discusses areas in which the by the increasingly international character new estimates have shown changes in in- of financial markets, before the Senate dustrial production trends over the past Committee on Banking, Housing, and Urthirteen years. ban Affairs, February 22, 1990. (Chairman Greenspan presented similar testimony before the Subcommittee on Domestic Mone- 205 TREASURY AND FEDERAL RESERVE tary Policy of the House Committee on FOREIGN EXCHANGE OPERATIONS Banking, Finance and Urban Affairs, Feb- In the period from November 1989 through ruary 20, 1990.) January 1990, the dollar declined on bal- 222 Chairman Greenspan discusses recent proance against the mark and other European posals to return social security to a paycurrencies, moving down 8V2 percent, 7lA as-you-go basis and to move its finances off percent, and 6 percent respectively against budget and says that he is concerned that the German mark, Swiss franc, and British these proposals, if enacted, would hamper pound. It rose about 1 percent against both the efforts needed to meet our longer-term the yen and the Canadian dollar. On a fiscal responsibilities and to provide for the trade-weighted basis, as measured by the needs of an aging population in a way that is staff of the Board of Governors, the dollar equitable across generations, before the declined 53A percent. Senate Committee on Finance, February 27, 1990. 209 INDUSTRIAL PRODUCTION 226 Chairman Greenspan reviews some of the Industrial production fell 1.2 percent in Jan- main themes of the Monetary Policy Report uary after an increase of 0.2 percent (re- to the Congress and some specific budgetvised) in December. ary issues, including the proposal to return the social security system to a pay-as-yougo basis or to move social security off 211 STATEMENTS TO THE CONGRESS budget, and says that he hopes that the Wayne D. Angell, Member, Board of Gov- Congress will give special attention to the ernors, discusses issues related to the se- long-run needs of the economy in its delibcurity of electronic funds transfer systems erations on the budget, before the House for large-dollar value transactions, before Committee on the Budget, February 28, the Subcommittee on Telecommunications 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

231 ANNOUNCEMENTS annual rates of about 8V2 and 51/2 percent respectively over the four-month period Proposed regulation to set standards for from November 1989 through March 1990. appraisals conducted for state member In light of the easing of reserve conditions banks and bank holding companies in fedover the course of recent months and the erally related transactions; proposed regufurther slight easing at this meeting, the lation providing interim procedures for no- Committee decided to lower the intermeettifying the Board of changes in senior ing range for the federal funds rate by 1 executive officers and directors at bank percentage point to 6 to 10 percent. holding companies and state member banks that are newly chartered, undercapitalized, 241 LEGAL DEVELOPMENTS or in troubled condition. Various bank holding company, bank ser- Hotline telephone number available for the vice corporation, and bank merger orders; Office of the Inspector General at the Board and pending cases. of Governors. Ai FINANCIAL AND BUSINESS STATISTICS Changes in Board staff. These tables reflect data available as of Admission of one state bank to membership February 26, 1990. in the Federal Reserve System. A3 Domestic Financial Statistics A46 Domestic Nonfinancial Statistics 233 RECORD OF POLICY ACTIONS OF THE A55 International Statistics FEDERAL OPEN MARKET COMMITTEE At its meeting on December 18-19, 1989, All GUIDE TO TABULAR PRESENTATION, the Committee adopted a directive that STATISTICAL RELEASES, AND called for a slight easing of reserve condi- SPECIAL TABLES tions. In keeping with the Committee's usual approach to policy, the conduct of AH BOARD OF GOVERNORS AND STAFF open market operations would be subject to further adjustment during the intermeeting A74 FEDERAL OPEN MARKET COMMITTEE period depending on progress toward price AND STAFF; ADVISORY COUNCILS stability, the strength of the business expansion, the behavior of the monetary aggre- A76 FEDERAL RESERVE BOARD gates, and developments in foreign ex- PUBLICATIONS change and domestic financial markets. On the basis of such developments, slightly A78 INDEX TO STATISTICAL TABLES greater or slightly lesser reserve restraint would be acceptable during the period A80 FEDERAL RESERVE BANKS, ahead. The reserve conditions contem- BRANCHES, AND OFFICES plated at this meeting were expected to be consistent with growth of M2 and M3 at A8i MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Industrial Production: 1989 Developments and Historical Revision Kenneth Armitage and Dixon A. Tranum, of the MAJOR INDUSTRIAL DEVELOPMENTS Board's Industrial Output Section in the Division IN 1989 of Research and Statistics, prepared this article. Rona J. McNeil provided research assistance. The revision to the industrial production index has altered only slightly the picture of major developments in the industrial sector during The Board of Governors of the Federal Reserve 1989. The revised index still shows that output System has completed a revision of its index of decelerated markedly throughout 1989, after sizindustrial production. The index has been re- able advances in the preceding two years (table vised back to 1977, and it now uses 1987 instead 1). Much of the slowdown in 1989 stemmed from of 1977 as its reference period. a decrease in domestic purchases of goods made This discussion of the revision falls into two in the United States, particularly those relating to main parts. The first part reviews the recent the motor vehicle industry. Some of this decline performance of the industrial sector in light of in demand for domestic goods was offset by the new data. The second part presents high- further healthy gains in exports. In response to lights of the revision and discusses areas in the slowing in overall demand, manufacturers which the new estimates have shown changes in quickly adjusted output to prevent a large industrial production trends over the past thir- buildup of inventories. This timely reaction teen years. Technical aspects of the revision helped prevent a significant contraction in overall appear in an appendix. industrial activity. 1. Annual rates of change in industrial production, by major group, 1987-89' Percent Item 1987 1988 1989 1989:H1 1989:H2 TToottaall iinndduussttrriiaall pprroodduuccttiioonn11 6.5 4.5 1.1 2.7 -.4 (5.8) (5.0) (1.6) (2.7) (.5) Major market groups Products 6.1 4.7 1.8 3.8 -.1 Materials 7.1 4.1 0 1.0 - 1.0 Major industry groups Mining 4.9 -.9 -.6 -.7 -.6 Manufacturing 7.1 5.0 .9 2.9 -1.0 Utilities 2.6 3.3 5.5 4.3 6.8 MEMO Domestic purchases of goods and structures' 5.3 2.3 .3 .2 .3 U.S.-produced 4.7 1.6 -1.0 -.2 -1.7 Foreign-produced 7.4 5.0 4.9 1.7 8.3 Nonagricultural merchandise exports 23.2 17.1 11.5 15.3 7.8 1. Percent change from the final quarter of previous period to the final chandise exports, farm inventories, and Commodity Credit Corporation quarter of the period indicated. inventory change). 2. Numbers in parentheses are from the previous, unrevised index. SOURCE. "National Income and Product Accounts," Survey of Current 3. Purchases in the United States of goods and structures wherever produced Business, vol. 70 (February 1990), various tables. (defined as GNP for goods and structures plus merchandise imports less mer- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

188 Federal Reserve Bulletin • April 1990 Nonetheless, the production adjustment re- tives even further in an attempt to reduce sulted in a loss of manufacturing jobs. Factory inventories. employment, which had risen 90,000 in the first The decline in the manufacture of cars by the quarter of 1989, fell nearly 200,000 during the domestic companies more than accounted for the remainder of the year. About one-fourth of the overall drop in industrial output of autos in 1989. decline occurred in the motor vehicle industry, At the same time, foreign car companies inand significant reductions were made in related creased their output of autos produced in the industries, such as steel and metal stampings. United States about 300,000 units. As a result, Cutbacks in employment also occurred in elec- the share of these so-called transplants in total trical machinery, particularly in appliances and auto production rose to 15 percent from about 11 communication equipment. Although the adjust- percent in 1988. ment of labor input to output changes was rela- Over the first half of 1989, the output of light tively prompt, the implied growth in productivity trucks, most of which consumers purchase, alfor production workers in manufacturing slowed though down somewhat from late 1988, remained in 1989 to about 2Vi percent, compared with the relatively high. During the second half, however, trend of about 4 percent per year that had pre- it was slashed sharply. The output of medium vailed since 1981. and heavy trucks, all of which are included in business equipment, was weak throughout much Motor Vehicles of the year. The proportion of motor vehicles and parts in The most significant declines in industrial pro- total industrial production in 1987 was about 43/4 duction last year occurred in motor vehicles percent. However, this proportion does not inand related industries (table 2). During much of clude the value added in production of various 1989, dealers faced a persistent excess of materials and equipment—including steel, rubber stocks. In response, manufacturers of autos and and plastics, machinery, chemicals, and texlight trucks adjusted production and offered tiles—that are used in assembling motor vehimore sales incentives during the year. Even so, cles. Data from various sources suggest that the by late autumn, inventories were still uncom- effect on total industrial output of these upstream fortably high in relation to the lackluster pace of industries is nearly equal to the direct effect of sales. As a result, dealers became reluctant to the change in motor vehicles and parts. place orders, and in late December the major Because of the lack of detailed statistics, producers of motor vehicles announced drastic monthly industrial production estimates are cuts in output and increased their sales incen- available for only some of the parts and materials 2. Annual rates of change in the industrial production of motor vehicles, parts, and related materials, 1987-89' Percent 1987 Series proportion2 1987 1988 1989 1989: HI 1989:H2 Total 6.0 5.2 9.7 -10.1 -6.7 -13.5 Motor vehicles and parts 4.7 3.9 9.3 -11.1 -7.6 -14.4 Autos 1.6 -6.3 12.6 -14.5 -12.9 -16.1 Trucks 1.1 19.1 9.9 -11.4 -9.0 -13.7 Related materials Tires, original equipment .1 6.3 13.7 -17.6 7.3 -36.8 Steel' .3 6.7 14.6 -21.5 -14.0 -28.3 Metal stampings4 1.0 9.8 9.7 -1.3 -.8 -1.8 1. Percent change from the final quarter of the previous period to the final published by the American Iron and Steel Institute, about 80 percent of steel quarter of the period indicated. shipments for use in the manufacture of durable consumer goods go to the 2. Proportion of the total industrial production index derived from value- motor vehicle industry. added data from the 1987 Census of Manufactures. Details may not sum to 4. According to the value-added data from the 1987 Census of Manufactotals because of rounding. tures, about 50 percent of the output of this industry represents automotive 3. Steel mill products for consumer durables. In the 1989 shipments data stampings. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in Industrial Production 189 used primarily in the manufacture of motor vehi- Other goods for the home, such as appliances, cles (table 2). The recent pattern of output in carpeting, and furniture, which had advanced these industries parallels that for motor vehicles: during the first half of the year, sagged during the After increasing rapidly in 1987 and over much of third quarter. In the fourth quarter, appliance 1988, output of these parts and materials dropped production fell sharply, and furniture output resharply in 1989. In most cases, particularly in mained weak. steel and tires, the largest reductions occurred Growth in the output of nondurable consumer late in the year. goods continued throughout 1989. The production of consumer paper products, particularly Industrial Production outside the Motor periodicals, books, and sanitary paper products, Vehicle Sector advanced noticeably over the year. The output of food continued to rise throughout the year, but Industrial production excluding motor vehicles clothing production, which had increased early in and related parts and materials rose at a rela- the year, weakened in the second half as imports tively robust 3.4 percent annual rate during the picked up. The production of consumer chemical first half of 1989 but leveled off in the second half products—for example, drugs and medicines and (table 3). Some of the stagnation in the non- soaps and toiletries—also increased late in the motor-vehicle portion of industrial production year after changing little, on balance, since the reflected the influence of the motor vehicle sector fourth quarter of 1988. The production of conon upstream industries that cannot be separated sumer fuel, mainly automotive gasoline, reout. For example, the textiles used in making mained steady until late in the year when exseats are included in total fabrics. tremely cold weather caused temporary Among final products, the slowdown over the disruptions in production. The cold weather led year was widespread. During the first half of the to extraordinary demands for heating; and, as a year, particularly strong increases in the produc- result, the output of gas and electricity for resition of linens and curtains, cutlery, and toys and dential use jumped sharply in December. sporting goods boosted the growth in the output During the first half of 1989, the output of of consumer durables. Output of these goods business equipment, led by continued rapid grew further in the second half, but production of growth in information-processing and related 3. Annual rates of change of industrial production, by market group, excluding motor vehicles, parts, and related materials, 1987-89' Percent Series prop 1 o 9 r 8 t 7 io n2 1987 1988 1989 1989: HI 1989:H2 Total 94.0 6.6 4.1 1.9 3.4 .5 Products 57.6 6.3 4.4 2.7 4.7 .7 Final products 42.9 5.6 4.8 2.9 5.4 .4 Consumer goods 24.5 3.1 3.9 2.7 2.9 2.5 Durable 4.1 6.4 4.4 2.1 5.1 -.8 Nondurable 20.4 2.3 3.9 2.8 2.4 3.2 Business equipment 12.6 11.0 11.0 4.1 11.0 -2.3 Information processing and related equipment 5.6 14.0 10.2 6.3 13.5 -.5 Industrial equipment 4.0 5.6 8.2 1.8 6.0 -2.3 Transit equipment 1.1 6.7 33.7 1.9 19.6 -13.2 Other equipment 1.9 11.4 6.3 4.1 6.7 1.6 Defense and space equipment 5.4 1.8 -3.1 -.2 1.8 -2.2 Intermediate products 14.7 8.4 2.9 2.0 2.6 1.5 Construction supplies 6.0 6.7 2.6 1.2 1.9 .5 Materials 36.4 7.0 3.8 .6 1.2 0 Durable 16.6 10.9 6.7 .3 1.1 -.5 Nondurable 9.0 6.2 2.0 1.1 2.9 -.7 Energy 10.9 2.5 .3 .8 .2 1.5 1. Percent change from the final quarter of the previous period to the final added data from the 1987 Census of Manufactures. Details may not sum to quarter of the period indicated. totals because of rounding. 2. Proportion of the total industrial production index derived from value- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

190 Federal Reserve Bulletin • April 1990 equipment, particularly computers, was a signif- resulted from the reduction in defense appropriicant source of strength to industrial production.1 ations for hardware that began in 1986. In the second half, the output of computers The revised data for construction supplies inleveled out, and near the end of the year, new dicate that a deceleration in output growth began bookings for computers weakened. The output of in mid-1988, somewhat earlier than previously the other types of information-processing and estimated. During 1989, the growth of production related equipment, including communications slowed to a 1 VA percent rate. This anemic pace is equipment and instruments, declined over the generally consistent with the softness observed summer and then remained sluggish through the throughout the year in outlays for both nonresiend of 1989. dential and residential structures. The output of the other major sectors within The growth in the production of materials was business equipment also rose sharply during the similar to that of total products during 1987 and first half of 1989, but then declined, in most 1988. During 1989, while the output of total cases, during the second half. For example, products slowed, the rate of growth in the proproduction of industrial equipment, which in- duction of materials decreased more sharply, the cludes machinery used in manufacturing, in min- deceleration occurring mainly in durables proing, and in the generation and distribution of duction. For example, the production of parts electricity, grew rapidly earlier in the year; but used in the manufacture of equipment and the by summer, new orders for most of these goods output of basic metals slowed during the first six had weakened. Producers reacted quickly and months of 1989 and then flattened in the latter curtailed output over the remainder of the year. half of the year. The rapid increase in the output of transit Among nondurable materials industries, the equipment other than motor vehicles during the output of textiles, mainly those used in making first half of last year reflected mainly another clothing, surged during the first half of 1989, after surge in the production of commercial aircraft as a sharp drop in 1988. Much of the rebound order books remained full. However, a strike at stemmed from increased orders from domestic the Boeing Company during October and No- apparel producers. However, the production of vember depressed commercial aircraft output in textiles declined in the second half of 1989, when the fourth quarter; but production was back to most major users curtailed output. normal in December, and capacity utilization The production of chemical materials rereturned to a very high level. mained at a high level during 1989 after several The output of farm equipment, which is in- years of rapid growth. Unlike the output of most cluded in the category "other equipment," products and materials, which in 1989 generally weakened during most of 1989 partially because followed the path of demand, the output of of a curtailment in exports coupled with a large chemical materials was limited to some extent by rise in imports. Toward the end of the year, the high level of capacity utilization in this indusexports rebounded somewhat, and production try. Some expansion in capacity over 1989 lessincreased. Output of the remaining components ened production constraints a bit; as a result, of the "other equipment" category—office furni- price pressures eased during the year. The situture and service equipment—increased early in ation was similar for paper materials: Output was the year and then weakened. well maintained, on balance, over 1989; and After increasing during most of the 1980s, utilization rates, although a little lower than output of defense and space equipment declined those in late 1988, remained quite high. in 1988 and then remained essentially unchanged Despite a weather-related surge in electricity in 1989. The weakness in the past two years has generation and gas transmission late in the year, the output of energy materials remained sluggish over 1989 as crude oil production continued to decline. The oil spill in Alaska, which led to a 1. Within the category of business equipment, new aggretemporary curtailment of oil flow through the gates have been created (see table A.2 for their definition). Of the old groups, only transit equipment has been retained. Alaskan pipeline, aggravated the downward Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in Industrial Production 191 1. Change in output of industries with These developments related partly to an increase above-average trade shares and of other in the foreign exchange value of the dollar during manufacturing industries1 much of 1988 and 1989: The change in the foreign Index, March 1973^100 Percent exchange value of the dollar adversely influenced Exchange value of the dollar against the competitiveness of U.S. goods in markets »G-10 currencies abroad as well as their ability to compete with Industries with above-average trade shares imports in the domestic market. •Other manufacturing As a result of these developments, growth in industries those domestic industries with above-average volumes of trade relative to factory shipments slowed more sharply in 1989 than did that in other industries (chart l).2 Important among the group of industries with above-average trade shares are producers of capital goods—such as computers and most other nonelectrical machin- 1983 1984 1985 1986 1987 1988 1989 ery, electronic components, and aircraft. Ex- 1. Percent changes are from the fourth quarter of the previous year ports of these goods, in real terms, continued to to the fourth quarter of the year indicated. Data are seasonally adjusted. The bar scale is on the left; the curve scale is on the right. expand rapidly in 1989, but imports accelerated. Other industries that typically are heavily intrend in oil extraction. Despite a strike in the fluenced by changes in the overall terms of trade spring, the output at coal mines was little include materials, particularly chemicals, paper, changed, on balance, over 1989. textiles, and metals. Real net exports of nonagricultural industrial supplies rose about $12 bil- Foreign Trade and U.S. Industrial lion in 1988 and 1989. However, all of the 1989 Performance gain occurred during the first half of the year; real net exports of industrial materials, reflecting the Changes in foreign trade have heavily influenced weakness in demand for materials, actually fell recent developments in industrial production. nearly $4 billion in the second half. Although in 1989 real net exports of the United States rose, they did so less rapidly than during the previous two years; the deceleration oc- HIGHLIGHTS OF THE 1990 REVISION curred during the second half of the year, when the growth of merchandise imports picked up The revised index of industrial production shows while the growth in merchandise exports slowed. slower growth from 1977 to 1989, on average, than previously reported (chart 2). The revision 2. Revised and earlier industrial production indexes1 also 'Indicates that the recession in 1982 was somewhat less severe than originally estimated. Ratio scale, 1987 = 100 These results stem from the incorporation into the index of available benchmark, annual, and .^110 monthly source data from 1977 to the present, including a revision of the Federal Reserve's f 100 index of industrial electricity use. The revision f Revised 90 2. Trade shares were calculated (using data from 1985 on) by summing exports and imports and dividing by shipments. 80 In general, data were gathered at the three-digit Standard Earlier Industrial Classification (SIC) level. Manufacturing industries were then divided into two groups—those with trade shares 1 1 1 1 I 1 1 1 i 1 I 1 1 1 greater than the total manufacturing average and those with 1977 1981 1985 1989 less. In terms of 1987 value added, the former group ac- 1. Monthly data, seasonally adjusted. counted for a little more than half of manufacturing. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

192 Federal Reserve Bulletin • April 1990 also introduces new weights to aggregate the suses of manufactures and minerals industries, individual series into industry and market groups which have been published every five years since and has set 1987 as the comparison-base year, 1939. The Census Bureau indexes—called benchwhen all index numbers are equal to 100. These marks—capture the change in physical output of changes are outlined in the box "Summary of each represented industry by an indirect methstatistical revisions" and documented in greater od—converting information on the value of shipdetail in the appendix. ments and inventory change into constant dol- The primary purpose of the 1990 revision was lars. This revision to the Federal Reserve's to include the latest available benchmark and industrial production indexes incorporates the annual information on the levels of the 250 basic Census Bureau's 1982 indexes of production. series that now make up the index. When appro- For its 1982 benchmark indexes of office and priate and where possible, the levels of the basic computing machines, the Census Bureau adopted series in the industrial production index are de- the price deflator that the Commerce Departtermined by direct physical measures of output— ment's Bureau of Economic Analysis (BEA) and for example, tons of primary aluminum ingot or the IBM Corporation developed jointly. This debarrels of motor gasoline. In many cases, how- flator, in turn, has been incorporated into the ever, comprehensive physical-product data are index of industrial production, and the result has not available. In these cases, changes in output been a significant upward revision of the growth from one census year to the next for the basic rate in the nonelectrical machinery industry (chart series are derived from the indexes of production 3). With the introduction of this deflator in the developed by the Census Bureau from the cen- industrial production index, most major statistical Summary of statistical revisions, 1977-89 Item 1990 revision Previous index Benchmark information Mining Latest monthly physical data from Same Department of Energy Annual physical data from Bureau of Annual physical data from Bureau of Mines through 1986 Mines through 1982 Manufacturing 1982 Census indexes of production 1977 Census indexes of production Annual Survey of Manufactures for Annual Survey of Manufactures for 1978-81 and 1983-86 1978-81 Information from 1987 Census of Manufactures Utilities Latest monthly physical data from Latest monthly physical data from Department of Energy Department of Energy and American Gas Association Weighting 1977-81: 1977 weights 1977- : 1977 weights 1982-86: 1982 weights 1987- : 1987 weights Base year 1987 1977 Series and structure modifications Textiles New series for cotton and synthetic fabrics, yarns, and fabric finishing Gas utilities All series based on data from Some series based on data from Department of Energy American Gas Association and rest from Department of Energy Changes in market groups New aggregates compiled for business equipment Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in Industrial Production 193 In the index, series that measure the output of 3. Revised and earlier industrial production indexes of nonelectrical machinery1 an individual industry are weighted according to their proportion in the total value-added output Ratio scale, 1987 = 100 of all industries. If prices and costs changed uniformly across industries, different weight years in different periods would not be needed; jf 100 but such factors do change. To represent as Earlier accurately as possible the relative price and cost structure of industries, the industrial production . 80 index, which extends back to 1919, is built for the most part in five-year chronological segments that are chainlinked to form a continuous index ^Revised 60 expressed as a percentage of output in a comparison-base year. Thus, the introduction of two new weight periods in the 1990 revision reflects more accurately the evolution of relative prices r i i1 1 1 1 t i ll 1 1 1 I from 1977 to the present. 1977 1981 1985 1989 Table 4 shows the value-added proportions 1. Monthly data, seasonally adjusted. used in the index for the period since 1963. The series produced by U.S. government agencies ten-point dip in 1982 in the proportion of manumeasuring output now treat computers consis- facturing, accompanied by a similar rise in mintently. BE A initially introduced the deflator for ing and utilities, partly reflects the elevated crude computers, which incorporates both matched- oil prices of the late 1970s and early 1980s. The model and hedonic components, in the National relative proportions of mining and manufacturing Income and Product Accounts in 1985.3 It ac- shown for 1987 are closer to those of 1977, the cepted this new price measure on the basis of previous reference year, and reflect in part a research conducted by several economists that decline in the output of oil and gas extraction in indicated that conventional methods of calculating 1982-87 and a softening of crude oil prices. price indexes may not completely capture Few modifications were made to the structure changes in quality in a rapidly evolving industry of the index and its monthly compilation as relike computers.4 ported in Industrial Production—1986 Edition. An important feature of the 1990 revision of Modifications that have been made to series in the the industrial production index is the introduc- index include a newly developed structure for the tion of two new weight periods. Updated Census monthly measurement of textile mill products and value-added weights have been used for 1982-86 the use of new annual and monthly data to meaand for 1987-90. Previously, the index used sure output at gas utilities. Also, as mentioned 1977 Census value-added weights for the entire previously, new aggregates within the category of period. business equipment have been created. Results of the Revision 3. See, for example, Allan H. Young, "BEA's Measurement of Computer Output," Survey of Current Business, vol. The average annual rate of growth for the total 69 (July 1989), pp. 108-15; and David W. Cartwright, "Imindex is now 2.7 percent over 1977-89, or about proved Deflation of Purchases of Computers," Survey of Current Business, vol. 66 (March 1986), pp. 7-10. 0.2 percentage point less than previously reported 4. Rosanne Cole and others, "Quality-Adjusted Price In- (table 5). Excluding office and computing machindexes for Computer Processors and Selected Peripheral ery, the downward revision in the average annual Equipment," Survey of Current Business, vol. 66 (January 1986), pp. 41-50; and Ellen R. Dulberger, "The Application growth rate of the index is 0.7 percentage point. of a Hedonic Model to a Quality-Adjusted Price Index for Computer Processors," in Dale W. Jorgenson and Ralph Market Groups. The revision led to little change Landau, Technology and Capital Formation (MIT Press, 1989). in the estimate of the overall growth of total Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

194 Federal Reserve Bulletin • April 1990 4. Proportions of value added in industrial production, by major market group and major industry group, selected years, 1963-87' Percent Series 1963 1967 1972 1977 1982 1987 Total 100.00 100.00 100.00 100.00 100.00 100.00 Major market group Products, total 61.48 61.30 61.91 57.72 56.05 60.79 Final products 47.88 47.82 47.67 44.77 44.10 46.05 Consumer goods 29.88 27.65 27.90 25.52 23.71 26.02 Durable 8.05 7.89 7.97 6.89 4.80 5.58 Nondurable 21.83 19.79 19.94 18.63 18.91 20.44 Total equipment2 18.00 20.23 19.77 19.25 20.39 20.02 Business 10.61 13.27 14.08 14.34 13.75 13.93 Defense and space 7.39 6.96 4.80 3.67 4.21 5.35 Intermediate products 13.60 13.42 14.24 12.94 11.95 14.74 Construction supplies 6.35 6.51 6.80 5.96 4.51 6.05 Business supplies 7.25 6.91 7.44 6.99 7.43 8.69 Materials 38.52 38.70 38.09 42.28 43.95 39.21 Durable 20.68 20.29 19.81 20.50 16.99 19.35 Nondurable 14.51 10.10 9.80 10.10 7.76 9.01 Energy 3.33 8.31 8.48 11.69 19.20 10.85 Major industry group Mining 7.09 6.36 6.59 9.83 16.92 7.93 Metals .63 .51 .58 .50 .29 .32 Coal .77 .69 ;91 1.60 1.68 1.22 Oil and gas extraction 4.91 4.40 4.44 7.07 14.39 5.73 Stone and earth minerals .78 .75 .66 .66 .57 .67 Manufacturing 87.27 87.95 87.33 84.22 74.71 84.44 Durables 50.09 51.98 51.08 49.10 42.36 47.27 Lumber and products 1.79 1.64 2.50 2.30 1.41 2.00 Furniture and fixtures 1.37 1.37 1.48 1.27 1.16 1.45 Clay, glass, and stone products 3.14 2.74 3.05 2.72 2.12 2.47 Primary metals 6.80 6.57 5.63 5.33 2.73 3.32 Fabricated metal products 5.66 5.93 6.51 6.46 5.30 5.38 Nonelectrical machinery 7.72 9.15 9.09 9.54 9.20 8.55 Office and computing machines .73 1.10 1.19 1.41 2.10 2.46 Electrical machinery 7.58 8.05 7.40 7.15 7.61 8.62 Transportation equipment 9.74 9.27 9.63 9.13 7.57 9.80 Instruments 1.78 2.11 2.56 2.66 3.03 3.26 Miscellaneous manufactures 1.59 1.51 1.64 1.46 1.27 1.24 Nondurables 37.18 35.97 36.26 35.11 32.36 37.17 Foods 9.73 8.75 8.62 7.96 7.96 8.76 Tobacco products .75 .67 .64 .62 .81 1.02 Textile mill products 2.73 2.68 2.84 2.29 1.67 1.84 Apparel products 3.50 3.31 3.27 2.79 2.35 2.36 Paper and products 3.30 3.21 3.16 3.15 3.00 3.58 Printing and publishing 4.67 4.72 4.89 4.54 4.90 6.37 Chemicals and products 7.84 7.74 7.85 8.05 6.81 8.60 Petroleum products 1.66 1.79 1.47 2.40 1.99 1.32 Rubber and plastics products 2.07 2.24 2.82 2.80 2.45 3.02 Leather and products .93 .86 .71 .53 .43 .30 Utilities 5.64 5.69 6.08 5.96 8.36 7.63 Electric 4.32 3.88 4.13 4.18 6.26 6.01 Gas 1.31 1.81 1.96 1.78 2.10 1.62 1. Details may not sum to totals because of rounding and the omission of but not in business equipment. Also, in 1972, prefabricated buildings were some series. moved from intermediate products to total equipment. 2. Beginning in 1972, oil and gas well drilling is included in total equipment, products: A slight upward revision in final prod- more cyclical than that of products, from 1954 to ucts was about offset by a downward revision of 1980 their overall growth rates were similar. Durabout 0.8 percentage point per year in the less ing the 1980s, however, domestic producers of heavily weighted intermediate products group. raw materials faced stiffer competition from for- The annual growth rate of materials production, eign producers. Moreover, the use of imported which accounts for about 40 percent of the index, parts that are classified as materials—such as was revised down about 0.3 percentage point per semiconductors, auto engines, and specialty year over the entire period of the revision. As a steel—increased in the domestic assembly of final result, the disparity in rates of growth between products, leading to a slower growth rate of dototal products and materials that began in the mestically produced materials relative to products early 1980s is more pronounced than before the throughout the decade. revision. Although the production of materials is Within the category of final products, the average Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in Industrial Production 195 5. Rates of growth in industrial production, by major market group, 1977-89 Average annual rate of growth, Growth rate calculated with revised index revised index minus growth rate calculated SSeerriieess (percent) with earlier index 1977-82 1982-87 1987-89 1977-89 1977-82 1982-87 1987-89 1977-89 Total index .9 4.1 4.0 2.7 .3 -.6 -.5 -.2 Products, total 1.9 4.7 4.2 3.4 .4 -.4 -.6 -.1 Final products 2.4 4.4 4.5 3.6 .6 -.2 -.3 .1 Consumer goods -.1 3.4 3.3 1.9 -.4 -1.3 -1.2 -.9 Durable -4.3 7.8 3.9 2.0 -.6 .1 .1 -.2 Nondurable 1.2 2.2 3.1 1.9 -.4 -1.6 -1.6 -1.1 Total equipment 5.5 5.4 6.0 5.5 1.8 1.0 .9 1.3 Business 5.2 6.5 9.1 6.4 2.6 1.6 1.4 2.0 Defense and space 6.0 8.8 -1.3 5.9 .1 1.5 1.2 .8 Intermediate products .1 5.9 3.4 3.0 -.3 -1.2 -1.4 -.8 Construction supplies -2.7 6.7 2.9 2.1 -.2 -1.6 -.8 -.8 Business supplies 2.2 5.4 3.7 3.7 -.3 -.9 -1.9 -.8 Materials -.5 3.3 3.6 1.7 .2 -.8 -.5 -.3 Durable -.5 6.4 5.7 3.3 .7 .6 .1 .5 Nondurable - 1.1 4.0 2.6 1.6 -.4 - 1.4 -1.8 -1.0 Energy -.1 -.1 .7 0 -.3 .1 .3 0 Excluding computers Total index 0 3.2 3.6 1.9 -.2 -1.3 -.6 -.7 Products, total .6 3.5 3.7 2.3 -.2 -1.3 -.6 -.7 Final products .8 2.8 3.9 2.1 -.2 -1.3 -.3 -.7 Business equipment 0 1.7 7.8 2.0 .3 -2.0 1.2 -.5 Materials -1.0 2.8 3.4 1.3 -.1 -1.2 -.5 -.6 annual growth rate of consumer goods was revised In the materials sector, the growth of output of down about 0.9 percentage point for the 1977-89 durable goods materials revised up about 0.5 period, whereas that of equipment was revised up percentage point, on net, with a substantial upabout 1.3 percentage points. The output of both ward revision of 2 percentage points in equipdurable and nondurable consumer goods is esti- ment parts largely offset by a downward adjustmated to be lower, but the downward revision to ment of nearly 1 percentage point in the growth nondurable goods is particularly significant. The rate of consumer durable parts. The market estimates of the production of consumer foods, group of equipment parts includes several highchemical products, and paper products were all technology components, such as computer and revised downward substantially because of the in- aircraft parts; the consumer durable parts aggrecorporation of annual data. gate includes several series related to motor The revised annual growth rate of business vehicles, such as metal stampings and original equipment is quite a bit stronger than shown equipment motor vehicle parts. previously because of the sharply faster growth of Among nondurables, output in three series— office and computing machines. Excluding this textiles, paper, and chemicals—is now estimated series, business equipment was revised down and to have risen much more slowly than estimated shows much slower growth for 1982-87. Output of previously. In particular, the heavily weighted defense and space equipment was revised up, on series for industrial organic chemicals revised average. Even so, estimated production for 1987- down significantly. Comprehensive constant- 89 declined. dollar data for many other chemical materials The downward revision to the intermediate series also showed lower levels of output than products category was widespread among com- previously reported. The revision made little ponent series for construction and business sup- change to the production of energy materials. plies. The bulk of the revision occurred in the 1982-84 recovery period; for that period, the Industry Groups. As table 6 shows, the revision annual rate of growth of the new index is esti- for 1977-89 did not change the estimate for the mated at about 8 percent, about 4 percentage average annual growth of manufacturing. Growth points less per year than that of the old index. in the manufacturing of durable goods was up Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

196 Federal Reserve Bulletin • April 1990 6. Rates of growth in industrial production, by major industry group, 1977-89 Average annual rate of growth, Growth rate calculated with revised index revised index minus growth rate calculated Series (percent) with earlier index 1977-82 1982-87 1987-89 1977-89 1977-82 1982-87 1987-89 1977-89 Mining 1.5 -1.8 .3 -.1 -.3 -.1 -.7 -.3 Metals -3.1 2.8 18.5 2.7 3.4 1.1 4.2 2.6 Coal 3.7 1.8 2.8 2.8 0 -.1 .2 0 Oil and gas extraction 1.8 -2.6 -2.2 -.7 -.3 .9 -.8 .1 Stone and earth minerals -4.6 4.8 6.7 1.1 -3.6 -1.4 -1.2 -2.3 Manufacturing .9 5.5 4.4 3.4 .5 -.2 -.5 0 Durables 1.1 6.6 5.3 4.1 1.1 .7 .4 .8 Lumber and products -3.9 8.2 1.4 1.9 -.2 -1.3 -1.0 -.8 Furniture and fixtures -.1 6.2 2.6 3.0 -1.0 -1.7 -2.2 -1.5 Clay, glass, and stone products -2.9 4.4 3.9 1.2 -.7 -1.5 1.7 -.6 Primary metals -7.3 3.7 4.5 -.9 .7 -.6 .1 .1 Fabricated metal products -2.1 3.7 3.6 1.2 .7 -1.3 -2.4 -.6 Nonelectrical machinery 7.2 9.4 10.3 8.6 4.3 3.7 .1 3.4 Excluding computing and office machinery... -2.6 -.1 7.5 .1 .3 -3.4 -2.2 -1.6 Office and computing machines 35.0 28.4 17.0 29.1 11.8 18.9 6.3 13.9 Electrical machinery 5.4 5.7 4.6 5.4 .2 -.4 1.9 .3 Transportation equipment -2.6 9.1 3.5 3.2 .1 1.0 2.3 .8 Instruments 4.9 4.1 7.9 5.1 .3 1.3 1.5 .9 Miscellaneous manufactures -1.6 1.8 7.3 1.3 .5 -.9 .3 -.1 Nondurables .6 3.9 3.1 2.4 -.5 -1.4 -1.8 -1.1 Foods 2.1 2.7 2.6 2.4 -.7 - 1.0 -1.1 -.9 Tobacco products .7 -.3 -.5 .1 -.3 0 .4 -.1 Textile mill products -1.9 3.8 1.0 .9 .3 -1.6 -1.7 -.8 Apparel products -.3 2.1 2.1 1.1 2.3 -2.1 .6 .2 Paper and products 1.0 4.1 1.6 2.4 -.8 -1.6 -1.1 -1.2 Printing and publishing 3.2 5.9 4.3 4.5 -.6 -1.6 -3.8 -1.5 Chemicals and products -.4 4.1 4.2 2.2 -1.1 -2.1 -2.7 -1.8 Petroleum products -3.1 2.3 3.0 .1 .2 .2 1.0 .3 Rubber and plastics products .4 8.7 4.3 4.4 -1.6 .5 -1.0 -.7 Leather and products -4.0 -7.2 1.6 -4.4 0 -1.2 1.4 -.3 Utilities .4 1.7 3.4 1.4 -.5 .7 .9 .2 somewhat less than 1 percentage point, and that Implied Production-Worker and of nondurable goods was down about 1 percent- Kilowatt-Hour Productivity age point. Output in mining and utilities changed little. Much of the downward revision within The revision caused little change in overall meamanufacturing occurred in foods, textiles, lumber, sures of production-worker productivity (that is, furniture and fixtures, paper, printing and publish- output per hour worked) in the industrial sector ing, chemicals, and nonelectrical machinery other and in manufacturing for 1977-89 (table 7). Over than office and computing machinery. For these the period, the annual rate of productivity growth industries, annual rates of growth between 1977 for total industrial production remained about and 1989 were revised down from 3A of a percent- 3 percent, and that for manufacturing remained age point to l3/4 percentage points. The growth about 3Vz percent. This apparent stability in the rates of three individual series within the machin- aggregate masks two offsetting underlying deery group—construction and mining machinery, velopments—a large upward revision to the metalworking machinery, and general industrial measure of output per hour in the computer machinery—revised down between 2Vi and 3!/2 industry and smaller downward revisions in a percentage points by 1989. Offsetting these down- variety of other industries. Consequently, outward revisions were a striking upward revision in put per hour for the total industrial sector office and computing machinery and noticeable excluding office and computing machinery was upward adjustments to output growth in transpor- revised down nearly half a percentage point. tation equipment and instruments. Output per kilowatt hour trended downward Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in Industrial Production 197 7. Average annual rate of growth in output per production-worker hour and in output per kilowatt hour, 1977-89 Percent Output per Output per production-worker hour kilowatt hour Item Unrevised Revised Unrevised Revised Total index 3.0 2.9 2.1 1.8 Manufacturing 3.4 3.5 2.5 2.5 Foods 3.1 2.2 .9 0 Tobacco products 2.1 2.1 0 -.1 Textile mill products 3.7 3.4 .9 .1 Apparel products 2.0 2.1 - 1.5 -1.3 Lumber and products 2.5 1.5 -.5 -1.2 Furniture and fixtures 3.8 2.3 1.1 -.3 Paper and products 3.4 2.3 1.3 .2 Printing and publishing 3.0 1.5 1.0 -.5 Chemicals and products 3.0 1.2 4.5 2.7 Petroleum products 1.3 1.6 - 1.5 -1.2 Rubber and plastics products 2.5 1.8 1.4 .8 Leather and products 1.1 .7 -4.1 -4.4 Clay, glass, and stone products 2.1 1.5 1.1 .5 Primary metals 3.9 3.8 -.2 -.1 Fabricated metal products 2.9 2.3 -.6 -1.2 Nonelectrical machinery 5.9 9.6 3.0 6.2 Electrical machinery 4.4 4.6 2.2 2.4 Transportation equipment 2.9 4.0 .8 1.5 Instruments 3.1 3.7 -.6 .3 Miscellaneous manufactures 2.7 2.6 .7 .6 Excluding computers iBftpBiS? Total index 2.6 2.1 1.7 1.1 Manufacturing 3.0 2.5 2.1 1.6 Nonelectrical machinery 2.7 1.1 .5 - 1.0 during the 1960s; but, spurred by higher oil prices, vented an excessive buildup of factory inventoit began an upward trend in the 1970s.5 As table 7 ries. shows, the upward trend has continued through The revision indicates that the rate of growth of the 1980s, as kilowatt-hour productivity in the total industrial production over 1977-89 was total industrial sector increased at an average slower than it appeared in the previous index. annual rate of nearly 2 percent from 1977 to 1989. However, the revised index shows the growth Gains in four large industries—chemicals, non- rate for 1977-82 to be stronger and the 1982 electrical machinery, electrical machinery, and recession to be milder than previously estimated. transportation equipment—accounted for much of For 1982 to date, the annual average growth rate the advance in the total. Elsewhere, kilowatt-hour has been revised down more than 0.5 percentage productivity grew little or declined. point, and the index now shows growth of output in the industrial sector at a rate of about 4 percent per year. SUMMARY Industrial output weakened over the course of 1989, particularly during the second half. While APPENDIX the most pronounced declines occurred in motor vehicles and related industries, the output of other As the text indicates, the most important aspect of industries slowed significantly as both domestic the 1990 revision is the benchmarking of many of and foreign demand softened. The response by the indexes of industrial production to the valueproducers to the overall slowing in demand in added-weighted production indexes from the 1982 1989 was relatively rapid and, on balance, pre- Indexes of Production developed by the Census Bureau. "Benchmarking" is the process of adjusting the 250 components of the monthly indus- 5. Board of Governors of the Federal Reserve System, trial production index to annual levels derived Industrial Production—1986 Edition (Board of Governors, 1986), p.39. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A.l. Industry structure and composition of industrial production: classification, value-added weights, and description of selected series Value added3 CCllaassssiiffiiccaattiioonn22 1977 1982 1987 TTTyyypppeee UUUnnniiitttsss,,, cccooommmpppooosssiiitttiiiooonnn,,, sssooouuurrrccceee fffooorrr ssseeerrriiieeesss,,, GGGrrrooouuuppp aaannnddd ssseeerrriiieeesss''' Proportion Proportion Proportion ooofff aaannnddd bbbeeegggiiinnnnnniiinnnggg dddaaattteee Millions of total Millions of total Millions of total ssseeerrriiieeesss*** SIC code Market of industrial of industrial of industrial dollars production dollars production dollars production Textile mill products 22 16,105 2.29 18,549 1.67 25,705 1.84 1947 Fabrics 221-4 5,399 .77 5,940 .53 7,371 .53 1954 CCoottttoonn aanndd ssyynntthheettiicc ffaabbrriiccss 222211,,22 Mnt 4,735 .68 5,126 .46 6,254 .45 Prod. Index, production of broadwoven goods, American Textile Manufactures Institute (ATMI); shipments, pounds, filament fibers from Fiber Economics Bureau. 1954; two series before 1982 Wool fabrics* 223 Mnt 313 .04 349 .03 507 .03 Kwh Linear yards, wool apparel fabrics (gray), Census Bureau, 1954-76. 1954 Narrow fabrics* 224 Mnt 351 .05 465 .04 610 .04 Pwh 1972 Knit goods 225 3,863 .55 4,985 .45 6,103 .44 1954 HHoossiieerryy 2251,2 Cc 859 .12 1,395 .13 1,729 .12 Prod. Pairs, weighted combination of total hosiery and pantyhose, National Association of Hosiery Manufactures. 1954 Knit garments 22153 , Q 4, Cc 3,004 .43 3,590 .32 4,374 .31 Kwh Production-worker hours for 1954-62. 1954 FFaabbrriicc ffiinniisshhiinngg 226 Mnt 1,417 .20 1,590 .14 2,308 .16 Prod. Index, production of broadwoven goods by weaving mills, ATMI; linear yards, finished cotton, finished synthetic, and silk fabrics, Census Bureau for 1954-81. 1954 Carpeting 227 1,530 .22 1,712 .15 3,181 .23 1954 Woven carpets* 2271,9 Ch 92 .01 127 .01 248 .02 Prod. Square yards, Carpet and Rug Institute, 1954 TTuufftteedd ccaarrppeettiinngg** 2272 Ch 1,438 .20 1,585 .14 2,933 .21 Prod. Square yards, Carpet and Rug Institute; Productionworker hours for 1954-62; kilowatt hours for 1963-66. 1954; two series before 1977 Yarns and miscellaneous textiles .... 228,9 3,896 .55 4,322 .39 6,742 .48 1954 Yarns and thread* 228 2,255 .32 2,318 .21 3,822 .27 Prod. Tons, consumption of cotton and synthetic fibers, Census Bureau, 1954 Miscellaneous textiles* 229 Mnt 1,641 .23 2,004 .18 2,920 .21 Kwh Production-worker hours for 1954-62. 1954 Gas utilities* 492,493pt 12,548 1.78 17,839 2.10 15,820 1.62 Department of Energy (DOE). 1947 Gas transmission* Me 4,465 .63 9,756 .88 7,737 .55 Prod. Cubic feet, sales by major pipeline companies of gas for transmission adjusted to annual data for marketed gas production. 1967 Sales, gas* 8,083 1.15 13,600 1.22 14,898 1.07 Residential gas* Cs 3,296 .47 5,100 .46 7,732 .55 Prod. Cubic feet, sales, DOE. 1954 Nonresidential gas* 4,787 .68 8,500 .77 7,166 .51 Industrial gas* Me 3,251 .46 5,848 .53 3,635 .26 Prod. Cubic feet, sales, DOE. 1954 Commercial and other gas* lb 1,536 .22 2,652 .24 3,531 .25 Prod. Cubic feet, sales, DOE. 1954 1. Series with asterisks are included in published totals but are not shown separately in the monthly tion codes are as follows: Mnt—textile, paper, and chemical materials; Cc—clothing; Ch—home goods; report. Me—energy materials; Cs-consumer staples; and lb—business supplies. 2. SIC numbers are from the Standard Industrial Classification Manual, 1977 edition, published 3. Details may not sum to totals because of rounding. by the U.S. Office of Management and Budget. The abbreviation "pt" means part. Market classifica- 4. Prod.-physical product data; Kwh-kilowatt-hour data; Pwh-production-worker-hour data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in Industrial Production 199 A.2. Market structure of business equipment: classification and weights Value added3 CCllaassssiiffiiccaattiioonn22 1977 1982 1987 GGGrrrooouuuppp aaannnddd ssseeerrriiieeesss''' Proportion Proportion Proportion Millions of total Millions of total Millions of total SIC code Market of industrial of industrial of industrial dollars production dollars production dollars production Business equipment Eb 101,027 14.34 152,856 13.75 194,563 13.93 Information processing and related equipment Ebi 27,897 3.96 54,635 4.92 77,762 5.57 Office and computing machines* 357pt 8,213 1.17 18,148 1.63 27,074 1.94 Telephone apparatus* 3661 4,192 .60 7,121 .64 6,809 .49 Nondefense electronic communication equipment* 3662pt 3,313 .47 7,059 .63 11,768 .84 Scientific and optical goods* 381,3 2,185 .31 4,469 .40 7,540 .54 Medical instruments* 384 3,262 .46 6,978 .63 11,496 .82 Copiers and related equipment* 386 6,732 .96 10,860 .98 13,075 .94 Industrial equipment Ebn 41,205 5.85 55,636 5.00 56,389 4.04 Boiler shop products* 3443 4,075 .58 4,136 .37 3,395 .24 Turbines 3511 1,553 .22 2,153 .19 1,967 .14 Construction and mining equipment 3531-3 9,200 1.31 13,173 1.18 11,675 .84 Materials handling machinery* 3534-7 2,635 .37 3,317 .30 3,837 .27 Metal working machinery* 354 8,747 1.24 11,284 1.01 13,006 .93 Special industry machinery* 355 5,271 .75 7,416 .67 9,590 .69 General industrial equipment* 3561, 3-5, 6,388 .91 9,573 .86 7,225 .52 Electrical distribution equipment* 361 3,336 .47 4,584 .41 5,694 .41 Transit equipment Ebt 17,559 2.49 22,946 2.06 34,428 2.46 Autos, business 371pt 4,630 .66 4,976 .45 9,390 .67 Trucks, business 371pt 2,870 .41 2,555 .23 7,950 .57 Truck trailers 3715 646 .09 592 .05 1,117 .08 Commercial aircraft* 372 lpt 3,539 .50 6,591 .59 6,330 .45 Commercial aircraft equipment n.e.c.* 3724, 8pt 1,952 .28 3,853 .35 7,505 .54 Commercial ships* 373 lpt 2,039 .29 3,961 .36 852 .06 Railroad equipment 374 1,883 .27 418 .04 1,284 .09 Other equipment Ebo 14,366 2.04 19,639 1.77 25,984 1.86 Fixtures and office furniture 252, 4, 9 3,294 .47 5,795 .52 9,888 .71 Farm and garden equipment 352 5,490 .78 6,146 .55 5,624 .40 Service industry equipment* 358pt 5,582 .79 7,698 .69 10,472 .75 «|. See table A.l, note 1. N.e.c. means not elsewhere classified. Ebn—industrial equipment; Ebt—transit equipment: and Ebo—other 2. See table A.l, note 2. Market classification codes are as follows: Eb— equipment. business equipment; Ebi-information processing and related equipment; 3. Details may not sum to totals because of rounding. from data sources more comprehensive than The 1990 revision also incorporates a considerthose available for the monthly compilation. able amount of other new benchmark information. "Value-added-weighted production index" refers The general sources of this information are preto the concept of production to which the index of sented in the summary of statistical changes (see industrial production, as a measure, most closely box). This appendix documents more fully the adheres. This concept is known as "Census value way in which the revision uses this information; it added;" from the sum of the gross outputs of each also evaluates the effect of the new weights. industrial establishment it excludes the flows The structure of the basic series and the among establishments within the industrial sector monthly source data used in the compilation of and the inputs from other sectors.6 the monthly index are fundamentally unchanged, so the appendix does not present the complete series structure. Descriptions of several addi- 6. Census value-added data do not exclude outlays for tions—the new textile industry series, the new business services purchased outside the industrial sector, source in gas utilities, and the new business equipsuch as advertising, insurance, and the like. For a discussion ment aggregates—appear in tables A. 1 and A.2. A of concepts of industrial production, see Clayton Gehman and Cornelia Motheral, "Industrial Production Measurement copy of the complete 1990 index of industrial in the United States: Concepts, Uses, and Compilation production structure and series composition is Practices" (reply to an inquiry from the Economic Commisavailable upon written request to Industrial Outsion of Europe, Board of Governors of the Federal Reserve System, Division of Research and Statistics, February 1964). put Section, Mail Stop 82, Division of Research Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

200 Federal Reserve Bulletin • April 1990 and Statistics, Federal Reserve Board, Washing- dollars with deflators from the Bureau of Ecoton, D.C. 20551. nomic Analysis, which are based mostly on producer price indexes published by the Bureau of Benchmark and Annual Data Labor Statistics. In the 1990 revision, the annual indexes have The Census value-added-weighted production in- also incorporated preliminary reports from the dexes are used at the four-digit Standard Indus- 1987 Censuses of Manufactures and Mineral Intrial Classification (SIC) level, yielding measures dustries. The 1987 Census data are organized of change in industry output from 1977 to 1982. according to a new basis for industry classifica- For years in which Census indexes are unavail- tion, the 1987 SIC. However, the 1977 SIC able, 1978-81 and 1983-86, staff members of the remains the basis of classification for the indus- Federal Reserve Board developed annual in- trial production index because most monthly dexes of production that are similar in concept to source data are still reported according to it. For the Census indexes to form a consistent time many industries, the changes have had little or no series for the benchmarking of the industrial effect on the representation of industrial producproduction index. The annual indexes are based tion series; for other industries, such as electrical on industry output in terms of current dollars, and nonelectrical machinery, extensive changes defined as value added plus the cost of materials, have affected series in the index. Thus, the reported in the Annual Survey of Manufactures; annual indexes and the weights constructed from the current dollars are converted to constant the 1987 Census data adjusted to approximate the A.3. Sources of annual levels for basic series in the 1990 revision of the index of industrial production, by two-digit Standard Industrial Classification code1 Annual Annual average of Annual index physical product monthly physical constructed from data product data constant-dollar data SSeerriieess aanndd SSIICC ccooddee Number of 1987 Number of 1987 Number of 1987 series proportion series proportion series proportion Mining 7 1.38 10 6.52 1 .03 10 3 .14 2 .15 1 .03 11-12 2 1.22 13 1 .58 6 5.15 14 3 .67 Manufacturing 11 2.80 56 11.66 156 69.98 20 . . . 14 2.61 15 6.15 21 2 .94 1 .08 22 10 1.84 23 6 2.35 24 1 .48 7 1.51 25 3 1.45 26 4 2.34 4 1.24 27 1 .36 1 1.37 2 4.63 28 3 .99 5 .78 10 6.83 29 7 1.11 1 .20 30 1 .25 4 .40 4 2.37 31 1 .10 2 .20 32 2 .06 10 2.40 33 5 1.14 8 1.09 7 1.10 34 13 5.38 35 1 .04 13 8.52 36 1 .06 5 .29 19 8.26 37 1 .05 19 9.75 38 5 3.26 39 2 1.24 91 3 1.18 Utilities (49) 9 7.63 Total index 18 4.18 75 25.81 157 70.01 1. This table refers to the source of annual levels to which the three types data) are benchmarked. The table does not show the proportion of the three of monthly indicator (physical-product, kilowatt-hour, or production-worker types of monthly indicator used in the index of industrial production. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in Industrial Production 201 1977 SIC are subject to further revision when the indicator account for about 40 percent of the industrial production index switches to the 1987 index in terms of its value-added proportions. No SIC. monthly indicators in the index require deflation. Approximately 70 percent of the index is bench- In all cases, the adjustment of monthly indicators marked to the annual indexes derived from com- to annual benchmark levels is performed as deprehensive constant-dollar measures of industry scribed in Industrial Production—1986 Edition. output (table A.3). Benchmarking to constantdollar measures occurs almost exclusively in the Weighting of the Index manufacturing portion of the index. A smaller portion of the manufacturing series is bench- As the text indicates, this revision incorporates marked to a second type of basic source data— new weight periods. The index now uses 1977 comprehensive physical-product data that are value-added weights for 1977-81; 1982 weights available on a monthly basis. An example is the for 1982-86; and 1987 weights for 1987-90. The index of primary aluminum ingot, which is shown chainlinking of intercensus segments of the index in chart A.l with an annual index derived from follows procedures established in the 1959 verconstant-dollar data. As is typical, the movements sion of the index, as modified and reported in and levels of the two types of indexes, though Industrial Production—1986 Edition. similar, are not identical. Because weighting is often difficult to under- The third type of basic source data—annual stand, it should be recognized that the word physical-product data—is used for benchmarking weight commonly is used in two ways. One is in only 11 of the 223 individual manufacturing se- reference to proportions in the index showing the ries. For example, the predominant source of relative importance of each series in a weightdata for the annual levels for the mining and base year. Such figures have been published as utilities industries in the industrial production "1977 proportion" in the Federal Reserve statisindex are physical measures of annual output tical release Industrial Production, and compaavailable from the Bureau of Mines and the rable figures will be shown as "1987 proportion" Department of Energy. The Bureau of Mines' for the revised index in the new release Industrial Minerals Yearbooks through 1986 provided the Production and Capacity Utilization. (A sumbasic data for most of the revised annual levels mary of these figures and those for earlier years for the metal mining and stone and earth minerals was presented in table 4.) A second usage of series. Coal and oil and gas extraction series, as weight refers to the price element of the valuewell as all utilities series, reflect the latest data added data used to calculate the proportions. available from the Department of Energy. Only the price element changes when one weight The use of physical-product data for bench- base replaces another.7 marking should not be confused with their use in determining month-to-month movements in the 7. Consider a weighted relative quantity index, index. In the revised index, as in the old, series j _ SCgn/go) W that use physical-product data as a monthly A.l Annual indexes based on constant-dollar and where q and q are the quantity relatives and the w's are n 0 physical-product data value weights (with both price and quantity elements) to indicate the relative importance of the quantities. Then with Ratio scale, 1987 = 100 QoPo Aluminum ingot 150 the expression for /„ given above is algebraically equivalent to the equation ^sr-125 Physical products >\ j _ Zq p n 0 \ \ 100 ZqoPo This is a Laspeyres quantity index, which shows changes in quantities with prices held fixed at base-year values. There- 1 1 1 1 1 1 1 1 1 1 1 1 1 1 fore, introducing new weights in an index—shifting the base 1977 1981 198<i 1989 year—updates the price element. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

202 Federal Reserve Bulletin • April 1990 A.4. Effects of alternative weight years on the industrial production index, 1977-891 Weight year 1977--82 1982-87 1987-89 1977-89 Percentage increases 1977 4.7 (-.2) 34.2 (20.3) 12.2 (7.6) 57.6 (29.1) 1982 1.1 (-.6) 22.1 (17.2) 8.4 (6.5) 33.7 (24.1) 1987 -.5 (-1.1) 20.4 (18.4) 8.1 (7.4) 29.5 (25.7) Linked 4.7 (-.2) 22.1 (17.2) 8.1 (7.4) 38.2 (25.6) Average annual rate of growth 1977 .9 (0) 6.1 (3.8) 5.9 (3.7) 3.9 (2.2) 1982 .2 (-.1) 4.1 (3.2) 4.1 (3.2) 2.5 (1.8) 1987 -.1 (-.2) 3.8 (3.4) 4.0 (3.6) 2.2 (1.9) Linked .9 (0) 4.1 (3.2) 4.0 (3.6) 2.7 (1.9) 1. Numbers in parentheses show the effect of excluding office and computing machines from the aggregates. As explained and illustrated in Industrial weight years, rather than linked segments, to Production—1971 Edition, in a segment of the aggregate component series of the index distorts industrial production index for which the the representation of total industrial output in weights are held fixed, the proportion of fast- periods distant from the base year. As the lower growing industries in the index rises with time, portion of the right column shows, total induswhereas that of industries with relatively slow trial output is calculated, with 1977 as a single or declining growth falls. Because fast-growing weight year, to grow at an almost 4 percent rate industries generally show less-than-average in- on average for 1977-89, whereas the linked index creases in prices, the composition of the in- grows at a more representative 2.7 percent rate. dex—the proportions in the total—may be sub- As shown by the figures in parentheses, these stantially altered with the introduction of new effects are exaggerated by the rapid growth of the weights. For the most part such changes, re- office and computing machinery industry, which flecting changes in price relationships since the since 1977 has been estimated to have expanded previous weight year, tend to reverse the at an average rate of almost 30 percent per year. changes in proportions that have already oc- A factor thought to complicate the use of 1982 curred as a result of quantity changes. weights is that year's recession, which might Thus, one can analyze the revisions in the new have distorted relationships in the value-added index over 1977-89, and compare them with the proportions between cyclical and noncyclical old index, according to the increases or de- series. However, in view of the calculations in creases owing to the introduction of two new table A.4, where the growth rates shown are weight periods. With this analysis, upward influ- similar for 1982-87 with alternative 1982 and ences that arise from reweighting slow-growing 1987 weight bases, the use of 1982 as a weight industries such as textiles, primary metals, fab- year has made little difference. Moreover, one ricated metals, and nonelectrical machinery ex- can eliminate most of the effect of the oil crisis cluding office and computing machines, almost evident in the value-added proportions shown offset in the aggregate downward influences ow- in table 4 by excluding mining and utilities from ing to the reweighting of fast-growing industries, total industrial production. When those groups such as printing and publishing, electrical ma- are excluded, the proportions of the relatively chinery, and instruments. Consequently, as in more cyclical durable goods industries and the the past, the new weight periods cause a slight A.5. Proportions of value added in manufacturing, downward revision to the index, as the relative 1977-871 importance of industries that have been growing Percent rapidly is reduced. The use of alternative weight years for the Series 1977 1982 1987 separate periods beginning in 1977 affects the Total manufacturing 111000000...000000 111000000...000000 111000000...000000 index's representation of total industrial output. 555888...333111 555666...666999 555555...999888 444111...666999 444333...333111 444444...000222 As table A.4 shows, the use of various single Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Developments in Industrial Production 203 A.6. gomgarison of rates of growth in industrial production, by type of monthly indicator, 1977-89 Growth" rale eSKtfrafgtT WmTT5vi§5jnird55J— Average annual rate of growth, minus growth rate calculated IInnddiiccaattoorr revised index with earlier index 1977-82 1982-87 1987-89 1977-89 1977-82 1982-87 1987-89 1977-89 Physical product -1.2 1.7 2.1 .5 -.4 -1.6 -.2 -.8 Kilowatt hours 2.9 6.7 5.9 5.0 .9 .2 -1.8 .2 Kilowatt hours, excluding computers -.2 4.0 4.9 2.4 -.6 -2.0 -2.3 -1.4 Production-worker hours 1.9 4.7 4.2 3.5 .7 -.1 .9 4 less cyclically sensitive nondurable goods in- adjustments allow for incomplete coverage and dustries within manufacturing alone appear un- for a change in the quality of the products distorted by the recession (table A.5). produced in the industry. Production-workerhour or kilowatt-hour series reflect an extrapolation of the historical relationship of output to Revisions of Basic Series by Type of inputs, that is, changes in labor or energy Monthly Indicator productivity. Estimates of these relationships The industrial production index relies on three are recalculated when more comprehensive major types of indicators of monthly produc- data are available; the extent of the 1990 revition: (1) physical-product series, (2) kilowatt sions to industrial production series aggregated hours of electricity used by industry, and (3) by type of indicator is shown in chart A.2. aggregate hours for which production workers In the overall 1977-89 period, the annual are paid. The reliability of each series as a growth rates of the series whose initial estimates measure of output depends on two factors: (1) were derived from the kilowatt-hour and producthe accuracy of the indicator in reflecting tion-worker-hour series revised upward 0.4 and changes in industry activity on a monthly basis 0.2 percentage point respectively. Excluding the and p) the accuracy with which the basic office and computing machinery industry from indicators are transformed into measures of the estimates, the growth rate of the kilowattproduction. With physical-product data, the hour series revised down about IV2 percentage A.2 Revised and earlier industrial production indexes of output, by type of monthly indicator Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

204 Federal Reserve Bulletin • April 1990 the total industrial level appears in the top panel A.3 Indexes of electric power use by U.S. industries Ratio scale, 19HV-1UU of chart A.3. Overall, the difference between the old series and the revised ones is small; Total kilowatt hours used however, the revised data for 1977-82 show a somewhat stronger cyclical pattern than do the earlier data, especially in the steeper decline in kilowatt hours now shown during the 1982 80 recession. Although the growth rate of total industrial use was little changed, changes at lower levels of aggregation were significant. The bottom panel of chart A.3 shows an aggre- Kilowatt hours used for industrial production series gate of kilowatt-hour use for those industries for which the electric power series are used as monthly indicators in industrial production indexes. The panel, which shows the basic kilowatt-hour data before they were converted to a measure of output, indicates a more rapid growth rate for the revised aggregate than before, especially in 1977-82. 1977 1981 1985 1989 point, the largest revision shown in table A.6. The aggregate of series based on physicalproduct information revised downward 0.9 per- On April 17,1990, revised Federal Reserve statistics centage point. On balance, these series had of industrial production, capacity utilization, and elecbeen thought to require more adjustment than tric power use by industries will be released. Historical data from all of these time series will be available the revision now indicates. This development on a single magnetic tape from the National Technical suggests that the physical product indicators, Information Service (703-487-4650). which are more prevalent in relatively mature The G.12.3 statistical release, Industrial Production, industries, were more representative of changes and the G.3(402) release, Capacity Utilization, will be in quantity and quality of output during 1977-87 combined into the single publication: than in earlier periods. G. 17(419) Industrial Production and Capacity Utilization Revision of Electric Power Data All data shown in the combined release will be available on the day of issue through the Department of The series on electric power use by industry has Commerce's online Economic Bulletin Board (202-377-3870). been revised back to January 1972. The revised The separate system of capacity utilization for materseries include the incorporation of new volunials will be discontinued. Many of the components of tary reporters of data as well as adjustment for the materials group will be included in mining and in the loss of reporters. The results of the review an improved primary processing aggregate for manufacand the correction of the SIC codes assigned to turing. The revisions and structure modifications to the capacity and capacity utilization indexes will be prethe reporters are also included. The results of sented in an article in the June Bulletin. the revision of basic kilowatt-hour data used at Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

205 Treasury and Federal Reserve Foreign Exchange Operations This quarterly report, covering the period No- 1. Federal Reserve reciprocal currency arrangements vember 1989 through January 1990, provides Millions of dollars information on Treasury and System foreign Amount of exchange operations. It was presented by Sam Institution facility, January 31, 1990 Y. Cross, Manager of Foreign Operations of the System Open Market Account and Executive Austrian National Bank 250 National Bank of Belgium 1,000 Vice President in charge of the Foreign Group of Bank of Canada 2,000 National Bank of Denmark 250 the Federal Reserve Bank of New York. George Bank of England 3,000 G. Bentley was primarily responsible for prepa- Bank of France 2,000 Deutsche Bundesbank 6,000 ration of the report.1 Bank of Italy 3,000 Bank of Japan 5,000 Bank of Mexico 700 Movements of the dollar against individual cur- Netherlands Bank 500 rencies diverged widely between November 1989 Bank of Norway 250 Bank of Sweden 300 and January 1990—a period when the rapid Swiss National Bank 4,000 opening up of Eastern Europe benefited the Bank for International Settlements German mark and a number of factors continued Dollars against Swiss Francs 600 Dollars against other authorized European to weigh against the Japanese yen. The dollar currencies 11,,225500 experienced occasional bouts of upward pressure Total 3300,,110000 against the yen, and on several of these occasions the U.S. monetary authorities intervened ing the first half of the reporting period. Positive to resist the dollar's rise against that currency, sentiment toward the mark built rapidly after the selling a total of $750 million for yen. On balance, opening on November 9 of the borders between the dollar declined against the mark and other East and West Germany. Market participants European currencies, moving down 8V2 percent, anticipated that an influx of East German immi- IVA percent, and 6 percent respectively against grants would benefit the German economy by the mark, Swiss franc, and British pound. The providing a new supply of skilled labor. At the dollar rose, however, about 1 percent against same time, the new immigrants were expected to both the yen and the Canadian dollar. On a stimulate domestic demand and thereby spur trade-weighted basis, as measured by the staff of higher mark interest rates as the Bundesbank the Board of Governors of the Federal Reserve sought to contain any potential inflationary pres- System, the dollar declined 53/4 percent. sures. More broadly, international investors focused on the prospects for greatly expanded market opportunities for German enterprises, and the German equity market surged in re- NOVEMBER THROUGH MID-DECEMBER sponse to actual and anticipated capital inflows. The movement in dollar exchange rates against Against this background, the mark strengththe European currencies was most marked dur- ened against all major currencies, and talk began to circulate, especially around the December 8-9 European Community summit, that exchange 1. The charts for the report are available on request from market pressures would lead to a revaluation of Publications Services, Board of Governors of the Federal the mark within the European Monetary System Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

206 Federal Reserve Bulletin • April 1990 (EMS). Germany has had large sustained trade keeping alive expectations that U.S. interest surpluses against most of its European trading rates would continue to move lower. The marpartners. Moreover, the German authorities ket's hope that the Federal Reserve had intended were presumed to welcome any developments to signal a new easing of monetary policy in that would foster adjustment of the trade surplus November had proved unfounded. But market or help dampen inflationary impulses to the econ- participants were still confident that the Federal omy. Market participants believed that a realign- Reserve would continue to respond, as it had in ment within the EMS would be viewed by preceding months, to evidence of a decelerating Bundesbank officials as consistent with both of economy by allowing short-term interest rates to these objectives. Accordingly, speculative flows ease a bit further. Indeed, the Federal Reserve into marks increased, and reports circulated in moved on December 20 to supply liquidity under the market that the Bundesbank's partner central circumstances that led market participants to banks were intervening to sell both dollars and believe that another such move had occurred, marks to support their own currencies. and they anticipated that further moves would be In the process, the dollar declined steadily forthcoming early in the new year. against the mark. From DM1.8415 at the begin- In Japan, market participants had noted that ning of November, the dollar declined by mid- short-term market interest rates had drifted pro- December to around DM1.7300, a drop of 6 gressively higher for several months, and that percent. this trend had continued even after the Bank of Against the yen, the dollar showed less of a Japan raised its discount rate in a surprise move trend, although it experienced upward pressure in October. Trying to anticipate the authorities' from time to time when there were reports of next action, dealers were sensitive to the possistrong Japanese investor demand for portfolio bility that the Bank of Japan might again raise its and direct investments in the United States. discount rate to follow up on the move in market Market participants were particularly impressed rates. When such an action did not occur by that Japanese interest in investing in dollar-de- mid-December, market participants began to susnominated assets appeared to remain strong, pect that these expectations might not be fuleven though market commentary about the out- filled. They began to doubt that the authorities look for U.S. and Japanese monetary policy would move on interest rates at a time of impendimplied that the interest rate differentials favor- ing changes in Bank of Japan leadership and so ing the dollar would continue to narrow. Once in soon before parliamentary elections in early November and again in early December, the 1990. Market participants were surprised, there- U.S. monetary authorities, in keeping with un- fore, when Japanese newspapers reported on derstandings in the Group of Seven on exchange December 18 that the Bank of Japan would soon rate cooperation, intervened to sell a total of $150 raise its discount rate, a move that indeed took million against yen. These operations were coor- place on December 25. When worldwide trading dinated with the Bank of Japan. By mid-De- resumed after the Christmas holidays, the dolcember, the dollar was trading around ¥144.00, a lar declined to its period low against the yen level 3/4 percent higher than at the start of the of ¥141.70 on December 27 and a twentyreporting period. month low against the mark of DM1.6752 on December 28—1 percent and 9 percent lower respectively than at the start of November. In early January, the market's assessment of MID-DECEMBER THROUGH JANUARY the outlook for dollar interest rates began to In mid-December, one focus of market attention change. Accumulating signs that the U.S. econwas the extent to which monetary policies in the omy had stopped decelerating began to raise United States and Japan might move in opposite doubts about both the timing and the extent of directions. Economic statistics released through any further easing of U.S. monetary policy. Data mid-December suggested that the U.S. economy released around the turn of the year suggested was still sluggish and price pressures subdued, that growth might not be as fragile as had previ- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Treasury and Federal Reserve Foreign Exchange Operations 207 ously been thought and that the slowdown in further near-term adjustments of exchange rates some manufacturing sectors in late 1989 had not diminished. The dollar's low for the period was spilled over into other sectors of the economy. DM1.6630 on January 8. Unseasonably cold weather led to a sharp runup For the remainder of January, movements in in oil prices and heightened concerns about re- the dollar-mark exchange rate were dominated newed price pressures in the food and energy by events in Eastern Europe. Although indicasectors. The January 12 report of an unexpect- tions of heavy investor demand for the mark edly large jump in U.S. producer prices was then continued to support that currency, reports in interpreted as justifying concerns that little scope mid-January began to reveal the fragility of the remained for further immediate declines in dollar government structure in East Germany and elseinterest rates. Later in January, the dollar re- where in Eastern Europe. Doubts also were ceived additional support as market participants voiced about political stability in the Soviet focused on interpretive press reports indicating Union, especially in light of mounting separatist the Federal Reserve's concerns with inflation movements in several Soviet republics. These and its more optimistic assessment of economic fears somewhat dampened the near-term enthugrowth prospects in 1990. When trading resumed siasm for the mark, which traded with little clear after the new year, this reassessment helped to direction for the rest of the month. The dollar move the dollar up from its lows of late Decem- closed the period against the mark at DM1.6850. ber and provided continuing support to the dollar Uncertainty about the implications of the throughout the rest of January. widespread political and economic changes tak- Against the yen, the dollar also benefited early ing place was reflected in increased volatility in in January from the potential uncertainties sur- the world equity and bond markets during Janurounding the upcoming parliamentary elections ary. This volatility, together with convergence of in Japan. Around the start of the new year, long-term interest rates in the United States, rumors of scandals involving members of the Germany, and Japan, and the attraction of new ruling Liberal Democratic Party once again un- investment opportunities in Europe, revived consettled the exchange markets, and the dollar cerns about the continued smooth financing of reached its three-month high against the yen the U.S. current account deficit. In this context, at ¥146.80 on January 3. With upward pressure dollar rates from day to day were sometimes on the dollar-yen exchange rate persisting influenced by sharp movements in other financial throughout the first half of the month, the U.S. markets. But for the month as a whole, these monetary authorities again intervened, on three developments appeared to have little lasting efdays, to sell $600 million against yen. These fect on dollar exchange rates. operations, which were coordinated with the Against the Canadian dollar, the dollar trended Bank of Japan, brought the total of U.S. inter- lower throughout the three-month period until vention for the November-January period to mid-January. The dollar reversed its course at $750 million, shared equally by the Federal Re- that time, when a move by the Bank of Canada to serve and the U.S. Treasury. The dollar closed ease interest rates precipitated a sell-off of the the period at ¥144.45, roughly 1 percent higher Canadian currency. than at the start of November. In other operations, the U.S. Treasury through The dollar recovered little against the mark in the Exchange Stabilization Fund (ESF), together early January. At this time, talk revived of a with the Bank for International Settlements revaluation of the German mark within the EMS. (BIS), acting for certain participating central In fact, an adjustment of the EMS was an- banks, agreed to provide short-term support of nounced on January 5 to accommodate a request $500 million to the National Bank of Poland for from the Italian government to bring the Italian its economic stabilization and reform efforts, lira within the narrow band of the exchange rate effective December 27. The ESF's share in the mechanism of the EMS. When this relatively facility was $200 million. On December 28, Pomodest adjustment occurred smoothly and with- land drew $86 million of the ESF's portion. out a generalized realignment, expectations of Also during the period, Bolivia on December Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

208 Federal Reserve Bulletin • April 1990 2. Drawings and repayments by foreign central banks under special swap arrangements with the U.S. Treasury1 Millions of dollars; drawings or repayments (-) Central bank drawing Amount of O of u O ts c ta to n b d e in r g 3 a 1 s , November Decem i b f e f r January O of u J ts a t n a u n a d r i y n g 3 1 as , on the U.S. Treasury facility 1989 1990 Bank of Mexico2 425.0 384.1 -6.5 -35.8 -7.7 334.1 Central Bank of Bolivia flOO.O3 75.03 . . . —75.03 ... 0 1 I 75.04 ... ... 75.04 -75.04 0 j National Bank of Poland5 200.0 ... ... 86.0 . . . 86.0 1. Data are on a value-date basis. 4. The latest facility was established on December 29, 1989, and expired 2. Represents the ESF portion of $2,000 million near-term credit facility. upon repayment on January 12, 1990. 3. The facility, which was established for $100 million on July 11, 1989, 5. Represents the ESF portion of a $500 million short-term credit facility was renewed on September 15, 1989. established on December 27, 1989. 3. Drawings and repayments by foreign central banks1 Millions of dollars; drawings or repayments (-) Outstanding as Outstanding as AAmmoouunntt ooff Central bank of October 31, November December January of January 31, ffaacciilliittyy 1989 1990 Under reciprocal currency arrangements with the Federal Reserve System Bank of Mexico2. 700.0 700.0 700.0 Under special swap arrangements with the Federal Reserve System Bank of Mexico2 125.0 84.1 -6.5 -35.8 -7.7 34.1 1. Data are on a value-date basis. 2. Drawn as part of the $2,000 million near-term credit facility established on September 21, 1989. 29 repaid in full its $75 million outstanding draw- prevailing at the time the foreign currencies were ing of a $100 million facility established with the acquired. ESF. On the same day, Bolivia drew the full The Federal Reserve and the ESF regularly amount of a newly established facility of $75 invest their foreign currency balances in a variety million. The drawing was fully repaid upon ma- of instruments that yield market-related rates of turity on January 12 (table 2). return and have a high degree of quality and On four separate occasions, Mexico repaid liquidity. A portion of the balances is invested in portions of its outstanding swap commitments securities issued by foreign governments. As of under the $2,000 million facility established the end of January, holdings of such securities by with the U.S. monetary authorities, the BIS the Federal Reserve amounted to $7,180.4 mil- (acting for certain participating central banks), lion equivalent, and holdings by the ESF and the Bank of Spain. The Federal Reserve amounted to the equivalent of $7,477.6 million. and the ESF each received a total of $50 million (table 3). 4. Net profits or losses (-) on U. S. Treasury and As of the end of January, cumulative bookkeep- Federal Reserve current foreign exchange operations1 ing or valuation gains on outstanding foreign cur- Millions of dollars rency balances were $2,709.6 million for the Federal Reserve and $2,011.0 million for the ESF U.S. Treasury Federal Exchange (table 4). (Valuation gains on holdings ware- Period and item Reserve Stabilization Fund housed by the ESF with the Federal Reserve are excluded in the first figure and, correspondingly, October 1, 1989- January 31,1990 ..00 ..00 included in the second figure.) These valuation Valuation profits and losses gains represent the increase in dollar value of on outstanding assets and liabilities as of outstanding currency assets valued at end- January 31, 1990 22,,770099..66 22,,001111..00 of-period exchange rates, compared with the rates 1. Data are on a value-date basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

209 Industrial Production Released for publication February 16 ance, rose slightly. At 140.9 percent of the 1977 annual average, the total index was little changed Industrial production fell 1.2 percent in January from a year earlier. Manufacturing output defollowing a revised increase of 0.2 percent in clined 0.9 percent in January, and factory utiliza- December. In January, the output of motor vehi- tion dropped to 81.9 percent from 82.9 percent in cles was curtailed drastically, and the extremely December. Detailed data for capacity utilization warm weather caused a sharp drop in utilities are shown separately in "Capacity Utilization," output. Elsewhere, industrial production, on bal- Federal Reserve monthly statistical release G.3. 1984 1986 1988 1990 1984 1986 1988 1990 All series are seasonally adjusted. Latest series: January. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

210 Federal Reserve Bulletin • April 1990 1977 = 100 Percentage change from preceding month Percentage change, Group 1989 1990 1989 1990 Jan. 1989 1990 Dec. Jan. Sept. Oct. Nov. Dec. Jan. Major market groups Total industrial production 142.5 140.9 -.1 -.3 .3 .2 -1.2 .1 Products, total 153.5 151.3 -.1 -.6 .5 .7 -1.4 .8 Final products 151.5 148.8 -.2 -.9 .5 .8 -1.8 .4 Consumer goods 141.4 138.2 -.2 .9 .2 .6 -2.2 -.2 Durable 128.5 119.7 -.6 .0 -.4 .8 -6.8 -9.0 Nondurable 146.1 145.1 -.1 1.2 .4 .6 -.7 2.8 Business equipment 168.8 165.9 -.2 -2.8 1.1 1.3 -1.7 1.2 Defense and space 177.7 177.7 -.3 -3.4 .3 .6 .0 -1.3 Intermediate products 160.3 159.9 .2 .5 .6 .5 -.3 2.1 Construction supplies 143.7 144.0 -.4 1.2 .9 -.1 .2 1.2 Materials 127.6 126.6 -.2 .0 -.2 -.7 -.7 -1.1 Major industry groups Manufacturing 148.6 147.2 -.2 -.6 .3 .1 -.9 .1 Durable 145.9 143.3 -.4 -1.6 .4 .3 -1.7 -2.0 Nondurable 152.4 152.7 .0 .8 .2 -.2 .2 2.8 Mining 102.4 104.6 1.1 .8 .2 -2.0 2.1 1.5 Utilities 122.8 109.6 1.0 .9 -.1 6.3 -10.7 -3.8 NOTE. Indexes are seasonally adjusted. In market groups, the production of consumer equipment was about unchanged, output of congoods fell 2.2 percent in January as automobile struction, mining, and farm equipment advanced assemblies plunged to an annual rate of 4.1 further, but commercial equipment, particularly million units from a rate of 6.2 million units in computers, weakened. Construction supplies December, and light truck production for con- were essentially unchanged again last month, but sumer use fell more than 30 percent. In addition, business supplies, which include the sale of electhe sale of electricity and gas for residential use tricity and gas to commercial users, declined. was down sharply because of warmer than usual Materials output was down 0.7 percent in Januweather over most of the nation. Output of home ary as output of consumer durable parts, mainly goods, however, picked up as appliances re- for motor vehicles, and energy materials, primarbounded after significant cutbacks in each of the ily electricity generation, fell sharply. However, two preceding months. these declines were moderated somewhat by Business equipment also was down sharply increases in steel and coal output. because of the decline in production of motor In industry groups, output in manufacturing vehicles. Excluding motor vehicles, business declined 0.9 percent in January, with motor vehicles and parts more than accounting for the Total industrial production—Revisions drop. Fabricated metals and rubber and plastics Estimates as shown last month and current estimates products, which are partially related to motor vehicles, also declined. In addition, declines oc- Percentage change Index (1977=100) from previous curred in lumber, nonelectrical machinery, and MMoonntthh months textiles. However, there were sharp increases in petroleum refining and iron and steel output. Previous Current Previous Current Outside manufacturing, mining rose because of Oct 141.8 141.8 -.4 -.3 increased coal production, and utilities fell be- Nov 142.3 142.2 .3 .3 Dec 142.8 142.5 .4 .2 cause the warm weather lowered the demand for Jan 140.9 -1.2 heating. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

211 Statements to the Congress Statement by Wayne D. Angell, Member, Board serves as the automation "platform" for Fedwire of Governors of the Federal Reserve System, has evolved from decades of experience in apbefore the Subcommittee on Telecommunica- plying new technology to meet business requiretions and Finance of the Committee on Energy ments. The electronic transfer of reserve baland Commerce, U.S. House of Representatives, ances on the books of the Federal Reserve Banks February 21, 1990. began in 1918, using the telegraph. Today, the Federal Reserve uses state-of-the-art computers I am pleased to appear today to discuss with you and data communications to operate Fedwire and issues related to the security of large-dollar value is investing in research and development to enelectronic funds transfer systems and the influ- sure that the most current technology is used ence of technology on the future development of effectively, with a strong focus on security. Secthese systems. The security of funds transfer and ond, Fedwire is truly the nation's funds transfer financial message processing systems is the sub- system. All depository institutions have access ject of a report by the General Accounting Office to Fedwire, and the Reserve Banks currently (GAO).i connect more than 11,000 end points in all parts My testimony is divided into three parts and of the nation. These end points include the addresses topics identified by the subcommittee smallest to the largest depository institutions. As as being of particular interest. First, I will pro- a truly national payment system, Fedwire must vide an update on progress with respect to im- be responsive to a variety of needs presented by plementation of the GAO's recommendations depository institutions having diverse characteraddressing security on Fedwire, the large-dollar istics. Third, Fedwire is the chief vehicle for funds transfer system operated by the Federal effecting immediate final settlement for U.S. dol- Reserve Banks. Second, I will provide the lar payments, that is, the irrevocable transfer of Board's views on the need for clarification of its value on the books of the Federal Reserve authority to oversee other funds transfer and Banks, regardless of whether the payment origifinancial message systems, such as the Clearing nated domestically, or in London or Tokyo and House Interbank Payments System (CHIPS) and was sent through a U.S. banking office. In short, the Society for Worldwide Interbank Financial when describing the role of Fedwire for settling Telecommunication (S.W.I.F.T.). Finally, I will interbank dollar transactions, it is no exaggeraprovide a broader perspective on future technol- tion to say that "the buck stops here." ogy trends as they will influence the international As noted in the Board's November 9, 1989, financial marketplace, with particular reference response to GAO's draft report on oversight of to payments networks. electronic funds transfer systems, the Federal As background to the update on the Federal Reserve is strongly committed to providing the Reserve's response to the GAO recommenda- most secure electronic payment services possitions regarding Fedwire, it may be useful to ble. Such a commitment is essential in the case of highlight three distinguishing features of this sys- a funds transfer system like Fedwire that handles tem. First, the modern technology base that about 240,000 transfers each day with an average value per transfer of $3.1 million. We believe that it is important to begin any discussion of Fedwire 1. See U.S. General Accounting Office, Electronic Funds security, as did the GAO, with the statement that Transfer: Oversight of Critical Banking Systems Should Be there have not been any reported incidents (I can Strengthened, report number IMTEC-90-14 (GAO, January 1990). say with assurance no incidents) of fraudulent Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

212 Federal Reserve Bulletin • April 1990 transfers by the employees who operate the uptime averaged 99.14 and 99.21 percent respecsystem. Moreover, in the case of Fedwire, the tively. In 1989, Fedwire computer uptime aversame holds true for so-called interloper fraud. aged more than 99.71 percent. I might note that The Federal Reserve's commitment to security last year's uptime statistic covers the period of begins with a sound Fedwire security "architec- the San Francisco earthquake on October 17, ture," or unified structure of security safeguards 1989. As a result of careful preparation and and features, which, in combination, define an skillful action on the scene, the Federal Reserve organization's approach to security. The Federal Bank of San Francisco was able to recover Reserve security architecture incorporates a operations quickly after the earthquake, with no wide range of safeguards, which total more than disruption to electronic payments processing. 100. These safeguards are, by the way, the result We welcome the opportunity to refine the of our work with an outside consultant. To put implementation of the security safeguards that the GAO recommendations in the proper per- make up the Fedwire security architecture by spective, it is important to understand the Fed- responding to the recommendations recently eral Reserve's overall security architecture. I made by the GAO. The GAO's recommendations would now like to take a few moments to de- represent opportunities to tighten further the scribe the safeguards and mechanisms that pro- implementation of a very solid security architectect the Fedwire system within the overall secur- ture. ity architecture. We agree fully with fifteen of the seventeen The Fedwire safeguards are grouped into the GAO findings. In twelve of the fifteen cases, full following categories: corrective action has already been taken. Correc- Physical security—to limit access to terminals tive action for the other three findings will be and computer operations areas to those individ- fully completed by the end of June. Moreover, uals who require access to perform their duties. steps are being taken to ensure that the condi- Guards, surveillance equipment, and card key tions leading to the GAO's findings do not exist access devices are relied upon to prevent and at the eight Reserve Banks that were not redetect unauthorized physical access to restricted viewed by the GAO. computer spaces. The Federal Reserve's internal oversight of Access controls—both software and code security is being focused to ensure that appropriwords, to prevent unauthorized access to sensi- ate attention is given to the issues raised by the tive data and programs. GAO. As we noted to the GAO, the Federal Encryption—to protect the confidentiality and Reserve has for many years had a program of integrity of Fedwire transactions, especially from internal oversight based on independent operainterlopers. Nearly 100 percent of transmissions tions review, financial examination, and audit between depository institutions and Reserve staffs at both the Board and the Reserve Banks. Banks are encrypted and, as I will discuss later, The Board's operations review and financial exthe "backbone" communications network that amination programs will scrutinize Fedwire selinks the twelve Federal Reserve Banks will be curity in these areas during 1990. Additionally, encrypted by July 1990. every Reserve Bank's internal audit function will Administrative controls—to govern employ- perform a review of the Fedwire system, includment practices, separation of duties, and soft- ing security, to be completed by midyear. ware development standards. Two specific GAO findings relating to (1) the Capacity planning and disaster recovery pro- separation of duties between computer and netgrams are also key components of the architec- work operators, and (2) hardware redundancy on ture to ensure that Fedwire provides secure and the "backbone" network linking the twelve Rereliable services. In recent years, Fedwire com- serve Banks may be due to some confusion puter uptime has improved steadily as a result of regarding how Fedwire security is implemented added attention to the need for a secure, resil- in these areas. The GAO report indicates that ient, and reliable automation environment. For there should be a complete separation of duties example, in 1987 and 1988, Fedwire computer between computer and network operators. Our Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 213 view is that combining these functions has no or message authentication codes) to enhance detrimental effect on security and is industry security. As noted earlier, nearly 100 percent of practice. Adequate hardware redundancy al- Fedwire links between Reserve Banks and deready exists on the backbone communications pository institutions are already encrypted. Furnetwork as part of a comprehensive and sound ther, encryption of the backbone network will be backup plan to provide quick recovery for the completed by July 1990. failure of any network component. This backup The Federal Reserve has made significant replan, which is tested quarterly and has been used source investments in studying the use of messuccessfully in production, has contributed to sage authentication codes for Fedwire. These our network availability record of more than investments include active participation in study 99.99 percent since the network was imple- groups of the American National Standards Inmented in 1982. A detailed discussion of our stitute to develop bona fide national standards for response regarding network backup is appended message authentication and the complex process to the GAO report. of key management that is a necessary part of a The GAO also makes two systemwide recom- message authentication system. On a large netmendations. First, the GAO recommends that work with a variety of end points, such as the Board require annual external reviews of Fedwire, use of message authentication codes Fedwire security. We agree that it is useful to must take place in a manner consistent with engage the services of outside consultants to approved technical standards for both authentiassess security. We believe, however, that such cation and management of authentication keys. outside consultation can best be used when con- Reliance on national standards is important to ditions support such a need, as opposed to reg- avoid unique technical solutions that ultimately ular annual consultations. The System has a raise the costs of the depository institutions history of employing outside technical consul- connected to Fedwire. Further, commercially tants to assess security, as I already noted in the available solutions that are cost effective for the case of the development of the Federal Reserve's range of depository institutions that use Fedwire security safeguards. More recently, an outside must be available. assessment of Fedwire security has just been The first phase of a Federal Reserve effort to completed at the Federal Reserve Bank of New test emerging commercial message authentica- York. An outside consultant specializing in se- tion code products that meet national standards curity performed a risk assessment of the Bank's has just been completed. These tests have not Fedwire operations, including both automation uncovered any technical impediments to the use and business areas. Use of a firm with specialized of message authentication codes on Fedwire. security expertise is intended, in part, to intro- With the results of this phase of our program to duce a view that is unconstrained by acceptance investigate message authentication codes comof traditional safeguards. It is a way to take a plete, plans to adopt message authentication as "fresh look" at what we do. The results of this an additional security enhancement for Fedwire security review will be shared among all the are currently under review. Adoption of message Federal Reserve Banks. In addition, the Board authentication on Fedwire has my strong perretains a public accounting firm each year to sonal support. review a range of operations review and financial I will now turn to the GAO recommendation examination procedures. This year, the firm will that the Federal Reserve Board work with other review electronic data processing, including a central banks and bank supervisory authorities to review of security. We will continue to employ ensure effective oversight and regulation of the consultative services such as these when, based S.W.I.F.T. system and similar systems that on management judgement, the circumstances serve the international banking community. warrant such input. S.W.I.F.T. processes a large volume of payment The GAO's second systemwide recommenda- orders that result in the transfer of very large tion is that the Federal Reserve use both encryp- sums between depository institutions, both dotion and message authentication (known as MAC mestically and abroad. S.W.I.F.T. differs from Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

214 Federal Reserve Bulletin • April 1990 Fedwire and CHIPS, however, in the manner of ourselves that depository institutions are not settlement for these payment orders. In Fedwire, delegating these functions inappropriately. At payment orders result in virtually instantaneous the same time, however, we do not want to debits and credits on the books of the Reserve encourage depository institutions to delegate Banks without any independent action on the these functions to service providers merely bepart of the sending or receiving bank. Similarly, cause the service providers enjoy some degree of CHIPS messages are settled virtually automati- federal oversight. We will continue to monitor cally at the end of the day. Payment orders sent and evaluate bank reliance on telecommunicaover S.W.I.F.T., on the other hand, must be tions systems, including the S.W.I.F.T. system. settled independently of the S.W.I.F.T. system When we discover problems stemming from through correspondent accounts or through Fed- banks' reliance on telecommunications systems wire or CHIPS transfers. In this regard, we will take steps to strengthen our supervisory S.W.I.F.T. is only one of several means that oversight and, when appropriate, coordinate any banks use to communicate payment orders. Pay- regulatory activities with supervisory authorities ment orders may be transmitted telephonically or or central banks in other countries. We believe, by data transmission, using a variety of providers however, that the principal responsibility to auof telecommunications services. thenticate payment orders lies with the banks For any system used to transmit payment receiving these orders. orders that may result in the transfer of large The subcommittee has also asked for the Fedsums, however, a depository institution receiv- eral Reserve's broader perspective on the imporing the payment order should be responsible for tance of technology in the future of the internaverifying the authenticity and the content of the tional financial marketplace. We expect a payment order before acting on it. A proposed continuing and increasing reliance on automation new Article 4A to the Uniform Commercial Code and communications to provide secure, reliable, makes it clear that depository institutions are and efficient payment services. In our discusliable if they act on unauthorized payment orders sions with central bankers from other developed unless they use commercially reasonable secur- nations, it is evident that their approach to using ity procedures. In some cases, a receiving bank advanced technologies for payment system apmay have sufficient confidence in the controls plications is quite similar to that in the United and the integrity of the system through which it States. Most of the G-10 countries and Switzerreceives payment orders to rely on this system's land have state-of-the-art computer systems with authentication and verification procedures. In many of the features found in comparable U.S. other cases, a depository institution may wish to banking systems. These systems rely on sophisverify and authenticate payment orders by means ticated computer systems, sound test proceof its own procedures. dures, and advanced recovery features designed We believe that the appropriate role of bank to provide high availability. Generally, the same supervisors is to ensure that depository institu- technology used in the United States for encryptions maintain adequate authentication and veri- tion, physical security, and access control is fication procedures and that they do not rely on available in many other nations. As the cost others to perform these critical functions without effectiveness of automation improves, the use of assuring themselves that these functions are per- advanced automation and communications techformed adequately. Ordinarily, the supervisory nologies will continue to grow. Even today, the focus should be on the institution receiving a technology is available to link international finanpayment order rather than on a telecommunica- cial markets around the clock. tions system transmitting the order. When a The benefits and promise of this advanced receiving depository institution relies on an au- technology, however, can only be achieved thentication procedure provided by a telecom- through its careful management. As payment munications service provider, such as CHIPS, systems become more reliant on sophisticated we may need to be able to examine the commu- technology to deliver basic functions, the consenications systems on which they rely to assure quences of a systems failure or security breach is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 215 expanded significantly. We believe that close at- conducted by the GAO and, in most cases, we tention by senior management to automation plan- agree with the findings and have moved quickly ning, disaster recovery, and security is essential. to correct the problems that have been identified. In conclusion, we are confident in the security As I stated at the outset, the GAO's findings architecture surrounding Fedwire and in this represent an opportunity to tighten the implesystem's ability to provide high reliability in a mentation of a security program that we believe secure environment. We appreciate the analysis is exceptionally sound. • Statement by Alan Greenspan, Chairman, Board the winter, but started down when signs of more of Governors of the Federal Reserve System, restrained aggregate demand and of reduced pobefore the Committee on Banking, Housing, and tential for higher inflation began to appear. As Urban Affairs, U.S. Senate, February 22, 1990. midyear approached, a marked strengthening of the dollar on foreign exchange markets further diminished the threat of accelerating inflation. I appreciate the opportunity to testify today on New economic data suggested that the balance of the Federal Reserve's semiannual Monetary Policy Report to the Congress.1 My prepared risks had shifted toward the possibility of an undue weakening in economic activity. With M2 remarks discuss our monetary policy actions and M3 below the lower bounds of their annual and plans in the context not only of the current ranges in the spring, the Federal Reserve in June and projected state of the economy, but also embarked on a series of measured easing steps against the background of our longer-term obthat continued through late last year. Across the jectives and strategy for achieving them. The maturity spectrum, interest rates declined furtestimony also addresses some issues for monther, to levels about 1 Vi percentage points below etary policy raised by the increasingly interna- March peaks. Reductions in inflation expectational character of financial markets. tions and reports of a softer economy evidently contributed to the drop in rates in longer-term markets. ECONOMIC AND MONETARY POLICY The decrease in short-term rates lifted M2 to DEVELOPMENTS IN 1989 around the middle of its annual range in the latter part of the year. Efforts under the Financial Last year marked the seventh year of the long- Institutions Reform, Recovery, and Enforcement est peacetime expansion of the U.S. economy Act (FIRREA) of 1989 to close insolvent thrift on record. Some 2Vz million jobs were created, institutions and strengthen undercapitalized and the civilian unemployment rate held steady thrift institutions led to a cutback of the indusat 5V4 percent. Inflation was held to a rate no try's assets and funding needs. This behavior faster than that in recent years, but unfortu- held down M3 growth in the second half of the nately no progress was made in 1989 toward year, and that aggregate ended the year around price stability. Thus, while we can look back the lower end of its annual range. The restrucwith satisfaction at the economic progress made turing of the thrift industry did not, however, last year, there is still important work to be seem to appreciably affect the overall cost and done. availability of residential mortgage credit, as About a year ago, Federal Reserve policy was other suppliers of this credit stepped into the in the final phase of a period of gradual tighten- breach. In the aggregate, the debt of nonfinancial ing, designed to inhibit a buildup of inflation sectors slowed somewhat, along with spending, pressures. Interest rates moved higher through to a rate just below the midpoint of its annual range. So far this year, the federal funds rate has 1. See "Monetary Policy Report to the Congress," Federal Reserve Bulletin, vol. 76 (March 1990), pp. 107-19. remained around 8V4 percent, but rates on Trea- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

216 Federal Reserve Bulletin • April 1990 sury securities and longer-term private instru- below the growth in the economy's potential, ments have reversed some of their earlier de- thereby relieving pressures on resources. Once clines. Investors have reacted to economic data some slack develops, real output growth can pick that were stronger than expected, a runup in up to around its potential growth rate, even as energy prices, and increasingly attractive invest- inflation continues to trend down. Later, as price ment opportunities abroad, especially in Europe. stability is approached, real output growth can move still higher, until full resource utilization is restored. THE ULTIMATE OBJECTIVES AND While these are the general principles, no one MEDIUM-TERM STRATEGY can be certain what path for the economy would, OF MONETARY POLICY in practice, accompany the gradual approach to price stability. One key element that would min- Monetary policy was conducted again last year imize the costs associated with the transition with an eye on long-run policy goals, and eco- would be a conviction of participants in the nomic developments in 1989 were consistent economy that the anti-inflation policy is credible, with the Federal Reserve's medium-term strat- that is, likely to be effective and unlikely to be egy for reaching them. The ultimate objective of reversed. economic policy is to foster the maximum sus- Stability of the general price level will yield tainable rate of economic growth. This outcome important long-run benefits. Nominal interest depends on market mechanisms that provide rates will be reduced with the disappearance of incentives for economic progress by encouraging expectations of inflation, and real interest rates creativity, innovation, saving, and investment. likely will be lower as well, as less uncertainty Markets perform these tasks most effectively about the future behavior of overall prices inwhen individuals can reasonably believe that by duces a greater willingness to save. Higher savforgoing consumption or leisure in the present ing and capital accumulation will enhance prothey can reap adequate rewards in the future. ductivity, and the trend growth in real GNP will Inflation insidiously undermines such confi- be greater than would be possible if the recent dence. It raises doubts in people's minds about inflation rate continued. the future real value of their nominal savings and If past patterns of monetary behavior persist, earnings, and it distorts decisionmaking. Faced maintaining price stability will require an average with inflation, investors are more likely to divert rate of M2 growth over time approximately equal their attention to protecting the near-term pur- to the trend growth in output. During the transichasing power of their wealth. Modern day ex- tion, the decline of market interest rates in reamples of economies stunted by rapid inflation sponse to the moderation in inflation would boost are instructive. In countries with high rates of the public's demand for M2 relative to nominal inflation, people tend to put their savings in spending, lowering M2 velocity. M2 growth over foreign currencies and commodities rather than several years accordingly may show little decelin the financial investments and claims on pro- eration, and it could actually speed up from time ductive assets that can best foster domestic to time, as interest rates decline in fits and starts. growth. By ensuring stable prices, monetary Hence, the FOMC would not expect to lower its policy can play its most important role in pro- M2 range mechanically each and every year in moting economic progress. the transition to price stability. The strategy of the Federal Open Market Com- This qualitative description of our mediummittee (FOMC) for moving toward this goal term strategy is easy to state, but actually impleremains the same—to restrain growth in money menting it will be difficult. Unexpected developand aggregate demand in coming years enough to ments no doubt will require flexible policy establish a clear downward tilt to the trend of responses. Any such adjustments will not imply a inflation and inflation expectations, while avoid- retreat from the medium-term strategy or from ing a recession. Approaching price stability may ultimate policy goals. Rather, they will be midinvolve a period of expansion in activity at a rate course corrections that attempt to keep the econ- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 217 omy and prices on track. The easing of reserve while longer. M2 growth over 1990 thus may be pressures starting last June is a case in point. faster than in recent years, and M2 velocity could Successive FOMC decisions to ease operating well decline over the four quarters of the year, policy were intended to forestall an economic absent a pronounced firming in short-term market downturn, the chances of which seemed to be interest rates. increasing as the balance of risks shifted away In contrast to M2, the range for M3 has been from greater inflation. The FOMC was in no way reduced from its tentative range set last July. The abandoning its long-run goal of price stability. new M3 range of 2Vi percent to 6V2 percent is Instead, it sought financial conditions that would intended to embody the same degree of restraint support the moderate economic expansion as the M2 range, but it was lowered to reflect the judged to be consistent with progress toward continued decline in thrift assets and funding stable prices. In the event, output growth was needs now anticipated to accompany the ongoing sustained last year, although in the fourth quarter restructuring of the thrift industry. This asset a major strike at Boeing, combined with the first runoff began in earnest in the second half of last round of production cuts in the auto industry, year, so its magnitude was not incorporated into accentuated the underlying slowdown. On the the tentative M3 range for 1990 set last July. The inflation side, price increases in the second half bulk of the mortgage and real estate assets that were appreciably lower than those in the first. thrift institutions will shed are expected to be Although the CPI for January, as expected, acquired by the Resolution Trust Corporation showed a sizable jump in energy and food prices and diversified investors other than depository in the wake of December's cold snap, a reversal institutions. Such assets thus will no longer be is apparently under way. financed by monetary instruments included in M3. In addition, commercial banks are likely to be more cautious in their lending activities, re- MONETARY POLICY AND ducing their need to issue wholesale managed THE ECONOMIC OUTLOOK FOR 1990 liabilities included in M3. These influences should retard the growth of M3 relative to M2 Against this background, the Federal Reserve again this year. Governors and the Presidents of the Reserve The debt of domestic nonfinancial sectors is Banks foresee continued moderate economic ex- expected to decelerate along with nominal GNP pansion over 1990, consistent with conditions for a fourth straight year, and the Committee that will foster progress toward price stability chose to lower the monitoring range for this over time. At its meeting earlier this month, the aggregate to 5 percent to 9 percent for 1990. FOMC selected ranges for growth in money and Merger and acquisition activity has retreated debt that it believes will promote this outcome. from the feverish pace of recent years, reflecting My testimony last July indicated the very pre- some well-publicized difficulties of restructured liminary nature of the tentative ranges chosen for firms and more caution on the part of creditors. 1990, given the uncertain outlook for the econ- All other things equal, less restructuring activity omy, financial conditions, and appropriate growth and greater use of equity finance imply reduced of money and debt. With the economic situation corporate borrowing. An ebbing of growth in not materially different from what was anticipated household debt also seems probable. at that time, the FOMC reaffirmed the tentative Over the last decade, money and debt aggregrowth range of 3 percent to 7 percent for M2 in gates have become less reliable guides for the 1990 that it set last July. This range, which is the Federal Reserve in conducting policy. The velocsame as that used in 1989, is expected by most ities of the aggregates have ranged widely from FOMC members to produce somewhat slower one quarter or one year to the next, in response growth in nominal GNP this year. The declines in to interest rate movements and special factors. In short-term interest rates through late last year can the coming year, the effects of the contraction of be expected to continue to boost the public's the thrift industry on the velocity of M3, and to a demands for liquid balances in M2, at least for a lesser extent on that of M2, are especially dif- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

218 Federal Reserve Bulletin • April 1990 ficult to predict. While recognizing that the vehicle sales—seems to be largely behind us. growth rates of the broader monetary aggregates Industrial activity outside of motor vehicles apover long periods are still good indicators of pears to be holding up. Production of business trends in inflation, the FOMC will continue to equipment, when evidence has accumulated of take an array of factors into account in guiding some stability—if not an increase—in orders for operating policy. Information about emerging capital goods, is likely to support manufacturing patterns of inflationary pressure, business activ- output in coming months. Housing starts were ity, and conditions in domestic and international depressed in December by severely cold weather financial markets again will need to supplement in much of the country. But starts bounced back monetary data in providing the background for strongly in January, in line with the large gain in decisions about the appropriate operating stance. construction employment last month. From The Committee's best judgment is that money these and similar data, one can infer the beginand debt growth within these annual ranges will nings of a modest firming in economic activity. be compatible with a moderation in the expan- While we cannot be certain that we are as yet out sion of nominal GNP. Most FOMC members and of the recessionary woods, such evidence warother Reserve Bank presidents foresee real GNP rants at least guarded optimism. growing V>h percent to 2 percent over the year as There are, however, other undercurrents that a whole. Such a rate would be around last year's continue to signal caution. One that could disturb moderate pace, excluding the rebound in agricul- the sustainability of the current economic expantural output from the 1988 drought. A slight sion has been the recent substantial deterioration easing of pressures on resources probably is in in profit margins. A continuation of this trend store. Inflation pressures should remain con- could seriously undercut the still expanding captained, even though the decline in the dollar's ital goods market. However, if current signs of value over the past half year likely will reverse an upturn in economic activity broaden, profit some of the beneficial effects on domestic infla- margins can be expected to stabilize. tion stemming from the dollar's earlier apprecia- A more deep-seated concern with respect to tion. The CPI this year is projected to increase 4 the longer-run viability of the expansion is the percent to Wi percent, as compared with last increase in debt leverage. Although the trends of year's AVI percent. income and cash flow may have turned the corner, the structure of the economy's financial balance sheet weighs increasingly heavily on the RISKS TO THE ECONOMIC OUTLOOK dynamics of economic expansion. In recent years, business debt burdens have been enlarged Experience has shown such macroeconomic through corporate restructurings, and as a conforecasts to be subject to a variety of risks. sequence interest costs as a percent of cash flow Assessing the balance of risks between produc- have risen markedly. Responding to certain welltion shortfalls and inflation pressures in the cur- publicized, debt-servicing problems, creditors rent outlook is complicated by several crosscur- have become more selective in committing funds rents in the domestic and international economic for these purposes. Within the banking indusand financial situation. try, credit standards have been tightened for One risk is that the weakness in economic merger and leveraged buyout (LBO) loans, as activity evident around year-end may tend to well as for some other business customers. cumulate, causing members' forecasts about pro- Credit for construction projects reportedly has duction and employment this year to be overly become less available because of limits imposed optimistic. However, available indicators of by the FIRREA and heightened concerns about near-term economic performance suggest that overbuilding in a number of real estate markets. the weakest point may have passed. The inven- Among households, too, debt-servicing burtory correction in the auto industry—a rapid one dens have risen to historic highs relative to involving a sharp reduction in motor vehicle income, and delinquency rates have moved up of assemblies in January coupled with better motor late. Suppliers of consumer and mortgage credit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 219 appear to have tightened lending terms a little. technology has fostered the unbundling and trans- Real estate values have softened in some locales, fer of risk and engendered a proliferation of new although prices have maintained an uptrend in financial products. Cross border financial flows terms of the national averages, especially for have accordingly accelerated at a pace in excess single-family residences. These and other finan- of global trade gains. This globalization of financial forces merit careful monitoring. While wel- cial markets has meant that events in one market come from a supervisory perspective, more cau- or in one country can affect within minutes develtious lending does have the potential for damping opments in markets throughout the world. aggregate demand. More integrated and open financial markets It is difficult to assess how serious a threat have enabled all countries to reap the benefits of increased leverage is to the current levels of enhanced competition and improved allocation economic activity. Clearly, should the economy of capital. Our businesses can raise funds almost fall into a recession, excess debt service costs anywhere in the world. Our savers can choose would intensify the problems of adjustment. But from a lengthening menu of investments as they it is unlikely that in current circumstances strains seek the highest possible return on their funds. coming from the economy's financial balance Our financial institutions enjoy wider opportunisheet can themselves precipitate a downturn. As ties to compete. I indicated earlier, we expect nonfinancial debt In such an environment, a change in the exgrowth to continue to slow from its frenetic pace pected rate of return on financial assets abroad of the mid-1980s. This should lessen the strain naturally can affect the actions of borrowers or and hopefully the threat to the economy. lenders in the United States. In response, exchange rates, asset prices, and rates of return all may adjust to new values. INTERNATIONAL FINANCIAL MARKETS Strengthened linkages among world financial AND MONETARY POLICY markets affect all markets and all investors. Just as U.S. markets are influenced by developments Among other concerns, recent events have high- in markets abroad, foreign markets are influlighted the complex interactions between devel- enced by events here. These channels of influopments in the U.S. economy and financial mar- ence do not depend on whether a country is kets and those in the other major industrial experiencing a deficit or a surplus in its current countries. Specifically, the parallel movements in account. In today's financial markets, the net long-term interest rates here and abroad over the flows associated with current account surpluses early weeks of 1990 have raised questions: To and deficits are only the tip of the iceberg. What what extent is the U.S. economy subject to are more important are the huge stocks of finaninfluences from abroad? To what extent, as a cial claims—more than $1.5 trillion held in the consequence, have we lost control over our United States by foreigners and more than $26 economic destiny? The simple answer to these trillion of dollar-denominated claims on U.S. questions is that the U.S. economy is influenced borrowers held by U.S. residents. This is in from abroad to a substantially greater degree addition to the vast quantities of assets held in than, say, two or three decades ago, but U.S. foreign currencies abroad. It is these holdings monetary policy is, nonetheless, able to carry out that can respond to changes in actual and exits responsibilities effectively. pected rates of return. The postwar period has seen markedly closer In recent years we have seen several instances ties among the world's economies. Markets for in which rates of return have changed essentially goods have become increasingly, and irreversibly, simultaneously around the world. For example, integrated as a result of the downsizing of eco- stock prices moved together in October 1987 and nomic output and the consequent expansion of 1989, and in 1990 bond yields have risen markinternational trade. The past decade, in particular, edly in many industrial countries. also has witnessed the growing integration of However, we must be cautious in interpreting financial markets around the world. Advancing such events, and in drawing implications for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

220 Federal Reserve Bulletin • April 1990 United States. Frequently, such movements oc- the strongest influence on the asset prices and cur in response to a common worldwide influence. interest rates determined by those markets and, Currently, the world economy is adjusting to the through them, on the U.S. economy. Exchange implications of changes in Eastern Europe, where rates absorb much of the impact of developments there are tremendous new opportunities to invest in foreign asset markets, permitting U.S. interest and to promote reconstruction and growth. Those rates to reflect primarily domestic economic conopportunities, while contributing to the increase ditions. Exchange rates influence the prices of in interest rates in the United States, also open up products that do, or can, enter into international new markets for our exports. trade. Such factors can bring about changes in Moreover, despite globalization, financial mar- the composition of production between purely kets do not necessarily move together—they also domestic goods and services and those entering respond to more localized influences. Over 1989, international trade, and they can affect aggregate for example, bond yields in West Germany and price movements for a time. Japan rose about a percentage point, while those However, the overall pace of spending and in the United States fell by a similar amount. The output in the United States depends on the decontrast between 1989 and 1990 illustrates the mands upon all sectors of the U.S. economy taken complexity of relationships among financial mar- together. And our inflation rate, over time, dekets. Interactions can show through in move- pends on the strength of those demands relative to ments in exchange rates as well as interest rates, our ability to supply them out of domestic producand changes in the relative prices of assets de- tion. Because the Federal Reserve is able to affect pend on a variety of factors, including economic short-term interest rates in U.S. financial markets, developments and inflation expectations in vari- it is able to influence the pace of economic activity ous countries as well as monetary and fiscal in the short run and inflationary pressures longer policies here and abroad. term. To be sure, monetary policy must currently The importance of foreign economic policies balance more factors than in previous decades. for domestic economic conditions has given rise But our goals are still achievable. in recent years to a formalized process of policy Monetary policy is only one tool, however, coordination among the major industrial coun- and it cannot be used successfully to meet multries. The purpose of such coordination is to help tiple objectives. The Federal Reserve, for exampolicymakers achieve better performance in their ple, can address itself to either domestic prices or national economies. It begins with improved exchange rates but cannot be expected to communication among authorities about eco- achieve objectives for both simultaneously. nomic developments within each country. It in- Monetary policy alone is not readily capable of cludes systematic analysis of the likely impact of addressing today's large current account deficit, these developments on the economies of the which is symptomatic of underlying imbalances partner countries and on variables such as ex- among saving, spending, and production within change rates that are inherently jointly deter- the U.S. economy. Continued progress in reducmined in international markets. Within such a ing the federal deficit is a more appropriate framework, it is possible to consider alternative instrument to raise domestic saving and free choices for economic policies and to account additional resources for productive investment. explicitly for the impacts of likely policy mea- The long-term health of our economy requires sures in one country on the other economies. the balanced use of monetary and fiscal policy to The influence of economic policies abroad and reach all of the nation's policy objectives. other foreign developments on the U.S. economy is profound, and the Federal Reserve must care- CONSIDERATIONS REGARDING fully take them into account when considering its IMMEDIATE RELEASE OF FOMC monetary policy. But these influences do not OPERATING DECISIONS fundamentally constrain our ability to meet our most important monetary policy objectives. De- Finally, you requested that I address an issue velopments within U.S. financial markets remain that has been prominent in recent discussions of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 221 the procedures used to implement policy on a Earlier release of the Directive would, in day-to-day basis. I refer to the way the Federal addition, force the Committee itself to focus on Reserve communicates its policy decisions to the market impact of the announcement as well the public. The selection of money and debt as on the ultimate economic impact of its acranges is aired promptly and thoroughly in the tions. To avoid premature market reaction to semiannual reports and testimonies. Changes in mere contingencies, FOMC decisions could the discount rate are immediately announced in well lose their conditional character. Given the a press release. uncertainties in economic forecasts and in the Decisions made about open market opera- links between monetary policy actions and ecotions at and between FOMC meetings are con- nomic outcomes, such an impairment of flexiveyed to the markets and to the public at large bility in the evolution of policy would be undethrough those operations. In practice, there is sirable. little lag between a discrete change in operating Wide movements in bond and stock prices policy and the wide recognition of that change, occur when investors receive new information despite the absence of an immediate public that significantly alters their expectations over announcement. Guidance for those operations a relatively long-term horizon. Normally, is given to the Account Manager at the Federal changing perceptions about the current operat- Reserve Bank of New York as a Directive, ing stance of monetary policy play only a minor which is made public shortly after the next role in episodes of financial variability. For FOMC meeting, six to seven weeks later. example, over the last two months, U.S. bond Suggestions have been made that we release and stock prices fell appreciably on balance, the Directive immediately after an FOMC meet- with fairly wide day-to-day and even intraday ing, or announce publicly any change in our swings, but there was no uncertainty or change operating objectives as it occurs. These sugges- of view about the current stance of operating tions have appeal: Surely more information is policy. To the extent that any of these market better than less in promoting efficient financial movements reflected policy, they must have markets; and the need to infer the Federal been reactions to prospective changes in policy. Reserve's policy stance from its actions can But announcements of future changes in opergive rise to mistakes and unnecessary market ating policy are not possible, since they are volatility. contingent upon future economic develop- Yet the amount of genuine new information ments. that would be released is small; it is subject to Changes in our current operating stance, of misinterpretations; and its premature an- course, have the potential to alter anticipations nouncement could adversely affect the policy of future conditions, including future policy. At process. times, monetary policymakers wish to For example, the Directive itself cannot cap- strengthen the market's sense of a more basic ture all the considerations that guide Committee change in the thrust of policy through an anpolicy for the intermeeting period. It needs to nouncement effect, as well as through a change be accompanied by the record of the Commit- in the instrument itself. Changes in the discount tee's deliberations, which takes several weeks rate provide good examples. to prepare properly. Moreover, early release More often, however, the Federal Reserve could provoke overreactions in financial mar- judges that policy implementation is better kets to contingencies or reserve pressure alter- served through small, incremental operating natives mentioned in a Directive that may not moves that do not connote a significant alteroccur, or that may be superseded by intermeet- ation in policy intent and do not have major ing developments and adjustments. To the ex- implications for financial conditions in the more tent that market participants anticipate contin- distant future. Signaling such policy moves gencies in the Directive that never materialize, through open market operations usually avoids the markets would be subjected to unnecessary major and potentially destabilizing movements volatility. in bond and stock prices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

222 Federal Reserve Bulletin • April 1990 This way of distinguishing the nature of pol- of policy better than would a formal, icy intent may well convey information to the immediate announcement of every policy financial markets about the future direction change. • Chairman Greenspan presented similar testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, February 20, 1990. Statement by Alan Greenspan, Chairman, Board sources to meet the retirement needs of today's of Governors of the Federal Reserve System, working population. Although the share of the before the Committee on Finance, U.S. Senate, total population that is in the labor force has risen February 27, 1990. steadily over the past few decades, that percentage will shrink considerably after the turn of the I am pleased to be here today to discuss the century as members of the so-called baby boom government's role in providing retirement secur- generation begin to retire. Barring a sharp upturn ity to present and future generations—an issue in the birth rate, a large influx of immigrants, or that has moved to the forefront of the policy a significant increase in the age of retirement, debate. Senator Moynihan has introduced legis- growth of the labor force will slow appreciably. lation to cut payroll taxes and return social The demographics are compelling. In 1960, security to a pay-as-you-go basis, and others there were twenty beneficiaries for every one would like to move its finances fully off budget. hundred workers contributing to social security; In large part, such proposals arise out of currently there are thirty. The Social Security frustration with the slow pace of deficit reduc- Administration—under intermediate economic tion, and they have helped to dramatize the and demographic assumptions—expects that seriousness of the current budget situation. But I number to approach fifty by about the year 2025 am concerned that they will ultimately be coun- and to remain at that level at least through the terproductive and hamper the efforts needed to middle of the twenty-first century. meet our longer-term fiscal responsibilities. And, Assuming their living standards keep pace with as I hope to make clear, they will increase the those of the working population, the elderly will difficulty of providing for the needs of an aging of necessity consume a growing proportion of population in a way that is equitable across total output in the future. They will finance their generations. I shall address, in particular, how consumption out of private and public pensions the social security system can contribute to those and by drawing down their own assets. Nonetheobjectives; this issue was a main focus of the less, the goods and services they buy can only National Commission on Social Security Reform come from the output of then-active workers. in the early 1980s. I shall also touch on the The allocation of production to meet the needs of relationship of social security to the rest of the retirees necessarily will cut into what is available budget and its role in the setting of overall budget for consumption by the rest of the population and goals. for investment in new equipment and structures. I have testified often before committees of the We can do little to change the demographic Congress about the corrosive effects that sus- forces. We can, however, take actions now that tained large budget deficits have on the economy will help to lift the size of future output above and about the way our economic prospects in that implied by the current pace of capital formacoming years will hinge on our ability to increase tion and the trend in productivity. Such actions national saving and investment. One factor that will improve the likelihood that future workers argues for running sizable budget surpluses by can maintain their living standards while satisfylater this decade is the need to set aside re- ing the retirement expectations of current work- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 223 ers. Your decisions will also influence how much ductions in the saving of households and busiof the burden of its retirement the baby boom nesses or by larger dissaving, that is, deficits, cohort will shoulder for itself and how much will elsewhere in the federal budget, they should fall on its children. Indeed, this is one of the few boost investment and thus foster the growth of instances in which policymakers have had the the nation's capital stock. And with more capital luxury of being able to foresee a problem that a per worker than would otherwise be in place, thoughtful policy response might ameliorate. productive capacity will be greater, and we will Thus far, I believe, the plan for social security, be better able to fulfill our promises to the given the conflicting political pressures, has been retirees, while maintaining the standard of living reasonable. of future workers. One element in the strategy is the accumula- The relationships among saving, the aggregate tion of sizable balances in the social security capital stock, and labor productivity are complex trust funds over the next few decades. As you and difficult to pin down quantitatively, in part, know, before the Social Security Amendments of because productivity depends not only on the 1977, the system operated, in effect, on a pay- amount of physical capital but on factors such as as-you-go basis. The 1977 amendments set in the education and skill level of the work force motion an accumulation of trust fund assets that and the rate of technological progress. Nonethecan be drawn down as required to meet the less, I have little doubt that a larger, more retirement needs of today's workers. This shift modern capital stock will improve labor productoward a funded system was given careful further tivity and hence overall real income levels in consideration by the National Commission on coming years. Social Security Reform in the early 1980s. Building surpluses in the trust funds also con- The deliberations of the commission identified tributes to fairness across generations. Given the several complex issues. They included difficult demographics, the generation after the baby questions of equity within and across generations boomers will have to shoulder a fairly heavy and assessments of the effects social security has burden to meet the retirement claims of their on incentives to work and save. We recognized, parents. This burden can be ameliorated only if too, the political riskiness of accumulating large current workers save enough during their worksurpluses. On the whole, however, we concluded ing years to fund, in effect, their own retirement. that each cohort of workers and their employers Saving today will not reduce the share of GNP should make contributions into a fund that, with that will be transferred to retirees tomorrow; interest, at least approached the actuarial value however, current saving directed toward capital of the benefits the workers will eventually re- formation will help to ensure that overall inceive. Notably, this requirement forces today's comes in the future will be large enough to workers—including the baby boomers—to pay provide benefits to retirees without denting the more in payroll taxes than is needed to cover the standards of living of their children too deeply, if benefits of the relatively small group of current at all. The current social security system, when beneficiaries, so that sizable surpluses build up in used properly, has such a focus and affords an the trust funds. In essence, the commission reaf- opportunity for today's workers to lighten the firmed the intent of the 1977 amendments; our burden on the workers of the next generation. recommendations were largely accepted by the Pay-as-you-go financing does not have that Congress and hence shaped the legislation of focus. Rather, each year, workers and employers 1983. The current structure of social security contribute only enough to cover the cost of may not be appropriate in all circumstances. But, providing benefits to current recipients and to at present, it is still the best option. maintain a contingency reserve sufficient to carry One reason to build surpluses in the trust funds the system through periods of poor economic is to set aside saving, and thus to divert part of performance. Thus, returning to pay as you go the nation's current production away from con- now would confer a significant windfall on the sumption—both private and public. Assuming, of baby boomers who, in effect, would benefit doucourse, that the surpluses are not offset by re- bly from the size of their age cohort. Given their Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

224 Federal Reserve Bulletin • April 1990 numbers, each would make a disproportionately The numbers are striking. Consider individuals small contribution during his or her working who retire this year at age sixty-five after workyears to the retirement of their elders. Yet in ing forty years. All anticipate receiving a benefits retirement, each would expect to receive full annuity that equals or exceeds in pre sent-value benefits, which could come only at a dispropor- terms the sum of lifetime social security contritionately high cost to their children. At that time, butions plus accumulated interest. The return for pressures may well emerge to stretch out benefits low-income workers, however, is especially by, for example, increasing the retirement age to great. In fact, the average minimum-wage worker reflect rising life expectancies. can expect benefits that—relative to contribu- Linking an individual's benefits to his or her tions—are roughly one and one-half to two times contributions has generally been considered eq- as large as those received by persons with aboveuitable and desirable. Under the present system, average earnings. the current generation of workers and the next In any event, although the current system will face the same Old Age, Survivors, and assigns them a leading role in providing retire- Disability Insurance (OASDI) tax rate of 12.4 ment incomes in coming decades, the trust funds percent, summing the employee and the em- are only part of the story. In reality, the social ployer shares. Assuming that benefits evolve security reserves are merely a bookkeeping entry according to existing laws—and that social secur- within the federal sector. Ultimately, their size ity revenues are set aside, rather than used to matters only to the extent that they lead to lower other taxes or raise other outlays—the smaller overall federal budget deficits—or larger system moves in the direction of actuarial sound- total surpluses—and thus to higher national savness; it confers no windfall gains or unforeseen ing than would otherwise be the case. losses on any particular generation. Accordingly, At present, the contribution of the trust funds it offers some assurance to current and future to national saving is greatly diluted by the large workers that the government will keep its prom- deficits in the rest of the budget. As long as the ises. non-social-security deficits remain sizable, Sen- Senator Moynihan's proposal cuts the ator Moynihan and others are correct in pointing OASDI tax rate to 10.2 percent of covered out that we are doing little to solve the future wages in the 1990s. However, as his bill makes retirement problem. If, however, actions are clear, with pay as you go, rates will have to rise taken to bring the rest of the budget into balance, sharply once the baby boomers begin to retire; the trust funds will no longer be financing current the proposed rate for the years 2025 through government consumption, but will translate dol- 2044, for example, is 15.4 percent. Support for lar for dollar into national saving. the system may well erode when the next gener- Where in the total unified budget the saving ation is asked to take on a tax bill that their takes place—in social security or elsewhere—is parents were unwilling—or too shortsighted—to of secondary importance. What matters in terms assume during their own working years. of reaching our longer-term growth objective is The choice of financing mechanism can also the government's net contribution to national influence the mix of federal taxes. Indeed, the saving. The important policy issue in the current increase in the share of payroll taxes in total context, therefore, is whether any of the major revenues—and the regressiveness of these tax- proposals regarding social security will help to es—is frequently cited as a reason to return to achieve that goal. For example, is the federal pay-as-you-go financing. However, looking at just government more likely to shift toward a position the tax side presents an overly narrow view of the of positive net saving if social security is returned relationship between social security and the dis- to pay-as-you-go financing? Given the large revtribution of income in the United States. When enue loss implied by the plan, I think not. considered from the perspective of an individual's Another proposal is to move the social security lifetime—and when the formula for benefits as system fully "off-budget," so that the trust funds well as contributions is taken into account—social would be excluded from the official summary security clearly appears progressive. budget figures and from the setting of deficit Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 225 targets. Unlike Senator Moynihan's plan, a wash out when the accounts are consolidated. switch in budget accounting systems in isolation But, because they result in an overstatement of would not change the government's contribution both the saving taking place in the trust funds to national saving and thus would have no direct and the dissaving elsewhere, they can contribeffect on the economy. But the proposal raises ute to a significant misreading of saving trends other concerns. when either part of the budget is considered in First, splitting off social security—or any other isolation. program—would highlight a distinction that has The figures over longer time horizons are little macroeconomic or analytical significance. even more dramatic, magnified by the wonders Regardless of which numbers are reported, gov- of compound interest; but the story is much the ernment saving or dissaving would continue to be same. For example, the Social Security Trustwell approximated by the surplus or deficit in the ees project that net inflows to the trust funds— total federal budget as currently defined in the apart from interest—will remain at their current National Income and Product Accounts, a close level of about 1 percent of GNP over the next variant of the total unified budget. twenty years, then turn sharply negative once Moreover, the way budget numbers are pre- the baby boomers retire in force. However, sented can influence public perceptions of impor- because of the surging interest payments, trust tant fiscal issues and thus—for good or ill—shape fund assets will continue to grow for a time, the debate among policymakers. As a conse- reaching a peak of about $12 trillion around the quence, methods of accounting and presentation year 2030. Excluding interest payments, those can play a role in determining the size of the assets will rise to only about $3 trillion around overall deficit or surplus. In particular, I fear that the year 2020 before turning down. Thus, the adopting a system that draws attention to the peak trust balance in 2030 will essentially repsurpluses in the trust funds might foster the resent interest receipts that are offset elsewhere illusion that we already are putting enough in the federal accounts. While the contribution money aside to meet future obligations. Further- of social security to national saving is sizable— more, it would tend to remove social security over both the medium and the long term—it is from the broader fiscal policy debate. clearly much smaller than the conventional In large part, my concerns are grounded in calculations suggest. the analytical issues I discussed earlier. But More generally, I fear that moving away from they are compounded by a technical factor that the unified budget concept will impede the affects the interpretation of the commonly cited achievement of the sizable deficit reductions that statistics on the social security trust funds. For the nation so sorely needs. The arguments are example, the Congressional Budget Office well known. Many of them center on social (CBO) projects that the annual surplus in the security itself and on the inevitable pressures OASDI trust funds will increase from $66 bil- that would develop to expand benefits or to cut lion in fiscal 1990 to $128 billion in fiscal 1995. payroll taxes if the system were not subject to the But, as the CBO points out, fully half of the discipline of an overall deficit constraint. In the difference between those two figures is ac- absence of offsetting changes elsewhere in the counted for by the interest received on the trust budget, such actions would reduce national savfunds' holdings of government debt, which is ing and over time worsen the burden on the forecast to grow from $16 billion to $50 billion generation after the baby boom. over that period. The latter figure represents Moreover, responsible budgeting requires a nearly 0.7 percent of the GNP projected by the comprehensive framework for setting priorities CBO for that year. Moreover, in their report for and assessing competing claims on national re- 1989, the Social Security Board of Trustees sources. That function currently is filled by the projects that ratio to rise to 1.3 percent of GNP unified budget process. If deficit targets were to by the year 2030. Such intragovernmental inter- be set exclusive of social security, they could be est payments are both an inflow to the trust met—at least in part—by moving related profunds and an outlay from the general funds and grams into the social security account or by Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

226 Federal Reserve Bulletin • April 1990 shifting other trust funds off the books. Such it is just a first step. If households and busiactions would shrink the on-budget deficit but nesses continue to save relatively little, then would not reduce federal demands on private the federal government should compensate by saving or on credit markets. moving its budget in the direction of greater Most important, we must not allow the choice surplus. of a budget accounting system to divert atten- Let me reiterate that the source of our funtion from the pressing need for meaningful damental budget problem is the persistence of deficit reduction. In other words, the Congress enormous deficits at a time when demomust take actions to set the federal govern- raphic trends call for increases in private and ment's claim on saving—however the budget government saving. Undoing a social security deficit is measured—firmly on a downward system that is the result of many years of track. Making a serious commitment to elim- careful consideration and compromise, in my inating the unified deficit within the foreseeable judgment, will not address our fundamental future is an essential first step and meeting that policy needs. Indeed, it could be commitment will be a formidable challenge. But counterproductive. • Statement by Alan Greenspan, Chairman, Board emerged an increasing risk of an undue weakof Governors of the Federal Reserve System, ening in economic activity. Consequently, the before the Committee on the Budget, U.S. Federal Reserve in June embarked on a series House of Representatives, February 28, 1990. of measured steps to ease reserve positions, and those steps continued through late last year. Interest rates, which had turned down- I am pleased to have the opportunity to appear ward in the spring, declined further in the before you once again. As you know, the Federal second half of the year, to levels about 1 Vi Reserve's semiannual Monetary Policy Report to percentage points below March peaks. In the the Congress, which was submitted to the Conevent, output growth slowed from the unsusgress last week, provided an extensive picture tainable pace of the two previous years, but still both of recent economic developments and of the Federal Reserve's policy actions and intentions.1 was sufficient to support the creation of 2Vi million jobs and keep the civilian unemploy- Rather than take you through the details of that ment rate steady at 5lA percent. Inflation was report this morning, I would like briefly to review held to a rate no faster than that of recent years, some of its main themes and then turn to some of but unfortunately no progress was made in 1989 the specific budgetary issues that the committee toward price stability. has asked me to address. The policy adjustments that we undertook over the course of 1989 were more in the nature of a midcourse correction, rather than a reflec- ECONOMIC AND MONETARY POLICY tion of a fundamental shift in policy. Our more DEVELOPMENTS IN 1989 basic goals and strategies remained unchanged from what they had been in previous years. The About a year ago, in early 1989, Federal Reultimate goal of monetary policy still is that of serve policy was in the final phase of a period of ensuring price stability so as to promote the gradual tightening, designed to inhibit a buildup maximum sustainable rate of economic growth. of inflation pressures. However, as the year Similarly, the strategy for moving toward this progressed, the threat of accelerating inflation goal still is that of restraining growth in money seemed to diminish, and at the same time, there and aggregate demand in coming years enough to establish a clear downward tilt to the trend of inflation and inflation expectations, while avoid- 1. See "Monetary Policy Report to the Congress," Federal ing a recession. Reserve Bulletin, vol. 76 (March 1990), pp. 107-19. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 227 MONETARY POLICY AND THE ECONOMIC since last summer likely will reverse some of OUTLOOK FOR 1990 the beneficial effects on domestic inflation stemming from the dollar's earlier consumer appre- Thus far in 1990, monetary policy basically has ciation. The consumer price index (CPI) this stayed on an even keel, and the federal funds rate year is projected to increase 4 percent to 4V2 has remained around 8V4 percent. Nonetheless, percent, as compared with last year's rise of 4V2 the interest rates on Treasury securities and percent. longer-term private instruments have reversed, on net, some of their earlier declines, reflecting RISKS TO THE ECONOMIC OUTLOOK the reaction of investors to stronger-than-expected economic data, a firming of oil prices, and Economic forecasting, of course, is not an the prospect of greater demands on world saving exact science, and at present, there are obvious to support development of the economies of risks in the outlook. For example, it is possible Eastern Europe. that the weakness in economic activity evident In assessing the economic prospects for 1990 around the turn of the year may tend to cumuas a whole, the Federal Reserve Governors and late, causing members' forecasts about producthe Reserve Bank Presidents foresee continued tion and employment this year to be overly moderate economic expansion, consistent with optimistic. However, two major depressants of conditions that will foster progress toward price growth now seem behind us: Boeing has restability over time. At its meeting earlier this turned to full-scale production after last fall's month, the Federal Open Market Committee long strike, and in January the auto industry (FOMC) selected ranges for growth in money greatly reduced its inventory problems by and debt that it believes will promote this slashing production and boosting incentives to outcome. In brief, the FOMC reaffirmed the customers. tentative growth range for M2 of 3 percent to 7 Still, we shall need to remain attentive to the percent in 1990 that it set last July, and it risks posed in several areas in which the underreduced the M3 targets from their tentative currents have been troubling of late. Profit marrange. The M2 range for 1990, which is the gins, for example, have deteriorated substansame as that used in 1989, is expected by most tially in recent quarters, and a continuation of FOMC members to produce somewhat slower this trend could seriously undercut the expansion growth in nominal GNP this year. The new M3 in capital investment. range of 2Vi percent to 6V2 percent is intended Another concern is the increase in financial to embody the same degree of restraint as the leverage in the economy. In recent years, busi- M2 range, but it was lowered to reflect the ness debt burdens have been enlarged through continued decline in thrift assets and funding corporate restructurings, and as a consequence needs anticipated to accompany the ongoing interest costs as a percent of cash flow have risen restructuring of the thrift industry. The moni- markedly. Among households, too, debttoring range for debt was lowered from a range servicing burdens have risen to historic highs of 6V2 percent to 10V2 percent in 1989 to a range relative to income, and delinquency rates have of 5 percent to 9 percent in 1990. moved up a bit. Clearly, should the economy fall The overwhelming majority of the Committee into a recession, excess debt-service costs would believes that money growth within these annual intensify the problems of adjustment. While ranges will be compatible with expansion of these strains seem unlikely in themselves to nominal GNP in a range of 5V2 percent to 6V2 precipitate a downturn, they are nonetheless percent. Expectations of real GNP growth cen- worrisome. Fortunately, the growth of nonfinanter on a range of PA percent to 2 percent over cial debt has slowed from its frenetic pace of the the four quarters of the year. A slight easing of mid-1980s, and a continuation of this recent pressures on resources probably is in store, and trend, along the lines that the FOMC is anticipatinflation pressures should remain contained, ing, should lessen the financial strains and, hopeeven though the decline in the dollar's value fully, the threat to the economy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

228 Federal Reserve Bulletin • April 1990 THE FEDERAL BUDGET DEFICIT AND thirty. The Social Security Administration—un- SOCIAL SECURITY der intermediate economic and demographic assumptions—expects that number to approach A risk in the longer-run outlook for the econo- fifty by about the year 2025 and to remain at that my—and one that is closer to the day-to-day level at least through the middle of the twentywork of this committee—is the possibility that first century. Assuming that their living stanthe federal government might fail to build upon dards keep pace with those of the working popthe progress that has been made to date in ulation, the elderly will of necessity consume a moving toward reduced federal budget deficits growing proportion of total output in the future. and eventually, I would hope, toward a position They will finance their consumption out of priof surplus. vate and public pensions and by drawing down I have testified often before committees of the their own assets. Nonetheless, the goods and Congress about the adverse effects on our econ- services they buy can only come from the output omy of sustained large budget deficits. Put sim- of then-active workers, whose productivity will ply, my central concern on this score is that depend on the investments that we make in deficits cut into national saving and investment capital and new technologies in the interim. and thereby limit our ability to expand and Investment is possible, of course, only if there upgrade the nation's stock of productive capital. is saving—the diversion of part of the nation's It is the size of that stock, together with the current production away from consumption, quality of the labor force, that ultimately deter- both private and public. The present buildup in mines overall productive capacity and the future the social security trust funds is one source of the standard of living of our population. needed saving. While, in a sense, these funds Unfortunately, much of the recent policy de- exist on paper only, they also are very real claims bate has shifted away from the budget deficit per on future taxpayers and hence on future real se, and toward the financing over time of the output. All else constant, the accumulation of nation's social security program. Senator Moy- saving in the trust funds increases the likelihood nihan has introduced legislation to cut payroll that the real output will be available to meet the taxes and return the system to a pay-as-you-go needs of retirees without denting the living stanbasis, and others would like to move its finances dards of their children too deeply, if at all. In fully off-budget. As I stated yesterday in my particular, to the extent that the surpluses are not testimony before the Senate Finance Committee, offset by reductions in the saving of households I am concerned that these changes, if enacted, and businesses or by larger dissaving, that is, will ultimately prove counterproductive and will deficits, elsewhere in the federal budget, they hamper the efforts needed to meet our longer- should boost investment and thus foster growth term fiscal responsibilities. They also would of the nation's capital stock. And with more likely increase the difficulty of providing for the capital per worker than would otherwise be in needs of an aging population in a way that is place, productive capacity and output also will equitable across generations. If I may frame the be higher. issue in the most basic way: We need to save and At present, the contribution of the trust funds invest now to have the productive economy that to national saving is being swamped by the large can support a rapidly growing population of deficits in the rest of the budget. As long as the retirees two or three decades in the future; pay as non-social-security deficits remain sizable, Senyou go would not be supportive of that saving- ator Moynihan and others are correct in pointinvestment relationship, besides undermining the ing out that we are doing little to solve the notion of equity across generations. future retirement problem. If, however, actions The need to take a long view of the issue arises are taken to bring the non-social-security part from the compelling demographic trends that are of the budget into balance, the trust funds no now in progress. In 1960, there were twenty longer will be financing current government beneficiaries for every one hundred workers con- spending, but will translate dollar for dollar into tributing to social security; currently there are national saving. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 229 Ultimately, when saving takes place in the National Income and Product Accounts, a close total unified budget—social security or else- variant of the total unified budget. where—is of secondary importance. What mat- Second, the way budget numbers are preters in terms of reaching our longer-term growth sented can influence public perceptions of imporobjective is the government's overall net contri- tant fiscal issues and thereby—for good or ill— bution to national saving. Thus, a chief criterion play a role in decisions that affect the size of the for evaluating the major proposals regarding so- overall deficit or surplus. In particular, I fear that cial security should perhaps be whether they adopting a system that draws attention to the would, in fact, help us to achieve the needed surpluses in the trust funds might foster the saving and investment. For example, is the fed- illusion that saving already is great enough to eral government more likely to shift toward a meet future obligations. position of positive net saving if social security is In large part, my concerns are grounded in the returned to pay-as-you-go financing? Given the analytical issues I discussed earlier. But they are large revenue loss implied by the plan, I think compounded by a technical factor, namely that not. much of the growth in the trust funds is reflecting A second key criterion for evaluating the pro- interest received from the holdings of governposals is whether they meet the test of equity ment debt. Such intragovernmental interest payacross generations. Without going into great de- ments, which will approach 1 percent of GNP in tail on this point, it would seem to me that the a few years, are both an inflow to the trust funds pay-as-you-go proposal again falls short. Indeed, and an outlay from the general funds, and they returning now to pay-as-you-go financing would wash out when the accounts are consolidated. confer a significant windfall on the baby boomers But, because they result in an overstatement of who, in effect, would benefit doubly from the size both the saving taking place in the trust funds and of their age cohort. Given their numbers, each the dissaving elsewhere, they can contribute to a would make a disproportionately small contribu- significant misreading of saving trends when eition during his or her working years to the ther part of the budget is considered in isolation. retirement of their elders. Yet, in retirement, Moreover, the very growth in anticipated social each would expect to receive full benefits, which security surpluses, in large part the result of could come only at a disproportionately high cost interest received, is mirrored in the increasing to their children. The present structure, in my interest costs and widening deficits projected in view, is more likely to ensure that an individual's the non-social-security part of the budget. The contributions are linked equitably to his or her implied deficit-reduction targets might then be benefits. well out of political reach. Accordingly, I fear that moving away from the unified budget concept will impede the achieve- MOVING SOCIAL SECURITY ment of the sizable deficit reductions that the "OFF-BUDGET" country so sorely needs. In addition, the inevitable pressures to expand social security benefits I also have deep reservations about proposals or cut payroll taxes if the system were not that would move the social security system fully subject to the discipline of an overall deficit "off-budget," so that the trust funds would be constraint would mount. In the absence of offexcluded from the official summary budget fig- setting changes elsewhere in the budget, such ures and from the setting of deficit targets. First, actions would reduce national saving and over splitting off social security—or any other pro- time worsen the burden on the generation after gram—would highlight a distinction that has little the baby boom. macroeconomic or analytical significance. Responsible budgeting requires a comprehen- Regardless of which numbers are reported, gov- sive framework for setting priorities and assessernment saving or dissaving would continue to be ing competing claims on national resources. That well approximated by the surplus or deficit in the function currently is filled by the unified budget total federal budget as currently defined in the process. If deficit targets were to be set exclusive Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

230 Federal Reserve Bulletin • April 1990 of social security, for example, they could be But it is just a first step. If households and met—at least in part—by moving related pro- businesses continue to save relatively little, then grams into the social security account or by the federal government should compensate by shifting other trust funds off the books. Such moving its budget in the direction of greater actions would shrink the on-budget deficit but surplus. would not reduce federal demands on private I would remind you, in closing, that budget saving or on credit markets. decisions often have been shaped by short-run concerns and pressures. Those same decisions, though, many times have had longer-run reper- THE NEED FOR FURTHER DEFICIT cussions that were unintended or perhaps even REDUCTION contrary to original intentions. I hope that in your deliberations on the budget—and particu- Most important, we must not allow the choice of larly in your actions on the social security a budget accounting system to divert attention issue—you will give special attention to the from the pressing need for meaningful deficit long-run needs of the economy. It is the process reduction, but rather must take actions to set the of saving, investment, capital accumulation, federal government's claim on saving—however and rising productivity that largely will deterthe budget deficit is measured—on a firm down- mine the economic prospects of the next generward track. Making a serious commitment to ation. These goals will be fostered to the extent eliminating the unified deficit within the foresee- that you keep us on the path toward reduced able future is an essential first step, and meeting government deficits and increased national that commitment will be a formidable challenge. saving. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

231 Announcements PROPOSED ACTIONS Robert J. Zemel has been promoted from Assistant Director to Associate Director in the The Federal Reserve Board issued for public Division of Applications Development and Stacomment on February 6, 1990, a proposed regu- tistical Services. lation that would set standards for appraisals Marianne M: Emerson has been appointed conducted for state member banks and bank Assistant Director in the Office of Executive holding companies in federally related transac- Director for Information Resources Managetions. Comments should be received by the ment. Board by April 10. Raymond H. Massey has been appointed As- The Board also issued for public comment on sistant Director in the Division of Applications February 14, 1990, a proposed regulation provid- Development and Statistical Services. ing interim procedures for notifying the Board of Po Kyung Kim has been appointed Assistant changes in senior executive officers and directors Director in the Division of Applications Develat bank holding companies and state member opment and Statistical Services. banks that are newly chartered, undercapitalized, or in troubled condition. Comments are Ms. Emerson joined the Board's staff in Aurequested by April 23, 1990. gust 1982 and has rotated through several positions in Information Resources Management as a manager. She holds a B.A. from Bryn Mawr HOTLINE TELEPHONE NUMBER College and an M.S. in Computer Science from AVAILABLE FOR OFFICE OF THE the University of Maryland. INSPECTOR GENERAL AT THE BOARD Mr. Massey joined the Board's staff in February 1971 and has held several positions in the The Office of Inspector General at the Board has Division of Applications Development and Staestablished a nationwide, toll-free hotline teletistical Services and in the Division of Hardware phone number that can be used to report susand Software Systems. pected cases of impropriety, wrongdoing, fraud, Mr. Kim joined the Board's staff in April 1977 or waste and abuse in programs and operations and has held several managerial positions in the administered or financed by the Board. Division of Applications Development and Sta- The hotline number is (800) 827-3340. tistical Services. He holds a B.A. in Economics The Office may also be reached at the local from the University of North Carolina. Washington number (202) 452-6400, or by writing to the following address: Office of Inspector General Federal Reserve Board SYSTEM MEMBERSHIP: ADMISSION OF Washington, D.C. 20551. STATE BANKS The following state bank was admitted to mem- CHANGES IN BOARD STAFF bership during the period from November 1, 1989, to January 31, 1990: The Board of Governors announced the following official staff actions, effective February 14, Pennsylvania 1990: Troy First Bank of Troy Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

233 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON DECEMBER 18-19, 1989 the San Francisco area. Total industrial capacity utilization slipped a bit in November and was 1. Domestic Policy Directive nearly 1 Vi percent below its level a year earlier. Nominal retail sales in November partially The information reviewed at this meeting sug- retraced the sharp October decline; sales for the gested that economic activity was expanding month were little changed from the third-quarter slowly in the fourth quarter, with the moderation average, reflecting continued weakness in motor from earlier in the year only partly attributable to vehicles. Outside of vehicles, sales rebounded strikes and other special factors. Abstracting for a wide range of goods, especially for apparel from these factors, the growth of final demands items. Housing starts declined in November as had slowed, and the effects were especially evi- construction of multifamily units fell back to dent in the manufacturing sector. By contrast, about the average pace that had prevailed since growth of the service sector appeared to be well April. However, for the October-November pesustained, and overall construction activity riod, starts were up somewhat on average from seemed relatively firm. Broad measures of infla- their third-quarter level because of a pickup in tion indicated that prices had risen more slowly single-family units. on balance since midyear, partly reflecting sharp Recent indicators of business capital spending reductions in energy prices; recent wage data suggested a weakening in expenditures after a suggested no significant change in prevailing substantial increase earlier in the year. Shiptrends. ments of nondefense capital goods fell in October Total nonfarm payroll employment rose appre- for a second straight month. Part of the October ciably in November after a small gain in October. decline stemmed from the effects of the strike at All of the November increase occurred at ser- Boeing on shipments of aircraft; small declines vice, trade, and financial establishments. Job were widespread elsewhere, and a considerable losses continued in manufacturing, especially in drop occurred in computing equipment. The ormotor vehicle and related industries, but cut- ders data for October suggested continued weakbacks were evident elsewhere, notably in electri- ness in equipment outlays in the near term. cal machinery. The civilian unemployment rate Nonresidential construction activity posted anedged up to 5.4 percent in November, its highest other gain, led by a sizable increase in non-office level since January. commercial construction; however, office va- Industrial production rose slightly in Novem- cancy rates, construction permits, and other inber after a sizable decline in October that re- dicators pointed to renewed weakness. Total sulted from strike activity and other disruptions; manufacturing and trade inventories rose in Ocadjusting for these temporary influences, produc- tober at about the third-quarter pace. Accumulation was down slightly, on balance, in recent tion of manufacturing inventories was moderate, months. Output of consumer goods declined in and stocks remained at relatively low levels November as production of durables other than compared to shipments. Stocks at wholesalers motor vehicles dropped sharply further. Output jumped but, in relation to sales, remained in the of business equipment increased appreciably, middle of the range that has prevailed over the owing in part to a recovery in the production of past two years. Retail inventories fell appreciacomputers in the aftermath of the earthquake in bly in October, reflecting a large decline in auto Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

234 Federal Reserve Bulletin • April 1990 dealers' stocks. Excluding auto dealers, the retail straint might be acceptable, depending on proginventory-sales ratio increased in October to a ress toward price stability, the strength of the level well above its range over the past year. business expansion, the behavior of the mone- The nominal U.S. merchandise trade deficit tary aggregates, and developments in foreign widened appreciably in October from an upward exchange and domestic financial markets. The revised September rate. Much of the widening contemplated reserve conditions were expected reflected a sharp increase in imports of industrial to be consistent with growth of M2 and M3 over supplies, notably paper, steel, and textiles. The the period from September through December at value of exports showed a small increase for the annual rates of about IVi percent and AVi percent third straight month as larger shipments of auto- respectively. motive products and other industrial goods out- In the period since the November meeting, the weighed a substantial decline in exports of air- Manager for Domestic Operations had directed craft. Indicators of economic activity in the open market transactions toward maintaining an major foreign industrial countries suggested a unchanged degree of reserve availability. Condimixed performance in the third quarter, although tions in reserve markets softened temporarily growth remained fairly strong on balance. Eco- around Thanksgiving when operations to meet nomic growth appeared to have rebounded seasonal reserve needs were misread as signaling strongly in Japan and, adjusted for special fac- a further easing of monetary policy. Over most of tors, to have remained firm in Germany. the intermeeting period, however, federal funds Producer prices for finished goods edged down traded around 8V2 percent, the level prevailing at in November after sizable increases in the previ- the time of the mid-November meeting. Adjustous two months and, on balance, had risen at ment plus seasonal borrowing fell to an average lower rates since midyear. Prices of finished of around $150 million in the first half of Decemenergy products, especially gasoline, fell ber. To reflect a continuing decline in seasonal sharply; the drop more than offset a second borrowing, technical reductions were made at month of increases in finished food prices. Con- the start of the intermeeting period and in the sumer prices excluding food and energy items second week of December in the assumed level rose a little faster in October and November of adjustment plus seasonal borrowing used in than in other recent months. Over the October- constructing the target paths for the provision of November period, food prices were boosted by reserves. sharp increases in dairy products, meats, and Against the background of an unchanged monfresh produce while the rise in energy prices was etary policy and incoming information that genheld down by a net decline in the price of erally was viewed as consistent with expectagasoline. Average hourly earnings slipped in No- tions of continuing but slow growth in economic vember, and the large increase initially reported activity, most market interest rates changed little for October was revised downward. However, on balance over the intermeeting period. Major the results of recent collective bargaining activity indexes of stock prices generally rose over the suggested a continuation of the larger wage set- period. In foreign exchange markets, the tradetlements evident earlier in the year. weighted value of the dollar in terms of the other At its meeting on November 14, the Commit- G-10 currencies fell substantially despite some tee had adopted a directive that called for main- easing of short-term interest rates in Germany taining the existing degree of pressure on reserve and Japan. The decline of the dollar primarily positions and that provided for giving special reflected the buoyancy of the German mark as weight to potential developments that might re- exchange market participants interpreted politiquire some easing during the intermeeting pe- cal developments in Eastern Europe as having riod. The availability of reserves had been eased favorable implications for the German economy. slightly earlier in November. With regard to the The dollar declined somewhat less against other intermeeting period ahead, the Committee had European currencies linked to the mark in the agreed that slightly lesser reserve restraint would European Monetary System and was little be acceptable, or slightly greater reserve re- changed against the yen. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 235 Growth of the broader monetary aggregates gish at least over the near term. While most accelerated somewhat further in November and members agreed that further economic growth remained robust in early December, despite a was a reasonable expectation for the year ahead, contraction in demand deposits that resulted in several observed that recent developments sugconsiderably slower expansion of Ml. The ex- gested greater risks in the direction of a weaker pansion of M2 continued to reflect the effects of economic performance. These members exearlier reductions in market interest rates and pressed concern that problems in some sectors of related opportunity costs, and it seemed likely the economy such as motor vehicles and comthat the velocity of M2 would decline substan- mercial and residential real estate might lead to tially further in the fourth quarter. Assets of thrift greater caution in credit extensions and overall institutions and their associated funding needs spending, especially given indications of some apparently continued to contract, keeping deterioration in business confidence, and to more growth of M3 below that of M2, but the decline widespread softening in the economy. Other seemed to be at a reduced pace and in November members saw more favorable prospects for some M3 grew at its fastest rate since the summer. strengthening of the expansion next year, though Through November, M2 had expanded at a pace they did not anticipate a strong rebound in econear the midpoint of the Committee's annual nomic activity. These members recognized that range while M3 had grown at a rate a little above there were imbalances in the economy, but they the lower bound of its annual range. felt that, among other developments, prevailing The staff projection prepared for this meeting patterns in orders and production, though softcontinued to suggest that the economy would ening, were not inconsistent with somewhat expand at a reduced pace over the next several faster economic growth once current difficulties quarters. Growth in the first quarter was ex- such as those in the automobile industry were pected to rebound from temporary disturbances worked through and the effects of the monetary to production stemming from strike activity and policy easing over the past half year were felt natural disasters in the fourth quarter, although more fully. It also was noted that certain forthe extent of the rebound would be limited by ward-looking indicators, including commodity further reductions in the production of motor prices, monetary growth, foreign exchange rates, vehicles in the early months of the year. Over the and the Treasury yield curve, were consistent remainder of 1990, a relatively moderate expan- with some pickup in economic expansion next sion in consumer spending was projected to be a spring. With regard to the outlook for inflation, key factor in sustaining overall demand and those who believed the risks were on the side of production. Business outlays for fixed invest- a weaker economy and less pressure on producment also were expected to increase, but at a tion resources generally saw favorable prospects much reduced pace in an environment of slow for further progress toward price stability next revenue growth and deteriorating cash flows. year. Some of the members who expected a Housing construction was forecast to expand at a somewhat stronger economy were less optimistic relatively sluggish pace over the course of the about the extent of such progress, if any, but year. The projection continued to assume that they also believed that there was little risk of a the federal budget deficit would decline moder- pickup in the underlying rate of inflation. ately and that net exports would make little In the course of the Committee's discussion, contribution to domestic economic growth in members reported more sluggish business condi- 1990. Pressures on labor and other production tions in a number of areas and some loss of resources were expected to ease only marginally, business confidence, but overall economic activand the underlying trend of inflation was not ity appeared to be continuing to grow in most, if projected to change significantly. not all, parts of the country. With some notable In the Committee's discussion of the economic exceptions, manufacturing activity had modersituation and outlook, members emphasized that ated across the country, with particular weaksigns of a weaker expansion had accumulated ness in the production of motor vehicles, other and that the economy was likely to remain slug- durable consumer goods, and some types of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

236 Federal Reserve Bulletin • April 1990 capital equipment. Members observed that con- the recent decline of the dollar would tend to ditions in the automobile industry probably offset expected gains from diminished pressures would continue to have a negative effect on on labor and other production resources. Some overall economic activity in the months ahead, of these members also expressed concern that a and some noted that the longer-term outlook was possible resumption of economic growth at a difficult to predict because structural problems pace closer to the economy's potential, perhaps related to changing demand patterns appeared to later next year, would reverse any tendency for be involved. Construction activity also was cited inflation to decline. Other members were someas a source of weakness in many areas, though it what more optimistic about the outlook for prices remained relatively robust in others. In general, and wages. Some commented that they were nonresidential construction seemed likely to be encouraged by the performance of prices in the damped by overcapacity in office and other com- second half of 1989, and a number cited the mercial structures. Overall demand for new strong competition for many products from both housing appeared to be essentially flat, though domestic and foreign producers, the behavior of with considerable local variations, despite earlier industrial materials and commodity prices, and declines in mortgage interest rates. It was noted the growth of capacity in some key industries. that the availability of financing for the construc- In the Committee's discussion of monetary tion of housing appeared to have been reduced policy for the intermeeting period ahead, the by tighter supervisory regulations and some de- members focused on the possible need to ease crease in the number of traditional institutional reserve conditions slightly further to provide lenders to this industry. In addition, the availabil- greater assurance that weaknesses in demand did ity of such financing appeared to have been not persist or deepen. The current slowdown in adversely affected by the weakness of real estate economic growth was to a considerable extent markets in a number of areas and the large the result of the policy implemented much earlier resulting losses on loans. to restrain emerging inflation pressures, and this On a more positive note, a number of members policy seemed at least to have avoided an upcommented that consumer spending was likely to surge in inflation. Over time, a further damping be sustained by continuing gains in incomes and of price pressures was needed if the economy the ample liquid assets of households that were was to realize the benefits of price stability, but available to support greater spending. Consumer that need not involve a downturn in the econspending on services was likely to continue to omy. Several members observed that the choice grow. The outlook for retail sales was somewhat between some slight easing at this time or waiting uncertain, including at this point the still very for additional evidence that the economy might limited information on holiday sales, but outside be weakening further was a close one. A majority the most depressed areas retailers appeared to be indicated that on balance they viewed the risks of relatively optimistic. The recent depreciation of a shortfall in economic activity as sufficiently the dollar would tend over time to boost overall high to justify an immediate move to slightly demand and economic growth. More generally, easier reserve conditions, and one member exthe recent slowing in the expansion could be pressed a preference for somewhat greater easattributed in part to special or temporary factors ing. In this regard, some noted that the next and to the lagged effects of the tightening of several months might be a critical period in terms monetary policy through early 1989. On the of avoiding a recession and that some modest whole, current demand conditions were not seen easing at this point might have a calming effect on by most members as suggesting a cumulative financial markets and help to boost business weakening in the economy. confidence. Given downward pressures on many prices and softness in business conditions, some With regard to the outlook for inflation, the slight easing was not likely in this view to be views of the members continued to differ to some inconsistent with the long-run objective of price extent. Several anticipated that little or no progstability or the public's perception of the imporress was likely to be made in reducing inflation tance that the System placed on that objective. over the year ahead, in part because the effects of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 237 These members recognized that an easing of The outlook for M3 was subject to considerable reserve pressures immediately after the meeting uncertainty, but growth of that aggregate was would make the need for further easing less likely expected to remain below that of M2. The extent over the coming intermeeting period. As a con- of the shortfall would depend in important measequence, they favored a directive that did not sure on the degree to which solvent but capitalcontain a tilt toward less restraint but one that deficient thrift institutions continued to reduce gave equal weight to potential intermeeting ad- assets to meet new capital requirements and on justments in either direction. the extent of RTC activity in resolving insolvent Members who supported an unchanged policy thrift institutions. commented that current reserve conditions ap- At the conclusion of the Committee's discuspeared to be consistent with ongoing expansion sion, all but two of the members indicated that in business activity at a pace that over time they favored or could accept a directive that would serve to moderate pressures on labor and called for a slight easing of reserve conditions. In other production resources, and they were con- keeping with the Committee's usual approach to cerned that further easing might overcompensate policy, the conduct of open market operations for current weaknesses in the economy at the would be subject to further adjustment during the cost of delaying progress toward price stability. intermeeting period depending on progress In current circumstances, an easing also might toward price stability, the strength of the busifoster some concern about the System's commit- ness expansion, the behavior of the monetary ment to achieving price stability and put undesir- aggregates, and developments in foreign exable downward pressure on the dollar in the change and domestic financial markets. On the foreign exchange markets. At the same time, basis of such developments, slightly greater or these members recognized the risk of some fur- slightly lesser reserve restraint would be acceptther weakening in the economy, and several able during the period ahead. The reserve condifavored a directive that incorporated a strong tions contemplated at this meeting were expected presumption that indications of such a develop- to be consistent with growth of M2 and M3 at ment would trigger a prompt adjustment of re- annual rates of about 8V2 and 5Vi percent respecserve conditions. Most of these members were tively over the four-month period from Novemwilling to accept a slight immediate move toward ber 1989 through March 1990. In light of the easier reserve conditions but, in that case, they easing of reserve conditions over the course of doubted that any further easing would be appro- recent months and the further slight easing fapriate over the intermeeting period unless the vored by a majority of the members at this economy, prices, or financial developments de- meeting, the Committee decided to lower the viated very substantially from current expecta- intermeeting range for the federal funds rate by 1 tions. Two members indicated that they could percentage point to 6 to 10 percent. Such a not accept any further easing at this time, in part reduction would center the range more closely because of their concerns about the conse- around the average federal funds rate that was quences for growth of the monetary aggregates expected to prevail after this meeting. and, more generally, for inflation expectations At the conclusion of the Committee's meeting, and inflation over time. the following domestic policy directive was is- Members referred to the strong growth of M2 sued to the Federal Reserve Bank of New York: over the past several months and took note of a staff analysis that concluded that such growth The information reviewed at this meeting suggests would remain fairly strong over months ahead if that economic activity is expanding slowly in the reserve conditions stayed unchanged or were current quarter. Total nonfarm payroll employment eased slightly. Earlier declines in short-term in- has increased at a reduced pace on average over the past several months, with declines continuing in the terest rates and typically slow adjustments of manufacturing sector. The civilian unemployment rate offering rates on M2-type deposits had tended to edged up to 5.4 percent in November. Industrial make such deposits relatively more attractive by production rose slightly in November after a decline in reducing the opportunity costs of holding them. October resulting from strike activity and other dis- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

238 Federal Reserve Bulletin • April 1990 ruptions. Nominal retail sales excluding motor vehi- ing account of progress toward price stability, the cles strengthened in November, but continued weak strength of the business expansion, the behavior of the sales of vehicles held total retail sales for the month to monetary aggregates, and developments in foreign a level that was little changed from the third-quarter exchange and domestic financial markets, slightly average. Housing starts fell in November but for the greater reserve restraint or slightly lesser reserve October-November period were up somewhat on av- restraint would be acceptable in the intermeeting peerage from their third-quarter level. Indicators of riod. The contemplated reserve conditions are exbusiness capital spending suggest a weakening in ex- pected to be consistent with growth of M2 and M3 penditures after a substantial increase earlier in the over the period from November through March at year. The preliminary data indicate that the nominal annual rates of about 8V2 and 5'/2 percent respectively. U.S. merchandise trade deficit widened appreciably in The Chairman may call for Committee consultation if October from an upward revised September rate. it appears to the Manager for Domestic Operations Broad measures of inflation suggest that prices have that reserve conditions during the period before the risen more slowly on balance since midyear, partly next meeting are likely to be associated with a federal reflecting sharp reductions in energy prices, but the funds rate persistently outside a range of 6 to 10 latest data on labor compensation suggest no signifi- percent. cant change in prevailing trends. Interest rates have changed little on balance since Votes for this action: Messrs. Greenspan, Corthe Committee meeting on November 14. In foreign rigan, Guffey, Johnson, Keehn, Kelley, La Ware, exchange markets, the trade-weighted value of the Ms. Seger, and Mr. Syron. Votes against this dollar in terms of the other G-10 currencies declined action: Messrs. Angell and Melzer. substantially over the intermeeting period, with a particularly pronounced depreciation against the Ger- Messrs. Angell and Melzer dissented because man mark and related European currencies in the last week of the period. they did not believe that policy should be eased. Mr. Angell was concerned that the Committee M2 continued to grow fairly briskly in November, largely reflecting strength in its retail deposit compo- was responding to indicators of recent weakness nents; M2 has expanded this year at a pace near the in economic activity, a weakness that was a midpoint of the Committee's annual range. Growth of consequence of somewhat cautious policy re- M3 picked up in November but has remained more sponses earlier. Policy decisions should rely restrained than that of M2, as assets of thrift institumainly on leading indicators, including commodtions and their associated funding needs apparently continued to contract; for the year to date, M3 has ity prices, the exchange rate, the yield curve, and grown at a rate a little above the lower bound of the money supply growth. Attention to such indica- Committee's annual range. tors had served policy well in the past. During the The Federal Open Market Committee seeks mone- spring and summer while the dollar was apprecitary and financial conditions that will foster price ating and commodity prices, including gold, were stability, promote growth in output on a sustainable generally falling, easing of reserve conditions was basis, and contribute to an improved pattern of international transactions. In furtherance of these objec- accompanied by the lower long-term interest rates tives, the Committee at its meeting in July reaffirmed necessary to undergird housing and other longthe ranges it had established in February for growth of term investments. At this meeting, price-level M2 and M3 of 3 to 7 percent and 31/2 to IVi percent, indicators were not signaling a need for further respectively, measured from the fourth quarter of 1988 ease. In these circumstances, an additional drop to the fourth quarter of 1989. The monitoring range for growth of total domestic nonfinancial debt also was in the federal funds rate, coming after two previmaintained at 6!/2 to IOV2 percent for the year. For ous easing moves in the fourth quarter, could raise 1990, on a tentative basis, the Committee agreed in doubts about the System's commitment to its July to use the same ranges as in 1989 for growth in objective of price stability, especially given that each of the monetary aggregates and debt, measured the easing would further stimulate M2 growth. from the fourth quarter of 1989 to the fourth quarter of 1990. The behavior of the monetary aggregates will Under such conditions, further easing of reserve continue to be evaluated in the light of movements in pressures would tend to accommodate rising their velocities, developments in the economy and prices, foster uncertainty in financial markets, and financial markets, and progress toward price level drive up long-term interest rates, thereby increasstability. ing the likelihood of economic instability. Steady In the implementation of policy for the immediate policy in pursuit of price stability, using forwardfuture, the Committee seeks to decrease slightly the existing degree of pressure on reserve positions. Tak- looking indicators, would reduce uncertainty Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 239 about price trends, bolster confidence in the Paragraph ID of the Committee's Authorization dollar domestically and internationally, and bring for Foreign Currency Operations permitted the about lower interest rates and higher economic Federal Reserve Bank of New York, for the growth. System Open Market Account, to maintain an Mr. Melzer dissented because he favored an overall open position in all foreign currencies not unchanged degree of reserve restraint. He noted exceeding $20 billion, based on historical costs. that policy had been eased considerably over the System purchases of foreign currencies, which last six months in anticipation of prospective were coordinated with similar transactions by the sluggishness in the economy and that ample U.S. Treasury, had been relatively limited reliquidity was now being provided by the central cently, but, with the accumulation of interest, bank. In addition, based on recent and projected total holdings were approaching the $20 billion growth in the monetary aggregates, he was con- limit. The Manager for Foreign Operations adcerned that long-term progress toward price sta- vised that even in the absence of new market bility would be jeopardized by a more accommo- purchases, continuing accruals of interest would dative short-run policy stance. raise total holdings to the current limit by February. The Committee agreed to raise the limit to $21 billion, effective immediately. 2. Foreign Currency Authorization Votes for this action: Messrs. Greenspan, Cor- At this meeting, the Committee approved an rigan, Angell, Gufifey, Johnson, Keehn, Kelley, increase in the limit on holdings of foreign cur- La Ware, Melzer, Ms. Seger, and Mr. Syron. Votes rencies in the System Open Market Account. against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

241 Legal Developments ORDER TERMINATING STATE EXEMPTIONS (1989)). The Board amended Regulation C to implement the provisions of section 1211 of FIRREA, The Board of Governors determined that certain finan- publishing the revised regulation in final form in the cial institutions in Connecticut, Massachusetts, and Federal Register on December 15, 1989 (54 Federal New Jersey have previously been exempted from the Register 51,356). First, the coverage of HMDA and Home Mortgage Disclosure Act because they were of Regulation C was expanded to include mortgage subject to substantially similar mortgage disclosure lenders that are not affiliated with depository institurequirements under state law. Recent amendments to tions or holding companies. Second, the FIRREA the act and to the Board's implementing rule, Regula- amendments require reporting of data regarding loan tion C, have produced discrepancies between the fed- applications; previously, institutions reported only eral provisions and current state laws such that the state data regarding loans originated or purchased. Third, laws are no longer substantially similar to the federal the amendments require most covered lenders to statute and regulation, as amended. The Board is for- report the race or national origin, sex, and income of mally terminating the exemptions as of January 1, 1990, mortgage applicants and borrowers (depository instithe date the amended federal act and regulation took tutions with assets of $30 million or less are exempt effect. from this particular requirement). Fourth, the FIR- Effective January 1, 1990, applications that are REA amendments require that lenders identify the received prior to March 1, 1990, by a previously class of purchaser for mortgage loans that they sell. exempt institution, data on race or national origin and Fifth, the amendments to permit lenders to explain sex are to be reported if the institution has this the basis for lending decisions to their supervisory information; institutions need not contact applicants agency. Finally, the revised Regulation C provides again in order to obtain the data. for a "register" form of reporting. Lenders will record certain data for each application that they Introduction receive (whether granted, denied, or withdrawn) and for each home purchase or home improvement loan The Board's Regulation C (12 C.F.R. Part 203) imple- that they originate or purchase, and will submit the ments the Home Mortgage Disclosure Act of 1975 registers to their supervisory agency at the close of ("HMDA") (12 U.S.C. § 2801 etseq.). Prior to amend- the calendar year. Thus, covered institutions will no ments that took effect January 1, 1990, the regulation longer be required to cross-tabulate loan data, as was required depository institutions, mortgage banking sub- the case under federal law previously. sidiaries of holding companies, and savings and loan Under HMDA and Regulation C, the Board may service corporations with more than $10 million in grant exemptions to state-chartered or state-licensed assets and with offices in metropolitan statistical areas financial institutions subject to state mortgage discloto disclose annually their originations and purchases of sure laws that are substantially similar to the Federal home mortgage and home improvement loans. Institu- law and that contain adequate provision for enforcetions compiled data about loans, itemizing this informa- ment. Exemptions are subject to termination if the tion by census tract (or by country, in some instances) Board determines that the state laws no longer meet and also by type of loan. The institutions disclosed this these two conditions. information to the public by March 31 following the Based on the act and regulation in effect prior to the calendar year for which the data were compiled. Copies 1989 amendments, exemptions were previously granted were sent to the institutions' federal supervisory agen- for state-chartered financial institutions subject to the cies for aggregation on an MSA-wide basis by the state mortgage disclosure laws of Connecticut, Massa- Federal Financial Institutions Examination Council. chusetts, and New Jersey. Following the adoption of The Financial Institutions Reform, Recovery and the revised Regulation C, the Board published a notice Enforcement Act ("FIRREA"), which was signed of intent to terminate these state exemptions on Deceminto law on August 9, 1989, made major revisions to ber 15, 1989 (54 Federal Register 51,404), for a 30-day HMDA. (FIRREA, Pub. L. No. 101-73, 103 Stat. 183 comment period. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

242 Federal Reserve Bulletin • April 1990 Two comments were received. A state banking The termination of these state exemptions in no way official from Connecticut noted that the state intends affects the mortgage disclosures required for loans to amend its version of the Home Mortgage Disclosure made or purchased in calendar year 1989. Institutions Act and implementing regulation to make them sub- previously exempt must submit reports on these loans stantially similar to federal law, and required either a to their state supervisory agency in keeping with state continuance of the Connecticut exemption or its rein- law requirements. statement upon the adoption of the requisite changes. Order of Termination The other comment, submitted by an industry group, did not take issue with the Board's position that The Board granted exemptions from the federal Home substantial similarity no longer exists between the Mortgage Disclosure Act to state-chartered financial federal and state laws, but suggested that the revocainstitutions in Connecticut, Massachusetts, and New tion should not take effect on January 1, 1990, as Jersey in 1978, 1976, and 1978, respectively, based on proposed, but at a later date. In addition, officials from the existence of substantially similar requirements Massachusetts and New Jersey informally advised the imposed by state law and on the states' provisions for Board of plans to change their laws to parallel the their enforcement. These exemptions were renewed in federal requirements. 1982 following changes in the federal act and regula- The Board has determined that substantial similarity tion and corresponding changes in the state law. between the federal and state laws no longer exists. Because the federal law was amended in 1989, and Thus, it is terminating the exemptions as of January 1, no comparable changes in the state laws have followed 1990, the effective date of the changes to HMDA and to date, the substantial similarity required for an Regulation C. State-chartered institutions previously exemption no longer exists between the federal and exempted from HMDA and Regulation C by virtue of state laws. The Board is therefore terminating the the disclosure laws of Connecticut, Massachusetts, exemptions for Connecticut, Massachusetts, and New and New Jersey must comply with the data collection Jersey. State-chartered financial institutions in these requirements of the federal law as of that date. Ac- states that were previously exempted from the federal cordingly, these institutions must maintain loan/appli- law shall comply with the federal Home Mortgage cation registers showing the required information on Disclosure Act and Regulation C beginning January 1, the loans they originate or purchase, and for applica- 1990, the date the amendments to HMDA and Regutions they receive, beginning January 1, 1990, except lation C became effective. In the case of applications that for applications received by these institutions received by these institutions prior to March 1, 1990, prior to March 1, 1990, data on race or national origin data on race or national origin and sex are to be and sex are to be reported if the institution has this reported if the institution has this information; instituinformation; institutions are not required to contact tions are not required to contact applicants again in applicants again in order to obtain the data. order to obtain that data. The loan/application registers are to be submitted to institutions' federal supervisory agencies by March 1, AMENDMENT TO REGULATION Y 1991. If a state subsequently adopts new requirements that are substantially similar to the federal law, and The Board of Governors is amending its Regulation Y, those requirements are made effective as of January 1, section 225 of Title 12, Code of Federal Regulations, to 1990, the Board may grant a reinstatement of the implement the provisions of section 914 of the Finanexemption. If an exemption is reinstated, covered cial Institutions Reform, Recovery, and Enforcement institutions would submit data about their mortgage Act of 1989 ("FIRREA"), Pub. L. 101-73, 103 Stat. lending only to the state supervisory agency, instead 183. Section 914 of FIRREA requires bank holding of having to send separate reports to federal and state companies and state member banks that have recently regulators. undergone a change in control, have less than mini- To meet the "substantially similar" test, it will be mum required capital, or are otherwise in troubled necessary for the state law to cover applications as condition to file a notice with the Board of Governors well as loans granted and purchased; to require report- of the Federal Reserve System ("Board") prior to ing of information on the location of the properties to adding a member of the board of directors, or employwhich the covered loans or applications relate, and on ing an individual as a senior executive officer. This the race or national origin, sex, and income of appli- prior notice requirement also applies to state member cants and borrowers; to provide disclosure of the type banks that have been chartered within two years of purchaser for loans sold by an institution; and to call before the proposed management change. The Board may disapprove any proposed board member or senior for a register form of reporting. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 243 executive officer whose service is not considered to be (1) Has a composite rating, as determined in the in the best interests of the depositors of the bank or the most recent report of examination or inspection, of public. The regulation defines the terms "troubled 4 or 5 under the commercial bank Uniform Intercondition" and "senior executive officer." The regu- agency Bank Rating System or under the Federal lation also clarifies the types of changes in control of a Reserve bank holding company rating system; state member bank or bank holding company that (2) Is subject to a cease and desist order or formal require a notice under section 914, and establishes the written agreement that requires action to improve procedures for filing the required notice. the financial condition of the institution, unless Because the provisions of section 914 became effec- otherwise informed in writing by the Board or the tive on the date of enactment of FIRREA, this regu- appropriate Reserve Bank; or, lation is immediately effective. The Board requests (3) Is expressly informed by the Board or Reserve comment on any issue raised by this regulation; inter- Bank that it is in troubled condition for purposes of ested persons have 60 days in which to respond. After the requirements of this subpart on the basis of the the close of the comment period, the Board may institution's most recent examination, report of conamend the regulation in response to the comments dition, or inspection, or other information available received. to the Board. Effective February 13, 1990, the Board amends 12 C.F.R.Part 225 as follows: Section 225.72—Director and officer appointments; prior notice requirement 1. The authority citation for Part 225 is revised to read as follows: (a) Prior notice. A state member bank or bank holding company shall give the Board 30 days written notice, Authority: 12 U.S.C. 18170X13), 1818, 1831i, as specified in section 225.73, before adding or replac- 1843(c)(8), 1844(b), 3106, 3108, 3907 and 3909. ing any member of the board of directors of employing or changing the responsibilities of any individual to a 2. Subpart H, consisting of sections 225.71 through position as a senior executive officer of the bank or 225.73, is added to read as follows: bank holding company, if: (1) The bank has been chartered less than two years; Subpart H—Notice of Addition or Change of (2) Within the preceding two years, the bank or bank Directors and Senior Executive Officers holding company has undergone a change in control that required a notice to be filed pursuant to the Section 225.71—Definitions Change in Bank Control Act or Subpart E of this Section 225.72—Director and officer appointments; part; prior notice requirement (3) Within the preceding two years, the bank holding Section 225.73—Procedures for filing, processing, and company became a registered bank holding comacting on notices; standards for dis- pany, unless the bank holding company is owned or approval; waiver of notice controlled by a registered bank holding company, or the bank holding company was established in a Subpart H—Notice of Addition or Change of reorganization in which substantially all of the Directors and Senior Executive Officers shareholders of the bank holding company were shareholders of the bank prior to the bank holding Section 225.71—Definitions company's formation; or (4) The bank or bank holding company is not in (a) "Senior executive officer" means a person who, compliance with all minimum capital requirements without regard to title, exercises the authority of one applicable to the institution as determined on the or more of the following positions: chief executive basis of the institution's most recent report of conofficer, chief operating officer, chief financial officer, dition, examination or inspection, or is otherwise in chief lending officer, or chief investment officer. "Sen- troubled condition. ior executive officer" also includes any other person (b) Advisory directors. with significant influence over major policymaking (1) For purposes of this subpart, except as provided decisions of a state member bank or bank holding in paragraph (b)(2) of this section, the term "memcompany. ber of the board of directors" does not include an (b) "Bank or bank holding company in troubled con- advisory director who: dition" means any state member bank or bank holding (i) Is not elected by the shareholders of the bank company that: or bank holding company; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

244 Federal Reserve Bulletin • April 1990 (ii) Is not authorized to vote on any matters before The notice of disapproval shall contain a statement of the board of directors; and the basis for disapproval. (iii) Provides solely general policy advice to the (d) Appeal. board of directors. (1) The disapproved individual or the state member (2) The Board or Reserve Bank may otherwise bank or bank holding company may appeal to the determine that an advisory director is in fact func- Board the disapproval of a notice under this subpart tioning as a director or senior executive officer for within 15 calendar days of the effective date of the purposes of this subpart. notice of disapproval. An appeal shall be in writing and explain the reasons for the appeal and include all facts, documents, and arguments that the appeal- Section 225.73—Procedures for filing, ing party wishes to be considered in the appeal. processing, and acting on notices; standards for (2) The Board may, in its sole discretion, order an disapproval; waiver of notice informal hearing if the hearing is requested in writing by the disapproved individual or the notificant at (a)(1) Filing notice. The notice required in section the time of an appeal, and the Board finds that oral 225.72 shall be filed with the appropriate Reserve argument is appropriate or that a hearing is neces- Bank and shall contain the information required by sary to resolve disputes regarding material issues of paragraph 6(A) of the Change in Bank Control Act fact. (12 U.S.C. 1817(j)(6)(A)) or prescribed in the desig- (3) The disapproved individual may not serve as a nated Board form, subject, in either case, to the director or senior executive officer while the appeal authority of the Reserve Bank or the Board to is pending. Written notice of the final decision of the modify these requirements or require additional Board shall be sent to the appealing party. information. (e)(1) Waiver of notice. The Board or the Reserve (2) Acceptance of notice. The 30-day notice period Bank may waive the prior notice required under this specified in section 225.12 shall begin on the date all subpart if it finds that: required information is received by the appropriate (i) Delay would threaten the safety or soundness Reserve Bank or the Board. The Reserve Bank shall of the state member bank or the bank holding notify the bank or bank holding company submitting company or any of its bank subsidiaries; the notice of the date all such required information is (ii) Delay would not be in the public interest; or received and the notice is accepted for processing, (iii) Other extraordinary circumstances exist that and of the date on which the 30-day notice period justify waiver of prior notice. will expire. (2) Effect on disapproval authority. Any waiver (b) Commencement of service. issued by the Board or Reserve Bank shall not affect (1) At expiration of period. A proposed director or the authority of the Board or Reserve Bank to issue senior executive officer may begin service 30 days a notice of disapproval within 30 days after such after a complete notice under paragraph (a) of this waiver. section has been accepted by the Reserve Bank unless the Board or Reserve Bank issues a notice of disapproval of the proposed addition or employment ORDERS ISSUED UNDER BANK HOLDING before the end of the 30-day period. COMPANY ACT (2) Prior to expiration of period. A proposed director or senior executive officer may begin service Orders Issued Under Section 3 of the Bank before the expiration of the 30-day period if the Holding Company Act Board or the Reserve Bank notifies the bank or bank holding company in writing of the Board's intention BankAmerica Corporation not to disapprove the addition or employment. San Francisco, California (c) Notice of disapproval. The Board or Reserve Bank must disapprove a notice under section 225.72 if the Order Approving Acquisition of a Bank Board or Reserve Bank finds that the competence, experience, character, or integrity of the individual BankAmerica Corporation, San Francisco, California with respect to whom the notice is submitted indicates ("BankAmerica"), a bank holding company within the that it would not be in the best interests of the meaning of the Bank Holding Company Act ("BHC depositors of the bank or in the best interests of the Act"), has applied for the Board's approval under public to permit the individual to be employed by, or section 3(a)(3) of the BHC Act (12 U.S.C. associated with, the bank or bank holding company. § 1842(a)(3)) to acquire all the voting shares of Bank of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 245 America State Bank, Concord, California ("State cial strength below those levels for the purpose of Bank"), a de novo state bank. effecting major expansion.5 Notice of the application, affording an opportunity The Board has previously noted that BankAmerica for interested persons to submit comments, has been has taken the appropriate steps over the last few years duly published (54 Federal Register 29,620 (1989)). to strengthen its capital position, both through the The time for filing comments has expired, and the issuance of new equity and through the retention of Board has considered the application and all com- earnings.6 BankAmerica's capital ratios are above the ments received, including those of various insurance minimum requirements under the Board's Capital Adindustry trade associations ("protestants"), in light of equacy Guidelines and the proposal would have no the factors set forth in section 3(c) of the BHC Act.1 effect on BankAmerica's capital position. In light of BankAmerica operates two banking subsidiaries in these considerations, the Board concludes that the California and Washington.2 BankAmerica is the third financial resources of BankAmerica are consistent largest commercial banking organization in the United with approval of the proposal. States and is the largest commercial banking organi- State Bank is chartered under California law to zation in California, controlling deposits of $51.3 bil- engage in commercial banking business. State Bank lion, representing approximately 23.4 percent of the intends to focus its banking activities primarily on total deposits in commercial banks in California.3 providing the following services: State Bank, a de novo institution, is organized as a (1) specialized community development lending acstate-chartered nonmember bank. In light of State tivities to further economic and neighborhood revi- Bank's de novo status and based upon the facts of talization and production of housing for low- and record, the Board concludes that consummation of the moderate-income households;7 and proposed acquisition would not result in an adverse (2) cash management services for California corpoeffect on the concentration of banking resources in rate customers and public agencies.8 Based on the California. In evaluating this application, the Board facts of record, the Board concludes that the manhas carefully considered the financial resources of agerial resources, future prospects, and conve- BankAmerica and the effect on those resources of the nience and needs considerations are also consistent proposed acquisition. The Board has previously stated with approval. that it expects banking organizations contemplating expansion proposals to maintain strong capital levels 5. Thus, for example, the Board has generally approved proposals substantially above the minimum levels specified in involving a decline in capital only where the applicants have promptly the Board's Capital Adequacy Guidelines, without restored their capital to pre-acquisition levels following consummasignificant reliance on intangibles, particularly tion of the proposals and have implemented programs of capital improvement to raise capital significantly above minimum levels. See, goodwill.4 The Board carefully analyzes the effect of e.g. Citicorp, 72 Federal Reserve Bulletin 726 (1986); Security Pacific expansion proposals on the preservation or achieve- Corporation, 72 Federal Reserve Bulletin 800 (1986). ment of strong capital levels and has adopted a policy 6. BankAmerica Corporation (American Savings Corporation), 75 Federal Reserve Bulletin 827 (1989). that there should be no significant diminution of finan- 7. Except for investments in projects designed primarily to promote community welfare, such as the economic rehabilitation and development of low-income areas, State Bank will not make real estate or equity investments and will not make any investment not otherwise permissible for any national bank, a state member bank, or a nonbank subsidiary of a bank holding company, without the prior approval of the Federal Reserve System. 1. The Board has received comments protesting the application 8. The cash management services involve collection services (lockfrom the Independent Insurance Agents of America, Inc., National box, cash concentration, and cash vault services); information ser- Association of Casualty & Surety Agents, National Association of vices (transmission of or direct access via terminal to checking Life Underwriters, National Association of Professional Insurance account and investment information between State Bank and the Agents, National Association of Surety Bond Producers, New York customer); and disbursement services (controlled disbursement and Association of Life Underwriters, Professional Insurance Agents of electronic funds transfers). A controlled disbursement account allows New York, Inc., Independent Insurance Agents of New York, Inc., customers to fund their account on the same day that checks are California Association of Life Underwriters, Professional Insurance presented. Each morning the customer is advised of the total dollar Agents of California and Nevada, Inc., and Independent Insurance amount of checks that have been presented for payment and the Agents & Brokers of California. customer has until close of business that day to wire or otherwise 2. The Board has also recently approved BankAmerica's acquisition transfer good funds to cover those checks. The ability to segregate of a savings bank in Washington (BankAmerica Corporation (Ameri- controlled disbursement checks and report clearings early in the day is can Savings Financial Corporation), 75 Federal Reserve Bulletin 827 substantially facilitated by a distinct American Bankers Association (1989)) and a thrift in Nevada (BankAmerica Corporation (Nevada transit routing number, which BankAmerica will obtain through State First Development Corporation), 75 Federal Reserve Bulletin 825 Bank. California law encourages the use of California disbursement (1989)). banks by providing that, generally, wages paid by check must use 3. All data are as of September 30, 1989 checks payable at an established place of business in the state that is 4. The Bank of New York Company, Inc., 74 Federal Reserve identified on the check. Cal. Labor Code § 212 (1989). In addition, Bulletin 257 (1988); Capital Adequacy Guidelines, 50 Federal Register competitors of BankAmerica currently offer controlled disbursement 16,057 (April 24, 1985). services through California banking subsidiaries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

246 Federal Reserve Bulletin • April 1990 State Bank also proposes to engage in insurance the grant of broad insurance powers, which were agency/brokerage activities permissible for state-char- otherwise prohibited to bank holding companies, that tered banks under California law.9 The Board has replaced the opportunity to conduct a banking busipreviously determined that insurance activities con- ness in South Dakota as the incentive to attract ducted by holding company banks directly under state out-of-state bank holding companies to acquire South law are not limited by the nonbanking provisions of Dakota banks. This incentive—crucial to the success section 4 of the BHC Act, except where the record of the South Dakota statute's articulated legislative demonstrates the type of evasion described in the purpose of attracting out-of-state bank holding compa- Citicorp (South Dakota) case.10 In the Citicorp (South nies as a means of increasing tax revenues and jobs in Dakota) case, the Board concluded that the proposal, South Dakota—existed only because insurance activtaken as a whole, amounted to an evasion of the BHC ities were expressly prohibited for bank holding com- Act and on that basis denied the application.11 Protes- panies under the BHC Act. The insurance authorizatants have urged the Board to deny BankAmerica's tion provided under California law, however, contains application under this precedent. However, State no similar restrictive structure that effectively limits Bank is a bank within the BHC Act's definition the incentive for acquiring a state-chartered bank to its potential as a vehicle for selling insurance and State (12 U.S.C. § 1841(c)) and, in the Board's view, Bank will, in fact, conduct banking activities in Cali- BankAmerica's application presents material considfornia. erations that distinguish this record from the circumstances in the Citicorp proposal. The Board also concluded that the Citicorp operat- In Citicorp (South Dakota), after reviewing the ing plan required a dedication of significant resources applicable legal framework governing competition for for its insurance activities. Although BankAmerica has banking and insurance services within the state, the not developed financial projections or a definite oper- Board concluded that the South Dakota statute itself ational plan for State Bank's insurance activities, the had the effect of enabling out-of-state bank holding business operations differ significantly from Citicorp's companies to evade the nonbanking insurance prohi- plans to engage primarily, if not solely, in insurance bitions of the Garn-St Germain Act by authorizing, activities through its South Dakota bank. through an institution that was a bank in name only, a Unlike the Citicorp proposal, State Bank intends to nationwide insurance franchise.12 Accordingly, it was engage in traditional, although more focused, banking activities and will compete in the California market for community development and cash management bank- 9. Proposition 103, which repealed prohibitions against all insurance ing services. BankAmerica has also indicated that, activities by California banks and bank holding companies, was based on certain assumptions, the insurance agency approved by the voters in the November 8, 1988, general election and business may comprise approximately one-third of the its constitutionality has been upheld by the California Supreme Court. CalFarm Insurance Company v. Deukmejian, 48 Cal. 3d. 805, 771 total revenues of State Bank.13 This plan of operation P. 2d 1247 (1989). The California Superintendent of Banks has indi- significantly contrasts with Citicorp's plan to conduct cated that California state-chartered banks may engage in insurance insurance activities in its state bank to the fullest agency/brokerage activities and protestants concede that California law would permit State Bank to conduct a general insurance agency extent possible by investing approximately $2.5 milbusiness. State Bank would not engage in insurance underwriting or lion in a facility and employing a minimum of 100-125 the reinsurance of any insurance policies. Additionally, State Bank additional nonbanking personnel for a bank with $17.5 will not enter into contingent commission or other arrangements with insurers that would expose State Bank to an underwriting loss. All million in assets and 28 employees. insurance activities will be conducted directly in the bank and State Bank will only enter into agency agreements with insurers who are rated "A" or higher by A.M. Best and who exceed minimum capital and surplus requirements for the types of business they are underwriting. conduct a banking business in South Dakota once it acquired a South 10. Merchants National Corporation, 75 Federal Reserve Bulletin Dakota bank, the out-of-state bank holding company was permitted to 388 (1989); affirmed by the United States Court of Appeals for the use the South Dakota bank franchise to conduct insurance activities Second Circuit in Independent Insurance Agents of America, Inc., et nationwide without any limitation (other than that it restrict its al. v. Board of Governors, 890 F.2d 1275 (2d Cir. 1989) VMer- insurance activities within South Dakota itself to avoid competing chants"). Protestants continue to maintain, however, that State with South Dakota firms). Bank's proposed insurance activities are prohibited under section 13. Using its current experience with the sale of insurance and 4(c)(8) of the BHC Act, as amended by Title VI of the Garn-St securities products by a third-party vendor from leased branch office Germain Depository Institutions Act of 1982 ("Garn-St Germain space, BankAmerica estimates, by comparing the revenues expected Act"). The Garn-St Germain Act provides that, with seven excep- to be generated in 1989 from the sale of fixed-rate annuities (the only tions (not at issue in this application), insurance activities are not insurance product in the program) with the revenues expected to be closely related to banking and thus are not generally permissible for generated from the sale of securities (including variable-rate annuities) bank holding companies. and the banking services offered by State Bank, that in State Bank's 11. Citicorp (American State Bank), 71 Federal Reserve Bulletin 789 third year of operation, insurance revenue would amount to approx- (1985) ("Citicorp (South Dakota)"). imately one-third of State Bank's total revenues. BankAmerica re- 12. Under the applicable South Dakota statute, while an out-of-state gards years 1 and 2 as a start-up period for establishing its market share bank holding company was significantly limited in its ability to of community development and cash management banking services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 247 On the basis of this record, the Board does not prohibited by the Citicorp (South Dakota) precedent. believe that BankAmerica's acquisition of State Bank These factual disputes include the operational considwill constitute an evasion of the insurance prohibitions erations in support of cash management services of section 4 of the BHC Act. However, the Board, as through State Bank, the accuracy of BankAmerica's a condition of this Order, retains supervisory authority estimate regarding income from State Bank's insurto review State Bank's activities in order to ensure ance activities or, alternatively, the substantiality of that no such evasion of the requirements of the BHC insurance activity demonstrated by the estimate, and Act occurs.14 BankAmerica's motivation for chartering a state bank Protestants have requested a hearing on the appli- in a state that permits banks to engage in insurance cation. Section 3(b) of the BHC Act does not require agency activities. In a more general sense, protestants the Board to hold a hearing concerning an application allege that BankAmerica's credibility and real intent to acquire a bank under section 3 of the BHC Act are at issue and that additional information in the form unless the appropriate banking authority for the bank of documents and testimony from BankAmerica's to be acquired makes a timely written recommenda- officials and other witnesses is required to demonstrate tion of denial of the application. In this case, no such the evasion that protestants have alleged. recommendation of denial has been received from the These assertions, however, are not designed to California Superintendent of Banks.15 dispute material facts in the record or even to provide Furthermore, protestants have been given the op- a basis for eliciting new material facts relevant under portunity to submit, and have submitted, written facts the Citicorp (South Dakota) precedent. Rather than and arguments to the Board regarding this application. challenging existing facts, these assertions question These materials, as well as responses by BankAmer- inferences and conclusions drawn from the factual ica, have not provided any basis to believe that the presentation in the application. material facts already before the Board are incomplete State Bank intends to engage in banking activities or insufficient to permit the Board to evaluate the and to compete for banking services in California. As application under the BHC Act or that further inves- previously discussed, the statutory framework and the tigation would produce additional relevant informa- extent of the operational plans for insurance activities tion. The Board is not required to hold a formal presented by this application differ significantly from hearing where a party disputes the conclusions to be the Citicorp proposal. Furthermore, protestants have drawn from established facts or where such proceed- failed to allege sufficient facts to demonstrate that ings would not serve to develop new or useful material BankAmerica's representations, including its reprefacts.16 sentations regarding its insurance operations, are not Protestants have alleged several factual disputes credible or to justify convening a formal hearing for supporting their request for a hearing to determine the purpose of providing protestants with the opporwhether BankAmerica's application is proposed pri- tunity to enhance their protest.17 Under these circummarily to provide BankAmerica with an insurance stances, and with the recognition that the Board has agency subsidiary thereby evading the BHC Act as retained authority to prevent any evasion of the BHC Act or this Order, the Board concludes that a formal hearing is unnecessary and, accordingly, protestants' 14. The insurance activities of State Bank will also be subject to the request for a hearing is denied. anti-tying restrictions of the 1970 Amendments to the BHC Act, which Based on the foregoing and all of the facts of record, unlike section 4(a), explicitly apply to "banks." 12 U.S.C. § 1972(1). 15. 12 U.S.C. § 1842(b); Farmers & Merchants Bank of Las Cruces including representations made by BankAmerica, the v. Board of Governors, 567 F.2d 1082, 1085 (D.C. Cir. 1977); Grand- Board has determined that the application should be, view Bank & Trust Co. v. Board of Governors, 550 F.2d 415, 421 (8th and hereby is, approved. This transaction shall not be Cir. 1977), cert, denied, 434 U.S. 821 (1977); and Northwest Bancorporation v. Board of Governors, 303 F.2d 832, 842-44 (8th Cir. 1962). consummated before the thirtieth calendar day follow- Nothing in section 5 of the BHC Act, relating to the Board's authority ing the effective date of this Order, or later than three to prevent evasions, requires a hearing. 16. Section 4(c)(8) of the BHC Act provides that, in approving months after the effective date of this Order. State activities under that provision, the Board must provide notice and Bank shall be opened for business not later than six opportunity for hearing. However, this case does not involve an months after the effective date of this Order. The latter application under section 4 of the BHC Act. In light of the Board's determination in Merchants, section 4 does not apply to limit the two periods may be extended for good cause by the direct activities of subsidiary state banks or require that an application Board or the Federal Reserve Bank of San Francisco, under section 4(c)(8) be filed for approval for such bank. In addition, acting pursuant to delegated authority. even where the applicable provision requires an opportunity for a hearing, such as under section 4(c)(8), a protestant is not entitled to discovery and a hearing on every application, but only when there are material issues of fact in dispute. Connecticut Bankers Assn. v. Board 17. The Board notes that intentional violations of the BHC Act or of Governors, 627 F.2d 245 (D.C. Cir. 1980). As discussed in this regulations of the Board, including false statements of a bank holding Order, there are no material issues of fact in dispute. company, carry both civil and criminal penalties. 12 U.S.C. § 1847. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

248 Federal Reserve Bulletin • April 1990 By order of the Board of Governors, effective and not merely by implication."3 Oregon's banking February 16, 1990. laws permit out-of-state bank holding companies, with the approval of the Oregon Department of Insurance Voting for this action: Chairman Greenspan and Governors and Finance, to acquire established Oregon banks and Johnson, Seger, Angell, Kelley, and LaWare. bank holding companies.4 The Board has determined previously that a California bank holding company JENNIFER J. JOHNSON may acquire a bank holding company and bank in Associate Secretary of the Board Oregon.5 Accordingly, Board approval of this proposal is not barred by the Douglas Amendment. BankAmerica Corporation BankAmerica operates two banking subsidiaries in San Francisco, California California and Washington.6 BankAmerica is the third largest commercial banking organization in the United Seafirst Corporation States and is the largest commercial banking organi- Seattle, Washington zation in California, where it controls deposits of approximately $51.2 billion, representing approxi- Order Approving Acquisition of a Bank Holding mately 23.4 percent of the total deposits in commercial Company and Bank banks in California.7 Seafirst is the largest commercial banking organization in Washington, where it controls BankAmerica Corporation, San Francisco, California deposits of approximately $8.5 billion, representing ("BankAmerica"), and its wholly-owned subsidiary, approximately 29.3 percent of the total deposits in Seafirst Corporation, Seattle, Washington ("Seafirst"), commercial banks in Washington. Woodburn Bancorp both bank holding companies within the meaning of the is the 38th largest commercial banking organization in Bank Holding Company Act ("BHC Act"), have ap- Oregon, where it controls deposits of approximately plied for the Board's approval under section 3 of the $15.6 million, representing less than one percent of the BHC Act (12 U.S.C. § 1842) to acquire by merger total deposits in commercial banking organizations in Woodburn Bancorp, Woodburn, Oregon ("Wood- Oregon. Based upon the facts of record, the Board burn"), and thereby acquire Woodburn State Bank, concludes that consummation of the proposed acqui- Woodburn, Oregon ("Bank").1 sition would not result in any significantly adverse Notice of the application, affording an opportunity effect on the concentration of banking resources in for interested persons to submit comments, has been Oregon. duly published (54 Federal Register 48,940 (1989)). BankAmerica, through Seafirst, competes directly The time for filing comments has expired, and the with Woodburn in the Portland, Oregon, banking Board has considered the application and all com- market.8 BankAmerica is the ninth largest commercial ments received, including those of various insurance banking organization in the market, controlling depostrade associations ("Protestants"), in light of the factors set forth in section 3(c) of the BHC Act.2 Section 3(d) of the BHC Act, the Douglas Amend- 3. 12 U.S.C. § 1842(d). A bank holding company's home state for ment, prohibits the Board from approving an applica- purposes of the Douglas Amendment is that state in which the total deposits of its banking subsidiaries were largest on July 1, 1966, or on tion by a bank holding company to acquire control of the date it became a bank holding company, whichever date is later. any bank located outside of the bank holding com- Id. BankAmerica's home state is California. pany's home state, unless such acquisition is "specif- 4. Or. Rev. Stat. § 715.065(1) (1989); see also Or. Rev. Stat. § 706.005(29) (1989). In addition, the Oregon Department of Insurance ically authorized by the statute laws of the State in and Finance has determined that this proposal meets all the statutory which [the] bank is located, by language to that effect considerations. 5. Security Pacific Corporation, 73 Federal Reserve Bulletin 381 (1987). 6. The Board also has recently approved BankAmerica's acquisition 1. The proposed transaction would be effected through the ex- of a savings bank in Washington (BankAmerica Corporation (Americhange of newly issued BankAmerica shares for all the shares of can Savings Financial Corporation), 75 Federal Reserve Bulletin 827 Woodburn Bancorp, less dissenting shares. Immediately following the (1989)); a thrift in Nevada (BankAmerica Corporation (Nevada First exchange, Woodburn Bancorp would merge with and into Seafirst. Development Corporation), 75 Federal Reserve Bulletin 825 (1989)); 2. The Board has received comments protesting the application and a de novo state-chartered bank in California (BankAmerica from the Independent Insurance Agents of America, Inc., National Corporation (Bank of America State Bank), 76 Federal Reserve Association of Casualty & Surety Agents, National Association of Bulletin 244 (Order dated February 16, 1990)). Life Underwriters, National Association of Professional Insurance 7. State banking data are as of September 30, 1989. Market banking Agents, National Association of Surety Bond Producers, New York data are as of June 30, 1987. Association of Life Underwriters, Professional Insurance Agents of 8. The Portland, Oregon, banking market is approximated by the New York, Inc., Independent Insurance Agents of New York, Inc., Portland Ranally Metropolitan Area, which includes several commu- California Association of Life Underwriters, Professional Insurance nities in Washington State. Seafirst's principal bank subsidiary oper- Agents of California and Nevada, Inc., and Independent Insurance ates branches in that portion of the Portland banking market which is Agents & Brokers of California. within the State of Washington. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 249 its of approximately $119.8 million, representing ap- The Board has noted previously that BankAmerica proximately 1.5 percent of the total deposits in com- has taken appropriate steps over the last few years to mercial banking organizations in the market. strengthen its capital position, both through the issu- Woodburn is the 14th largest commercial banking ance of new equity and through the retention of organization in the market, controlling deposits of earnings.12 BankAmerica's capital ratios are above the approximately $13.4 million, representing less than minimum requirements under the Board's Capital Adone percent of the total deposits in commercial bank- equacy Guidelines. In addition, BankAmerica would ing organizations in the market. Upon consummation effect this transaction through an exchange of shares, of the proposed acquisition, BankAmerica would re- and the proposal would have a de minimis effect on main the ninth largest commercial banking organiza- BankAmerica's capital position. Moreover, this protion in the market, controlling deposits of $133.2 posal would result in a small increase in BankAmerimillion, representing approximately 1.7 percent of the ca's asset size in relative terms. In light of these total deposits in commercial banking organizations in considerations, the Board concludes that the financial the market. The Herfindahl-Hirschman Index resources of BankAmerica are consistent with ap- ("HHI") would increase by less than one percentage proval of the proposal. point to 2572 after consummation.9 Based upon the Based on the facts of record, the Board also confacts of record, the Board concludes that consumma- cludes that the managerial resources, future prospects, tion of the proposed acquisition would not result in and convenience and needs considerations are also any significantly adverse effect on competition in any consistent with approval. relevant market. Oregon law authorizes state-chartered banks, such In evaluating this application, the Board has consid- as Bank, to conduct general insurance agency activiered the financial resources of BankAmerica and ties, subject to the State's insurance licensing Seafirst and the effect on those resources of the provisions.13 Protestants allege that BankAmerica proposed acquisition. The Board has stated previously may conduct general insurance agency activities that it expects banking organizations contemplating through Bank in the future and that such conduct expansion proposals to maintain strong capital levels would be prohibited by section 4 of the BHC Act.14 substantially above the minimum levels specified in The Board previously determined in its Merchants the Board's Capital Adequacy Guidelines, without National decision that the nonbanking restrictions of significant reliance on intangibles, particularly section 4 of the BHC Act do not apply to the direct goodwill.10 The Board carefully analyzes the effect of activities of holding company banks, except where the expansion proposals on the preservation or achieve- record demonstrates the type of evasion described in ment of strong capital levels and has adopted a policy Citicorp (American State Bank) (71 Federal Reserve that there should be no significant diminution of finan- Bulletin 789 (1985) "Citicorp (South Dakota)").15 cial strength below those levels for the purpose of Thus, subject to the type of situation presented in effecting major expansion.11 Citicorp (South Dakota), a holding company's state bank may engage directly in insurance agency activities authorized under state law even though such activities are not permitted for bank holding compa- 9. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (1984)), a market in which the post-merger nies. HHI is above 1800 is considered highly concentrated. In such mar- The Board concludes that the record in this applikets, the Department of Justice is likely to challenge a merger that cation does not support a finding of evasion of the increases the HHI by more than 50 points. The Department of Justice has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger raises the HHI by at least 200 points. The Department 12. BankAmerica Corporation (American Savings Financial Corpoof Justice has stated that the higher than normal HHI thresholds for ration), 75 Federal Reserve Bulletin 827 (1989). screening bank mergers for anticompetitive effects implicitly recog- 13. Or. Rev. Stat. § 707.310(d) (1989). See also Or. Rev. Stat. nize the competitive effect of limited-purpose lenders and other §§ 744.002, 744.115 (1989). non-depository financial entities. 14. Section 4(c)(8) of the BHC Act, as amended by Title VI of the 10. BankAmerica Corporation (American Savings Financial Corpo- Garn-St Germain Depository Institutions Act of 1982, provides that, ration), 75 Federal Reserve Bulletin 827 (1989); The Bank of New York with seven exceptions (not at issue in this application), insurance Company, Inc., 74 Federal Reserve Bulletin 257 (1988); Capital activities are not closely related to banking and thus are not generally Adequacy Guidelines, 12 C.F.R. Part 225, Appendix B. permissible for bank holding companies. 11. Thus, for example, the Board generally has approved proposals 15. Merchants National Corporation, 75 Federal Reserve Bulletin involving a decline in capital only where the applicants have promptly 388; affirmed by the United States Court of Appeals for the Second restored their capital to preacquisition levels following consummation Circuit in Independent Insurance Agents of America, Inc., et al. v. of the proposals and have implemented programs of capital improve- Board of Governors, 890 F. 2d 1275 (1989). The Court of Appeals for ment to raise capital significantly above minimum levels. See, e.g., the Second Circuit lifted its stay order in Merchants National on Citicorp, 72 Federal Reserve Bulletin 726 (1986); Security Pacific February 1, 1990, and the United States Supreme Court has denied a Corporation, 72 Federal Reserve Bulletin 800 (1986). request to issue a stay. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

250 Federal Reserve Bulletin • April 1990 BHC Act. Bank conducts a full-service banking busi- (2) Torrey Pines Group, Solana Beach, California ness in Oregon, accepting demand deposits and engag- ("TPG"), thereby acquiring its subsidiary bank, ing in the business of making commercial loans, and is Torrey Pines Bank, Solana Beach, California.1 a bank within the BHC Act's definition (12 U.S.C. § 1841(c)). Bank does not currently conduct general Notice of the applications, affording an opportunity insurance agency activities or possess an Oregon for interested persons to submit comments, has been insurance license, nor has Bank itself previously acted duly published (54 Federal Register 48,025 and 48,320 as a general insurance agent. Furthermore, Bank- (1989)). The time for filing comments has expired, and America has stated that, at present, it does not intend the Board has considered the applications and all to engage in general insurance agency activities comments received in light of the factors set forth in through Bank. Accordingly, the Board concludes that section 3(c) of the BHC Act.* the record in this application, unlike the record of the Wells Fargo operates one banking subsidiary with Citicorp (South Dakota) order, does not indicate that numerous branches in California. Wells Fargo is the the acquisition of Bank is primarily a device to permit second largest commercial banking organization in the acquiring bank holding company to engage in California, controlling deposits of $34 billion, repreprohibited insurance activities. senting approximately 15.5 percent of the total depos- Based on the foregoing and all of the facts of record, its in commercial banks in the state.3 Central Pacific is including representations made by BankAmerica, the the 20th largest commercial banking organization in Board has determined that the application should be, California, controlling deposits of $817.8 million, repand hereby is, approved. The transaction shall not be resenting less than 1 percent of the total deposits in consummated before the thirtieth calendar day follow- commercial banks in the state. TPG is the 39th largest ing the effective date of this Order, or later than three commercial banking organization in California, conmonths after the effective date of the Order. The latter trolling deposits of $424 million, representing less than two periods may be extended for good cause by the 1 percent of the total deposits in commercial banks in Board or the Federal Reserve Bank of San Francisco, the state. Upon consummation of the proposal, Wells acting pursuant to delegated authority. Fargo would remain the second largest commercial banking organization in California, controlling depos- By order of the Board of Governors, effective its of $35.3 billion, representing approximately 16.1 February 26, 1990. percent of the total deposits in commercial banks in California. Consummation of this proposal would not Voting for this action: Chairman Greenspan and Governors Johnson, Seger, Angell, and Kelley. Absent and not voting: have a significantly adverse effect upon the concentra- Governor La Ware. tion of commercial banking resources in California. Wells Fargo and TPG compete directly in the San JENNIFER J. JOHNSON Diego RMA and Oceanside RMA banking markets. Associate Secretary of the Board Upon consummation of this proposal, neither of the banking markets would be highly concentrated and the Herfindahl-Hirschman Index ("HHI") would increase by fewer than 100 points in each of these markets.4 Wells Fargo & Company San Francisco, California 1. The Office of the Comptroller of the Currency ("OCC") has approved Wells Fargo's applications to merge American National Order Approving the Acquisition of Bank Holding Bank and Torrey Pines Bank with Wells Fargo Bank, N.A. 2. The Board has received comments filed by several groups Companies protesting Wells Fargo's applications ("Protestants"). These groups are the Certified Development Corporation of San Diego County, the Black Chamber of Commerce, the Sacramento Urban League, Inc., The Greenlining Coalition ("TGC" representing twenty-six commu- Wells Fargo & Company, San Francisco, California nity organizations), The Latino Issues Forum (a member of TGC), the ("Wells Fargo"), a bank holding company within the Consumers Union, the League of United Latin American Citizens, meaning of the Bank Holding Company Act ("BHC and Public Advocates Inc. 3. State deposit data are as of September 30, 1989. Market deposit Act"), has applied for the Board's approval under data are as of June 30, 1987. section 3(a)(5) of the BHC Act (12 U.S.C. 4. Under the revised Department of Justice Merger Guidelines (49 Federal Register 26,823 (June 29, 1984)) any market in which the § 1842(a)(5)) to merge with: post-merger HHI is greater than 1800 is considered highly concen- (1) Central Pacific Corporation, Bakersfield, Califor- trated, and the Justice Department is likely to challenge a merger that nia ("Central Pacific"), thereby acquiring its subsid- increases the HHI by more than 50 points unless other factors indicate that the merger will not substantially lessen competition. The Justice iary bank, American National Bank, Bakersfield, Department has informed the Board that a bank merger or acquisition California; and is not likely to be challenged (in the absence of other factors indicating Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 251 Wells Fargo also competes directly with Central In light of the market concentration and the number of Pacific in 13 banking markets in California.5 In ten of probable future entrants into those markets, the Board these banking markets, the increase in the HHI upon concludes that consummation of this proposal would consummation of the proposal would not exceed the not have a significantly adverse effect on probable limits in the revised Department of Justice Merger future competition in any relevant market. Guidelines.6 In the Bakersfield, San Bernardino and The financial and managerial resources of Wells Madera County banking markets, consummation of Fargo, TPG and Central Pacific are consistent with the proposal would increase the HHI more than 200 approval. No additional debt will be incurred in conpoints in a post-merger market exceeding 1800.7 How- nection with the proposals. ever, if 50 percent of the deposits held by thrift In considering the convenience and needs of the institutions were included in the calculation of market communities to be served, the Board has taken into concentration, upon consummation of the proposal account the record of Wells Fargo's subsidiary bank, these three banking markets would become moder- Wells Fargo Bank, N.A., San Francisco, California ately concentrated, and the HHI in all markets would ("Bank"), under the Community Reinvestment Act increase by fewer than 200 points.8 (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA re- On the basis of the above facts and other facts of quires the federal financial supervisory agencies to record, including the numerous competitors that encourage financial institutions to help meet the credit would remain in all the markets discussed, the Board needs of the local communities in which they operate finds that consummation of the proposal would not consistent with the safe and sound operation of such have a significantly adverse effect on existing compe- institutions. To accomplish this end, the CRA requires tition in any relevant market. The Board also has the appropriate federal supervisory authority to "asconsidered the effects of the proposal on probable sess an institution's record of meeting the credit needs future competition in the relevant markets in which of its entire community, including low- and moderate- Wells Fargo, TPG and Central Pacific do not compete. income neighborhoods, consistent with the safe and sound operation of the institution," and to "take this record into account in its evaluation of bank holding an anticompetitive effect) unless the post-merger HHI is at least 1800 company applications."9 and the merger increases the HHI by 200 points. The Justice Department has stated that the higher than normal HHI thresholds for Protestants allege that Bank has failed to meet the screening bank acquisitions for anticompetitive effects implicitly rec- credit needs of its entire community, including lowognizes the competitive effects of limited-purpose lenders and other income and minority neighborhoods.10 The Board has non-depository financial entities. 5. These markets are Bakersfield RMA, Fresno RMA, Merced carefully reviewed the CRA performance record of RMA, Modesto RMA, Porterville RMA, Visalia RMA, Riverside Wells Fargo, including Protestants' comments regard- RMA, San Bernardino RMA, Madera County, Fresno County (the ing Bank's provision of loans and other services to portion not in an RMA), western Kern County, southern Stanislaus County, and southwestern Tulare County. minority communities, and Wells Fargo's response to 6. In the Fresno RMA, Merced RMA, Porterville RMA, Visalia those comments, in light of the CRA, the Board's RMA, Riverside RMA, Fresno County (the portion not in an RMA), regulations, and the jointly issued Statement of the western Kern County, and southwestern Tulare County the HHI would increase by less than 200 points after consummation. In the Federal Financial Supervisory Agencies Regarding the Modesto RMA and the southern Stanislaus County banking markets, Community Reinvestment Act ("CRA Policy the HHI would increase by over 200 points but the market would remain moderately concentrated after consummation. Statement").11 The CRA Policy Statement provides 7. Wells Fargo's pro forma market share is 23.7 percent in the guidance regarding the types of policies and proce- Bakersfield banking market, 29.2 percent in the San Bernardino dures that the supervisory agencies believe financial banking market, and 28.0 percent in the Madera County banking market. The HHI will increase by 276 points to 1966 for the Bakersfield banking market, 415 points to 2224 for the San Bernardino banking market, and 233 points to 2621 for the Madera County 9. 12 U.S.C. § 2903. banking market. 10. Protestants' allegations regarding Bank include the following: 8. The Board previously has indicated that thrift institutions have (1) discriminatory lending practices for consumer and commercial become, or have the potential to become, important competitors of loans in minority neighborhoods; commercial banks. See National City Corporation, 70 Federal Re- (2) inadequate marketing programs to meet the credit needs of serve Bulletin 743 (1984); The Chase Manhattan Corporation, 70 minority communities; Federal Reserve Bulletin 529 (1984); NCNB Bancorporation, 70 (3) branch closings detrimental to minority neighborhoods; Federal Reserve Bulletin 225 (1984); General Bancshares Corpora- (4) inadequate investment in low-income consumer loan portfolios tion, 69 Federal Reserve Bulletin 802 (1983); First Tennessee Corpoand inadequate participation in Small Business Administration ration, 69 Federal Reserve Bulletin 298 (1983). By including 50 percent of the deposits held by thrift institutions, Wells Fargo's pro forma ("SBA") programs; market share would be 16.8 percent in the Bakersfield banking market, (5) inadequate philanthropic contributions to minorities and insen- 15.2 percent in the San Bernardino banking market, and 21.3 percent sitivity to the needs of minorities as reflected by inadequate in the Madera County banking market. The HHI would increase by participation of minorities in Bank's top management; and 139 points to 1111 for the Bakersfield banking market, 112 points to (6) the failure of Bank to award contracts to minority-owned 1356 for the San Bernardino banking market, and 135 points to 1669 businesses. for the Madera County banking market. 11. 54 Federal Register 13,742 (March 21, 1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

252 Federal Reserve Bulletin • April 1990 institutions should have in place in order to fulfill their the California Community Reinvestment Corporation, responsibilities under the CRA on an ongoing basis, making a $13 million commitment over two years. and the procedures that the supervisory agencies will Bank is also engaged in a variety of other CRAuse during the application process to review an insti- related activities. For example, Bank has one program tution's CRA compliance and performance. that provides liberalized credit qualifications and re- Initially, the Board notes that Bank has received a payment terms to qualified low-income borrowers. satisfactory rating from the OCC in an April 1989 Bank also makes direct contributions to community examination of its CRA performance. In addition, organizations, including minority organizations. In the Bank has in place the types of programs outlined in the small business area, while Bank makes few SBA CRA Policy Statement as essential to any effective loans, it has a variety of conventional products pro- CRA program. Bank has a Community Affairs Depart- viding non-guaranteed financing to non-profit and forment staffed by four full-time employees. The Com- profit small businesses. munity Affairs Department monitors community and In its April 1989 CRA examination of Bank, the economic development loan activities and promotes OCC found that Bank's geographic distribution of outreach efforts to neighborhood and consumer credit appeared reasonable and that Bank's lending groups, public officials, minority associations, and practices did not discourage applications for types of business organizations. It performs such roles as over- credit listed in Bank's CRA Statement. The examinaseeing the development and implementation of various tion found no evidence of discriminatory lending or housing development programs and training branch other illegal credit practices.14 Bank's assessment of managers in CRA-related concerns.12 Bank's board of community credit needs and its loan marketing were directors is also involved with Bank's CRA program. considered satisfactory. The types of credit offered A CRA Committee, consisting of three directors, and extended were also considered satisfactory. As meets three times a year with senior executive man- noted above, Bank has developed and extended loans agement responsible for overseeing the Community which meet the credit needs of low- and moderate- Affairs Department. The CRA Committee reports to income borrowers, including loans originated for resthe Board at least annually and this committee is idential mortgages, housing rehabilitation, home imactive in the affairs of Bank and the monitoring of CRA provement, small businesses, and small farms within activity. In addition, Bank has adopted a branch the community. Bank also participates in governmenclosure analysis procedure, designed to ensure that tal^ insured, guaranteed and subsidized loans. Bank's participation in local community development and CRA-related concerns will be taken into account in any decision to close a particular branch.13 redevelopment programs was determined to be satisfactory. A major aspect of Bank's CRA activities is a program entitled the Wells Fargo Community and Eco- The Board notes that Bank is also taking appropriate nomic Development Loan Program ("Program"). The measures to strengthen its performance in response to Program finances various CRA-related projects, such suggestions from its primary regulator. For example, as low-income housing projects, projects that provide Bank has agreed to explore advertising and direct jobs in lower-income communities, and programs de- marketing strategies for special credit products, based signed to help small businesses. In 1986, Wells Fargo on the study of local credit needs in progress at the set an annual goal of $41 million for the Program, time of its most recent examination.15 The Board will which Bank has exceeded every year. Bank invested review Bank's progress under the CRA in future approximately $118 million in the Program in 1989, of applications. which approximately half is attributable to low-income housing developments. In addition, Bank has joined 14. Analyses of the Home Mortgage Disclosure Act data for Bank in 22 California MSAs where Bank reported loans for 1987 and 1988 were consistent with lending patterns of aggregate lenders in those areas. In 1987, Bank made 11 percent of its mortgage loans in low- and moderate-income neighborhoods as compared to 13 percent for aggre- 12. Bank will require completion of community contact forms by gate lenders. Fourteen percent of Bank's mortgage portfolio was branch and Community Affairs Department staff and make outreach- originated in areas with a minority population higher than 40 percent, related training part of the ongoing CRA training provided to branch compared with 15 percent for lenders as a whole. Similarly, in 1988 managers. mortgage lending by Bank in low- and moderate-income areas ac- 13. The Community Affairs Department evaluates the CRA impact counted for 10 percent of its mortgage portfolio, while mortgage of branch closings and makes recommendations to appropriate Retail lending in substantially minority areas accounted for 14 percent. For and Commercial Banking Divisions to ensure that a branch closing is aggregate lenders in 1988, these figures were 13.5 percent and 16.5 consistent with Bank's continued effort to meet the credit needs of the percent, respectively. community. A CRA Compliance Checklist must be completed for any 15. Bank will initiate a promotion of its Low Income Finance Terms branch proposed to be closed, relocated, consolidated, or downsized. program, which features reduced monthly payments over longer The CRA Committee reviews the Community Affairs Department's terms, and modified employment qualifications, to include advertiseevaluations on branch closings. ments in community-based publications. 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Legal Developments 253 For the foregoing reasons, and based upon the MVestment Corporation, Dallas, Texas ("MVestoverall CRA record of Bank, and other facts of record, ment"), and thereby engage in the exercise of trust the Board concludes that convenience and needs con- powers, investment advisory activities, real estate siderations, including the record of performance under equity financing activities and real estate appraisals.1 the CRA of Bank, are consistent with approval of Notice of the application, affording interested perthese applications.16 sons an opportunity to submit comments, has been Based on the foregoing and other facts of record, the duly published (54 Federal Register 47,270 (1989)). Board has determined that the applications under The time for filing comments has expired, and the section 3 of the BHC Act should be, and hereby are, Board has considered the application and all comapproved. The proposals shall not be consummated ments received in light of the public interest factors set before the thirtieth calendar day following the effective forth in section 4(c)(8) of the BHC Act. date of this Order, or later than three months after the Ameritrust, with total consolidated assets of $10.9 effective date of this Order, unless such period is billion, is the third largest commercial banking organiextended for good cause by the Board or by the zation in Ohio and the 53rd largest bank holding Federal Reserve Bank of San Francisco, acting pursu- company in the United States.2 Ameritrust operates ant to delegated authority. six subsidiary banks in Ohio and Indiana and engages By order of the Board of Governors, effective through subsidiaries in a variety of nonbanking activ- February 26, 1990. ities. The Board has previously determined that the activ- Voting for this action: Chairman Greenspan and Governors ities Ameritrust proposes to conduct through MVest- Johnson, Seger, Angell, and Kelley. Absent and not voting: ment are closely related to banking and permissible for Governor La Ware. bank holding companies to conduct under section 4(c)(8) of the BHC Act.3 Ameritrust has proposed to JENNIFER J. JOHNSON conduct these activities within the limitations estab- Associate Secretary of the Board lished in the Board's regulations. In order to approve this application, the Board also Orders Issued Under Section 4 of the Bank must find that the performance of the proposed activ- Holding Company Act ities can reasonably be expected to produce benefits to the public, such as greater convenience, increased Ameritrust Corporation competition, or gains in efficiency, that outweigh pos- Cleveland, Ohio sible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts Order Approving Acquisition of a Company Engaged of interest or unsound banking practices. in Trust, Investment Advisory and Real Estate In evaluating the balance of public benefits associ- Equity Financing and Appraisal Activities ated with this proposal, the Board has considered the financial and managerial resources of Ameritrust and Ameritrust Corporation, Cleveland, Ohio ("Ameriits bank subsidiaries, and the effect on those resources trust"), a bank holding company within the meaning of of the proposed acquisition. The Board has stated and the Bank Holding Company Act (the "BHC Act"), continues to believe that capital adequacy is an imporhas applied pursuant to section 4(c)(8) of the BHC Act tant factor in the analysis of bank holding company (12 U.S.C. § 1843(c)(8)) and section 225.23(a) of the expansion proposals.4 In this regard, the Board has Board's Regulation Y (12 C.F.R. 225.23(a)), to acquire 1. MVestment owns four non-bank subsidiaries: MTrust Corpora- 16. Protestants also have requested that the Board hold a public tion, Dallas, Texas (provider of trust services); MSecurities Corporahearing or meeting to further assess the facts surrounding Bank's CRA tion, Dallas, Texas (provider of investment advisory services pertainperformance, as well as conduct an audit of Bank's commercial and ing to common stock portfolios); MRealty Corporation, Dallas, Texas residential loan portfolio. Generally under the Board's rules, the (investment advisory services pertaining to real estate investments, Board may hold a public hearing or meeting on an application to equity financing activities and real estate appraisal); and MPetroleum clarify factual issues related to the application and to provide an Corporation, Dallas, Texas (investment advisory services pertaining opportunity for testimony, if appropriate. 12 U.S.C. §§ 262.3(e) and to investments in petroleum producing facilities). 262.25(d). In light of the fact that the parties in this case have had 2. All banking data are as of September 30, 1989. ample opportunity to present their arguments in writing and to 3. The Board's Regulation Y (12 C.F.R. Part 225) includes the four respond to one another's submissions, the Board has determined that activities in which Ameritrust proposes to engage: exercising trust a public hearing or meeting would serve no useful purpose. Accord- powers; providing portfolio advice; performing appraisals of real ingly, these requests are denied. Furthermore, since the OCC com- estate; and arranging commercial real estate equity financing. pleted a CRA examination of Bank in April 1989, the Board has also (12 C.F.R. 225.25(b)(3), (4), (13) and (14)). determined that an audit of Bank's loan portfolio would serve no 4. First Union Corporation, 76 Federal Reserve Bulletin 83 (1990), useful purpose. Accordingly, the request for an audit of Bank's loan The Bank of New York Company, Inc., 74 Federal Reserve Bulletin portfolio is denied. 257 (1988); Chemical New York Corporation, 73 Federal Reserve Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

254 Federal Reserve Bulletin • April 1990 stated that it expects banking organizations contem- Accordingly, the Board has determined that the plating expansion proposals to maintain strong capital application should be, and hereby is, approved. This levels substantially above the minimum levels speci- determination is subject to all of the conditions confied in the Board's Capital Adequacy Guidelines tained in Regulation Y, including those in sections ("Guidelines")5 without significant reliance on intan- 225.4(d) and 225.23(b)(3) (12 C.F.R. 225.4(d) and gibles, in particular goodwill. The Board carefully 225.23(b)(3)), and to the Board's authority to require analyzes the effect of expansion proposals on the such modification or termination of the activities of a preservation or achievement of strong capital levels holding company or any of its subsidiaries as the and has adopted a policy that there should be no Board finds necessary to assure compliance with, or to significant diminution of financial strength below these prevent evasion of, the provisions and purposes of the levels for the purpose of effecting major expansion BHC Act and the Board's regulations and orders proposals.6 issued thereunder. Upon consummation of the proposed transaction, This transaction shall not be consummated later Ameritrust's capital ratios would remain above the than three months after the effective date of this minimum levels specified in the Guidelines, without Order, unless such period is extended for good cause significant reliance on intangible assets. In this regard, by the Board or by the Federal Reserve Bank of the Board notes that Ameritrust proposes to fund a Cleveland, pursuant to delegated authority. significant portion of the purchase price with the By order of the Board of Governors, effective issuance of new equity capital and that Ameritrust February 26, 1990. projects a further strengthening of its capital after consummation of this proposal. In light of the forego- Voting for this action: Chairman Greenspan and Governors ing and, in particular, Ameritrust's proposed issuance Johnson, Seger, Angell, and Kelley. Absent,and not voting: Governor La Ware. of equity capital, the Board concludes that the financial resources of Ameritrust are consistent with ap- JENNIFER J. JOHNSON proval of this proposal. Associate Secretary of the Board There is no evidence in the record to indicate that approval of this proposal would result in undue con- Peoples Bancorporation centration of resources, unfair competition, conflicts Rocky Mount, North Carolina of interests or other adverse effects on the public interest. Ameritrust does not currently engage in eq- Order Approving Acquisition of a Savings uity financing, or real estate appraisal activities, and Association does not provide personal trust services in Texas where MVestment operates. The corporate trust and Peoples Bancorporation, Rocky Mount, North Caroinvestment advisory services provided by Ameritrust lina ("Peoples"), has applied for the Board's approval and MVestment represent a de minimis share of the under section 4(c)(8) of the Bank Holding Company total market for these services. Moreover, the market Act ("BHC Act") (12 U.S.C. § 1843 et seq.), and for these services is highly competitive, with numersection 225.23 of the Board's Regulation Y (12 C.F.R. ous bank and nonbank competitors. Consummation of 225.23) to acquire Watauga Savings & Loan Associathe proposed transaction, therefore, would not have a tion, Inc., Boone, North Carolina ("Watauga"), a significant adverse effect on competition in any relesavings association, pursuant to section 225.25(b)(9) of vant market. Based upon the foregoing and all the the Board's Regulation Y (12 C.F.R. 225.25(b)(9)). facts of record, the Board has determined that the Notice of the application, affording interested perbalance of the public interest factors that it is required sons an opportunity to submit comments, has been to consider under section 4(c)(8) is favorable and published (54 Federal Register 41,680 (1989)). The consistent with approval of this application. time for filing comments has expired, and the Board has considered the application and all comments received in light of the public interest factors set forth in Bulletin 378 (1987); Citicorp, 72 Federal Reserve Bulletin 497 (1986); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). section 4(c)(8) of the BHC Act. 5. Capital Adequacy Guidelines, 50 Federal Register 16,057 Peoples, which operates three banking subsidiaries, (April 24, 1985). is the ninth largest commercial banking organization in 6. Thus, for example, the Board has generally approved proposals involving a decline in capital only where the applicants have promptly North Carolina, with deposits of approximately $1.1 restored their capital to pre-acquisition levels following consumma- billion.1 Watauga is the 52nd largest savings association of the proposals and have implemented programs of capital improvement to raise capital significantly above minimum levels. See, e.g., Citicorp, 72 Federal Reserve Bulletin 726 (1986); Security Pacific Corporation, 72 Federal Reserve Bulletin 800 (1986). 1. All deposit and market data are as of June 30, 1989. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 255 tion in North Carolina, with total deposits of approx- capital ratios adopted for savings associations by the imately $112.8 million. Watauga is currently operating Office of Thrift Supervision or the Federal Deposit as a mutual savings association. Prior to the acquisi- Insurance Corporation. tion, Watauga proposes to convert from mutual to Upon consummation of the proposed acquisition, stock form, with Peoples purchasing all of the out- Peoples would remain the ninth largest commercial standing stock of Watauga. banking organization in North Carolina, controlling Section 601 of the Financial Institutions Reform, approximately $1.2 billion in deposits in the state, Recovery and Enforcement Act of 1989, Pub. L. representing an approximate 1.85 percent share of 101-73, §601, 101 Stat. 183, 408 (as codified at deposits in depository institutions in North Carolina. 12 U.S.C. § 1843(i)) permits the Board to approve an Peoples and Watauga do not operate in the same application by a bank holding company to acquire a banking markets. Accordingly, the Board concludes savings association under section 4(c)(8) of the BHC that the acquisition would not have a significantly Act. Pursuant to this authority, the Board has deter- adverse effect upon the concentration of banking ormined that the operation of a savings association is ganizations in North Carolina, or on existing compeclosely related to banking and permissible for bank tition in any relevant market. holding companies. 12 C.F.R. 225.23(b)(9).2 There is no evidence in the record to indicate that In order to approve this application, the Board also approval of this proposal would result in conflicts of is required to determine that the performance of the interest, unsound banking practices, or other adverse proposed activities by Peoples "can reasonably be effects on the public interest. Moreover, the Board expected to produce benefits to the public . . . that feels that any adverse effects that may result from this outweigh possible adverse effects, such as undue acquisition are outweighed by the financial and manaconcentration of resources, decreased or unfair com- gerial strength that Peoples will provide to Watauga as petition, conflicts of interests, or unsound banking a result of the acquisition. Accordingly, based upon practices." 12 U.S.C. § 1843(c)(8). This consideration consideration of all the relevant facts, the Board has includes an evaluation of the financial and managerial determined that the balance of public interest factors it resources of the applicant, including its subsidiaries, must consider under section 4(c)(8) of the BHC Act is and any company to be acquired, and the effect of the favorable and consistent with approval of Peoples' proposed transaction on these resources. 12 C.F.R. application to acquire Watauga. 225.24. For these reasons and based on all the facts of The financial and managerial resources and future record, and subject to the commitments made by prospects of Peoples and its bank subsidiaries, and Peoples as set forth in its application and in this Order, Watauga are consistent with approval. Upon consum- the Board has determined that the proposed applicamation of the proposed transaction, Peoples' capitali- tion should be, and hereby is, approved. This deterzation will remain above the minimum levels specified mination is also subject to all of the conditions set in the Board's Capital Guidelines, without significant forth in the Board's Regulation Y, including sections reliance upon intangible assets. In assessing the finan- 225.4(d) and 225.23, and to the Board's authority to cial factors, the Board has also considered the pro- require such modifications or termination of the activposed recapitalization of Watauga. In this regard, the ities of a bank holding company or any of its subsid- Board believes that bank holding companies must iaries as the Board finds necessary to assure complimaintain adequate capital at savings associations that ance with, or to prevent evasion of, the provisions and they propose to acquire. Peoples' acquisition of Wa- purposes of the BHC Act and the Board's regulations tauga will result in a capital infusion of approximately and orders issued thereunder. This transaction shall be $6 million into Watauga. Upon consummation, Watau- made no later than three months after the effective ga's Tier 1 capital, exclusive of all intangible assets, date of this Order, unless such Order is extended for will be more than three percent of the savings associ- good cause by the Board or by the Federal Reserve ation's total assets. Further, Peoples has committed Bank of Richmond, pursuant to delegated authority. that Watauga will meet all present and future minimum By order of the Board of Governors, effective February 16, 1990. 2. In making this determination, the Board required that savings Voting for this action: Chairman Greenspan and Governors associations acquired by bank holding companies conform their direct Johnson, Angell, and Kelley. Absent and not voting: Goverand indirect activities to those activities permissible for bank holding nors Seger and La Ware. companies under section 4 of the BHC Act. See National City Corporation, 76 Federal Reserve Bulletin 11 (1990). Peoples has committed in its application to conform all of the direct and indirect JENNIFER J. JOHNSON activities of Watauga to the requirements of section 4(c)(8) of the BHC Act upon consummation. Associate Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

256 Federal Reserve Bulletin • April 1990 Sovran Financial Corporation The Board has previously determined that the con- Norfolk, Virginia duct of the proposed bank-ineligible securities underwriting and dealing activity is consistent with section Order Approving Application to Underwrite and 20 of the Glass-Steagall Act provided the underwriting Deal in Certain Securities to a Limited Extent subsidiary derives no more than 10 percent of its total gross revenue from underwriting and dealing in the Sovran Financial Corporation, Norfolk, Virginia approved securities over any two-year period.3 Sovran ("Sovran"), a bank holding company within the mean- has committed that Company will conduct its undering of the Bank Holding Company Act ("BHC Act"), writing and dealing activities with respect to bankhas applied for the Board's approval under section ineligible securities subject to the 10 percent revenue 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and test and the prudential limitations established by the section 225.23 of the Board's Regulation Y (12 C.F.R. Board in its Citicorp/Morgan/Bankers Trust, Chemi- 225.23), to engage through its subsidiary, Sovran In- cal, and Modification Orders. The Board has also vestment Corporation, Richmond, Virginia found by order that, subject to the prudential frame- ("Company"),1 on a limited basis in underwriting and work of limitations established to address the potential dealing in: for conflicts of interest, unsound banking practices or other adverse effects, the proposed underwriting and (1) municipal revenue bonds, including certain indealing activities are so closely related to banking as to dustrial development bonds; be a proper incident thereto within the meaning of (2) 1-4 family mortgage-related securities; section 4(c)(8) of the BHC Act.4 (3) commercial paper, and (4) consumer-receivable-related securities (collec- Consummation of the proposal would provide added tively "bank-ineligible securities"). convenience to Sovran's customers. In addition, the Board expects that the de novo entry of Sovran into Sovran, with total consolidated assets of $23.4 bil- the market for some of these services would increase lion, is the 27th largest banking organization in the the level of competition among providers of these nation.2 Sovran operates 13 subsidiary banks and services. Under the framework established in this and engages directly and through subsidiaries in a variety prior decisions, consummation of this proposal is not of permissible nonbanking activities. likely to result in any significant undue concentration Notice of the application, affording interested per- of resources, decreased or unfair competition, consons an opportunity to submit comments on the pro- flicts of interest, unsound banking practices, or other posal, has been published (55 Federal Register 1097 adverse effects. Accordingly, the Board has deter- (1990)). The time for filing comments has expired, and mined that the performance of the proposed activities the Board has considered the application and all by Sovran can reasonably be expected to produce comments received in light of the public interest public benefits which would outweigh adverse effects factors set forth in section 4(c)(8) of the BHC Act. under the proper incident to banking standard of section 4(c)(8) of the BHC Act.5 Based on the above, the Board has determined to approve Sovran's application subject to all of the 1. Company previously has received authorization from the Board to: (1) provide discount securities brokerage services; 3. Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust (2) buy and sell, as agent on behalf of unaffiliated persons, options New York Corporation, 73 Federal Reserve Bulletin 473 (1987) CCiton securities issued or guaranteed by the U.S. Government and its icorp! Morgan! Bankers Trust"), aff d sub nom., Securities Industry agencies, and options on U.S. and foreign money market instru- Association v. Board of Governors of the Federal Reserve System, 839 ments; F.2d 47 (2d Cir. 1988), cert, denied, 108 S.Ct 2830 (1988) C'SIA v. (3) purchase and sell gold and silver bullion and gold coins solely for Board"); and Chemical New York Corporation, The Chase Manhatthe account of customers; tan Corporation, Bankers Trust New York Corporation, Citicorp, (4) underwrite and deal in government obligations and money Manufacturers Hanover Corporation and Security Pacific Corporamarket instruments; tion, 73 Federal Reserve Bulletin 731 (1987) ("Chemical"); as modi- (5) provide investment advice relating solely to government obliga- fied by Order Approving Modifications to Section 20 Orders, 75 tions and money market instruments; Federal Reserve Bulletin 751 (1989) ("Modification Order"). (6) provide certain fiduciary services; 4. Id. (7) provide cash management services; 5. Company may also provide services that are necessary incidents (8) provide certain investment advisory services, and to these approved activities. Any activity conducted as a necessary (9) combine brokerage services with non-fee ancillary investment incident to the ineligible securities underwriting and dealing activity advice to corporate and other institutional customers in a limited must be treated as part of the ineligible securities activity unless range of non-bank eligible securities. Company has received specific approval under section 4(c)(8) of the BHC Act to conduct the activity independently. Until such approval See Sovran Financial Corporation, 74 Federal Reserve Bulletin 504 is obtained, any revenues from the incidental activity must be counted (1988). as ineligible revenue subject to the 10 percent gross revenue limit set 2. Data are as of September 30, 1989. forth in the Modification Order. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 257 terms and conditions set forth in this Order and in the the applications and all comments received in light of above-noted Board Orders that relate to this activity.6 the factors set forth in sections 3 and 4 of the BHC The Board's determination is subject to all of the Act. conditions set forth in the Board's Regulation Y, Cedar Vale is a non-operating company that forincluding those in sections 225.4(d) and 225.23(b), and merly operated a bank.1 Bank is the 245th largest to the Board's authority to require modification or commercial banking organization in Kansas, controltermination of the activities of a bank holding com- ling deposits of $25.4 million, representing less than pany or any of its subsidiaries as the Board finds one percent of the total deposits in commercial banknecessary to assure compliance with, and to prevent ing organizations in the state.2 Bank is the fifth largest evasion of, the provisions of the BHC Act and the of 11 commercial banking organizations in the Sumner Board's regulations and orders issued thereunder. County, Kansas, banking market, controlling 10.3 This transaction shall not be consummated later percent of the total deposits in commercial banking than three months after the effective date of this organizations in the market.3 This proposal represents Order, unless such period is extended for good cause a restructuring of existing ownership interests.4 Conby the Board or by the Federal Reserve Bank of summation of this proposal would not result in any Richmond, pursuant to delegated authority. significantly adverse effect on the concentration of banking resources or competition in any relevant By order of the Board of Governors, effective market. February 12, 1990. In evaluating this application, the Board is required Voting for this action: Chairman Greenspan and Governors under section 3 of the BHC Act to consider the Seger, Angell, Kelley, and LaWare. Absent and not voting: financial and managerial resources of Cedar Vale and Governor Johnson. Bank and the effect of the proposed acquisition on those resources and on the future prospects of both JENNIFER J. JOHNSON Bank and Cedar Vale. The Board previously has Associate Secretary of the Board stated that a bank holding company should serve as a source of financial strength to its subsidiary banks and The Cedar Vale Bank Holding Company that the Board would examine closely the condition of Wellington, Kansas an applicant and its subsidiaries in each case with this consideration in mind. The Board also has cautioned Order Denying Applications to Become a Bank against the assumption of substantial debt by a bank Holding Company and to Engage in Insurance holding company because of concern that a holding Agency Activities company with substantial debt would not have the financial flexibility necessary to meet unexpected The Cedar Vale Bank Holding Company, Wellington, problems in its subsidiary banks and could be forced to Kansas ("Cedar Vale"), has applied for the Board's place substantial demands on the subsidiary banks to approval under section 3 of the Bank Holding Com- meet debt-servicing requirements.5 pany Act (the "BHC Act") (12 U.S.C. § 1842) to Cedar Vale proposes to finance the transaction with become a bank holding company through the acquisisubstantial debt. Bank's current parent is debt free, tion of 90.5 percent of the voting shares of Bank of and thus the effect of the transaction would be to Commerce & Trust Company, Wellington, Kansas transfer Bank from a holding company without debt to ("Bank"). Cedar Vale also has applied under section a holding company with substantial debt obligations. 4(c)(8) of the BHC Act to acquire all of the voting Cedar Vale's controlling shareholder, who currently shares of Tri-County Financial Corporation, Wellington, Kansas, and thereby to engage in the sale of credit-related life, accident, and health insurance, and 1. Cedar Vale received approval in 1975 to become a bank holding crop insurance pursuant to section 225.25(b)(8)(vi) of company through the acquisition of Cedar Vale State Bank, Cedar the Board's Regulation Y (12 C.F.R. 225.25(b)(8)(vi)). Vale, Kansas. Cedar Vale was acquired by its current owner in 1984. Cedar Vale State Bank failed and was closed by the State of Kansas Notice of the applications, affording interested peron January 21, 1988. sons an opportunity to comment, has been published 2. Banking data are as of December 31, 1987. (54 Federal Register 38,738 (1989)). The time for filing 3. The Sumner County, Kansas banking market is approximated by Sumner County, Kansas. comments has expired, and the Board has considered 4. Cedar Vale proposes to acquire Bank from Sumner County Bancshares, Wellington, Kansas. Cedar Vale and Sumner County Bancshares are controlled by a common shareholder, who serves as 6. In light of the decision in SIA v. Board, Sovran will not be subject president and chief executive officer of each company. to the market share limitation with respect to its ineligible activities 5. See St. Croix Valley Bancshares, Inc., 75 Federal Reserve that was originally imposed in the CiticorplMorganlBankers Trust and Bulletin 575 (1989); F.N.B.A. Holding Company, Inc., 75 Federal Chemical Orders. Reserve Bulletin 711 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

258 Federal Reserve Bulletin • April 1990 services Cedar Vale's debt, states that the proposed proposed debt. Accordingly, based upon all the facts acquisition of Bank would provide Cedar Vale a of record in this case, the Board finds that financial source of income and enable Cedar Vale to avail itself considerations are not consistent with approval of this of certain tax benefits. application.9 Cedar Vale projects that it will be able to reduce the Managerial factors and convenience and needs conacquisition debt in a manner consistent with Board siderations in this case do not lend sufficient weight to policy. In light of the historical performance and warrant approval of this application. overall financial condition of Bank and Cedar Vale, On the basis of all the facts of record, the Board however, Cedar Vale's earnings projections appear to concludes that the banking considerations involved in be overly optimistic, even after consideration of po- this proposal present adverse factors bearing upon the tential tax benefits that Cedar Vale may gain as a result financial resources and future prospects of Cedar Vale of the proposed acquisition of Bank. In particular, the and Bank. Such adverse factors are not outweighed by Board's analysis of Bank's earnings performance dur- any pro-competitive effects, by significant benefits that ing the past five years and Bank's overall financial would better serve the convenience and needs of the condition, including Bank's current asset quality, in- community to be served, or by other factors. Accorddicates that Bank may be unable to provide income ingly, it is the Board's judgment that approval of these sufficient to support Cedar Vale's debt-servicing re- applications would not be in the public interest and quirements. In addition, although Bank's capital is that the applications should be, and hereby are, deabove the minimum levels set forth in the Board's nied. Capital Adequacy Guidelines, Bank's capital ratio has By order of the Board of Governors, effective declined during the past year.6 Finally, the continuing February 9, 1990. weak condition of Bank's loan portfolio may indicate the need to make additional provisions for loan losses. Voting for this action: Chairman Greenspan and Governors Upon careful evaluation of more conservative projec- Johnson, Seger, Angell, Kelley, and La Ware. tions based on the historical performance and overall financial condition of Bank and Cedar Vale, it is the JENNIFER J. JOHNSON Associate Secretary of the Board Board's judgment that Cedar Vale would not have sufficient financial flexibility to service its debt without unduly straining the resources of the proposed combined organization and Bank. The Board has approved proposals involving rela- 9. Applicant contends that these applications were approved by tively high levels of debt that otherwise met the terms operation of law as of January 22, 1990, and that Applicant, therefore, may consummate the proposed transactions without Board action. of the Board's Policy Statement for Formation of Applicant bases this argument on its opinion that the ninety-one day Small One-Bank Holding Companies (the "Policy period stipulated in the BHC Act and the Board's regulations for Board action on an application began upon the acceptance of these Statement") in order to facilitate the transfer of ownapplications for processing and thus has expired. ership of small banks to local owners.7 In this case, a The terms of the BHC Act, the Board's regulations, and relevant common shareholder controls both the selling and court cases do not support Applicant's contention. The BHC Act provides that the ninety-one day period does not begin until the acquiring companies and would remain in control of submission to the Board of the completed record on the application. the acquiring company following consummation of the 12 U.S.C. §§ 1842(b)(1), 1843(c). The Board's regulations provide that transaction. Based on these facts, the Board concludes the record on an application is not complete until the "date of receipt by the Board of the last relevant material regarding the application that that consummation of this proposal would not result in is needed for the Board's decision, if the material is received from a an actual change in ownership and control of Bank.8 source outside the Federal Reserve System." 12 C.F.R. 225.14(g); see also 12 C.F.R. 225.23(h); accord First Lincolnwood Corp. v. Board of Based on the facts of record and for the reasons stated Governors of the Federal Reserve System, 546 F.2d 718 (7th Cir. above, the Board believes that even if the proposed 1976), modified, 560 F.2d 258 (7th Cir. 1977), rev'd on other grounds, transaction did qualify for treatment under the Policy 439 U.S. 234 (1978). Applicant has submitted additional information regarding these Statement guidelines, Cedar Vale would not have applications on several occasions since acceptance of the applicasufficient financial resources or flexibility to service its tion for processing, including letters dated November 10, 1989, and January 19, 1990. This additional information concerned Bank's asset quality, earnings, and capital. Additional material information was also received from the FDIC on November 15, 1989, regarding 6. Capital Adequacy Guidelines for Bank Holding Companies and the financial condition of Bank. This information, all received from State Member Banks: Leverage Measure, 12 C.F.R. Part 225, Appen- sources outside the System, was necessary to the Board's decision dix B. regarding the financial and managerial factors in this case. In light of 7. Oxford Agency, Inc., 71 Federal Reserve Bulletin 348 (1985); the relevant, material nature of information received by the Board Policy Statement for Formation of Small One-Bank Holding Compa- through January 19, 1990, the Board finds that the ninety-one day nies, 12 C.F.R. Part 225, Appendix C. period in this case has not expired as of the date of this Order and 8. See Spur Bancshares, Inc., 69 Federal Reserve Bulletin 806 Applicant is not entitled as a matter of law to consummate this (1983). proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 259 Orders Issued Under Financial Institutions Based on the foregoing and all of the other facts Reform, Recovery, and Enforcement Act of record, the Staff Director of the Division of Banking Supervision and Regulation and the General February 2, 1990 Counsel of the Board, acting pursuant to authority delegated by the Board of Governors, hereby ap- Lee S. Adams prove your request to engage in the proposed trans- Counsel action under section 5(d)(3) of the FDI Act. This Banc One Corporation approval is subject to Banc One obtaining the re- 100 East Broad Street quired approval of the appropriate Federal banking Columbus, Ohio 43271 agency for the proposed merger under the Bank Merger Act. Dear Mr. Adams: Very truly yours, Banc One Corporation, Columbus, Ohio ("Banc One"), proposes that its bank subsidiary, Bank One, William W. Wiles Texas, N.A., Dallas, Texas, purchase the assets and Secretary of the Board assume the liabilities of Banc One Federal Savings Bank, Dallas, Texas, its savings association subsid- cc: Federal Reserve Bank of Cleveland iary, ("Banc One Savings"). Banc One has requested Board approval of this transaction pursuant to section February 2, 1990 5(d)(3) of the Federal Deposit Insurance Act ("FDI Act") as amended by the Financial Institutions Re- Lee S. Adams form, Recovery, and Enforcement Act of 1989 (Pub. Counsel L. No. 101-73, § 206, 103 Stat. 183, 199 (1989)). Banc Banc One Corporation One Savings has been established to acquire certain 100 East Broad Street assets and assume deposit liabilities of Bright Banc Columbus, Ohio 43271 Savings Association, Dallas, Texas ("Bright"). The record in this case shows that: Dear Mr. Adams: (1) The aggregate amount of the total assets of all depository institution subsidiaries of Banc One is Banc One Corporation, Columbus, Ohio ("Banc $26.7 billion, an amount which is not less than 200 One"), proposes that its bank subsidiaries, Bank percent of the total assets of Banc One Savings, One, Appleton, N.A., Appleton, Wisconsin; Bank which currently has $1.9 billion in total assets; One, Oshkosh, N.A., Oshkosh, Wisconsin; Bank (2) Banc One and all of its bank subsidiaries cur- One Campbellsport, Campbellsport, Wisconsin; and rently meet all applicable capital standards and, Bank One, Green Bay, Green Bay, Wisconsin, purupon consummation of the proposed transactions, chase the assets and assume the liabilities of Banc will continue to meet all applicable capital stan- One Savings, Fond du Lac, Wisconsin, its savings dards; association subsidiary, ("Banc One Savings"). Banc (3) The transaction is not in substance the acquisi- One has requested Board approval of this transaction tion of a Bank Insurance Fund member bank by a pursuant to section 5(d)(3) of the Federal Deposit Savings Association Insurance Fund member; Insurance Act ("FDI Act") as amended by the (4) Community, the predecessor to Banc One Sav- Financial Institutions Reform, Recovery, and Enings, had tangible capital of less than 4 percent forcement Act of 1989 (Pub. L. No. 101-73, § 206, during the quarter preceding its acquisition by Banc 103 Stat. 183, 199 (1989)). Banc One Savings has One; been established to acquire certain assets and as- (5) The transaction, which involves the purchase sume deposit liabilities of Community Savings & of assets and assumption of liabilities of Banc One Loan Association, Fond du Lac, Wisconsin ("Com- Savings, a savings association located in Wiscon- munity"). sin, by bank subsidiaries of Banc One, a bank The record in this case shows that: holding company whose banking subsidiaries' op- (1) The aggregate amount of the total assets of all erations are principally conducted in Ohio, would depository institution subsidiaries of Banc One is comply with the requirements of section 3(d) of the $26.7 billion, an amount which is not less than 200 Bank Holding Company Act if Banc One Savings percent of the total assets of Banc One Savings, were a state bank which Banc One was applying to which currently has $144.2 million in total assets; acquire. (2) Banc One and all of its bank subsidiaries cur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

260 Federal Reserve Bulletin • April 1990 rently meet all applicable capital standards and, Joseph, Michigan, its savings association subsidiary. upon consummation of the proposed transactions, Pinnacle has requested Board approval of this transwill continue to meet all applicable capital stan- action pursuant to section 5(d)(3) of the Federal Dedards; posit Insurance Act ("FDI Act") as amended by the (3) The transaction is not in substance the acqui- Financial Institutions Reform, Recovery, and Ensition of a Bank Insurance Fund member bank by forcement Act of 1989 (Pub. L. No. 101-73, § 206, 103 a Savings Association Insurance Fund member; Stat. 183, 199 (1989)). PSB S&L has been established (4) Community, the predecessor to Banc One Sav- to acquire certain assets and assume deposit liabilities ings, had tangible capital of less than 4 percent of Peoples Savings Association, St. Joseph, Michigan during the quarter preceding its acquisition by Banc ("Peoples"). One; The record in this case shows that: (5) The transaction, which involves the purchase (1) The aggregate amount of the total assets of all of assets and assumption of liabilities of Banc One depository institution subsidiaries of Pinnacle is Savings, a savings association located in Wiscon- $230 million, an amount which is not less than 200 sin, by bank subsidiaries of Banc One, a bank percent of the total assets of PSB S&L, which holding company whose banking subsidiaries' op- currently has $75 million in total assets; erations are principally conducted in Ohio, would (2) Pinnacle and all of its bank subsidiaries curcomply with the requirements of section 3(d) of the rently meet all applicable capital standards and, Bank Holding Company Act if Banc One Savings upon consummation of the proposed transactions, were a state bank which Banc One was applying to will continue to meet all applicable capital stanacquire. dards; (3) The transaction is not in substance the acquisi- Based on the foregoing and all of the other facts of tion of a Bank Insurance Fund member bank by a record, the Staff Director of the Division of Banking Savings Association Insurance Fund member; Supervision and Regulation and the General Counsel (4) Peoples, the predecessor to PSB S&L, had of the Board, acting pursuant to authority delegated by tangible capital of less than 4 percent during the the Board of Governors, hereby approve your request quarter preceding its acquisition by Pinnacle; to engage in the proposed transaction under section (5) The transaction, which involves the purchase 5(d)(3) of the FDI Act. This approval is subject to of assets and assumption of liabilities of PSB Banc One obtaining the required approval of the S&L, a savings association located in Michigan, by appropriate Federal banking agency for the proposed a bank subsidiary of Pinnacle, a bank holding merger under the Bank Merger Act. company whose banking subsidiaries' operations are principally conducted in Michigan, would com- Very truly yours, ply with the requirements of section 3(d) of the Bank Holding Company Act if PSB S&L were a William W. Wiles state bank which Pinnacle was applying to acquire. Secretary of the Board Based on the foregoing and all of the other facts of cc: Federal Reserve Bank of Cleveland record, the Staff Director of the Division of Banking Supervision and Regulation and the General Counsel February 2, 1990 of the Board, acting pursuant to authority delegated by the Board of Governors, hereby approve your John A. Newcomer request to engage in the proposed transaction under section 5(d)(3) of the FDI Act. This approval is Planning and Development Officer subject to Pinnacle obtaining the required approval Peoples State Bank of the appropriate Federal banking agency for the 830 Pleasant Street proposed merger under the Bank Merger Act. St. Joseph, Michigan 49085 Dear Mr. Newcomer: Very truly yours, Pinnacle Financial Services, Inc., St. Joseph, Michi- William W. Wiles gan ("Pinnacle"), proposes that its bank subsidiary, Secretary of the Board Peoples State Bank, St. Joseph, Michigan, purchase the assets and assume the liabilities of PSB S&L, St. cc: Federal Reserve Bank of Chicago Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 261 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant(s) Bank(s) Bank date Alton Bancshares, Inc., Alton Bank, St. Louis February 13, 1990 Grandin, Missouri Alton, Missouri Border Bancshares, Inc., Badger State Bank, Minneapolis February 2, 1990 Greenbush, Minnesota Badger, Minnesota Center Banks Incorporated, Skaneateles Savings Bank, New York February 16, 1990 Skaneateles, New York Skaneateles, New York Century South Banks, Inc., First Union Bancorp, Inc., Atlanta February 2, 1990 Dahlonega, Georgia Blairsville, Georgia Century South Banks, Inc., Mountain Bank of Georgia, Atlanta February 2, 1990 Dahlonega, Georgia Hiawassee, Georgia Citizens National Corporation, Citizens National Bank of Atlanta January 29, 1990 Naples, Florida Naples, Naples, Florida Claremont Financial Services, Security State Bank of Minneapolis February 1, 1990 Inc., Claremont, St. Paul, Minnesota Claremont, Minnesota Community National Community National Bank, Atlanta February 16, 1990 Bancorporation, Ashburn, Georgia Ashburn, Georgia Emclaire Financial Corp., Farmers National Bank of Cleveland February 2, 1990 Emlenton, Pennsylvania Emlenton, Emlenton, Pennsylvania Farmers National Bancorp, Inc. Woodhull State Bank, Chicago February 14, 1990 Geneseo, Illinois Woodhull, Illinois Farmers State Bancorporation, Farmers State Bank of Hoffman, St. Louis February 1, 1990 Inc., Hoffman, Illinois Hoffman, Illinois The Farmers State Bank The Farmers State Bank of Fort Kansas City January 26, 1990 Corporation of Fort Morgan, Morgan, Fort Morgan, Colorado Fort Morgan, Colorado FCFT, Inc., First Community Bancshares, Richmond February 9, 1990 Princeton, West Virginia Inc., Princeton, West Virginia Flat Top Bankshares, Inc., Bluefield, West Virginia First Virginia Banks, Inc., New Bank, Richmond January 25, 1990 Falls Church, Virginia Cockeysville, Maryland F.N.B. Corporation, Emclaire Financial Corp., Cleveland February 2, 1990 Hermitage, Pennsylvania Emlenton, Pennsylvania Greeley Bancshares, Inc., Bank of Greeley, Kansas City February 16, 1990 Greeley, Kansas Greeley, Kansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

262 Federal Reserve Bulletin • April 1990 Section 3—Continued Reserve Effective AApppplliiccaanntt((ss)) BBaannkk((ss)) Bank date High Point Bank Corporation, High Point Bank and Trust Richmond February 13, 1990 High Point, North Carolina Company, High Point, North Carolina Lonoke Bancshares, Inc., First State Bank, St. Louis February 7, 1990 Lonoke, Arkansas Lonoke, Arkansas Metro Financial Corporation, Metro Bank, Atlanta January 26, 1990 Atlanta, Georgia Atlanta, Georgia Mid-Michigan Bancorp, Inc., Maynard-Allen State Bank, Chicago February 21, 1990 Portland, Michigan Portland, Michigan Montgomery Bancorp, Inc., Prince George's National Bank, Richmond February 5, 1990 Bethesda, Maryland Landover, Maryland New East Bancorp, New East Bank of Elizabeth Richmond February 5, 1990 Raleigh, North Carolina City, Elizabeth City, North Carolina Omega Financial Corporation, Mifflinburg Bancorp, Inc., Philadelphia January 29, 1990 State College, Pennsylvania Mifflinburg, Pennsylvania Pennyrile Bancshares, Inc., Pennyrile Citizens Bank and St. Louis January 25, 1990 Hopkinsville, Kentucky Trust Company, Hopkins ville, Kentucky Planters & Merchants Planters & Merchants Bank, St. Louis January 26, 1990 Bancshares, Inc., Gillett, Arkansas Gillett, Arkansas Sun State Capital Corporation, Sun State Bank, San Francisco February 16, 1990 Las Vegas, Nevada Las Vegas, Nevada Synovus Financial Corp., NBWC Corporation, Atlanta February 5, 1990 Columbus, Georgia Monroe, Georgia TB&C Bancshares, Inc., Columbus, Georgia Synovus Financial Corp., State Bancshares, Inc., Atlanta February 9, 1990 Columbus, Georgia Enterprise, Alabama TB&C Bancshares, Inc., Columbus, Georgia Union Bancshares, Inc., Citizens Bank, Atlanta January 31, 1990 Blairsville, Georgia Murphy, North Carolina Walden Holding Company, Baker Financial Corporation, St. Louis February 12, 1990 Jonesboro, Arkansas Pocahontas, Arkansas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 263 Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank date A.B.N. - Stichting, LaSalle National Trust, N.A. Chicago February 21, 1990 Amsterdam, The Netherlands Chicago, Illinois Alegemene Bank Nederland N.V., Amsterdam, The Netherlands ABN/LaSalle North America, Inc., Chicago, Illinois LaSalle National Corporation, Chicago, Illinois The Chase Manhattan Chase Securities, Inc., New York February 5, 1990 Corporation, New York, New York New York, New York Citicorp, American Financial Systems, New York February 8, 1990 New York, New York Inc., Haverford, Pennsylvania MNC Financial, Inc., Mid-Atlantic Holdings, Inc., Richmond January 30, 1990 Baltimore, Maryland Fayetteville, North Carolina MNC Financial, Inc., Newton Finance Company, Inc. Richmond February 7, 1990 Baltimore, Maryland Covington, Georgia PSB Financial Corporation, H & R Block, Dallas January 26, 1990 Many, Louisiana Many, Louisiana Springfield Investment Company, Morgan Insurance Agency, Minneapolis February 16, 1990 Springfield, Minnesota Morgan, Minnesota Ziegenhagen Insurance Agency, Clements, Minnesota 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(s) Bank(s) Bank date Metro Bank, Metro Interim Bank, Atlanta January 26, 1990 Atlanta, Georgia Atlanta, Georgia New Bank, Clifton Trust Bank, Richmond January 25, 1990 Cockeysville, Maryland Cockeysville, Maryland Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

264 Federal Reserve Bulletin • April 1990 PENDING CASES INVOLVING THE BOARD OF bank holding company's national bank subsidiary GOVERNORS from Alabama to Georgia. MCorp v. Board of Governors, No. 89-2816 (5th Cir., filed May 2, 1989). Appeal of preliminary injunction This list of pending cases does not include suits against the Board enjoining pending and future against the Federal Reserve Banks in which the Board enforcement actions against bank holding company of Governors is not named a party. now in bankruptcy. Awaiting decision. Independent Insurance Agents of America v. Board of BancTEXAS Group, Inc. v. Board of Governors, No. Governors, No. 89-4030 (2d Cir., filed March 9, CA 3-90-0236-R (N.D. Texas, filed February 2, 1989). Petition for review of Board order ruling that 1990). Plaintiff seeks temporary restraining order the non-banking restrictions of section 4 of the Bank and preliminary injunction enjoining the Board from Holding Company Act apply only to non-bank subenforcing a temporary order to cease and desist sidiaries of bank holding companies. The Board's requiring injection of capital into plaintiffs subsid- order was upheld on November 29, 1989. Petitions iary banks under the Board's source of strength in the Second Circuit and the Supreme Court for a doctrine. The district court denied the TRO request stay pending review have been denied. on February 6, 1990. Securities Industry Association v. Board of Gover- Woodward v. Board of Governors, No. 90-3031 (11th nors, No. 89-1127 (D.C. Cir., filed February 16, Cir., filed January 16, 1990); Kaimowitz v. Board of 1989). Petition for review of Board order permitting Governors, No. 90-3067 (11th Cir., filed January 23, five bank holding companies to engage to a limited 1990). Petitions for review of Board order dated extent in additional securities underwriting and December 22, 1989, approving application by First dealing activities. Oral argument is scheduled for Union Corporation to acquire Florida National March 6, 1990. Banks. Petitioners object to approval on Commu- American Land Title Assoc. v. Board of Governors, nity Reinvestment Act grounds. The court denied No. 88-1872 (D.C. Cir., filed December 16, 1988). their motion for a stay of the Board's order, and is Petition for review of Board order ruling that exconsidering jurisdictional issues raised by the emption G from the section 4(c)(8) prohibition on Board. insurance activities, which grandfathers insurance Securities Industry Association v. Board of Gover- agency activities by bank holding companies that nors, No. 89-1730 (D.C. Cir., filed November 29, conducted insurance agency activities before Janu- 1989). Petition for review of Board order approving ary 1, 1971, does not limit those grandfathered application under section 4(c)(8) to engage in private activities to the specific ones undertaken at that placement and riskless principal activities. The case time. Board's order upheld on December 29, 1989. has been held in abeyance pending the outcome of MCorp v. Board of Governors, No. CA3-88-2693 Securities Industry Association v. Board of Gover- (N.D. Tex., filed October 10, 1988). Application for nors, No. 89-1127 (D.C. Circuit). injunction to set aside temporary cease and desist Babcock and Brown Holdings, Inc., et al. v. Board of orders. Stayed pending outcome of MCorp v. Board Governors, No. 89-70518 (9th Cir., filed Novem- of Governors in Fifth Circuit. ber 22, 1989). Petition for review of Board determi- White v. Board of Governors, No. CU-S-88-623-RDF nation that a company would control a proposed (D. Nev., filed July 29, 1988). Age discrimination insured bank for purposes of the Bank Holding complaint. Company Act. Cohen v. Board of Governors, No. 88-1061 (D.N.J., Consumers Union of U.S., Inc. v. Board of Gover- filed March 7, 1988). Action seeking disclosure of nors, No. 89-3008 (D.D.C., filed November 1, documents under the Freedom of Information Act. 1989). Challenge to various aspects of amendments Lewis v. Board of Governors, Nos. 87-3455, 87-3545 to Regulation Z implementing the Home Equity (11th Cir., filed June 25, August 3, 1987). Petition for Loan Consumer Protection Act. The Board and review of Board orders approving applications of Consumers Union have filed cross-motions for sum- non-Florida bank holding companies to expand acmary judgment. tivities of Florida trust company subsidiaries. Mat- Synovus Financial Corp. v. Board of Governors, No. ter stayed pending Supreme Court review of Conti- 89-1394 (D.C. Cir., filed June 21, 1989). Petition for nental Illinois Corp. v. Lewis, 827 F.2d 1517 (11th review of Board order permitting relocation of a Cir. 1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 265 FINAL ENFORCEMENT ORDERS ISSUED BY Ben D. Campbell, the former Chairman of the board of BOARD OF GOVERNORS directors of the Flower Mound Bank, Flower Mound, Texas. Mr. Campbell, who consented to the issuance Bank Dagang Negara of the Order of Prohibition, is henceforth prohibited Jakarta, Indonesia from participating, including serving as an officer, The Federal Reserve Board announced on Febru- director or employee, in any manner in the conduct of ary 21, 1990, the issuance of a Cease and Desist the affairs of any institution supervised by a financial Order against the Bank Dagang Negara, Jakarta, institution supervisory agency without the approval of Indonesia, and its Los Angeles Agency. the appropriate federal banking agency. Ben D. Campbell Former Chairman of the Board of Directors Flower Mound Bank Flower Mound, Texas The Federal Reserve Board announced on February 6, 1990, the issuance of an Order of Prohibition against 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 WEEKLY REPORTING COMMERCIAL BANKS A3 Reserves, money stock, liquid assets, and debt Assets and liabilities measures A19 All reporting banks A4 Reserves of depository institutions, Reserve A20 Banks in New York City Bank credit A21 Branches and agencies of foreign banks A5 Reserves and borrowings—Depository A22 Gross demand deposits—individuals, institutions partnerships, and corporations A6 Selected borrowings in immediately available funds—Large member banks FINANCIAL MARKETS A23 Commercial paper and bankers dollar POLICY INSTRUMENTS acceptances outstanding A23 Prime rate charged by banks on short-term A7 Federal Reserve Bank interest rates business loans A8 Reserve requirements of depository institutions A24 Interest rates—money and capital markets A9 Federal Reserve open market transactions 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 A28 Federal fiscal and financing operations holdings 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 A33 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 • April 1990 SECURITIES MARKETS AND International Statistics CORPORATE FINANCE A34 New security issues—State and local SUMMARY STATISTICS governments and corporations A55 U.S. international transactions—Summary A35 Open-end investment companies—Net sales A56 U.S. foreign trade and asset position A56 U.S. reserve assets A35 Corporate profits and their distribution A56 Foreign official assets held at Federal Reserve A35 Total nonfarm business expenditures on new Banks plant and equipment A57 Foreign branches of U.S. banks—Balance A36 Domestic finance companies—Assets and sheet data liabilities and business credit A59 Selected U.S. liabilities to foreign official institutions REAL ESTATE REPORTED BY BANKS IN THE UNITED STATES A37 Mortgage markets A59 Liabilities to and claims on foreigners A38 Mortgage debt outstanding A60 Liabilities to foreigners A62 Banks' own claims on foreigners A63 Banks' own and domestic customers' claims on CONSUMER INSTALLMENT CREDIT foreigners A39 Total outstanding and net change A63 Banks' own claims on unaffiliated foreigners A40 Terms A64 Claims on foreign countries—Combined domestic offices and foreign branches FLOW OF FUNDS REPORTED BY NONBANKING BUSINESS ENTERPRISES IN THE UNITED STATES A41 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit A65 Liabilities to unaffiliated foreigners markets A66 Claims on unaffiliated foreigners A44 Summary of credit market debt outstanding A45 Summary of credit market claims, by holder SECURITIES HOLDINGS AND TRANSACTIONS Domestic Nonfinancial Statistics A67 Foreign transactions in securities A68 Marketable U.S. Treasury bonds and notes—Foreign transactions SELECTED MEASURES A46 Nonfinancial business activity—Selected measures INTEREST AND EXCHANGE RATES A47 Labor force, employment, and unemployment A69 Discount rates of foreign central banks A48 Output, capacity, and capacity utilization A69 Foreign short-term interest rates A49 Industrial production—Indexes and gross value A70 Foreign exchange rates A51 Housing and construction A52 Consumer and producer prices A71 Guide to Tabular Presentation, A53 Gross national product and income Statistical Releases, and Special A54 Personal income and saving Tables Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Money Stock and Bank Credit A3 1.10 RESERVES, MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES Annual rates of change, seasonally adjusted in percent1 1989 1989 1990 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaatteess Qlr Q2' Q3r Q4r Sept/ Oct/ Nov/ Dec/ Jan. Reserves of depository institutions2 1 Total -4.2 -8.7 .3 5.7 9.6 8.1 -1.1 8.5 -4.4 2 Required -4.4 -7.6 .1 5.5 8.6 6.5 .4 9.1 -6.4 3 Nonborrowed .0 -10.2 8.3 7.8 9.3 11.0 3.1 10.3 -8.0 4 Monetary base 4.2 1.6 3.2 4.1 4.9 4.3 1.6 7.5 10.7 Concepts of money, liquid assets, and debt4 5 Ml -.1 -4.4 1.8 5.1 4.0 7.8 2.0 8.2 .2 6 M2 2.3 1.6 6.9 7.1 6.3 6.9 7.3 7.8 4.0 7 M3 3.9 3.3 3.9 1.9 .0 1.4 4.0 4.0 2.6 8 L 5.2 5.0 4.3 2.7 1.3 1.7 3.8 5.0 n.a. 9 Debt 8.4 7.9 7.2 8.0 7.1 8.6 8.9 5.6 n.a. Nontrgnsaction components 10 In M25 3.2 3.7 8.7 7.7 7.1 6.6 9.0 7.7 5.3 11 In M3 only6 9.6 9.1 -6.8 -16.7 -22.9 -19.2 -8.8 -10.7 -2.8 Time and savings deposits Commercial banks 12 Savings' -5.5 -11.5 .4 7.1 6.3 6.3 9.5 7.3 8.9 13 Small-denomination time 22.4 25.9 11.9 11.2 6.9 14.8 10.9 9.4 6.7 14 Large-denomination time9,10 16.5 16.3 3.0 2.6 -1.9 5.0 7.9 -.2 .5 Thrift institutions 15 Savings' -7.7 -14.9 -5.2 .3 2.9 -1.7 1.7 -.1 .4 16 Small-denomination time 5.7 10.7 8.8 -2.5 -.7 -5.8 -4.1 -1.0 -5.3 17 Large-denomination time9 .7 7.5 -10.7 -28.7 -29.5 -32.8 -32.0 -20.5 -30.2 Debt components4 18 Federal 7.7 6.9 4.6 9.6 11.0 9.8 11.1 3.6 n.a. 19 Nonfederal 8.6 8.2 8.0 7.5 5.9 8.2 8.2 6.2 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 • April 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 1990 1989 1990 Nov. Dec. Jan. Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 11111 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 265,521 269,244 269,857 267,551 270,879 276,395 274,209 269,192 267,901 265,235 22222 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss''''' 217,455 224,142 222,417 222,841 224,613 228,646 226,700 222,410 220,558 217,228 33333 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 216,475 223,031 221,432 222,609 221,943 225,276 224,145 222,410 220,558 217,228 44444 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 980 1,111 985 232 2,670 3,370 2,555 0 0 0 55555 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 6,602 6,683 6,644 6,544 6,786 7,164 6,810 6,525 6,525 6,525 66666 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 6,525 77777 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 77 158 119 19 261 639 285 0 0 0 88888 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 99999 LLLLLoooooaaaaannnnnsssss 346 289 412 189 513 523 155 219 379 851 1111100000 FFFFFllllloooooaaaaattttt 1,024 1,128 978 1,314 1,692 1,095 1,405 814 960 652 1111111111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 37,093 37,003 39,406 36,665 37,275 38,966 39,139 39,224 39,480 39,981 1111122222 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,062 11,059 11,059 11,059 11,059 11,059 11,059 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 19,529 19,585 19,650 19,592 19,606 19,620 19,630 19,640 19,645 19,655 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 1111155555 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 251,807 256,870 256,669 256,683 259,112 260,573 259,135 257,350 255,231 253,232 1111166666 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss22222 448 448 468 447 447 450 463 468 472 . 476 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 1111177777 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 5,008 4,787 6,302 4,402 4,571 6,283 5,416 4,108 5,930 9,550 1111188888 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 234 286 255 252 215 454 246 248 217 255 1111199999 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,944 1,817 2,075 1,881 1,822 1,998 2,210 2,094 2,125 1,882 2222200000 OOOOOttttthhhhheeeeerrrrr 333 397 364 337 337 1,004 164 227 209 625 2222211111 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 7,862 8,242 8,928 7,839 8,140 8,488 8,872 8,949 9,021 9,011 2222222222 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 33,993 35,559 34,023 34,878 35,417 36,342 36,910 34,965 33,918 29,436 End-of-month figures Wednesday figures 1989 1990 1989 1990 Nov. Dec. Jan. Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 SSSSSUUUUUPPPPPPPPPPLLLLLYYYYYIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 2222233333 RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkk cccccrrrrreeeeedddddiiiiittttt 267,060 276,622 265,926 270,208 283,575 277,334 274,917 271,289 269,550 265,926 2222244444 UUUUU.....SSSSS..... gggggooooovvvvveeeeerrrrrnnnnnmmmmmeeeeennnnnttttt ssssseeeeecccccuuuuurrrrriiiiitttttiiiiieeeeesssss11111 223,142 228,367 218,392 224,245 233,951 228,867 227,060 221,748 221,961 218,392 2222255555 BBBBBooooouuuuuggggghhhhhttttt ooooouuuuutttttrrrrriiiiiggggghhhhhttttt 223,142 226,775 218,392 222,623 222,195 223,744 223,666 221.748 221,961 218,392 2222266666 HHHHHeeeeelllllddddd uuuuunnnnndddddeeeeerrrrr rrrrreeeeepppppuuuuurrrrrccccchhhhhaaaaassssseeeee aaaaagggggrrrrreeeeeeeeeemmmmmeeeeennnnntttttsssss 0 1,592 0 1,622 11,756 5,123 3,394 0 0 0 2222277777 FFFFFeeeeedddddeeeeerrrrraaaaalllll aaaaagggggeeeeennnnncccccyyyyy ooooobbbbbllllliiiiigggggaaaaatttttiiiiiooooonnnnnsssss 6,525 7,050 6,525 6,655 8,026 7,310 7,117 6,525 6,525 6,525 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 0 525 0 130 1,501 785 592 0 0 0 3333300000 AAAAAcccccccccceeeeeppppptttttaaaaannnnnccccceeeeesssss 0 0 0 0 0 0 0 0 0 0 3333311111 LLLLLoooooaaaaannnnnsssss 181 481 733 182 2,159 166 158 147 640 733 3333322222 FFFFFllllloooooaaaaattttt 668 1,093 216 2,100 1,514 2,034 888 3,649 768 216 3333333333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee aaaaasssssssssseeeeetttttsssss 36,544 39,631 40,061 37,028 37,926 38,956 39,694 39,222 39,656 40,061 3333344444 GGGGGooooolllllddddd ssssstttttoooooccccckkkkk22222 11,060 11,059 11,059 11,059 11,059 11,059 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 19,564 19,615 19,655 19,592 19,606 19,620 19,630 19,640 19,645 19,655 AAAAABBBBBSSSSSOOOOORRRRRBBBBBIIIIINNNNNGGGGG RRRRREEEEESSSSSEEEEERRRRRVVVVVEEEEE FFFFFUUUUUNNNNNDDDDDSSSSS 3333377777 CCCCCuuuuurrrrrrrrrreeeeennnnncccccyyyyy iiiiinnnnn ccccciiiiirrrrrcccccuuuuulllllaaaaatttttiiiiiooooonnnnn 253,960 260,443 253,123 257,700 260,291 260,601 258,319 256.749 254,251 253,123 3333388888 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy cccccaaaaassssshhhhh hhhhhooooollllldddddiiiiinnnnngggggsssss 445 455 479 447 447 450 467 471 475 479 DDDDDeeeeepppppooooosssssiiiiitttttsssss,,,,, ooooottttthhhhheeeeerrrrr ttttthhhhhaaaaannnnn rrrrreeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss,,,,, wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss 3333399999 TTTTTrrrrreeeeeaaaaasssssuuuuurrrrryyyyy 5,500 6,217 13,153 5,356 5,029 7,203 4,509 6,948 6,044 13,153 4444400000 FFFFFooooorrrrreeeeeiiiiigggggnnnnn 307 589 251 228 269 282 216 273 188 251 4444411111 SSSSSeeeeerrrrrvvvvviiiiiccccceeeee-----rrrrreeeeelllllaaaaattttteeeeeddddd bbbbbaaaaalllllaaaaannnnnccccceeeeesssss aaaaannnnnddddd aaaaadddddjjjjjuuuuussssstttttmmmmmeeeeennnnntttttsssss 1,638 1,618 1,882 1,637 1,626 1,998 2,210 2,094 2,125 1,882 4444422222 OOOOOttttthhhhheeeeerrrrr 311 1,298 357 228 523 172 145 257 206 357 4444433333 OOOOOttttthhhhheeeeerrrrr FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee llllliiiiiaaaaabbbbbiiiiillllliiiiitttttiiiiieeeeesssss aaaaannnnnddddd cccccaaaaapppppiiiiitttttaaaaalllll 8,402 8,486 8,884 7,641 8,062 8,654 8,859 8,692 8,824 8,884 4444444444 RRRRReeeeessssseeeeerrrrrvvvvveeeee bbbbbaaaaalllllaaaaannnnnccccceeeeesssss wwwwwiiiiittttthhhhh FFFFFeeeeedddddeeeeerrrrraaaaalllll RRRRReeeeessssseeeeerrrrrvvvvveeeee BBBBBaaaaannnnnkkkkksssss33333 35,639 36,709 27,029 36,141 46,511 37,170 39,399 35,022 36,658 27,029 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 Reserve classification 1987 1988 1989 1989 1990 Dec. Dec. Dec. July Aug. Sept. Oct. Nov. Dec. Jan. 11 RReesseerrvvee bbaallaanncceess wwiitthh RReesseerrvvee BBaannkkss22 37,673 37,830 35,436' 33,902 32,823 33,556 33,123 33,941 35,436' 34,087 22 TToottaall vvaauulltt ccaasshh33 26,185 27,205' 28,782 27,851 28,362' 28,089' 28,897' 28,519 28,782 30,354 33 VVaauulltt44 24,449 25,909 27,374 26,351 26,735 26,570 27,275 27,048 27,374 28,841 44 SSuurrpplluuss 1,736 1,2%' 1,409 1,499' 1,627' 1,515^ 1,622' 1,472' 1,409 1,513 5 Total reserves6 62,123 63,739 62,810 60,254 59,559 60,126 60,397 60,989 62,810 62,928 6 Required reserves 61,094 62,699 61,888' 59,288 58,674 59,188 59,378 60,044 61,888' 61,914 7 Excess reserve balances at Reserve Banks 1,029 1,040 922' 966 885 938 1,020 945 922' 1,014 8 Total borrowings at Reserve Banks 777 1,716 265 694 675 693 555 349 265 440 9 Seasonal borrowings at Reserve Banks 93 130 84 497 490 452 330 134 84 47 10 Extended credit at Reserve Banks 483 1,244 20 106 41 22 21 21 20 26 Biweekly averages of daily figures for weeks ending 1989 1990 Oct. 4 Oct. 18 Nov. 1 Nov. 15 Nov. 29 Dec. 13 Dec. 27 Jan. 1C Jan. 24 Feb. 7 11 Reserve balances with Reserve Banks2 32,643 33,581 32,778 34,468 33,394 35,399 35,131 36,627 34,424 29,787 12 Total vault cash3 28,300' 29,088' 28,875 27,908' 29,156 27,821 29,415 29,695 29,338 33,327 13 Vault4.. 26,695 27,531 27,177 26,552 27,574 26,509 27,903 28,335 28,045 31,156 14 Surplus5.... 1,605' 1,557' 1,698 1,357' 1,582 1,312 1,513 1,360 1,294 2,171 15 Total reserves 59,338 61,112 59,955 61,020 60,968 61,908 63,033 64,961 62,468 60,943 16 Required reserves 58,343 60,186 58,827 60,139 59,958 61,149 62,015 63,844 61,627 59,733 17 Excess reserve balances at Reserve Banks 995 926 1,128 881 1,009 759 1,018 1,117 841 1,210 18 Total borrowings at Reserve Banks 898 653 345 272 441 151 351 339 300 865 19 Seasonal borrowings at Reserve Banks .. 453 342 280 147 115 87 89 58 41 44 20 Extended credit at Reserve Banks8 25 19 23 20 23 22 19 19 27 33 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 • April 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. 26 Jan. 2 Jan. 9 Jan. 16 Jan. 23 Jan. 30 Feb. 6 Feb. 13 Feb. 20 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 70,964 67,427 75,520 70,344 69,604 66,372 71,750 71,162 69,950 2 For all other maturities 9,810 9,356 9,753 1100,,887700 1100,,442244 99,,994477 1100,,228899 1100,,662277 1111,,993377 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 24,933 22,855 28,713 26,331 24,937 27,974 27,292 29,241 27,903 4 For all other maturities 8,730 7,709 6,801 7,431 6,694 6,345 6,524 6,787 7,467 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 13,043 12,610 15,134 14,513 15,955 16,041 14,289 14,754 15,077 6 For all other maturities 11,003 8,252 9,458 11,235 11,280 12,425 1133,,227799 1144,,110000 1133,,559922 All other customers 7 For one day or under continuing contract 27,986 27,418 28,613 29,334 28,826 28,775 27,966 27,901 27,792 8 For all other maturities 10,860 9,248 9,154 9,547 9,389 9.750 9,980 10,178 10,299 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 40,080 38,015 42,159 40,105 40,596 40,075 41,248 39,096 38,742 10 To all other specified customers 14,987 12,747 15,135 14,111 14,784 13,584 17,118 15,055 16,176 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 2/2 O 2 n /9 0 Ef d fe a c te ti ve Pre r v at i e o us 2/2 O 2 n /9 0 Eff d e a c te ti ve Pre ra v t i e o us 2/2 O 2 n /9 0 Ef d fe a c te ti ve Pre r v at i e o us Effective date Vl Vl Boston 7 2/24/89 6 7 2/24/89 6 8.70 2/22/90 8.70 2/8/90 New York 2/24/89 2/24/89 2/22/90 2/8/90 Philadelphia 2/24/89 2/24/89 2/22/90 2/8/90 Cleveland 2/24/89 2/24/89 2/22/90 2/8/90 Richmond 2/24/89 2/24/89 2/22/90 2/8/90 Atlanta 2/24/89 2/24/89 2/22/90 2/8/90 Chicago 2/24/89 2/24/89 2/22/90 2/8/90 St. Louis 2/24/89 2/24/89 2/22/90 2/8/90 Minneapolis 2/24/89 2/24/89 2/22/90 2/8/90 Kansas City 2/24/89 2/24/89 2/22/90 2/8/90 Dallas 2/27/89 6V2 2/27/89 Vl 2/22/90 2/8/90 San Francisco ... 7 2/24/89 7 2/24/89 6 8.70 2/22/90 8.70 2/8/90 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or level)— Bank level)— Bank level)— Effective date All F.R. of Effective date All F.R. of Effective date All F.R. Banks N.Y. Banks N.Y. Banks SVl-9 I 1 n 9 7 e 8 ff — ec J t a D n. e c. 9 3 1, 1977. 6-6 V 6 l V 1 66 6 V V 1 2 1980—July 2 2 8 9 10 1 - 0 1 1 1 1 0 0 1984—Apr. 1 9 3 SV 9 i-9 9 9 m May 2 11 0 ft6Vi-1 7 N Se o p v t . . 1 2 7 6 1 1 1 2 1 1 1 2 Nov. 2 2 1 6 8 Vi 8 Vi 12 7 7 Dec. 5 12-13 13 Dec. 24 8 8 July 3 7-I7V1/4* 7V4 IVi Aug. 2 1 1 0 7V4 7 7 V 3/ 4 4 1981—May 5 8 13 1 - 4 1 4 1 1 4 4 1985—May 2 2 0 4 7IWV-8i 7 Vi S O e c p t. t . 2 2 1 2 0 6 8-$8 8 VW 2 8 8 8 V W l N De o c v . . 2 4 6 13 1 1 - 3 2 1 4 1 1 12 3 3 1986—Mar. 1 7 0 ( 7 , -7 V 1 V i- l l 7 7 Vl Nov. 1 3 8V 9 > V-9'/i> 9 9 V Vi i 1982—July 20 11 Vi—12 11 Vl J A u p ly r. 2 1 1 1 6 6 6 1979— A Ju u ly g . 2 2 1 0 0 7 lOl-O 1 lO 0 VVi i 1 1 1 0 0 0 V V i i Aug. 2 1 2 3 3 6 11 i l - o m 1 1 w 1 \ Vi i 1 1 10 m 1 1 W 1987— A Se u p g t . . 2 2 4 1 2 5 5 5 W V V-6 l l - 6 6 5 5 WV l Sept. 19 10W-11 11 27 lO-lOVi 10 11 6 6 Oct. 21 8 11 1 - 1 1 2 1 1 1 2 Oct. 3 1 0 2 9^ 1 - V 0 1 0i 9 1 V 0 i 1988—Aug. 9 6-6 V V l l 6 V V l l 10 12 12 13 9 9Vl 11 6 6 Nov. 22 9-9Vz 9 6Vi-l 1980—Feb. 15 12-13 13 26 9 9 1989—Feb. 24 7 May 3 2 1 0 9 9 12 1 1 - 3 2 1 3 1 1 12 3 3 Dec. 1 1 1 4 5 7 S S V V8 l iV - - 9 9 1 9m 8 V i In effect Feb. 2 7 2 2, 1990. 7 7 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 Vl 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 • April 1990 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Monetary Control Act Type of deposit, and deposit interval Effective date Net transaction 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 \Yi years 10/6/83 1 Vi years or more 10/6/83 Eurocurrency liabilities All types 11/13/80 1. Reserve requirements in effect on Dec. 31, 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 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov. Dec. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 18,983 8,223 14,284 0 0 0 0 219 8,794 1,883 2 Gross sales 6,051 587 12,818 571 5,517 934 0 1,633 0 0 3 Exchange 0 0 0 0 0 0 0 0 0 0 4 Redemptions 9,029 2,200 12,730 1,200 2,400 800 0 1,400 3,530 0 Others within 1 year 5 Gross purchases 3,659 2,176 327 0 0 0 0 0 155 0 6 Gross sales 300 0 0 0 0 0 0 0 0 0 7 Maturity shift 21,504 23,854 28,848 1,828 1,749 4,200 1,832 852 3,915 1,268 8 Exchange -20,388 -24,588 -25,783 -1,434 -1,073 -4,025 0 -2,678 -5,502 0 9 Redemptions 70 0 500 0 0 0 0 500 0 0 1 to 5 years 10 Gross purchases 10,231 5,485 1,436 0 0 0 0 0 0 0 11 Gross sales 452 800 490 0 13 150 0 24 0 0 12 Maturity shift -17,975 -17,720 -25,534 -1,828 -1,584 -3,321 -1,832 -758 -2,869 -1,268 13 Exchange 18,938 22,515 23,250 1,434 787 3,425 0 2,552 4,902 0 5 to 10 years 14 Gross purchases 2,441 1,579 287 0 0 0 0 0 0 0 15 Gross sales 0 175 29 0 9 0 0 0 0 0 16 Maturity shift -3,529 -5,946 -2,231 0 -165 -879 0 -95 -1,046 0 17 Exchange 950 1,797 1,934 0 286 400 0 126 400 0 Over 10 years 18 Gross purchases 1,858 1,398 284 0 0 0 0 0 00 0 19 Gross sales 0 0 0 0 0 0 0 0 0 0 20 Maturity shift 0 -188 -1,086 0 0 0 0 0 0 0 21 Exchange 500 275 600 0 0 200 0 0 200 0 All maturities 22 Gross purchases 37,170 18,863 16,617 0 0 0 0 219 8,949 1,883 23 Gross sales 6,803 1,562 13,337 571 5,539 1,084 0 1,657 0 0 24 Redemptions 9,099 2,200 13,230 1,200 2,400 800 0 1,900 3,530 0 Matched transactions 25 Gross sales 950,923 1,168,484 1,323,480 128,139 123,373 146,611 116,502 111,430 105,696 103,077 26 Gross purchases 950,935 1,168,142 1,326,542 138,141 118,221 147,228 120,144 111,893 105,243 104,827 Repurchase agreements2 27 Gross purchases 314,621 152,613 129,518 6,203 4,961 0 9,396 0 15,350 22,737 28 Gross sales 324,666 151,497 132,688 6,203 4,961 0 9,396 0 15,350 21,145 29 Net change in U.S. government securities 11,234 15,872 -10,055 8,232 -13,091 -1,267 3,642 -2,875 4,966 5,225 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 276 587 442 0 45 0 54 30 0 0 Repurchase agreements2 33 Gross purchases 80,353 57,259 39,972 1,666 1,137 0 4,011 0 11,,224477 22,,999922 34 Gross sales 81,350 56,471 41,548 1,666 1,137 0 4,011 0 1,247 2,467 35 Net change in federal agency obligations -1,274 198 -2,018 0 -45 0 -54 -30 0 525 36 Total net change in System Open Market Account 9,961 16,070 -12,073 8,232 -13,136 -1,267 3,588 -2,905 4,966 5,750 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 • April 1990 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1990 1989 1990 Jan. 3 Jan.10 Jan. 17 Jan. 24 Jan. 31 Nov. Dec. Jan. Consolidated condition statement ASSETS 1 Gold certificate account 11,059 11,060 11,059 11,059 11,059 11,060 11,059 11,059 2 Special drawing rights certificate account 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 3 447 455 478 505 524 465 456 552244 Loans 4 To depository institutions 166 157 146 640 733 182 481 733 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 785 592 0 0 0 0 525 0 U.S. Treasury securities Bought outright 9 Bills 101,549 101,471 99,553 99,766 96,197 100,947 104,581 96,197 10 Notes 91,381 91,381 91,381 91,381 91,381 91,381 91,381 91,381 11 Bonds 30,814 30,814 30,814 30,814 30,814 30,814 30,814 30,814 12 Total bought outright2 223,744 223,666 221,748 221,961 218,392 223,142 226,775 218,392 13 Held under repurchase agreements 5,123 3,394 0 0 0 0 1,592 0 14 Total U.S. Treasury securities 228,867 227,060 221,748 221,961 218,392 223,142 228,367 218,392 15 Total loans and securities 236,343 234,334 228,418 229,125 225,649 229,848 235,898 225,649 16 Items in process of collection 10,830 7,225 14,272 5,892 5,848 6,103 8,903 5,848 17 Bank premises 790 791 791 791 791 776 790 791 Other assets 18 Denominated in foreign currencies3 31,335 31,487 31,585 31,744 31,920 29,593 31,333 31,920 19 All other4 6,741 6,879 6,854 7,110 7,723 6,175 7,465 7,723 20 Total assets 306,063 300,748 301,977 294,746 292,033 292,539 304,424 292,033 LIABILITIES 21 Federal Reserve notes 241,878 239,611 238,059 223355,,558888 223344,,447711 223355,,330066 224411,,773399 223344,,447711 Deposits 2222 To depository institutions 38,948 41,594 37,528 38,540 29,464 37,277 38,327 29,464 23 U.S. Treasury—General account 7,203 4,509 6,948 6,044 13,153 5,500 6,217 13,153 24 Foreign—Official accounts 282 216 273 188 251 307 590 251 25 Other 172 145 257 206 357 311 1,298 357 26 Total deposits 46,606 46,463 45,007 44,978 43,228 43,395 46,430 43,228 27 Deferred credit items 8,925 5,815 10,220 5,357 5,452 5,436 7,773 5,452 28 Other liabilities and accrued dividends5 3,980 3,943 3,795 3,915 3,911 3,081 3,994 3,911 29 Total liabilities 301,389 295,831 297,079 289,837 287,060 287,217 299,935 287,060 CAPITAL ACCOUNTS 30 Capital paid in 2,243 2,249 2,249 2,250 2,249 2,229 2,243 2,249 31 Surplus 2,243 2,243 2,243 2,243 2,243 2,112 2,243 2,243 32 Other capital accounts 188 425 405 416 481 980 0 481 33 Total liabilities and capital accounts 306,063 300,748 301,977 294,746 292,033 292,539 304,423 292,033 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 228,101 228,427 228,568 228,643 228,073 235,096 233,048 228,073 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 279,177 278,757 279,256 279,680 279,920 279,629 279,665 279,920 36 LESS: Held by bank 37,298 39,146 41,197 44,092 45,449 44,321 37,926 45,449 37 Federal Reserve notes, net 241,878 239,611 238,059 235,588 234,471 235,306 241,739 234,471 Collateral held against notes net: 38 Gold certificate account 11,059 11,060 11,059 11,059 11,059 11,060 11,059 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 222,301 220,033 218,481 216,010 214,894 215,728 222,162 214,894 42 Total collateral 241,878 239,611 238,059 235,588 234,471 235,306 241,739 234,471 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 way 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 Holding Millions of dollars Wednesday End of month TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1990 1989 1990 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Nov. 30 Dec. 29 Jan. 31 1 Loans—Total 166 157 146 640 850 182 481 850 2 Within 15 days 158 145 146 640 848 134 469 848 3 16 days to 90 days 8 12 0 0 2 48 11 2 4 91 days to 1 year 0 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 0 8 91 days to 1 year 0 0 0 0 0 0 0 0 9 U.S. Treasury securities—Total 228,867 227,060 221,748 221,961 218,392 223,142 228,367 218,392 10 Within 15 days1 18,867 10,617 7,490 5,076 10,372 4,468 9,413 10,372 11 16 days to 90 days 47,380 53,508 53,750 54,451 47,233 51,283 55,523 47,233 12 91 days to 1 year 69,308 69,624 67,477 69,402 68,022 74,646 70,687 68,022 13 Over 1 year to 5 years 54,076 54,076 53,717 53,717 53,452 53,509 53,509 53,452 14 Over 5 years to 10 years 12,529 12,529 12,607 12,607 12,607 12,529 12,529 12,607 15 Over 10 years 26,706 26,706 26,706 26,706 26,706 26,706 26,706 26,706 16 Federal agency obligations—Total 7,310 6,525 6,525 6,525 6,525 6,525 7,050 6,525 17 Within 15 days1 798 84 203 156 119 316 678 119 18 16 days to 90 days 718 659 540 570 668 418 568 668 19 91 days to 1 year 1,336 1,311 1,311 1,281 1,253 1,395 1,346 1,253 2 2 2 0 1 2 O O O v v v e e e r r r 5 1 1 0 y y e y e a a e r r a s r t s o t o 5 1 y 0 e y ar e s a rs 3 1 , , 1 0 1 9 7 8 8 1 8 3 1 , , 2 0 1 3 5 8 1 1 8 3 1 , , 2 0 1 3 5 8 1 1 8 3 1 , , 2 0 1 7 5 8 7 1 8 3 1 , , 2 0 1 3 5 8 8 7 8 3 1 , , 1 0 1 5 4 8 9 8 9 3 1 , , 1 0 1 9 7 8 8 1 8 3 1 , , 2 0 1 3 5 8 8 7 8 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 • April 1990 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1989 1990 11998866 11998877 11998888 11998899 IItteemm DDeecc.. DDeecc.. DDeecc.. DDeecc.. June July Aug. Sept. Oct. Nov. Dec. Jan. Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CCHHAANNGGEESS IINN RREESSEERRVVEE RREEQQUUIIRREEMMEENNTTSS22 11 TToottaall rreesseerrvveess33 58.14 58.69 60.71 59.99 58.35 58.70 58.75 59.22 59.62 59.57 59.99 59.77 22 NNoonnbboorrrroowweedd rreesseerrvveess 57.31 57.92 58.99 59.73 56.86 58.00 58.08 58.53 59.07 59.22 59.73 59.33 33 NNoonnbboorrrroowweedd rreesseerrvveess pplluuss eexxtteennddeedd ccrreeddiitt 57.62 58.40 60.23 59.74' 57.78 58.11 58.12 58.55 59.09 59.24 59.74' 59.36 44 RReeqquuiirreedd rreesseerrvveess 56.77 57.66 59.67 59.07 57.44 57.73 57.87 58.29 58.60 58.62 59.07 58.76 55 MMoonneettaarryy bbaassee 241.63r 258.27'' 275.54'' 285.08' 278.94r 279.97' 280.76r 281.91' 282.92' 283.31' 285.08' 287.62 Not seasonally adjusted 6 Total reserves3 59.46 60.06 62.21 61.50 58.41 58.95 58.30 58.91 59.14 59.72 61.50 61.43 7 Nonborrowed reserves 58.64 59.28 60.50 61.24 56.92 58.26 57.62 58.21 58.58 59.37 61.24 60.99 8 Nonborrowed reserves plus extended credit 58.94 59.76 61.74 61.26 57.84 58.37 57.66 58.24 58.61 59.39 61.26 61.02 9 Required reserves 58.09 59.03 61.17 60.58 57.51 57.99 57.41 57.97 58.12 58.77 60.58 60.42 10 Monetary base 245.25 262.08 279.71 289.45' 280.19 282.10 281.09 280.70 281.37 284.13 289.45' 288.72 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS6 11 Total reserves3 59.56 62.12 63.74 62.81 59.59 60.25 59.56 60.13 60.40 60.99 62.81 62.93 12 Nonborrowed reserves 58.73 61.35 62.02 62.54 58.10 59.56 58.88 59.43 59.84 60.64 62.54 62.49 13 Nonborrowed reserves plus extended credit 59.04 61.83 63.27 62.56 59.01 59.67 58.93 59.46 59.86 60.66 62.56 62.51 14 Required reserves 58.19 61.09 62.70 61.89 58.68 59.29 58.67 59.19 59.38 60.04 61.89 61.91 15 Monetary base5 247.71 266.16 283.18 292.71 283.28 285.39 284.23 283.78 284.49 287.35 292.71 292.31 1. Latest monthly and biweekly figures are available from the Board's H.3(502) the terms and conditions established for the extended credit program to helpdestatistical release. Historical data and estimates of the impact on required reserves pository institutions deal with sustained liquidity pressures. Because there isnot of changes in reserve requirements are available from the Monetary and Reserves the same need to repay such borrowing promptly as there is with traditional Projections Section. Division of Monetary Affairs. Board of Governors of the short-term adjustment credit, the money market impact of extended credit is Federal Reserve System, Washington, D.C. 20551. similar to that of nonborrowed reserves. 2. Figures incorporate adjustments for discontinuities associated with the 5. The monetary base not adjusted for discontinuities consists of total reserves implementation of the Monetary Control Act and other regulatory changes to plus required clearing balances and adjustments to compensate for float at Federal reserve requirements. To adjust for discontinuities due to changes in reserve Reserve Banks and the currency component of the money stock plus, for instirequirements on reservable nondeposit liabilities, the sum of such required tutions not having required reserve balances, the excess of current vault cash over reserves is subtracted from the actual series. Similarly, in adjusting for disconti- the amount applied to satisfy current reserve requirements. Currency and vault nuities in the monetary base, required clearing balances and adjustments to cash figures are measured over the weekly computation period ending Monday. compensate for float also are subtracted from the actual series. The seasonally adjusted monetary base consists of seasonally adjusted total 3. Total reserves not adjusted for discontinuities consist of reserve balances reserves, which include excess reserves on a not seasonally adjusted basis, plus with Federal Reserve Banks, which exclude required clearing balances and the seasonally adjusted currency component of the money stock and the remainadjustments to compensate for float, plus vault cash held during the lagged ing items seasonally adjusted as a whole. computation period by institutions having required reserve balances at Federal 6. Reflects actual reserve requirements, including those on nondeposit liabili- Reserve Banks plus the amount of vault cash equal to required reserves during the ties, with no adjustments to eliminate the effects of discontinuities associated with maintenance period at institutions having no required reserve balances. implementation of the Monetary Control Act or other regulatory changes to 4. Extended credit consists of borrowing at the discount window under reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1989 1990 Item D 19 e 8 c 6 / D 19 e 8 c 7 / D 19 e 8 c 8 / D 19 e 8 c 9 / Oct/ Nov/ Dec/ Jan. Seasonally adjusted 1 Ml 724.7 750.4 787.5 794.8 788.1 789.4 794.8 794.9 2 M2 2,814.2 2,913.2 3,072.4 3,221.7 3,181.5 3,200.8 3,221.7 3,232.5 3 M3 3,494.5 3,678.7 3,918.4 4,043.3 4,016.6 4,029.8 4,043.3 4,052.2 4 L 4,135.5 4,338.7 4,676.1 4,866.0 4,830.4 4,845.8 4,866.0 n.a. 5 Debt 7,597.0 8,316.1 9,082.2 9,801.3 9,684.3 9,756.0 9,801.3 n.a. Ml components 6 Currency 180.6 196.7 211.8 221.9 220.0 220.4 221.9 224.6 7 Travelers checks 6.5 7.0 7.5 7.4 7.3 7.4 7.4 7.5 8 Demand deposits 302.1 287.0 287.0 279.7 280.0 278.8 279.7 277.3 9 Other checkable deposits6 235.5 259.7 281.3 285.7 280.8 282.8 285.7 285.5 Nontransactions components 10 In M2 . 2,089.6 2,162.8 2,284.9 2,426.9 2,393.4 2,411.4 2,426.9 22,,443377..66 11 In M3 only8 680.3 765.5 845.9 821.6 835.2 829.0 821.6 819.7 Savings deposits9 n Commercial Banks 155.8 178.3 192.0 188.5 185.9 187.3 188.5 118899..99 13 Thrift institutions 214.3 236.6 235.9 220.5 220.3 220.6 220.5 220.6 Small-denomination time deposits10 14 Commercial Banks 366.3 388.1 447.5 528.5 519.7 524.4 528.5 531.4 15 Thrift institutions 489.9 529.7 583.5 613.6 616.2 614.1 613.6 610.9 Money market mutual funds 16 General purpose and broker-dealer 208.7 222.0 240.9 313.1 302.7 309.1 313.1 320.8 17 Institution-only 83.8 89.0 87.1 102.3 101.1 101.1 102.3 103.3 Large-denomination time deposits11 18 Commercial Banks 289.8 326.9 368.2 401.4 398.8 401.4 401.4 401.5 19 Thrift institutions 150.0 161.9 172.9 156.8 163.8 159.5 156.8 152.8 Debt components 70 Federal debt 1,805.8 1,957.4 2,113.5 2,265.8 2,238.3 2,259.0 2,265.8 n.a. 21 Nonfederal debt 5,791.2 6,358.6 6,968.7 7,535.5 7,445.9 7,497.1 7,535.5 n.a. Not seasonally adjusted ?? Ml 740.5 766.4 804.5 812.1 785.0 791.7 812.1 802.4 73 M2 2,826.5 2,925.6 3,085.2 3,234.6 3,178.9 3,204.4 3,234.6 3,244.2 ?A M3 3,508.8 3,692.7 3,932.5 4,057.4 4,016.7 4,039.6 4,057.4 4,061.2 25 L 4,151.5 4,355.0 4,692.9 4,883.4 4,830.3 4,854.6 4,883.4 n.a. 26 Debt 7,580.7 8,297.6 9,067.5 9,787.1 9,650.1 9,723.0 9,787.1 n.a. Ml components 27 Currency 183.0 199.3 214.8 225.3 218.9 221.0 225.3 222.9 28 Travelers checks 6.0 6.5 6.9 6.9 7.3 7.0 6.9 7.0 29 Demand deposits 314.0 298.6 298.9 291.6 280.7 281.6 291.6 283.0 30 Other checkable deposits 237.5 262.0 283.8 288.4 278.1 282.1 288.4 289.5 Nontransactions components 31 M2 2,086.0 2,159.2 2,280.8 2,422.5 2,393.9 2,412.7 2,422.5 2,441.8 32 M3 only® 682.3 767.0 847.3 822.8 837.8 835.1 822.8 817.0 Money market deposit accounts 33 Commercial Banks 379.8 359.0 353.2 355.0 342.7 350.3 355.0 356.4 34 Thrift institutions 192.9 167.5 150.6 132.9 131.8 132.8 132.9 133.0 Savings deposits9 35 Commercial Banks 154.4 176.9 190.6 187.2 185.9 187.1 187.2 189.0 36 Thrift institutions 212.7 234.9 234.2 219.0 221.3 220.5 219.0 219.0 Small-denomination time deposits10 37 Commercial Banks 366.1 387.3 446.0 526.4 519.3 523.1 526.4 530.8 38 Thrift institutions 489.8 529.1 582.4 612.3 616.3 614.2 612.3 613.0 Money market mutual funds 39 General purpose and broker-dealer 208.0 221.5 240.5 312.8 301.3 309.8 312.8 319.6 40 Institution-only 84.4 89.6 87.6 102.9 98.7 102.1 102.9 106.1 Large-denomination time deposits11 41 Commercial Banks 289.2 325.8 366.9 399.7 399.9 401.9 399.7 399.2 42 Thrift institutions 150.7 162.9 174.2 158.2 165.5 161.7 158.2 154.0 Debt components 43 Federal debt 1,803.9 1,955.6 2,111.8 2,264.1 2,222.6 2,250.8 2,264.1 n.a. 44 Nonfederal debt 5,776.8 6,342.0 6,955.7 7,523.0 7,427.5 7,472.2 7,523.0 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Nonfinancial Statistics • April 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, Washinjgton, D.C. 20551. sumer credit (including bank loans), other bank loans, commercial paper, bankers 2. Composition of the money stock measures and debt is as follows: acceptances, and other debt instruments. The source of data on domestic Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt of depository institutions; (2) travelers checks of nonbank issuers; (3) demand data are based on monthly averages. deposits at all commercial banks other than those due to depository institutions, 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of the U.S. government, and foreign banks and official institutions less cash items in depository institutions. the process of collection and Federal Reserve float; and (4) other checkable 4. Outstanding amount of U.S. dollar-denominated travelers checks of nondeposits (OCD) consisting of negotiable order of withdrawal (NOW) and auto- bank issuers. Travelers checks issued by depository institutions are included in matic transfer service (ATS) accounts at depository institutions, credit union demand deposits. share draft accounts, and demand deposits at thrift institutions. 5. Demand deposits at commercial banks and foreign-related institutions other M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) than those due to depository institutions, the U.S. government, and foreign banks issued by all commercial banks and overnight Eurodollars issued to U.S. residents and official institutions less cash items in the process of collection and Federal by foreign branches of U.S. banks worldwide, MMDAs, savings and small- Reserve float. denomination time deposits (time deposits—including retail RPs—in amounts of 6. Consists of NOW and ATS balances at all depository institutions, credit less than $100,000), and balances in both taxable and tax-exempt general purpose union share draft balances, and demand deposits at thrift institutions. and broker-dealer money market mutual funds. Excludes individual retirement 7. Sum of overnight RPs and overnight Eurodollars, money market fund accounts (IRA) and Keogh balances at depository institutions and money market balances (general purpose and broker-dealer), MMDAs, and savings and small funds. Also excludes all balances held by U.S. commercial banks, money market time deposits. funds (general purpose and broker-dealer), foreign governments and commercial 8. Sum of large time deposits, term RPs, and term Eurodollars of U.S. banks, and the U.S. government. residents, money market fund balances (institution-only), less the estimated M3: M2 plus large-denomination time deposits and term RP liabilities (in amount of overnight RPs and Eurodollars held by institution-only money market amounts of $100,000 or more) issued by commercial banks and thrift institutions, funds. term Eurodollars held by U.S. residents at foreign branches of U.S. banks 9. Savings deposits exclude MMDAs. worldwide and at all banking offices in the United Kingdom and Canada, and 10. Small-denomination time deposits—including retail RPs—are those issued balances in both taxable and tax-exempt, institution-only money market mutual in amounts of less than $100,000. All individual retirement accounts (IRA) and funds. Excludes amounts held by depository institutions, the U.S. government, Keogh accounts at commercial banks and thrifts are subtracted from small time money market funds, and foreign banks and official institutions. Also subtracted deposits. is the estimated amount of overnight RPs and Eurodollars held by institution-only 11. Large-denomination time deposits are those issued in amounts of $100,000 money market mutual funds. or more, excluding those booked at international banking facilities. L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term 12. Large-denomination time deposits at commercial banks less those held by Treasury securities, commercial paper and bankers acceptances, net of money money market mutual funds, depository institutions, and foreign banks and market mutual fund holdings of these assets. official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary and Credit Aggregates A15 1.22 BANK DEBITS AND DEPOSIT TURNOVER1 Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates. 1989 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr June July Aug. Sept. Oct. Nov. DEBITS TO Seasonally adjusted Demand deposits3 1 All insured banks 188,346.0 217,116.2 226,888.4 284,129.2 276,453.7 292,446.5 281,432.2 293,424.9 296,768.7 2 Major New York City banks 91,397.3 104,496.3 107,547.3 129,166.6 114,991.8 121,378.1 125,206.9 136,039.0 130,440.2 3 Other banks 96,948.8 112,619.8 119,341.2 154,962.7 161,461.9 171,068.3 156,225.3 155,385.9 166,328.5 4 ATS-NOW accounts4 2,182.5 2,402.7 2,757.7 3,696.5 3,596.3 3,943.1 3,601.9 3,911.9 3,855.2 5 Savings deposits 403.5 526.5 583.0 640.0 580.4 650.0 672.3 665.4 610.3 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 556.5 612.1 641.2 824.0 788.4 841.8 802.2 826.4 855.7 7 Major New York City banks 2,498.2 2,670.6 2,903.5 3,588.5 3,222.3 3,402.4 3,482.2 3,486.5 3,499.8 8 Other banks 321.2 357.0 376.8 501.8 512.6 548.8 496.2 492.5 537.3 9 ATS-NOW accounts4 15.6 13.8 14.7 19.8 19.1 20.6 18.8 20.1 19.7 10 Savings deposits5 3.0 3.1 3.1 3.6 3.2 3.6 3.7 3.6 3.3 DEBITS TO Not seasonally adjusted Demand deposits3 U All insured banks 188,506.7 217,125.1 227,010.7 295,522.8 268,243.0 304,407.5 266,882.2 292,750.0 285,372.8 12 Major New York City banks 91,500.1 104,518.8 107,565.0 134,020.7 117,276.1 132,158.8 115,187.4 138,964.6 129,905.5 13 Other banks 97,006.7 112,606.2 119,445.7 161,502.1 150,966.9 172,248.7 151,694.7 153,785.5 155,467.3 14 ATS-NOW accounts4 2,184.6 2,404.8 2,754.7 3,770.8 3,549.0 3,762.6 3,702.7 3,891.4 3,611.5 15 MMDA 1,609.4 1,954.2 2,430.1 3,136.0 2,686.7 3,068.7 2,554.3 2,651.5 2,569.1 16 Savings deposits 404.1 526.8 578.0 641.4 610.4 656.7 665.2 690.4 555.9 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 556.7 612.3 641.7 855.6 761.3 891.5 763.1 829.6 815.6 18 Major New York City banks 2,499.1 2,674.9 2,901.4 3,795.0 3,247.5 3,911.6 3,279.7 3,594.8 3,548.5 19 Other banks 321.2 356.9 377.1 520.9 477.4 559.9 482.2 489.4 496.3 20 ATS-NOW accounts4 15.6 13.8 14.7 20.3 18.9 20.0 19.5 20.3 18.5 21 MMDA6 4.5 5.3 6.9 9.7 8.2 9.2 7.6 7.8 7.4 22 Savings deposits5 3.0 3.1 3.1 3.6 3.4 3.6 3.7 3.8 3.0 1. Historical tables containing revised data for earlier periods may be obtained of states and political subdivisions. from the Monetary and Reserves Projections Section, Division of Monetary 4. Accounts authorized for negotiable orders of withdrawal (NOW) and ac- Affairs, Board of Governors of the Federal Reserve System, Washington, D.C. counts authorized for automatic transfer to demand deposits (ATS). ATS data are 20551. available beginning December 1978. These data also appear on the Board's G.6 (406) release. For address, see inside 5. Excludes ATS and NOW accounts, MMDA and special club accounts, such front cover. as Christmas and vacation clubs. 2. Annual averages of monthly figures. 6. Money market deposit accounts. 3. Represents accounts of individuals, partnerships, and corporations and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A16 Domestic Nonfinancial Statistics • April 1990 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1989 1990 CCaatteeggoorryy Feb/ Mar/ Apr/ Mayr Juner Julyr Aug/ Sept/ Oct/ Nov/ Dec/ Jan. Seasonally adjusted 1 Total loans and securities2 2,445.1 2,460.3 2,469.2 2,482.9 2,496.0 2,512.4 2,527.4 2,538.9 2,562.6 2,577.7 2,581.2 2,585.0 2 U.S. government securities 362.0 368.0 370.5 372.5 373.7 374.0 375.5 378.1 389.8 394.6 394.2 402.3 3 Other securities 190.0 189.3 188.3 187.8 187.3 186.3 183.8 183.1 181.0 179.4 180.4 180.2 4 Total loans and leases2 1,893.1 1,903.0 1,910.5 1,922.6 1,935.0 1,952.1 1,968.2 1,977.7 1,991.9 2,003.7 2,006.5 2,002.4 5 Commercial and industrial ..... 617.4 619.1 621.7 626.6 627.1 631.8 636.1 637.7 641.3 645.0 641.6 638.1 6 Bankers acceptances held ... 8.2 8.4 8.3 8.3 8.2 7.9 8.1 8.4 8.8 8.1 7.6 7.4 7 Other commercial and industrial 609.2 610.7 613.4 618.4 618.9 623.9 628.0 629.3 632.6 636.9 634.0 630.7 8 U.S. addressees4. 602.8 604.2 607.0 612.8 613.2 619.8 624.3 625.4 628.4 631.8 628.6 623.0 9 Non-U.S. addressees 6.4 6.5 6.4 5.6 5.8 4.0 3.7 3.9 4.2 5.1 5.5 7.7 10 Real estate 684.1 689.9 698.9 705.6 713.0 720.1 727.7 735.8 742.1 748.4 755.8 759.1 11 Individual 358.1 358.9 361.6 363.5 363.8 365.8 367.5 370.3 372.6 374.5 375.7 377.8 12 Security 45.1 43.8 40.0 38.5 40.6 40.1 39.1 39.8 41.3 41.6 3399..66 3399..22 13 Nonbank financial institutions 30.6 30.1 29.6 29.3 30.5 31.3 31.5 31.8 32.7 33.3 32.7 32.3 14 Agricultural 30.0 29.7 29.7 29.9 30.0 30.0 29.9 29.6 29.6 2299..99 3300..33 3300..99 15 State and political subdivisions 43.4 43.4 43.3 43.1 42.8 42.5 42.2 41.7 41.3 40.8 40.1 38.6 16 Foreign banks 8.0 7.4 7.3 8.0 7.9 7.9 8.1 7.5 8.5 8.0 8.6 7.9 1/ Foreign official institutions 4.7 4.7 4.7 4.5 4.2 4.0 3.8 3.8 3.6 3.3 3.3 2.9 18 Lease financing receivables 29.8 30.0 30.0 30.2 30.2 30.7 31.0 31.3 31.7 31.6 31.4 31.7 19 All other loans 41.9 46.1 43.7 43.3 44.9 47.9 51.2 48.3 47.2 47.2 47.4 43.9 Not seasonally adjusted 20 Total loans and securities2 2,447.1 2,455.0 2,469.4 2,482.2 2,496.3 2,507.0 2,521.1 2,537.5 2,562.9 2,579.8 2,589.2 2,590.6 21 U.S. government securities 366.1 369.5 370.4 371.6 371.3 372.1 376.1 377.2 387.1 394.7 395.4 404.0 22 Other securities 189.9 188.8 187.5 187.1 186.5 184.7 183.8 183.3 181.9 180.7 181.4 180.7 23 Total loans and leases2 1,891.0 1,896.7 1,911.5 1,923.5 1,938.5 1,950.2 1,961.2 1,977.0 1,993.9 2,004.5 2,012.5 2,005.9 24 Commercial and industrial ..... 617.9 621.1 625.9 630.6 629.6 631.9 633.4 633.7 638.7 642.3 641.6 636.6 25 Bankers acceptances held ... 8.4 8.3 8.1 8.1 8.0 7.6 8.1 8.4 8.9 8.2 7.7 77..55 26 Other commercial and industrial 609.5 612.8 617.9 622.5 621.6 624.3 625.3 625.3 629.8 634.0 633.8 629.1 2277 U.S. addressees4 604.2 607.4 612.5 616.9 616.0 618.6 619.8 619.8 624.2 628.6 628.5 624.1 28 Non-U.S. addressees 5.3 5.4 5.4 5.6 5.6 5.7 5.5 5.5 5.6 5.5 5.3 5.0 29 Real estate 681.9 687.5 697.2 704.6 712.9 720.7 729.2 737.8 743.4 750.1 756.6 759.1 30 Individual 357.3 355.8 359.0 361.2 362.1 364.3 367.7 372.1 373.7 375.9 380.2 381.4 31 Security 44.5 44.8 42.6 39.0 43.0 40.2 38.5 38.9 40.2 4400..44 3388..66 3377..55 32 Nonbank financial institutions 30.2 29.4 29.5 29.2 30.8 31.4 31.3 31.4 32.4 33.6 33.7 33.0 33 Agricultural 29.1 28.7 28.8 29.5 30.3 30.7 30.7 30.5 30.4 3300..22 30.2 3300..33 34 State and political subdivisions 44.0 43.6 43.3 43.0 42.6 42.1 41.9 41.6 41.2 4400..66 39.7 39.5 35 Foreign banks 7.9 7.0 7.0 7.9 8.1 8.0 8.1 7.8 8.8 88..11 8.4 8.0 36 Foreign official institutions 4.7 4.7 4.7 4.5 4.2 4.0 3.8 3.8 3.6 3.3 3.3 2.9 37 Lease financing receivables 29.9 29.9 30.1 30.2 30.2 30.4 30.9 31.1 31.6 31.6 31.5 32.1 38 All other loans 43.7 44.3 43.5 43.7 44.8 46.3 45.9 48.1 49.9 48.3 48.7 45.4 1. Data have been revised because of benchmarking and seasonal adjustment 2. Excludes loans to commercial banks in the United States, revisions beginning January 1973. These data also appear in the Board's G.7 (407) 3. Includes nonfinancial commercial paper held, release. For address, see inside front cover. 4. United States includes the 50 states and the District of Columbia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1989 1990 SSoouurrccee Feb/ Mar/ Apr/ May' June' July' Aug.' Sept.' Oct.' Nov.' Dec.' Jan. Seasonally adjusted 1 Total nondeposit funds 212.2 212.5 206.0 211.8 229.6 229.1 230.6 238.9 249.3 252.8 249.5 245.4 2 Net balances due to related foreign offices — 10.7 8.2 3.0 -.1 7.7 11.1 9.3 9.7 9.9 8.8 7.2 10.6 3 Borrowings from other than commercial banks in United States 201.4 204.3 203.0 212.0 221.9 218.0 221.4 229.2 239.4 244.0 242.4 234.9 4 Domestically chartered banks 161.3 165.7 163.5 169.6 179.5 175.8 178.7 185.4 192.6 194.8 195.0 187.1 5 Foreign-related banks 40.1 38.6 39.5 42.4 42.4 42.2 42.6 43.7 46.8 49.2 47.4 47.8 Not seasonally adjusted 6 Total nondeposit funds 217.0 218.2 208.7 219.5 232.8 224.8 229.4 234.9 242.4 248.4 242.5 245.0 7 Net balances due to related foreign offices 10.5 7.1 .9 2.5 7.8 8.1 8.9 10.7 9.6 9.8 9.7 10.2 8 Domestically chartered banks -17.6 -19.5 -22.8 -21.9 -18.3 -16.4 -15.5 -14.2 -14.8 -15.2 -19.0 -14.7 9 Foreign-related banks 28.1 26.7 23.7 24.4 26.2 24.5 24.4 24.9 24.4 25.0 28.7 24.9 10 Borrowings from other than commercial banks in United States4 206.5 211.0 207.8 217.0 224.9 216.7 220.5 224.2 232.8 238.6 232.8 234.8 11 Domestically chartered banks 165.1 170.9 167.4 174.1 180.8 174.0 178.2 181.2 187.8 193.2 187.9 185.4 12 Federal funds and security RP borrowings 161.9 167.4 162.9 170.1 177.0 170.9 175.2 178.3 184.8 190.8 185.4 182.8 13 Other® 3.2 3.5 4.5 4.0 3.8 3.1 3.0 3.0 2.9 2.4 2.5 2.6 14 Foreign-related banks6 41.4 40.1 40.4 42.9 44.1 42.8 42.3 42.9 45.1 45.4 44.9 49.4 MEMO Gross large time deposits7 15 Seasonally adjusted 441.9 447.1 452.3 457.0 460.0 463.4 462.0 460.0 461.4 463.9 464.3 462.7 16 Not seasonally adjusted 441.7 449.9 452.3 457.4 459.4 461.1 462.6 461.5 462.6 464.4 462.7 460.4 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 20.8 20.9 21.3 25.5 25.7 22.4 22.3 22.8 21.5 20.4 21.1 20.2 18 Not seasonally adjusted 25.9 18.1 20.2 34.3 26.2 23.0 15.8 24.9 20.6 14.7 19.6 23.2 1. Commercial banks are those in the 50 states and the District of Columbia 4. Other borrowings are borrowings through any instrument, such as a promwith national or state charters plus agencies and branches of foreign banks, New issory note or due bill, given for the purpose of borrowing money for the banking York investment companies majority owned by foreign banks, and Edge Act business. This includes borrowings from Federal Reserve Banks and from foreign corporations owned by domestically chartered and foreign banks. banks, term federal funds, loan RPs, and sales of participations in pooled loans. These data also appear in the Board's G.10 (411) release. For address, see 5. Based on daily average data reported weekly by approximately 120 large inside front cover. banks and quarterly or annual data reported by other banks. 2. Includes federal funds, RPs, and other borrowing from nonbanks and net 6. Figures are partly daily averages and partly averages of Wednesday data. balances due to related foreign offices. 7. Time deposits in denominations of $100,000 or more. Estimated averages of 3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and daily data. U.S. branches and agencies of foreign banks with related foreign offices plus net 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at compositions with own IBFs. mercial banks. Averages of daily data. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A18 Domestic Nonfinancial Statistics • April 1990 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1989 1990 AAccccoouunntt Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 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 2,770.9 2,781.3 2 Investment securities 539.1 538.3 541.1 541.6 538.3 542.8 542.4 545.4 549.5 550.4 562.9 3 U.S. government securities 355.5 356.6 359.1 362.2 360.3 365.3 366.4 370.8 375.8 375.7 389.8 4 Other 183.6 181.7 182.0 179.4 178.1 177.5 176.1 174.6 173.7 174.7 173.0 5 Trading account assets 21.8 17.8 19.2 18.2 19.8 18.7 18.3 26.6 27.6 23.4 32.0 6 Total loans 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 2,197.1 2,186.5 7 Interbank loans 154.9 150.7 160.5 155.0 162.4 162.9 158.0 164.2 179.9 181.9 180.2 8 Loans excluding interbank 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 2,015.2 2,006.3 9 Commercial and industrial 622.9 627.3 631.1 628.3 635.3 631.9 630.3 634.9 638.7 639.4 631.9 10 Real estate 692.6 699.4 706.7 715.1 722.8 733.9 737.5 743.2 752.0 757.6 760.4 11 Individual 358.1 361.8 363.8 366.0 366.2 371.4 375.5 376.1 378.8 384.5 383.6 12 All other 237.7 227.7 237.4 236.6 232.3 231.0 233.7 237.8 238.2 233.8 230.5 13 Total cash assets 211.5 215.8 248.3 214.2 211.7 212.0 219.6 213.0 234.8 259.4 223.2 14 Reserves with Federal Reserve Banks. 30.9 33.4 27.8 27.9 30.6 28.7 31.7 28.0 38.7 42.8 24.5 15 Cash in vault 26.8 26.9 27.9 27.6 27.4 28.5 28.0 27.9 30.7 31.6 28.1 16 Cash items in process of collection ... 75.9 78.8 107.6 78.7 75.2 77.4 82.6 77.5 84.1 98.8 89.8 17 Demand balances at U.S. depository institutions 28.8 28.5 34.9 29.6 28.8 29.7 29.0 28.8 28.9 32.5 30.6 18 Other cash assets 49.0 48.3 50.2 50.5 49.7 47.7 48.3 50.7 52.3 53.7 50.3 19 Other assets 194.1 200.7 206.8 198.7 201.1 199.6 203.9 203.8 201.9 208.2 214.0 20 Total assets/total liabilities and capital.... 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 3,238.4 3,218.5 21 Deposits 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 2,241.9 22 Transaction deposits 583.2 594.5 628.5 580.5 579.4 583.4 588.5 588.0 602.5 643.3 613.7 23 Savings deposits 523.2 512 0 509.7 507.4 514.0 518.9 520.7 527.6 537.6 540.3 542.7 24 Time deposits 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 1,085.5 25 Borrowings 483.6 486.7 510.6 512.7 510.2 504.6 516.5 526.5 542.2 530.6 551.7 26 Other liabilities 223.9 217.4 218.6 218.4 223.1 226.3 221.4 222.4 235.2 238.9 222.1 27 Residual (assets less liabilities) 201.4 201.2 203.2 204.4 204.7 206.5 206.1 201.9 202.9 203.8 202.8 MEMO 28 U.S. government securities (including trading account) 372.1 369.5 372.3 374.4 373.5 377.5 378.5 390.4 396.2 392.2 415.0 29 Other securities (including trading account) 188.8 186.6 188.0 185.4 184.6 184.0 182.3 181.6 180.9 181.6 179.8 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 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 2,535.8 2,548.3 31 Investment securities 513.1 513.8 516.1 517.3 514.2 519.4 519.0 521.6 523.0 524.2 535.1 32 U.S. government securities 342.7 344.1 345.9 349.5 347.8 353.5 354.5 358.7 362.1 363.2 375.3 33 Other 170.4 169.7 170.2 167.8 166.5 165.9 164.5 162.9 160.9 161.0 159.8 34 Trading account assets 21.8 17.8 19.2 18.2 19.8 18.7 18.3 26.6 27.6 23.4 32.0 35 Total loans 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 1,988.2 1,981.2 36 Interbank loans 122.3 120.2 131.5 119.3 126.4 127.0 125.1 134.9 142.1 145.8 144.7 37 Loans excluding interbank 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 1,842.4 1,836.5 38 Commercial and industrial 506.1 511.3 515.5 511.6 515.6 512.8 510.4 514.2 515.3 515.9 512.7 39 Real estate 669.8 676.0 683.2 691.6 698.2 708.7 712.2 717.1 724.4 729.6 731.0 40 Individual 357.7 361.4 363.5 365.6 365.8 371.1 375.2 375.8 378.5 384.2 383.2 41 All other 216.9 207.3 217.0 216.3 212.0 209.9 213.5 216.4 215.5 212.7 209.7 42 Total cash assets 191.4 195.3 227.0 192.3 190.1 191.7 197.6 191.5 209.5 235.0 200.9 43 Reserves with Federal Reserve Banks. 29.5 30.7 26.7 26.6 29.6 27.0 29.5 26.3 37.9 41.7 22.7 44 Cash in vault 26.8 26.8 27.9 27.6 27.4 28.5 28.0 27.9 30.7 31.5 28.1 45 Cash items in process of collection ... 75.1 77.9 106.6 77.7 74.4 76.5 81.3 76.3 82.2 97.4 88.3 46 Demand balances at U.S. depository institutions 26.6 26.8 32.9 27.5 27.0 28.0 27.3 26.9 27.0 30.7 28.7 47 Other cash assets 33.4 33.1 33.0 32.9 31.7 31.7 31.6 34.2 31.7 33.6 33.0 48 Other assets 130.6 134.6 133.6 131.6 128.4 127.5 131.5 126.3 132.2 136.0 138.7 49 Total assets/liabilities and capital 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 2,906.7 2,887.9 50 Deposits 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 2,182.4 2,159.9 51 Transaction deposits 574.1 584.8 618.7 571.2 570.2 574.7 578.8 578.4 592.7 633.2 603.4 52 Savings deposits 520.7 509.4 507.1 504.8 511.3 516.2 517.9 525.0 534.8 537.5 539.9 53 Time deposits 952.6 961.9 977.2 982.9 989.9 995.9 997.7 1,009.0 1,011.6 1,011.7 1,016.6 54 Borrowings 362.8 368.2 383.0 387.3 380.2 375.5 390.8 393.2 404.4 398.3 404.5 55 Other liabilities 121.7 115.6 120.9 116.9 117.8 121.3 114.9 120.4 125.2 125.8 124.2 56 Residual (assets less liabilities) 197.9 197.7 199.7 200.8 201.2 203.0 202.6 198.4 199.4 200.3 199.2 MEMO 57 Real estate loans, revolving 42.5 43.4 44.3 45.3 45.7 46.4 47.1 47.9 48.5 49.1 50.3 58 Real estate loans, other 627.3 632.6 638.9 646.2 652.5 662.3 665.0 669.2 676.0 680.5 680.6 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 1990 AAddjjuusstt-- AAccccoouunntt m b m baa ee nn nn kk tt Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 1199889922 1 Cash and balances due from depository institutions ... 112,989 114,977 123,403 138,913 141,952 119,669 144,053 112,801 110,336 1,024 2 Total loans, leases, and securities, net 1,257,325 1,258,300 1,258,888 1,251,465 1,275,712 1,268,788 1,280,208 1,272,574 1,283,823 17,888 3 U.S. Treasury and government agency 164,934 165,260 161,214 157,022 163,514 166,819 168,891 170,776 173,916 22,,440077 4 Trading account 22,782 22,685 19,700 16,554 20,%9 23,342 25,605 24,812 25,102 11 5 Investment account 142,152 142,576 141,514 140,469 142,545 143,477 143,286 145,964 148,814 2,406 6 Mortgage-backed securities3 71,306 71,601 71,681 71,196 7722,,111199 71,800 7722,,990055 7755,,774455 7766,,667744 470 All other maturing in 7 One year or less 19,930 20,406 19,949 19,846 20,370 20,957 20,815 21,161 21,860 591 8 Over one through five years 34,961 34,724 34,346 34,008 33,986 34,508 34,016 34,381 34,3% 1,014 9 Over five years 15,955 15,845 15,537 15,419 16,070 16,212 15,551 14,675 15,884 331 10 Other securities 66,311 66,355 66,206 66,258 67,485 67,070 67,140 67,226 67,006 1,234 11 Trading account 1,087 1,078 1,253 1,276 1,244 1,056 960 887 802 2 12 Investment account 65,224 65,277 64,954 64,981 66,241 66,014 66,180 66,338 66,205 1,232 13 States and political subdivisions, by maturity 38,036 37,790 37,406 37,332 37,672 37,459 37,357 37,2% 37,120 797 14 One year or less 5,017 4,963 4,919 4,876 4,778 4,644 4,614 4,643 4,676 124 15 Over one year 33,018 32,827 32,487 32,456 32,894 32,814 32,743 32,653 32,444 673 16 Other bonds, corporate stocks, and securities 27,188 27,486 27,548 27,649 28,568 28,555 28,823 29,043 29,085 434 17 Other trading account assets 6,265 6,001 5,866 5,570 5,576 6,000 5,471 6,011 6,060 0 18 Federal funds sold4 71,480 70,744 71,999 69,587 72,872 66,654 71,534 65,054 71,328 766 19 To commercial banks 48,399 49,069 51,964 50,681 55,314 48,007 52,004 45,791 50,288 745 20 To nonbank brokers and dealers in securities 15,248 14,638 13,459 13,484 12,650 12,595 13,274 13,961 13,679 21 21 To others 7,834 7,037 6,576 5,422 4,907 6,052 6,255 5,302 7,361 0 22 Other loans and leases, gross 991,529 993,2% 9%,866 995,794 1,009,602 1,005,167 1,010,300 1,007,098 1,008,772 13,916 23 Other loans, gross 965,642 %7,382 970,873 %9,626 983,139 978,476 983,518 980,076 981,752 13,864 24 Commercial and industrial 317,993 318,357 320,067 318,772 322,195 321,033 319,760 319,102 319,956 3,580 25 Bankers acceptances and commercial paper 1,495 1,410 1,404 1,404 1,425 1,387 1,451 1,325 1,425 17 26 All other 316,497 316,947 318,663 317,368 320,770 319,646 318,309 317,777 318,531 3,563 27 U.S. addressees 314,744 315,172 316,936 315,562 318,978 317,8% 316,626 316,176 316,957 3,562 28 Non-U.S. addressees 1,753 1,774 1,727 1,806 1,793 1,749 1,682 1,601 1,574 0 29 Real estate loans 352,158 353,161 353,408 352,577 357,615 357,986 358,292 358,666 358,597 6,248 30 Revolving, home equity 26,908 27,035 27,222 27,272 27,773 27,864 27,921 28,081 28,210 301 31 Mother 325,249 326,127 326,186 325,305 329,842 330,122 330,372 330,584 330,387 5,947 32 To individuals for personal expenditures 175,493 176,620 177,161 177,792 181,082 180,735 180,362 180,426 180,291 3,219 33 To depository and financial institutions 49,119 48,480 47,948 47,570 50,448 49,918 53,5% 52,485 52,183 43 34 Commercial banks in the United States 21,490 21,140 20,633 20,812 22,611 23,233 25,787 26,782 26,353 12 35 Banks in foreign countries 4,615 4,368 4,876 4,430 5,201 4,136 55,,119933 44,,113366 4,093 0 36 Nonbank depository and other financial institutions 23,014 22,972 22,439 22,329 22,636 22,548 22,616 21,566 21,737 32 37 For purchasing and carrying securities 15,286 16,852 17,110 16,260 14,650 14,767 16,453 16,251 16,041 97 38 To finance agricultural production 5,355 5,398 5,379 5,450 5,675 5,617 5,575 5,548 5,515 86 39 To states and political subdivisions 25,210 24,9% 24,919 24,856 25,040 24,916 24,834 24,816 24,756 355 40 To foreign governments and official institutions ... 1,340 1,364 1,452 1,415 1,319 1,201 1,207 1,143 1,181 0 41 All other 23,688 22,153 23,428 24,933 25,116 22,305 23,438 21,638 23,231 236 42 Lease financing receivables 25,887 25,913 25,993 26,168 26,463 26,691 26,783 27,022 27,020 52 43 LESS: Unearned income 4,813 4,817 4,784 4,762 4,938 4,928 4,924 4,924 4,848 193 44 Loan and lease reserve 38,381 38,539 38,480 38,004 38,400 37,994 38,205 38,668 38,412 242 45 Other loans and leases, net 948,336 949,940 953,602 953,027 966,264 %2,246 %7,172 %3,506 965,512 13,481 46 All other assets 135,658 136,780 136,526 135,727 139,695 135,674 134,365 133,542 138,785 935 47 Total assets 1,505,973 1,510,058 1,518,817 1,526,105 1,557,359 1,524,131 1,558,626 1,518,918 1,532,945 19,848 48 Demand deposits 227,177 228,102 247,136 247,985 271,702 235,259 260,654 219,475 232,213 3,273 49 Individuals, partnerships, and corporations 182,551 185,306 191,286 197,147 214,963 188,220 204,517 173,861 185,059 2,885 50 States and political subdivisions 5,998 5,944 7,450 7,245 8,112 6,170 6,770 6,560 7,160 69 51 U.S. government 2,675 1,446 5,104 1,853 2,730 3,554 4,504 4,127 2,246 29 52 Depository institutions in the United States 20,475 20,197 22,542 23,729 26,478 20,996 27,496 20,012 21,208 137 53 Banks in foreign countries 6,304 5,982 8,1% 6,844 8,088 6,119 6,833 6,362 6,021 0 54 Foreign governments and official institutions 606 878 628 681 746 606 676 720 780 0 55 Certified and officers' checks 8,567 8,349 11,929 10,485 10,585 9,595 9,857 7,833 9,739 152 56 Transaction balances other than demand deposits 79,918 78,322 79,232 79,264 86,524 83,724 83,015 78,982 80,236 1,998 57 Nontransaction balances 706,637 706,401 702,865 704,033 722,592 723,942 723,028 719,576 719,887 14,842 58 Individuals, partnerships, and corporations 668,841 668,522 665,733 666,395 684,705 684,646 683,968 680,428 680,987 13,867 59 States and political subdivisions 29,273 29,298 28,424 28,932 29,399 30,257 30,100 30,339 30,074 1,036 60 U.S. government 898 900 886 886 913 944 933 831 850 4 61 Depository institutions in the United States 7,061 7,128 7,289 7,241 7,002 7,523 7,429 7,380 7,392 -65 62 Foreign governments, official institutions, and banks 563 554 533 579 573 572 598 597 584 0 63 Liabilities for borrowed money 306,167 306,043 299,242 302,906 291,188 290,147 301,150 306,965 306,882 -1,246 64 Borrowings from Federal Reserve Banks 0 25 0 1,943 0 0 0 475 590 0 65 Treasury tax-and-loan notes 7,786 7,360 17,626 15,064 2,084 5,978 12,350 24,045 25,565 11 66 All other liabilities for borrowed money6 298,381 298,658 281,616 285,899 289,104 284,170 288,799 282,445 280,727 -1,257 67 Other liabilities and subordinated notes and debentures 87,003 92,012 91,000 92,732 86,772 90,901 91,949 95,455 93,749 409 68 Total liabilities 1,406,901 1,410,880 1,419,475 1,426,920 1,458,778 1,423,975 1,459,7% 1,420,453 1,432,%8 19,276 69 Residual (total assets minus total liabilities)7 99,072 99,178 99,342 99,185 98,581 100,157 98,830 98,464 99,977 572 MMEEMMOO 70 TToottaall llooaannss aanndd lleeaasseess ((ggrroossss)) aanndd iinnvveessttmmeennttss aaddjjuusstteedd88 1,230,630 1,231,448 1,229,554 1,222,738 1,241,125 1,240,470 1,245,545 1,243,592 1,250,442 17,567 71 Total loans and leases (gross) adjusted8 993,121 993,831 9%,268 993,888 1,004,549 1,000,581 1,004,043 999,579 1,003,459 13,926 72 Time deposits in amounts of $100,000 or more 217,753 217,113 215,307 214,664 218,564 218,338 217,514 217,171 216,028 4,3% 73 U.S. Treasury securities maturing in one year or less . 18,4% 19,039 17,882 17.257 18,753 19,652 19,243 20,510 21,792 462 74 Loans sold outright to affiliates—total9 536 536 524 532 537 541 544 542 540 0 75 Commercial and industrial 233 232 229 235 239 242 239 253 242 0 76 Other 304 304 295 297 298 299 305 290 298 0 77 Nontransaction savings deposits (including MMDAs) .. 268,157 268,617 266,828 268,435 275,728 276,506 275,917 272,733 273,730 4,068 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 and adding some new reporters with assets greater than $3 billion. or more on Dec. 31, 1977, see table 1.13. 2. These amounts represent accumulated adjustments originally made to offset 7. This is not a measure of equity capital for use in capital-adequacy analysis or the cumulative effects of bank mergers during the calendar year. The adjustment for other analytic uses. data for 1989 should be added to the reported data for 1989 to establish 8. Exclusive of loans and federal funds transactions with domestic commercial comparability with data reported for 1990. banks. 3. Includes U.S. government-issued or guaranteed certificates of participation 9. Loans sold are those sold outright to a bank's own foreign branches, Digitized foinr pFoRolAs oSf EreRsid ential mortgages. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if http://fraser.s4.t loInucliusdfeesd s.eocrugri/t ies purchased under agreements to resell. not a bank), and nonconsolidated nonbank subsidiaries of the holding company. 5. Includes allocated transfer risk reserve. Federal Reserve Bank of St. Louis

A20 Domestic Nonfinancial Statistics • April 1990 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1989 1990 AAccccoouunntt Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 1 Cash balances due from depository institutions 22,921 21,572 28,238 36,663 27,408 25,306 28,816 24,988 21,895 2 Total loans, leases, and securities, net2 209,462 214,997 210,684 207,786 211,295 207,205 213,833 212,264 215,737 Securities 3 U.S. Treasury and government agency 0 0 0 0 0 0 0 0 0 4 Trading account 0 0 0 0 0 0 0 0 0 5 Investment account 16,689' 16,591' 16,517' 16,396' 16,076 16,172 16,809 18,641 19,307 6 Mortgage-backed securities 8,588 8,464 8,402 8,242 8,242 8,235 9,000 10,807 11,138 All other maturing in 7 One year or less 2,792 2,813 2,816 2,774 2,264 2,367 2,241 2,168 2,256 8 Over one through five years 3,416' 3,420' 3,379' 3,452' 3,536 3,536 3,524 3,620 3,658 9 Over five years 1,893' 1,894' 1,92c 1,926' 2,034 2,034 2,044 2,046 2,254 10 Other securities3 0 0 0 0 0 0 0 0 0 11 Trading account 0 0 0 0 0 0 0 0 0 12 Investment account 14,325' 14,352r 14,257' 14,282' 14,525 14,576 14,625 14,849 14,847 13 States and political subdivisions, by maturity 7,893 7,867 7,837 7,833 7,829 7,816 7,789 7,807 7,749 14 One year or less 1,052 1,055 1,053 1,047 1,065 1,057 1,044 1,072 1,076 15 Over one year 6,841 6,812 6,783 6,786 6,763 6,759 6,745 6,734 6,673 16 Other bonds, corporate stocks, and securities 6,432r 6,485r 6,421' 6,449' 6,6% 6,760 6,835 7,042 7,098 17 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold 17,344 20,548 17,304 16,289 17,988 15,702 17,%2 16,456 18,516 19 To commercial banks 8,310 12,041 10,169 10,381 11,957 8,731 10,819 10,452 10,403 20 To nonbank brokers and dealers in securities 4,922 5,098 4,154 3,339 3,332 3,425 3,574 3,081 3,539 21 To others 4,113 3,409 2,981 2,569 2,699 3,546 3,569 2,923 4,574 22 Other loans and leases, gross 181,205 183,655 182,749 180,812 182,400 179,833 183,517 181,408 182,285 23 Other loans, gross 175,510 177,917 177,023 175,068 176,691 174,135 177,830 175,721 176,611 24 Commercial and industrial 59,781 60,455 60,379 58,571 57,966 58,008 57,792 57,854 58,519 25 Bankers acceptances and commercial paper 122 116 134 125 166 101 91 85 93 26 All other 59,659 60,339 60,245 58,445 57,800 57,907 57,702 57,769 58,426 27 U.S. addressees 59,056 59,724 59,635 57,838 57,233 57,339 57,054 57,195 57,854 28 Non-U.S. addressees 603 616 609 607 566 567 648 574 572 29 Real estate loans 61,332 61,563 61,303 60,850 61,398 61,661 61,625 61,489 61,750 30 Revolving, home equity 3,840 3,852 3,864 3,841 3,941 3,949 3,955 3,964 3,969 31 All other 57,492 57,711 57,439 57,009 57,458 57,712 57,671 57,525 57,782 32 To individuals for personal expenditures 19,975 19,969 19,967 20,046 20,096 20,096 20,081 20,117 20,121 33 To depository and financial institutions 18,596 18,479 18,066 18,098 20,511 19,024 21,044 19,603 19,296 34 Commercial banks in the United States 7,166 7,259 6,797 7,446 9,055 8,597 9,444 9,258 8,887 35 Banks in foreign countries 3,200 3,006 3,536 3,026 3,987 2,888 3,867 2,970 2,847 36 Nonbank depository and other financial institutions 8,230 8,214 7,733 7,625 7,469 7,539 7,732 7,375 7,562 37 For purchasing and carrying securities 5,425 6,841 6,298 6,150 5,208 5,260 6,551 6,658 5,988 38 To finance agricultural production 103 111 113 113 107 117 111 100 105 39 To states and political subdivisions 5,515 5,350 5,340 5,349 5,387 5,326 5,317 5,312 5,316 40 To foreign governments and official institutions 316 346 405 384 296 228 246 214 326 41 All other 4,465 4,803 5,154 5,509 5,723 4,414 5,061 4,374 5,189 42 Lease financing receivables 5,695 5,739 5,726 5,744 5,709 5,698 5,688 5,687 5,674 43 LESS: Unearned income 1,801 1,807 1,808 1,801 1,820 1,818 1,819 1,824 1,820 44 Loan and lease reserve 18,301 18,343 18,336 18,192 17,873 17,261 17,261 17,266 17,397 45 Other loans and leases, net 161,103 163,506 162,606 160,819 162,707 160,754 164,437 162,318 163,068 46 All other assets 61,547 61,204 59,750 61,849 65,902 62,252 64,560 61,211 63,950 47 Total assets 293,930 297,773 298,672 306,298 304,605 294,763 307,210 298,464 301,583 Deposits 48 Demand deposits 48,644 50,476 59,194 55,232 60,264 53,284 58,254 49,609 51,287 49 Individuals, partnerships, and corporations 34,518 36,648 39,192 38,291 43,850 37,261 40,746 34,652 35,897 50 States and political subdivisions 584 547 953 810 1,040 916 834 689 773 51 U.S. government 448 168 1,004 270 295 661 611 784 278 52 Depository institutions in the United States 4,451 4,458 5,424 5,432 4,617 5,332 6,341 5,115 5,324 53 Banks in foreign countries 5,037 4,799 6,708 5,547 6,690 4,844 5,423 5,044 4,664 54 Foreign governments and official institutions 479 740 392 541 578 470 510 557 659 55 Certified and officers' checks 3,127 3,114 5,521 4,340 3,194 33,,880000 33,,779900 22,,776688 3,692 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,560 8,505 8,675 8,701 9,403 9,146 9,073 8,659 8,760 57 Nontransaction balances 116,075 115,658 116,117 115,660 117,550 116,804 117,392 116,209 116,676 58 Individuals, partnerships, and corporations 106,650 106,374 107,067 106,870 109,041 108,307 108,884 107,697 108,165 59 States and political subdivisions 7,117 7,040 6,819 6,691 6,447 6,504 6,523 6,527 6,540 60 U.S. government 30 29 27 26 25 26 26 27 28 61 Depository institutions in the United States 2,041 1,980 1,976 1,833 1,795 1,736 1,727 1,726 1,723 62 Foreign governments, official institutions, and banks 238 234 228 240 241 231 233 232 220 63 Liabilities for borrowed money 68,108 67,054 61,462 71,691 65,457 61,668 68,106 64,150 67,277 64 Borrowings from Federal Reserve Banks 0 0 0 1,680 0 0 0 0 0 65 Treasury tax-and-loan notes 1,594 1,541 4,664 3,831 322 1,091 2,799 6,541 6,721 66 All other liabilities for borrowed money 66,515 65,514 56,798 66,180 65,135 60,577 65,307 57,609 60,556 67 Other liabilities and subordinated notes and debentures 28,037 31,589 28,929 30,930 27,880 29,828 30,482 35,893 33,717 68 Total liabilities 269,425 273,282 274,377 282,214 280,554 270,731 283,308 274,519 277,717 69 Residual (total assets minus total liabilities)9 24,505 24,491 24,295 24,084 24,051 24,032 23,901 23,945 23,866 MEMO 70 Total loans and leases (gross) and investments adjusted • 214,087 215,846 213,862 209,952 209,977 208,956 212,650 211,644 215,665 71 Total loans and leases (gross) adjusted10 183,073 184,904 183,087 179,274 179,377 178,207 181,216 178,154 181,511 72 Time deposits in amounts of $100,000 or more 41,740 41,535 41,798 41,103 41,336 40,855 41,683 41,147 41,281 73 U.S. Treasury securities maturing in one year or less 3,066 3,084 3,118 3,240 2,615 2,744 2,835 2,950 3,391 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. Digitized for FRin ApoSoEls Rof residential mortgages. 10. Exclusive of loans and federal funds transactions with domestic commer- 5. Includes securities purchased under agreements to resell. cial banks. http://fraser.stlou6.i sIfnecdlu.doesr ga/l located transfer risk reserve. 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 1990 AAccccoouunntt Dec. 6 Dec. 13 Dec. 20 Dec. 27 Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 1 Cash and due from depository institutions ... 12,161 12,958 13,008 13,410 12,719 13,077 12,920 13,708 12,637 2 Total loans and securities 142,824 143,457' 143,263 144,882' 143,274 142,536 140,223 141,533 143,025 3 U.S. Treasury and government agency securities 8,922 9,054 8,380 8,266 8,429 9,013 9,280 9,538 9,828 4 Other securities 6,637 6,672 6,810 6,925 7,038 6,893 6,741 6,770 6,747 5 Federal funds sold 4,984 6,182 4,857 6,956 6,153 6,403 4,678 7,639 6,993 6 To commercial banks in the United States . 3,233 4,293 3,532 5,745 4,626 4,942 3,165 5,989 5,643 7 To others 1,751 1,889 1,325 1,211 1,527 1,461 1,513 1,650 1,350 8 Other loans, gross 122,281 121,549' 123,216 122,735' 121,654 120,227 119,524 117,586 119,457 9 Commercial and industrial 74,495' 73,960' 75,246' 75,132' 74,243 72,964 73,060 72,006 72,210 10 Bankers acceptances and commercial paper 2,050 2,062 2,065 2,054 1,811 1,755 1,886 2,058 1,983 11 All other 72,445' 71,898' 73,181' 73,078' 72,432 71,209 71,174 69,948 70,227 12 U.S. addressees 70,785' 70,268' 71,515' 71.39C 70,822 69,751 69,701 68,388 68,732 13 Non-U.S. addressees 1,660^ 1,63C 1,666' 1,688' 1,610 1,458 1,473 1,560 1,495 14 Loans secured by real estate3 18,254' 18,234' 18,272' 18,581' 18,950 19,138 19,450 19,433 19,488 15 To financial institutions 24,869 24,441 24,826 24,910' 24,832 24,762 23,447 22,695 23,902 16 Commercial banks in the United States.. 18,487 18,082 18,348 18,388 17,900 17,817 16,900 16,628 17,943 17 Banks in foreign countries 1,803 1,779 1,636 1,415 1,833 1,867 1,421 1,231 1,144 18 Nonbank financial institutions 4,579 4,580 4,842 5,107' 5,099 5,078 5,126 4,836 4,815 19 To foreign governments and official institutions 431 434 402 388 382 226633 254 224466 254 20 For purchasing and carrying securities .... 2,026 2,206 2,141 1,956 1,510 1,436 1,702 1,559 1,585 21 All other3 2,206' 2,274' 2,329' 1,768' 1,737 1,664 1,611 1,647 2,018 22 Other assets (claims on nonrelated parties) .. 37,903 38,117 38,122 37,250 37,674 37,111 35,294 35,407 36,563 23 Net due from related institutions 13,961 12,517 13,350 12,124 15,131 16,059 16,458 14,558 15,184 24 Total assets 206,852 207,047 207,742 207,665 208,798 208,785 204,898 205,206 207,410 25 Deposits or credit balances due to other than directly related institutions 49,684 50,906 50,992 50,180 50,156 49,780 50,664 50,089 50,151 26 Transaction accounts and credit balances . 3,735 4,292 4,241 4,047 4,085 3,917 4,210 4,531 4,574 27 Individuals, partnerships, and corporations 2,509 2,514 2,612 2,632 2,656 2,542 2,725 2,572 3,0% 28 Other.. 1,226 1,778 1,629 1,415 1,429 1,375 1,485 1,959 1,478 29 Nontransaction accounts 45,949 46,614 46,751 46,133 46,071 45,863 46,454 45,558 45,577 30 Individuals, partnerships, and corporations 38,311 38,334 38,961 38,816 38,881 38,392 38,272 38,352 38,761 31 Other 7,638 8,280 7,790 7,317 7,190 7,471 8,182 7,206 6,816 32 Borrowings from other than directly related institutions 92,244 88,366 92,845 86,771 92,991 94,130 93,780 9955,,118811 96,982 33 Federal funds purchased 39,896 35,839 41,464 34,624 42,000 41,983 41,876 42,456 44,025 34 From commercial banks in the United States 21,010 18,551 23,606 16,521 19,993 20,900 19,264 18,687 20,677 35 From others 18,886 17,288 17,858 18,103 22,007 21,083 22,612 23,769 23,348 36 Other liabilities for borrowed money 52,348 52,527 51,381 52,147 50,991 52,147 51,904 52,725 52,957 37 To commercial banks in the United States 33,718 33,508 32,250 33,674 32,549 32,566 33,265 33,537 33,864 38 To others 18,630 19,019 19,131 18,473 18,442 19,581 18,639 19,188 19,093 39 Other liabilities to nonrelated parties 37,386 38,052 37,582 37,169 37,341 36,900 34,957 35,253 36,724 40 Net due to related institutions 27,537 29,722 26,323 33,545 28,310 27,975 25,496 24,684 23,552 41 Total liabilities 206,852 207,047 207,742 207,665 208,798 208,785 204,898 205,206 207,410 MEMO 42 Total loans (gross) and securities adjusted7 .. 121,104 121,082' 121,383 120,749' 120,748 119,777 120,158 118,916 119,439 43 Total loans (gross) adjusted 105,545 105,356' 106,193 105,558' 105,281 103,871 104,137 102,608 102,864 1. Effective Jan. 4, 1989, the reporting panel includes a new group of large U.S. separate component of Other loans, gross. Formerly, these loans were included in branches and agencies of foreign banks. Earlier data included 65 U.S. branches "All other", line 21. and agencies of foreign banks that included those branches and agencies with 4. Includes credit balances, demand deposits, and other checkable deposits. assets of $750 million or more on June 30, 1980, plus those branches and agencies 5. Includes savings deposits, money market deposit accounts, and time that had reached the $750 million asset level on Dec. 31, 1984. These data also deposits. appear in the Board's H.4.2 (504) release. For address, see inside front cover. 6. Includes securities sold under agreements to repurchase. 2. Includes securities purchased under agreements to resell. 7. Exclusive of loans to and federal funds sold to commercial banks in the 3. Effective Jan. 4, 1989, loans secured by real estate are being reported as a United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A22 Domestic Nonfinancial Statistics • April 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 1199885522 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 f 2 Financial business 32.3 41.4 36.3 38.6 34.8 38.6 36.3 33.0 33.7 1 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 1 5 Foreign 3.5 3.3 3.4 3.7 3.2 3.7 3.7 2.9 2.9 I 6 Other 21.2 25.8 21.9 22.8 21.7 22.8 20.7 21.0 22.4 • Weekly reporting banks 1988 1989 1199885522 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 Historical data back to March 1985 have been revised to account for corrections deposits are based on reports supplied by a sample of commercial banks. Types of bank reporting errors. Historical data before March 1985 have not been revised, of depositors in each category are described in the June 1971 Bulletin, p. 466. and may contain reporting errors. Data for all commercial banks for March 1985 Figures may not add to totals because of rounding. were revised as follows (in billions of dollars): all holders, -.3; financial business, 2. Beginning in March 1984, these data reflect a change in the panel of weekly -.8; nonfinancial business, -.4; consumer, .9; foreign, .1; other, -.1. Data for reporting banks, and are not comparable to earlier data. Estimates in billions of weekly reporting banks for March 1985 were revised as follows (in billions of dollars for December 1983 based on the new weekly reporting panel are: financial dollars): all holders, -.1; financial business, -.7; nonfinancial business, -.5; business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other consumer, 1.1; foreign, .1; other, -.2. 9.5. 3. Beginning March 1988, these data reflect a change in the panel of weekly 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 5 . D 19 e 8 c 6 . D 19 e 8 c 7 . D 19 e 8 c 8 . D 19 e 8 c 9 . July Aug. Sept. Oct. Nov/ Dec. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 298,779 329,991 357,129 455,017 525,266 506,095 516,476 507,090 508,043r 517,574 525,266 Financial companies' Dealer-placed paper 2 Total 78,443 101,072 101,958 159,947 186,362 179,354 118822,,008833'''' 177,080r 117755,,772222rr 182,459 186,362 3 Bank-related (not seasonally adjusted) 1,602 2,265 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper 4 Total 135,320 151,820 173,939 192,442 209,551 205,847 208,915 206,521 210,855 210,560 209,551 5 Bank-related (not seasonally adjusted) 44,778 40,860 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies 85,016 77,099 81,232 102,628 129,353 121,217 125,478 123,489 121,466 124,555 129,353 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 68,413 64,974 70,565 66,631 62,972 65,588 65,764 63,814 63,660 63,802 62,972 Holder 8 Accepting banks 11,197 13,423 10,943 9,086 9,433 9,410 9,935 9,526 10,81r 9,923 9,433 9 Own bills 9,471 11,707 9,464 8,022 8,510 8,334 8,874 8,779 9,108 8,548 8,510 10 Bills bought 1,726 1,716 1,479 1,064 924 1,076 1,061 747 1,703 1,375 924 Federal Reserve Banks 11 Own account 0 0 0 0 0 0 0 0 0 0 0 12 Foreign correspondents 937 1,317 965 1,493 1,066 1,026 1,014 1,016 1,016 1,034 1,066 13 Others 56,279 50,234 58,658 56,052 52,473 55,152 54,815r 53,370 51,833 52,846 52,473 Basis 14 Imports into United States 15,147 14,670 16,483 14,984 15,651 15,338 16,140 16,101 16,157 15,691 15,651 15 Exports from United States 13,204 12,960 15,227 14,410 13,683 15,270 14,895 14,304 14,275 14,385 13,683 16 All other 40,062 37,344 38,855 37,237 33,638 34,980 34,729 33,409 33,228 33,726 33,638 1. Institutions engaged primarily in activities such as, but not limited to, 5. Includes public utilities and firms engaged primarily in such activities as commercial savings, and mortgage banking; sales, personal, and mortgage fi- communications, construction, manufacturing, mining, wholesale and retail trade, nancing; factoring, finance leasing, and other business lending; insurance under- transportation, and services. writing; and other investment activities. 6. Beginning January 1988, the number of respondents in the bankers accep- 2. Includes all financial company paper sold by dealers in the open market. tance survey were reduced from 155 to 111 institutions—those with $100 million 3. Beginning January 1989, bank-related series have been discontinued. or more in total acceptances. The new reporting group accounts for over 90 4. As reported by financial companies that place their paper directly with percent of total acceptances activity. investors. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year Average Average rate rate Period 7.75 1987 8.21 1988—Jan. ... 8.75 1989— Jan. ... 8.00 1988 9.32 Feb. .. 8.51 Feb. .. 8.25 1989 10.87 Mar. .. 8.50 8.75 Apr. .. 8.50 Apr. . 9.25 1987— Jan. 7.50 May ... 8.84 May ... 9.00 Feb. 7.50 June .. 9.00 8.75 Mar. 7.50 July ... 9.29 July ... Apr. 7.75 Aug. .. 9.84 Aug. .. 8.50 May 8.14 Sept. .. 10.00 Sept. .. 9.00 June 8.25 Oct. ... 10.00 Oct. ... 9.50 July 8.25 Nov. .. 10.05 Nov. .. 10.00 Aug. 8.25 Dec. .. 10.50 Dec. .. 10.50 Sept. 8.70 Oct. 9.07 1990— Jan. ... 11.00 Nov. 8.78 Feb. 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 Nonfinancial Statistics • April 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 IInnssttrruummeenntt 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 borrowing1'2'3 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 77..9999 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 / 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 77..3366 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 77..8844 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 88..4400 88..4488 88..3399 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 77..1155 77..2277 Auction average10 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 bonds" Constant maturities12 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 11 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 77..8888 77..8855 77..9988 Composite13 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 88..1122 State and local notes and bonds Moody's series14 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 66..9966 66..9977 Corporate bonds Seasoned issues16 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 99..3322 34 Aaa 9.38 9.71 9.26 9.01 8.92 8.89 8.86 8.88 8.86 8.85 8.85 88..8888 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 3/ Baa 10.58 10.83 10.18 9.91 9.81 9.81 9.82 9.83 9.81 9.81 99..8822 99..8855 38 A-rated, recently offered utility bonds 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 9.05 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 3.45 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 of ten issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1989 1990 IInnddiiccaattoorr 11998877 11998888 11998899 May June July Aug. Sept. Oct. Nov. Dec. Jan. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 161.78 149.97 180.13 175.30 180.76 185.15 192.93 193.02 192.49 188.50 192.67 187.96 2 Industrial 195.31 180.83 228.04 211.81 216.75 221.74 231.32 230.86 229.40 224.38 230.12 225.79 3 Transportation 140.52 134.09 174.90 169.05 173.47 179.32 197.53 202.02 190.36 174.26 177.25 173.67 4 Utility 74.29 72.22 94.33 84.21 87.95 90.40 92.90 93.44 94.67 94.95 99.73 95.69 5 Finance 146.48 127.41 162.01 146.82 154.08 157.78 164.86 165.51 166.55 160.89 155.63 150.11 6 Standard & Poor's Corporation (1941-43 = 10)1 287.00 265.88 323.05 313.93 323.73 331.92 346.61 347.33 347.40 340.22 348.57 339.97 7 American Stock Exchange (Aug. 31, 1973 = 50? 316.78 295.08 356.67 349.50 362.73 368.52 379.28 382.75 383.63 371.92 373.87 367.40 Volume of trading (thousands of shares) 8 New York Stock Exchange 188,922 161,386 165,568 171,495 180,680 162,501 171,683 151,752 182,394 144,389 160,671 172,420 9 American Stock Exchange 13,832 9,955 13,124 11,699 13,519 11,702 14,538 12,631 13,853'" 12,001' 13,298' 14,831 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 31,990 32,740 34,320 33,140 34,730 34,360 33,940 35,020 35,110 34,630 34,320 32,640 Free credit balances at brokers4 11 Margin-account 4,750 5,660 7,040 5,250 6,900 5,420 5,580 5,680 6,000 5,815 7,040 6,755 12 Cash-account 15,640 16,595 18,505 15,965 19,080 16,345 16,015 15,310 16,340 16,345 18,505 17,370 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 Jan. 1, 1977, the Board of Governors for the first time established in broker-dealers includes credit extended against stocks, convertible bonds, stocks Regulation T the initial margin required for writing options on securities, setting acquired through exercise of subscription rights, corporate bonds, and govern- it at 30 percent of the current market-value of the stock underlying the option. On ment securities. Separate reporting of data for margin stocks, convertible bonds, Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the and subscription issues was discontinued in April 1984. same as the option maintenance margin required by the appropriate exchange or 4. Free credit balances are in accounts with no unfulfilled commitments to the self-regulatory organization; such maintenance margin rules must be approved by brokers and are subject to withdrawal by customers on demand. the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC 5. New series beginning June 1984. approved new maintenance margin rules, permitting margins to be the price of the 6. These regulations, adopted by the Board of Governors pursuant to the option plus 15 percent of the market value of the stock underlying the option. Securities Exchange Act of 1934, limit the amount of credit to purchase and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A26 Domestic Nonfinancial Statistics • April 1990 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1989 AAccccoouunntt 11998877 11998888 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. SAIF-insured institutions 1 Assets 1,250,855 1,350,500 1,339,115 1,340,502 1,345,347 1,346,564 1,338,576 1,331,940' 1,318,ll? 1,301,059' 1,288,722' 1,279,067 2 Mortgages 721,593 764,513 767,603 769,398 773,386 774,358 772,720 771,716' 770,117' 764,699' 757,718' 753,993 3 Mortgage-backed securities 201,828 214,587 213,090 215,203 216,129 216,256 211,325 204,364' 195,308' 188,436' 181,627' 176,541 4 Contra-assets to mortgage assets1 . 42,344 37,950 37,013 37,842 37,791 37,504 37,540 37,172' 36,763' 36,292' 34,925' 33,990 5 Commercial loans 23,163 33,889 32,955 32,866 32,812 33,009 33,073 33,198' 33,026' 32,925' 32,562' 32,334 6 Consumer loans 57,902 61,922 61,981 61,402 61,710 61,869 60,769 61,098' 60,978' 60,423' 59,793' 59,4% 7 Contra-assets to nonmortgage loans . 3,467 3,056 2,923 3,074 2,899 2,918 3,192 3,203' 3,167' 3,12C 3,106' 3,202 8 Cash and investment securities 169,717 186,986 177,178 177,094 175,841 174,333 175,222 175,135' 171,565' 169,582' 172,612' 172,333 9 Other3 122,462 129,610 126,243 125,455 126,065 127,161 126,200 126,803' 127,055' 124,415' 122,440' 121,561 10 Liabilities and net worth . 1,250,855 1,350,500 1,339,115 1,340,502 1,345,347 1,346,564 1,338,576 1,331,94c 1,318,118' 1,301,059' 1,288,722' 1,279,067 11 Savings capital 932,616 971,700 957,358 956,663 954,495 955,566 960,073 963,158 960,344 958,911' 948,512' 946,668 12 Borrowed money 249,917 299,400 305,675 312,988 318,671 318,367 312,093 301,572' 289,634' 281,474 275,977' 268,462 13 FHLBB 116,363 134,168 140,089 146,007 148,000 146,520 144,217 141,875 138,331 133,633 130,514 127,671 14 Other 133,554 165,232 165,586 166,981 170,671 171,847 167,876 159,697' 151,303' 147,841 145,463' 140,791 15 Other 21,941 24,216 31,749 29,593 31,629 33,585 29,892 31,881' 33,807 29,899' 30.96C 31,991 16 Net worth 46,382 55,185 58,962 57,113 56,068 54,5% 52,741 50,907' 49,93C 46,685' 48,345' 47,177 SAIF-insured federal savings banks 17 Assets 284,270 425,983 432,675 443,167 455,143 469,939 495,739 507,020 504,187 501,128 502,589 18 Mortgages 161,926 227,869 238,415 241,076 249,940 257,187 276,613 285,072 285,503 283,188 283,674 19 Mortgage-backed securities 45,826 64,957 65,896 68,086 69,964 73,%3 73,943 74,341 72,082 72,438 72,318 20 Contra-assets to mortgage assets1 . 9,100 13,140 12,685 12,8% 13,049 13,227 13,662 13,972 13,859 13,821 13,492 21 Commercial loans 6,504 16,731 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 25,977 26,0% 26,768 27,957 28,157 28,9% 28,985 28,766 28,326 23 Contra-assets to nonmortgage loans2 . 678 889 857 977 863 888 976 980 987 1,029 1,051 24 Finance leases plus interest 591 880 946 1,011 1,047 1,072 1,083 1,088 1,075 1,092 1,087 n.a. 25 Cash and investment ... 35,347 61,029 57,986 60,272 61,278 62,002 65,778 66,068 65,109 64,232 65,277 26 Other 24,069 35,428 34,664 34,964 37,333 38,021 39,644 40,340 40,534 40,680 40,756 27 Liabilities and net worth . 284,270 425,983 432,675 443,167 455,143 469,939 495,739 507,020 504,187 501,128 502,589 28 Savings capital 203,196 298,197 301,770 307,580 315,725 324,369 342,145 352,547 352,099 353,461 355,903 29 Borrowed money 60,716 99,286 102,902 107,179 110,004 114,854 121,895 121,195 117,970 115,628 114,232 30 FHLBB 29,617 46,265 48,951 51,532 53,519 55,463 58,505 59,781 59,189 57,941 57,793 31 Other 31,099 53,021 53,951 55,647 56,485 59,391 63,390 61,414 58,781 57,687 56,439 32 Other 5,324 8,075 8,884 8,649 9,306 10,174 9,825 10,697 11,443 9,904 10,298 33 Net worth 15,034 20,235 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 A27 1.37—Continued 1989 AAccccoouunntt 11998877 11998888 Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Credit unions4 34 Total assets/liabilities and capital 174,593 176,270 178,175 177,417 178,812 180,664 179,029 180,035 181,812 181,527 182,856 35 Federal 114,566 115,543 117,555 115,416 116,705 117,632 117,475 117,463 118,746 118,887 119,682 36 State 60,027 60,727 60,620 62,001 62,107 63,032 61,554 62,572 63,066 62,640 63,174 37 Loans outstanding 113,191 113,880 114,572 115,249 116,947 119,101 119,720 120,577 122,522 122,997 122,899 38 Federal n.a. 73,766 73,917 74,395 75,003 76,052 77,729 78,472 78,946 80,548 80,570 80,601 39 State 1 39,425 39,963 40,177 40,246 40,895 41,372 41,248 41,631 41,874 42,427 42,298 40 Savings 159,010 161,073 164,322 161,388 162,134 164,415 162,405 162,754 164,050 164,695 165,533 41 Federal I 104,431 105,262 107,368 105,208 105,787 106,984 106,266 106,038 106,633 107,588 108,319 42 State t 54,579 55,811 56,954 56,180 56,347 57,431 56,139 56,716 57,417 57,107 57,214 Life insurance companies 43 Assets 1,044,459 1,157,140 1,186,208 1,199,125 1,209,242 1,221,332 1,232,195 1,247,341 1,257,045 1,266,773 1,276,181 Securities 44 Government.. 84,426 84,051 84,190 84,485 82,873 83,847 84,564 84,438 83,225 82,867 83,727 45 United States5 57,078 58,564 58,509 58,417 57,127 57,790 57,817 57,698 56,978 56,684 57,726 46 State and local 10,681 9,136 8,817 8,860 8,911 8,953 9,036 9,061 9,002 9,037 9,019 47 Foreign6 16,667 16,351 16,864 17,208 16,835 17,104 17,711 17,679 17,245 17,146 16,982 48 Business n.a. n.a/ 678,541 687,777 697,703 706,960 714,398 726,599 735,441 742,537 748,075 n.a. 49 Bonds 472,684 556,043 571,365 579,232 587,889 595,500 601,786 606,686 614,585 621,856 628,695 50 Stocks n.a. n.a/ 107,176 108,545 109,814 111,460 112,612 119,913 120,856 120,681 119,380 51 Mortgages 203,545 232,863 233,556 234,632 235,312 236,651 237,444 237,865 238,944 240,189 242,391 52 Real estate 34,172 37,371 37,603 37,842 37,976 38,598 38,190 38,622 38,822 38,942 39,343 53 Policy loans 53,626 54,236 54,738 54,921 55,201 55,525 55,746 55,812 56,077 56,403 56,727 54 Other assets 89,586 93,358 97,580 99,468 100,173 99,751 101,853 104,005 104,536 105,835 105,918 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. Data include all federally insured credit unions, both federal and state Life insurance companies: Estimates of the American Council of Life Insurance chartered, serving natural persons. for all life insurance companies in the United States. Annual figures are annual- 5. Direct and guaranteed obligations. Excludes federal agency issues not statement asset values, with bonds carried on an amortized basis and stocks at guaranteed, which are shown in the table under "Business" securities. year-end market value. Adjustments for interest due and accrued and for 6. Issues of foreign governments and their subdivisions and bonds of the differences between market and book values are not made on each item separately International Bank for Reconstruction and Development. but are included, in total, in "other assets." 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 Financial Statistics • April 1990 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1989 1990 111999888777 111999888888rrr 111999888999 Aug. Sept. Oct. Nov. Dec. Jan. U.S. budget1 1 Receipts, total 854,143 908,166 990,789 76,161 99,233 68,426 71,213 89,130 99,542 2 On-budget 640,741 666,675 727,123 57,156 75,711 50,122 51,989 69,052 74,247 3 Off-budget 213,402 241,491 263,666 19,004 23,522 18,304 19,223 20,077 25,295 4 Outlays, total 1,003,804 1,063,318 1,142,777 98,310 105,299 94,515 100,172 103,770 89,622 5 On-budget 809,972 860,626 931,556 79,218 86,548 75,096 80,794 91,249 71,082 6 Off-budget 193,832 202,691 211,221 19,092 18,750 19,419 19,378 12,522 18,540 7 Surplus, or deficit (-), total -149,661 -155,151 -151,988 -22,150 -6,066 -26,089 -28,959 -14,641 9,920 8 On-budget -169,231 -193,951 -204,433 -22,062 -10,837 -24,974 -28,804 -22,196 3,165 9 Off-budget 19,570 38,800 52,445 -88 4,771 -1,115 -155 7,556 6,755 Source of financing (total) 10 Borrowing from the public 151,717 166,139 140,156 35,854 6,618 36,690 19,790 6,821 15,841 11 Operating cash (decrease, or increase (-)), -5,052 -7,963 3,425 -3,235 -15,589 -2,513 21,772 -5,221 -18,116 12 Other 2 2,996 -3,025 8,407 -10,469 14,977 -8,088 -12,603 13,040 -7,644 MEMO 13 Treasury operating balance (level, end of period) 36,436 44,398 40,973 25,384 40,973 43,486 21,715 26,935 45,051 14 Federal Reserve Banks 9,120 13,024 13,452 6,652 13,452 13,124 5,501 6,217 13,153 15 Tax and loan accounts 27,316 31,375 27,521 18,732 27,521 30,362 16,214 20,718 31,899 1. In accordance with the Balanced Budget and Emergency Deficit Control Act international monetary fund; other cash and monetary assets; accrued interest of 1985, all former off-budget entries are now presented on-budget. The Federal payable to the public; allocations of special drawing rights; deposit funds; Financing Bank (FFB) activities are now shown as separate accounts under the miscellaneous liability (including checks outstanding) and asset accounts; agencies that use the FFB to finance their programs. The act has also moved two seigniorage; increment on gold; net gain/loss for U.S. currency valuation adjustsocial security trust funds (Federal old-age survivors insurance and Federal ment; net gain/loss for IMF valuation adjustment; and profit on the sale of gold. disability insurance trust funds) off-budget. SOURCE. Monthly Treasury Statement of Receipts and Outlays of the U.S. 2. Includes SDRs; reserve position on the U.S. quota in the IMF; loans to Government and the Budget of the U.S. Government. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A29 1.39 U.S. BUDGET RECEIPTS AND OUTLAYS1 Millions of dollars Calendar year Fiscal Fiscal Source or type year year 1988 1989 1990 1988 1989 HI H2 HI H2 Nov. Dec. Jan. RECEIPTS 1 All sources 908,166 990,789 475,724 449,394 527,574 470,354 71,213 89,130 99,542 2 Individual income taxes, net 401,181 445,690 207,659 200,300 233,572 218,661 34,448 37,385 56,044 3 Withheld 341,435 361,386 169,300 179,600 174,230 193,2% 34,439 35,443 34,172 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 1,459 2,717 22,389 6 Refunds 72,487 70,567 63,283 9,186 62,251 7,943 1,450 775 517 Corporation income taxes 7 Gross receipts 109,683 117,015 58,002 56,409 61,585 52,269 3,381 19,731 4,277 8 Refunds 15,487 13,723 8,706 7,250 7,259 6,842 996 853 1,159 9 Social insurance taxes and contributions, net 334,335 359,416 181,058 157,603 200,127 162,574 26,791 25,805 32,863 10 Employment taxes and contributions2 305,093 332,859 116644,,441122 144,983 184,569 152,407 24,303 25,266 31,767 11 Self-employment taxes and contributions 17,691 18,405 14,839 3,032 16,371 1,947 140 0 1,213 12 Unemployment insurance 24,584 22,011 14,363 10,359 13,279 7,909 2,088 161 742 13 Other net receipts 4,659 4,547 2,284 2,262 2,277 2,260 401 377 354 14 Excise taxes 35,540 34,386 16,440 19,299 16,814 16,844 2,939 2,763 2,624 15 Customs deposits 15,411 16,334 7,522 8,107 7,918 8,667 1,421 1,293 1,440 16 Estate and gift taxes 7,594 8,745 3,863 4,054 4,583 4,451 693 850 805 17 Miscellaneous receipts 19,909 22,927 9,950 10,873 10,235 13,728 2,535 2,156 2,648 OUTLAYS 18 All types 1,063,318 1,142,777 512,856 552,801 565,524 586,4% 100,172 103,770 89,622 19 National defense 290,361 303,551 143,080 150,496 148,098 149,613 25,234 28,570 21,978 20 International affairs 10,471 9,596 7,150 2,636 6,605 5,981 495 1,306 1,248 21 General science, space, and technology 10,841 12,891 5,361 5,852 6,238 7,091 1,155 1,202 1,058 22 Energy 2,297 3,745 555 1,966 2,221 564 -170 160 -460 23 Natural resources and environment 14,625 16,084 6,776 9,144 7,022 9,209 2,064 1,319 1,133 24 Agriculture 17,210 16,948 7,872 6,911 9,619 4,132 1,967 1,097 1,113 25 Commerce and housing credit 18,828 27,81<y 5,951 19,836 4,129 22,200 2,030 1,107 -2,286 26 Transportation 27,272 27,623 12,700 14,922 13,035 14,982 2,584 2,515 2,409 27 Community and regional development 5,294 5,755 2,765 2,690 1,833 4,879 1,100 841 848 28 Education, training, employment, and social services 31,938 35,697 15,451 16,152 18,083 18,663 3,194 3,151 3,4% 29 Health 44,490 48,391 22,643 23,360 24,078 25,339 4,136 4,435 4,663 30 Social security and medicare 297,828 317,506 135,322 149,017 162,195 162,322 27,337 27,166 28,228 31 Income security 129,332 136,765 65,555 64,978 70,937 67,950 11,456 13,217 12,010 32 Veterans benefits and services 29,406 30,066 13,241 15,797 14,891 14,864 2,627 3,664 1,086 33 Administration of justice 8,436 9,396 4,379 4,351 4,801 4,963 771 %8 811 34 General government 9,518 8,940 4,337 5,137 3,858 4,753 1,437 745 972 35 General-purpose fiscal assistance 1,816 n.a. 448 0 0 n.a. n.a. n.a. n.a. 36 Net interest 151,748 169,314 76,098 78,317 86,009 87,927 15,526 14,579 14,281 37 Undistributed offsetting receipts -36,967 -37,212 -17,766 -18,771 -18,131 -18,935 -2,771 -2,271 -2,967 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 • April 1990 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1987 1988 1989 IItteemm Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 1 Federal debt outstanding 2,435.2 2,493.2 2,555.1 2,614.6 2,707.3 2,763.6 2,824.0 2,881.1 2,975.5 2 Public debt securities 2,431.7 2,487.6 2,547.7 2,602.2 2,684.4 2,740.9 2,799.9 2,857.4 2,953.0 3 Held by public 1,954.1 1,996.7 2,013.4 2,051.7 2,095.2 2,133.4 2,142.1 2,180.7 n.a. 4 Held by agencies 477.6 490.8 534.2 550.4 589.2 607.5 657.8 676.7 n.a. 5 Agency securities 3.5 5.6 7.4 12.4 22.9 22.7 24.0 23.7 n.a. 6 Held by public 2.7 5.1 7.0 12.2 22.6 22.3 23.6 23.5 n.a. 7 Held by agencies .8 .6 .5 .2 .3 .4 .5 .1 n.a. 8 Debt subject to statutory limit 2,417.4 2,472.6 2,532.2 2,586.9 2,669.1 2,725.6 2,784.6 2,829.8 2,921.7 9 Public debt securities 2,416.3 2,472.1 2,532.1 2,586.7 2,668.9 2,725.5 2,784.3 2,829.5 2,921.4 10 Other debt1 1.1 .5 .1 .1 .2 .2 .2 .3 .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 2,870.0 3,122.7 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 Type and holder 1987 1989 Qi Q2 Q3 Q4 1 Total gross public debt 2,214.8 2,431.7 2,684.4 2,953.0 2,740.9 2,799.9 2,857.4 2,953.0 By type 2 Interest-bearing debt 2,212.0 2,428.9 2,663.1 2,931.8 2,738.3 2,797.4 2,836.3 2,931.8 3 Marketable 1,619.0 1,724.7 1,821.3 1.945.4 1,871.7 1,877.3 1,892.8 1,945.4 4 Bills 426.7 389.5 414.0 430.6 417.0 397.1 406.6 430.6 5 Notes 927.5 1,037.9 1,083.6 1.151.5 1,121.4 1,137.2 1,133.2 1,151.5 6 Bonds 249.8 282.5 308.9 348.2 318.4 328.0 338.0 348.2 7 Nonmarketable1 593.1 704.2 841.8 986.4 866.6 920.1 943.5 986.4 8 State and local government series 110.5 139.3 151.5 163.3 154.4 156.0 158.6 163.3 9 Foreign issues 4.7 4.0 6.6 6.8 6.7 6.2 6.8 6.8 10 Government 4.7 4.0 6.6 6.8 6.7 6.2 6.8 6.8 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes.. ^ 90.6 99.2 107.6 115.7 110.4 112.3 114.0 115.7 13 Government account series 386.9 461.3 575.6 695.6 594.7 645.2 663.7 695.6 14 Non-interest-bearing debt 2.8 2.8 21.3 21.2 2.6 2.5 21.1 21.2 By holder4 15 U.S. government agencies and trust funds 403.1 477.6 589.2 607.5 657.8 676.7 16 Federal Reserve Banks 211.3 222.6 238.4 228.6 231.8 220.6 17 Private investors 1,602.0 1,745.2 1,852.8 1,900.2 1,905.4 1,954.6 18 Commercial banks 203.5 201.5 193.8 200.9 206.7 n.a. 19 Money market funds 28.0 14.6 18.8 13.0 11.6 12.4 20 Insurance companies 105.6 104.9 111.2 112.5 n.a. n.a. 21 Other companies 68.8 84.6 86.5 89.2 90.7 n.a. n.a. 22 State and local Treasurys 262.8 284.6 313.6 320.4 322.1 n.a. Individuals 23 Savings bonds 92.3 101.1 109.6 112.2 114.0 115.7 24 Other securities 70.4 70.2 77.0 82.9 89.1 n.a. 25 Foreign and international5 263.4 299.7 362.1 375.6 367.9 393.5 26 Other miscellaneous investors 506.6 584.0 587.2 593.5 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 and the are actual holdings; data for other groups are Treasury estimates. Treasury Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A31 1.42 U.S. GOVERNMENT SECURITIES DEALERS Transactions1 Par value; averages of daily figures, in millions of dollars 1989 1990 1989 1990 IItteemm 11998877 11998888 11998899'' Nov/ Dec/ Jan. Dec. 27' Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Immediate delivery2 1 U.S. Treasury securities 110,050 101,623 112,715 115,662 84,153 118,584 72,702 72,473 102,219 128,457 123,690 133,945 By maturity 7 Bills 37,924 29,387 30,733 32,611 26,756 32,817 24,356 23,913 26,939 41,663 30,796 35,767 3 Other within 1 year 3,271 3,426 3,182 2,811 2,559 3,438 2,193 3,764 3,382 3,283 2,568 4,216 4 1-5 years 27,918 27,777 33,662 38,423 25,884 32,925 22,219 20,322 27,628 34,180 36,446 37,091 5-10 years 24,014 24,939 28,679 26,189 18,240 31,345 14,336 15,805 29,015 32,612 33,252 34,744 6 Over 10 years 16,923 16,093 16,458 15,628 10,714 18,059 9,597 8,669 15,255 16,718 20,628 22,126 By type of customer 7 U.S. government securities dealers 2,936 2,761 3,287 3,498 2,545 3,141 2,952 1,998 2,765 3,138 3,149 3,890 8 U.S. government securities brokers 61,539 59,844 66,417 66,532 45,753 71,886 38,310 39,910 60,945 77,400 76,535 81,668 9 All others3 45,575 39,019 43,011 45,632 35,854 43,557 31,439 30,565 38,509 47,918 44,006 48,387 10 Federal agency securities 18,084 15,903 18,623 20,012 17,939 19,950 13,428 12,136 22,046 24,078 18,123 18,496 11 Certificates of deposit 4,112 3,369 2,798 2,184 1,597 2,283 1,052 1,487 2,083 2,667 2,476 2,142 12 Bankers acceptances 2,965 2,316 2,222 1,998 1,635 1,843 1,226 1,854 1,960 2,079 1,744 1,550 13 Commercial paper 17,135 22,927 31,805 31,188 32,267 37,311 31,735 37,538 36,227 40,660 35,886 35,765 Futures contracts 14 Treasury bills 3,233 2,627 2,525 1,898 2,523 2,684 1,788 1,014 1,940 4,274 2,784 2,464 15 Treasury coupons 8,963 9,695 9,603 9,313 5,836 12,345 6,769 6,353 9,451 11,507 12,746 16,908 16 Federal agency securities 5 1 8 7 3 14 2 0 7 32 24 4 Forward transactions 17 U.S. Treasury securities 2,029 2,095 2,126 2,009 1,821 1,786 1,672 817 2,207 1,022 2,770 1,358 18 Federal agency securities 9,290 8,008 9,484 10,894 9,520 11,594 5,710 7,432 15,040 13,816 10,104 8,710 1. Transactions are market purchases and sales of securities as reported to the securities, nondealer departments of commercial banks, foreign banking agencies, Federal Reserve Bank of New York by the U.S. government securities dealers on and the Federal Reserve System. its published list of primary dealers. 4. Futures contracts are standardized agreements arranged on an organized Averages for transactions are based on the number of trading days in the period. exchange in which parties commit to purchase or sell securities for delivery at a The figures exclude allotments of, and exchanges for, new U.S. Treasury future date. securities, redemptions of called or matured securities, purchases or sales of 5. Forward transactions are agreements arranged in the over-the-counter securities under repurchase agreement, reverse repurchase (resale), or similar market in which securities are purchased (sold) for delivery after 5 business days contracts. from the date of the transaction for Treasury securities (Treasury bills, notes, and 2. Data for immediate transactions do not include forward transactions. bonds) or after 30 days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • April 1990 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1989 1990 1990 IItteemm 11998877'' 11998888'' 11998899'' Nov.' Dec.' Jan. Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Positions Net immediate2 1 U.S. Treasury securities -6,216 -22,765 -5,948 17,139 25,224 18,282 20,189 18,684 21,044 16,817 17,217 2 Bills 4,317 2,238 7,831 22,515 26,823 24,925 22,282 24,690 25,198 25,767 25,234 3 Other within 1 year 1,557 -2,236 -1,528 -1,276 -1,171 -836 -2,031 -877 -321 -476 -1,007 4 1-5 years 649 -3,020 2,334 10,532 12,398 13,976 15,108 14,012 13,704 12,142 15,787 3 5—10 years -6,564 -9,663 -8,133 -8,992 -7,230 -10,477 -8,682 -10,256 -8,744 -11,182 -11,953 6 Over 10 years -6,174 -10,084 -6,452 -5,640 -5,596 -9,305 -6,488 -8,884 -8,794 -9,435 -10,845 7 Federal agency securities 31,911 28,230 31,914 35,453 35,928 35,551 32,315 35,441 39,301 37,300 33,184 8 Certificates of deposit 8,188 7,300 6,674 7,003 6,884 5,972 5,896 5,874 5,985 6,063 5,993 9 Bankers acceptances 3,660 2,486 2,089 1,925 1,736 1,703 1,533 1,542 1,925 1,781 1,692 10 Commercial paper 7,496 6,152 8,243 7,650 8,152 7,663 7,599 7,067 7,509 77,,661111 88,,228866 Futures positions 11 Treasury bills -3,373 -2,210 -4,599 -9,455 -10,135 -9,896 -6,730 -6,365 -9,387 -12,771 -12,323 12 Treasury coupons 5,988 6,224 -2,919 -11,364 -11,022 -6,388 -7,693 -7,244 -7,631 -6,405 -4,241 13 Federal agency securities -95 0 14 25 30 27 47 46 -7 23 31 Forward positions 14 U.S. Treasury securities -1,211 346 -546 -109 -145 -2,094 -2,405 -1,226 -1,688 -3,273 -2,194 15 Federal agency securities -18,817 -16,348 -16,878 -17,372 -16,522 -13,814 -10,672 -14,569 -18,644 -15,322 -10,056 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 126,709 136,327 157,955 153,134 143,024 150,660 141,007 143,920 150,622 154,459 159,429 17 Term 148,288 177,477 225,126 242,219 219,169 216,646 195,588 214,139 220099,,993344 222233,,662200 223311,,552266 Repurchase agreements 18 Overnight and continuing 170,763 172,695 219,083 227,653 233,258 240,341 231,227 233,091 242,684 247,370 243,687 19 Term 121,270 137,056 179,555 218,441 179,487 179,484 151,466 174,758 176,502 189,192 194,294 1. Data for dealer positions and sources of financing are obtained from reports reverses to maturity, which are securities that were sold after having been submitted to the Federal Reserve Bank of New York by the U.S. Treasury obtained under reverse repurchase agreements that mature on the same day as the securities dealers on its published list of primary dealers. securities. Data for immediate positions do not include forward positions. Data for positions are averages of daily figures, in terms of par value, based on 3. Figures cover financing involving U.S. Treasury and federal agency securithe number of trading days in the period. Positions are net amounts and are shown ties, negotiable CDs, bankers acceptances, and commercial paper. on a commitment basis. Data for financing are in terms of actual amounts 4. Includes all reverse repurchase agreements, including those that have been borrowed or lent and are based on Wednesday figures. arranged to make delivery on short sales and those for which the securities 2. Immediate positions are net amounts (in terms of par values) of securities obtained have been used as collateral on borrowings, that is, matched agreements. owned by nonbank dealer firms and dealer departments of commercial banks on 5. Includes both repurchase agreements undertaken to finance positions and a commitment, that is, trade-date basis, including any such securities that have "matched book" repurchase agreements. been sold under agreements to repurchase (RPs). The maturities of some NOTE. Data on positions for the period May 1 to Sept. 30, 1986, are partially repurchase agreements are sufficiently long, however, to suggest that the securi- estimated. ties involved are not available for trading purposes. Immediate positions include Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Federal Finance A33 1.44 FEDERAL AND FEDERALLY SPONSORED CREDIT AGENCIES Debt Outstanding Millions of dollars, end of period 1989 AAggeennccyy 11998866 11998877 11998888 11998899 Aug. Sept. Oct. Nov. Dec. 1 Federal and federally sponsored agencies 307,361 341,386 381,498 411,805 411,979 408,591 409,113 412,234 411,805 2 Federal agencies 36,958 37,981 35,668 35,664 36,453 36,584 36,378 35,855 35,664 3 Defense Department 33 13 8 7 7 7 7 7 7 4 Export-Import Bank2,3 14,211 11,978 11,033 10,985 11,014 10,990 10,990 10,990 10,985 5 Federal Housing Administration 138 183 150 328 255 295 301 308 328 6 Government National Mortgage Association participation certificates5 2,165 1,615 0 0 0 0 00 00 00 7 Postal Service 3,104 6,103 6,142 6,445 6,445 6,445 6,445 6,445 6,445 8 Tennessee Valley Authority 17,222 18,089 18,335 17,899 18,732 18,847 18,635 18,105 17,899 9 United States Railway Association6 85 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 270,553 303,405 345,830 376,141 375,526 372,007 372,735 376,379 376.141 11 Federal Home Loan Banks 88,752 115,725 135,834 136,087 149,269 143,578 140,854 138,229 136,087 12 Federal Home Loan Mortgage Corporation 13,589 17,645 22,797 26,882 27,165 26,738 25,097 27,018 26,882 13 Federal National Mortgage Association 93,563 97,057 105,459 116,064 110,155 111,507 111,776 115,774 116,064 14 Farm Credit Banks 62,478 55,275 53,127 54,864 53,511 54,015 54,029 54,131 54,864 15 Student Loan Marketing Association 12,171 16,503 22,073 28,705 27,079 27,126 27,440 27,688 28,705 16 Financing Corporation 0 1,200 5,850 8,170 7,500 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation 0 0 690 847 847 847 847 847 847 18 Resolution Funding Corporation 0 0 0 4,522 0 0 4,522 4,522 4,522 MEMO 19 Federal Financing Bank debt13 157,510 152,417 142,850 134,873 137,690 136,092 135,841 135,213 134,873 Lending to federal and federally sponsored agencies 70 Export-Import Bank 14,205 11,972 1111,,002277 10,979 11,008 1100,,998844 1100,,998844 1100,,998844 1100,,997799 21 Postal Service 2,854 5,853 5,892 6,195 6,195 6,195 6,195 6,195 6,195 7.2 Student Loan Marketing Association 4,970 4,940 4,910 4,880 4,910 4,910 4,880 4,880 4,880 23 Tennessee Valley Authority 15,797 16,709 16,955 16,519 17,352 17,467 17,255 16,725 16,519 24 United States Railway Association 85 0 0 0 0 0 0 0 0 Other Lending14 Farmers Home Administration 65,374 59,674 58,496 53,311 54,611 53,311 53,311 53,311 53,311 76 Rural Electrification Administration 21,680 21,191 19,246 19,265 19,270 19,275 19,233 19,249 19,265 27 Other 32,545 32,078 26,324 23,724 24,344 23,950 23,983 23,869 23,724 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. 1 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 • April 1990 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1989 1990 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov. Dec.' Jan. 1 All issues, new and refunding1 102,407 114,522 113,646r 13,775 8,735 9,824 10,818 9,075 9,564 13,636 5,876 Type of issue 2 General obligation 30,589 30,312 35,774' 4,960 3,789 2,199 3,500 3,273 3,328 2,158 2,231 3 Revenue 71,818 84,210 77,873' 8,815 4,946 7,625 7,318 5,802 6,237 11,478 3,645 Type of issuer 4 State 10,102 8,830 l l^ 1,989 970 694 764 1,330 930 911 709 5 Special district and statutory authority 65,460 74,409 71,022' 8,033 4,868 7,027 7,567 4,770 5,473 9,391 3,975 6 Municipalities, counties, and townships 26,845 31,193 30,805' 3,753 2,897 2,103 2,487 2,975 3,161 3,334 1,192 7 Issues for new capital, total 56,789 79,665 84,062' 10,078 6,816 6,612 7,470 7,266 7,777 10,195 5,578 Use of proceeds 8 Education 9,524 15,021 15,133' 2,678 998 1,302 1,639 1,006 1,058 1,495 1,173 9 Transportation 3,677 6,825 6,870' 576 500 556 976 280 675 645 84 10 Utilities and conservation 7,912 8,4% 11,427' 1,058 551 813 622 718 1,137 2,219 796 11 Social welfare 11,106 19,027 16,703' 1,509 1,632 1,553 1,242 1,803 1,441 2,518 667 12 Industrial aid 7,474 5,624 5,036' 329 440 447 381 345 444 1,119 305 13 Other purposes 18,020 24,672 28,894' 3,928 2,695 1,941 2,610 3,114 3,022 2,199 2,553 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 ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11998877 11998888 11998899 May June July Aug. Sept. Oct. Nov. Dec. 1 AU issues1 392,339' 409,925' 231,206 21,571' 24,750' 18,030' 14,930' 14,629' 24,644' 20,522' 20,945 2 Bonds2 325,838' 352,124' 199,930 19,762' 21,922' 12,976' 12,895' 12,356' 20,964' 16,282' 17,000 Type of offering 3 Public, domestic 209,455' 201,246' 177,438 17,856' 19,014' 11,556' 12,079' 11,156' 19,856' 14,208' 15,500 4 Private placement, domestic3 92,070 127,700 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 24,308 23,178 22,492 1,906 2,908 1,420 816 1,200 1,108 2,074' 1,500 Industry group 6 Manufacturing 61,266' 70,595' 42,049 7,815' 3,502' 2,850' 2,670' 2,247' 3,646' 3,435' 3,992 7 Commercial and miscellaneous 49,773' 62,070' 15,945 2,162 1,649 1,331 1,090 1,393 1,830 1,253' 347 8 Transportation 11,974 10,076' 3,586 150 480 0 423 30' 906' 312' 1,083 9 Public utility 23,004 19,318 13,619 385 2,936 1,346' 705 1,059' 1,738 977' 1,090 10 Communication 7,340 5,951 3,859 122 4 300 358 308 632 812 577 11 Real estate and financial 172,474' 184,114' 120,875 9,128 13,352' 7,149' 7,649' 7,320' 12,213' 9,493' 9,911 12 Stocks2 66,508 57,802 32,225 1,809 2,828 5,054 2,035 2,273 3,680 4,240 3,945 Type 13 Preferred 10,123 6,544 6,194 306 335 920 1,013 519 570 160 626 14 Common 43,225 35,911 26,030 1,503 2,493 4,134 1,023 1,754 3,110 4,080 3,319 15 Private placement3 13,157 15,346 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 16 Manufacturing 13,880 7,608 5,081 299 630 593 393 193 190 378 279 17 Commercial and miscellaneous 12,888 8,449 4,428 115 512 438 343 155 728 498 1,045 18 Transportation 2,439 1,535 532 39 0 0 0 0 50 0 0 19 Public utility 4,322 1,898 2,297 192 125 25 137 709 465 211 244 20 Communication 1,458 515 471 280 25 29 20 0 0 0 0 21 Real estate and financial 31,521 37,798 19,250 884 1,536 3,%9 1,020 1,195 2,214 3,153 2,377 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 11998888 11998899 May June July Aug. Sept. Oct. Nov/ Dec. INVESTMENT COMPANIES1 1 Sales of own shares2 271,237 306,445 24,661 25,817 25,330 26,800 23,911 23,872 24,673 30,982 2 Redemptions of own shares3 267,451 272,165 22,483 22,562 20,053 22,262 21,499 21,702 19,573 24,967 3 Net sales 3,786 34,280 2,178 3,255 5,277 4,538 2,412 2,170 5,100 6,015 4 Assets4 472,297 553,875 509,781 515,814 535,910 539,553 539,814 534,922 549,892 553,875 5 Cash position5 45,090 44,792 49,177 48,428 47,888 47,209 47,163 46,146 47,875 44,792 6 Other 427,207 509,083 460,604 467,386 488,022 492,344 492,651 488,776 502,017 509,083 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. 1988 1989 AAccccoouunntt 11998877 11998888 11998899 QL Q2 Q3 Q4 QL Q2 Q3 Q4 1 Corporate profits with inventory valuation and capital consumption adjustment 298.7 328.6 298.2 318.1 325.3 330.9 340.2 316.3 307.8 295.2 n.a. 2 Profits before tax 266.7 306.8 287.3 288.8 305.3 314.4 318.8 318.0 296.0 275.0 n.a. 3 Profits tax liability 124.7 137.9 129.0 129.0 138.4 141.2 143.2 144.4 134.9 122.6 n.a. 4 Profits after tax 142.0 168.9 158.2 159.9 166.9 173.2 175.6 173.6 161.1 152.4 n.a. 5 Dividends 98.7 110.4 122.1 105.7 108.6 112.2 115.2 118.5 120.9 123.3 125.6 6 Undistributed profits 43.3 58.5 36.2 54.2 58.3 61.1 60.4 55.1 40.2 29.1 n.a. 7 Inventory valuation -18.9 -25.0 n.a. -20.7 -28.8 -30.4 -20.1 -38.3 -21.0 n.a. n.a. 8 Capital consumption adjustment 50.9 46.8 29.4 49.9 48.9 46.9 41.5 36.6 32.3 26.5 22.4 Source. Survey of Current Business (Department of Commerce). 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 1 430.17 475.18 505.49 427.54 435.61 442.11 459.47 470.86 484.93 485.45 503.46 Manufacturing 7777..7755 8833..0055 8833..2222 7777..3388 7799..1155 8800..5566 8811..2266 8822..9977 8855..6666 8822..3300 8866..8844 7 8866..7799 110000..1111 110066..9944 8855..2244 8899..6622 9922..7766 9933..9966 9988..5577 110022..0000 110055..9900 110066..9922 3 Nonmanufacturing 12.57 12.50 12.01 13.15 12.53 12.38 12.15 12.70 12.59 12.58 12.23 4 Transportation 777...222111 888...111222 777...777888 666...999999 666...888444 777...444555 888...000222 777...333777 888...111666 888...999333 777...999111 5 777...000000 999...555000 111000...666000 666...999111 888...000999 777...666999 777...000444 999...444999 111222...444888 888...999999 111000...111222 6 Air 777...111555 777...666222 888...000333 777...000555 777...000888 666...888999 888...000777 777...444000 777...888999 777...111333 888...555888 7 Other Public utilities 333111...777555 333333...999666 333444...333222 333111...333111 333222...000777 333333...666999 333333...666999 333555...333444 333333...777333 333333...000777 333555...444777 8 111444...666333 111666...111000 111555...888222 111444...444999 111444...666111 111555...000444 111777...111222 111666...666777 111555...888444 111444...777999 111666...444222 9 111888555...333222 222000444...222222 222222666...777888 111888555...222111 111888555...666111 111888555...666555 111999888...111555 222000000...333666 222000666...555999 222111111...777666 222111888...999777 1100 •Trade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A36 Domestic Nonfinancial Statistics • April 1990 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period 1988 1989 AAccccoouunntt 11998855 11998866 11998877 Q1 Q2 Q3 Q4 Q1 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 3 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 All 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 99.2 117.8 128.4 125.2 131.6 129.4 142.0 147.9 149.2 147.4 12 Other short-term 12.7 17.5 28.0 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. 132.4 139.8 139.3 137.9 134.5 141.3 146.1 16 All other liabilities 41.5 44.1 52.8 56.1 58.7 58.9 59.8 58.1 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 Type 1987 1989 July Aug. Sept. Oct. 1 Total 205,810 234,529 257,762 251,126 253,822 258,851 259,083 257,930 257,762 Retail financing of installment sales 2 Automotive 35,782 36,548 38,534 39,183 39,355 39,258 38,952 38,187 38,534 3 Equipment 25,170 28,298 29,781 28,128 29,039 29,639 29,594 29,568 29,781 4 Pools of securitized assets2 n.a. n.a. 698 769 793 755 715 739 698 Wholesale 5 Automotive 30,507 33,300 34,357 33,233 33,566 37,243 35,210 33,537 34,357 6 Equipment 5,600 5,983 6,945 6,244 6,497 6,602 6,843 6,933 6,945 7 All other 8,342 9,341 9,949 10,001 9,990 9,957 9,927 9,895 9,949 8 Pools of securitized assets2 n.a. n.a. 0 0 0 0 0 0 0 Leasing 9 Automotive 21,952 24,673 26,856 26,701 26,739 26,865 27,442 27,547 26,856 10 Equipment 43,335 57,455 67,506 64,086 64,186 65,170 66,787 67,677 67,506 11 Pools of securitized assets2 n.a. n.a. 1,247 887 990 948 1,199 1,093 1,247 12 Loans on commercial accounts receivable and factored commercial accounts receivable 18,078 17,796 18,442 19,989 20,098 19,611 19,487 18,892 18,442 13 All other business credit 17,043 21,134 23,447 21,904 22,571 22,804 22,926 23,861 23,447 Net change (during period) 14 Total 33,750 22,662 21,789 1,803 2,697 5,029 232 -1,153 -168 Retail financing of installment sales 15 Automotive 9,767 766 1,988 141 172 -97 -305 -765 347 1 1 6 7 P E o q o u l i s p m of e s n e t curitized assets2 2 n , . 0 a 5 . 8 n 1, . 3 a 8 . 4 1 - ,4 2 8 6 3 - 3 3 5 8 4 9 2 1 4 1 - 6 3 0 8 0 - - 4 4 5 0 -2 2 5 4 - 2 4 1 1 3 Wholesale 18 Automotive 7,497 2,793 1,057 -788 332 3,677 -2,033 -1,673 820 19 Equipment 252 226 962 79 253 104 242 90 11 2 2 0 1 A Po ll o o ls t h o e f r securitized assets2 n 1, . 3 a 0 . 9 n. 9 a 9 . 9 609 0 13 0 9 -11 0 -32 0 -30 0 -32 0 54 0 Leasing 22 Automotive 2,125 2,721 2,184 187 38 126 577 105 -691 2 2 3 4 P E o q o u l i s p m of e s n e t curitized assets2 5 n , . 1 a 5 . 6 9 n , . 9 a 6 . 2 8,6 5 4 2 6 6 7 9 1 1 6 1 9 0 9 3 - 9 4 8 2 4 1, 2 6 5 1 1 8 -1 8 0 9 6 0 -1 1 7 5 1 4 25 Loans on commercial accounts receivable and factored commercial accounts receivable 2,100 -282 646 687 109 -487 -124 -595 -450 26 All other business credit 3,486 4,091 3,719 235 667 234 122 934 -414 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 1990 IItteemm 11998877 11998888 11998899 July Aug. Sept. Oct. Nov. Dec. Jan. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 137.0 150.0 159.6 174.5 160.8 160.6 153.1 152.8 162.7 2 Amount of loan (thousands of dollars) 100.5 110.5 117.0 125.3 119.4 118.6 111.3 110.4 119.9 3 Loan/price ratio (percent) 75.2 75.5 74.5 73.8 75.6 75.3 73.2 73.0 74.4 4 Maturity (years) 27.8 28.0 28.1 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 2.42 2.31 2.14 1.95 1.81 2.18 6 Contract rate (percent per year) 8.94 8.81 9.76 10.06 9.83 9.87 9.77 9.78 9.70 Yield (percent per year) 7 OTS series3 9.31 9.18 10.11 10.48 10.22 10.24 10.11 10.09 10.07 8 HUD series4 10.17 10.30 10.22 9.70 10.05 10.04 9.79 9.72 9.75 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series)5 10.16 10.49 n.a. 9.61 9.95 9.94 9.73 9.69 9.72' 10 GNMA securities6 9.43 9.83 n.a. 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 95,030 101,329 104,974 104,421 105,896 107,052 108,180 109,076 110,721 111,329 12 FHA/VA-insured 21,660 19,762 19,640 19,630 19,589 19,608 19,843 19,953 20,283 20,471 13 Conventional 73,370 81,567 85,335 84,791 86,307 87,444 88,337 89,123 90,438 90,858 Mortgage transactions (during period) 14 Purchases 20,531 23,110 22,518 2,091 2,724 2,223 2,267 2,376 2,982 2,214 Mortgage commitments7 15 Contracted (during period) 25,415 23,435 27,409 2,513 2,842 2,328 2,963 2,536 2,495 1,787 16 Outstanding (end of period) 4,886 2,148 6,037 5,648 5,755 5,865 6,548 6,645 6,037 5,619 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 12,802 15,105 n.a. 20,533 21,024 20,650 21,342 n.a. n.a. n.a. 18 FHA/VA 686 620 n.a. 585 589 540 588 n.a. n.a. n.a. 19 Conventional 12,116 14,485 n.a. 19,948 20,435 20,110 20,755 n.a. n.a. n.a. Mortgage transactions (during period) 20 Purchases 76,845 44,077 n.a. 5,720 7,283 7,889 7,884 n.a. n.a. n.a. 21 Sales 75,082 39,780 73,446 5,180 6,650 8,050 7,058 7,058 8,526 6,845 Mortgage commitments9 22 Contracted (during period) 71,467 66,026 n.a. 6,608 5,705 7,708 7,555 n.a. 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 • April 1990 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1988 1989 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998877 11998888 11998899 Q4 QL Q2 Q3 Q4" 1 All holders 2,977,293 3,268,285 3,521,337 3,268,285 3,328,824 3,391,259 3,454,053'' 3,521,337 2 1- to 4-family 1,959,607 2,189,475 2,383,983 2,189,475 2,230,006 2,281,317 2,331,366r 2,383,983 3 Multifamily 273,954 290,355 305,746 290,355 296,139 297,860 302,121 305,746 4 Commercial 654,863 701,652 745,102 701,652 716,695 725,341 733,988 745,102 5 88,869 86,803 86,506 86,803 85,984 86,741 86,578 86,506 6 Selected financial institutions 1,704,560 1,874,967 1,968,786 1,874,967 1,905,052 1,932,154 1,950,634 1,968,786 7 Commercial banks 591,369 669,160 757,904 669,160 688,662 715,049 737,979'' 757,904 8 1- to 4-family 276,270 314,283 359,182 314,283 324,681 338,872 349,739 359,182 9 Multifamily 33,330 34,131 37,049 34,131 34,172 34,954 36,075 37,049 10 Commercial 267,340 305,242 344,349 305,242 313,941 324,878 335,296 344,349 11 Farm 14,429 15,504 17,324 15,504 15,868 16,345 16,869 17,324 12 Savings institutions3 860,467 929,647 920,974 929,647 936,091 933,694 927,982' 920,974 13 1- to 4-family 602,408 678,263 675,842 678,263 682,658 684,828 680,572 675,842 14 Multifamily 106,359 111,302 108,421 111,302 112,507 110,009 109,353 108,421 15 Commercial 150,943 139,416 136,070 139,416 140,255 138,201 137,406 136,070 16 Farm 757 666 641 666 671 656 651 641 17 Life insurance companies 212,375 232,639 239,202 232,639 234,910 236,160 235,767r 239,202 18 1- to 4-family 13,226 15.284 13,525 15,284 12,690 12,745 13,045 13,525 19 Multifamily 22,524 23,562 26,506 23,562 24,636 25,103 25,913 26,506 20 Commercial 166,722 184,124 189,642 184,124 188,073 188,756 187,208 189,642 21 Farm 9,903 9,669 9,529 9,669 9,511 9,556 9,601 9,529 22 Finance companies4 40,349 43,521 50,707 43,521 45,389 47,251 48,906r 50,707 23 Federal and related agencies 192,721 200,570 212,150 200,570 199,847 201,909 206,673' 212,150 24 Government National Mortgage Association 444 26 24 26 26 24 23r 24 25 1- to 4-family 25 26 24 26 26 24 23 24 26 Multifamily 419 0 0 0 0 0 0 0 27 Farmers Home Administration 43,051 42,018 41,985 42,018 41,780 40,711 41,117' 41,985 28 1- to 4-family 18,169 18,347 19,083 18,347 18,347 18,391 18,405 19,083 29 Multifamily 8,044 8,513 9,120 8,513 8,615 8,778 8,916 9,120 30 Commercial 6,603 5,343 4,423 5,343 5,101 3,885 4,366 4,423 31 Farm 10,235 9,815 9,359 9,815 9,717 9,657 9,430 9,359 32 Federal Housing and Veterans Administration 5,574 5,973 6,202 5,973 6,075 6,424 6,023r 6,202 33 1- to 4-family 2,557 2,672 3,007 2,672 2,550 2,827 2,900' 3,007 34 Multifamily 3,017 3,301 3,194 3,301 3,525 3,597 3,123r 3,194 35 Federal National Mortgage Association 96,649 103,013 110,884 103,013 101,991 103,309 107,052r 110,884 36 1- to 4-family 89,666 95,833 102,819 95,833 94,727 95,714 99,168 102,819 37 Multifamily 6,983 7,180 8,064 7,180 7,264 7,595 7,884 8,064 38 Federal Land Banks 34,131 32,115 30,792 32,115 31,261 31,467 30,943r 30,792 39 1- to 4-family 2,008 1,890 1,888 1,890 1,839 1,851 1,821 1,888 40 Farm 32,123 30,225 28,904 30,225 29,422 29,616 29,122 28,904 41 Federal Home Loan Mortgage Corporation 12,872 17,425 22,265 17,425 18,714 19,974 21,515r 22,265 42 1- to 4-family 11,430 15,077 19,174 15,077 16,192 17,305 18,493 19,174 43 Multifamily 1,442 2,348 3,091 2,348 2,522 2,669 3,022 3,091 44 Mortgage pools or trusts6 718,297 810,887 931,090 810,887 839,684 861,827 898,388r 931,090 45 Government National Mortgage Association 317,555 340,527 374,434 340,527 348,622 353,154 361,291' 374,434 46 1- to 4-family 309,806 331,257 362,711 331,257 337,563 341,951 349,830 362,711 47 Multifamily 7,749 9,270 11,723 9,270 11,059 11,203 11,461 11,723 48 Federal Home Loan Mortgage Corporation 212,634 226,406 266,260 226,406 234,695 242,789 256,896' 266,260 49 1- to 4-family 205,977 219,988 259,332 219,988 228,389 236,404 250,123 259,332 50 Multifamily 6,657 6,418 6,928 6,418 6,306 6,385 6,773 6,928 51 Federal National Mortgage Association 139,960 178,250 216,466 178,250 188,071 196,501 208,894'' 216,466 52 1- to 4-family 137,988 172,331 207,677 172,331 181,352 188,774 200,302 207,677 53 Multifamily 1,972 5,919 8,789 5,919 6,719 7,727 8,592 8,789 54 Farmers Home Administration5 245 104 79 104 96 85 78r 79 55 1- to 4-family 121 26 23 26 24 23 22 23 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 63 38 22 38 34 26 22 22 58 Farm 61 40 34 40 38 36 34 34 59 Individuals and others7 361,715 381,861 409,310 381,861 384,241 395,369 398,358r 409,310 60 1- to 4-family 201,704 215,077 235,138 215,077 215,379 225,059 226,788r 235,138 61 Multifamily 75,458 78,411 82,862 78,411 78,814 79,840 81,009 82,862 62 Commercial 63,192 67,489 70,596 67,489 69,291 69,595 69,690 70,596 63 Farm 21,361 20,884 20,714 20,884 20,757 20,875 20,871 20,714 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 11998888 11998899 Apr. May June July Aug. Sept. Oct. Nov/ Dec. Amounts outstanding (end of period) 1 Total 659,507 717,074 693,911 698,132 700,849 700,344 703,001 704,371 707,562 712,160 717,074 By major holder ? Commercial banks 318,925 334,936 320,458 323,363 324,438 323,621 326,135 327,327 330,746 332,675 333344,,993366 3 Finance companies 145,180 140,484 144,378 145,523 146,055 145,488 144,386 144,188 141,273 141,396 140,484 4 Credit unions 86,118 89,886 89,330 89,890 90,073 89,852 90,016 89,892 89,856 89,677 89,886 5 Retailers 43,498 42,744 41,301 41,323 41,649 41,798 41,989 42,221 42,319 42,554 42,744 6 Savings institutions 62,099 57,693 61,919 61,311 59,920 60,092 59,229 59,883 58,890 58,264 57,693 7 Gasoline companies 3,687 3,835 3,787 3,897 4,017 3,936 3,976 3,886 3,804 3,828 3,835 8 Pools of securitized assets n.a. 47,495 32,737 32,826 34,696 35,557 37,270 36,974 40,675 43,766 47,495 By major type of credit 9 Automobile 281,174 289,459 289,654 290,741 290,192 288,526 288,533 287,754 288,747 228899,,220000 228899,,445599 10 Commercial banks 123,259 127,285 123,878 125,118 125,592 124,881 126,597 126,759 128,238 128,654 127,285 11 Credit unions 41,326 42,865 42,510 42,687 42,684 42,624 42,747 42,733 42,761 42,720 42,865 1? Finance companies 97,204 83,572 90,268 90,976 91,184 90,213 89,439 88,317 84,814 84,707 83,572 13 Savings institutions 19,385 17,332 18,866 18,566 18,032 17,972 17,603 17,990 17,692 17,504 17,332 14 Pools of securitized assets n.a. 18,404 14,132 13,395 12,700 12,835 12,147 11,955 15,243 15,615 18,404 11 Revolving 174,792 203,301 184,500 186,502 189,622 191,028 194,398 195,302 196,379 199,240 203,301 16 Commercial banks 117,572 122,404 114,130 115,407 115,561 115,967 117,012 117,868 118,801 119,254 122,404 17 Retailers 38,692 37,804 36,497 36,504 36,814 36,963 37,134 37,355 37,435 37,639 37,804 18 Gasoline companies 3,687 3,835 3,787 3,897 4,017 3,936 3,976 3,886 3,804 3,828 3,835 19 Savings institutions 10,151 10,775 10,918 11,008 10,951 11,176 11,206 11,183 10,998 10,881 10,775 70 Credit unions 4,691 5,406 5,035 5,109 5,162 5,192 5,244 5,279 5,319 5,351 5,406 21 Pools of securitized assets n.a. 23,077 14,134 14,578 17,117 17,795 19,827 19,731 20,021 22,286 23,077 ?? Mobile home 25,744 22,602 23,993 23,952 23,685 23,630 22,938 22,991 22,947 22,567 22,602 73 Commercial banks 8,974 9,001 8,836 8,878 8,847 8,830 8,808 8,788 8,724 8,941 9,001 74 Finance companies 7,186 4,846 5,659 5,684 5,674 5,624 5,100 5,087 5,272 4,783 4,846 25 Savings institutions 9,583 8,756 9,498 9,390 9,163 9,176 9,030 9,116 8,951 8,843 8,756 76 Other 177,798 201,711 195,763 196,936 197,349 197,161 197,132 198,324 199,490 201,154 201,711 77 Commercial banks 69,120 76,246 73,614 73,960 74,438 73,944 73,718 73,912 74,983 75,826 76,246 78 Finance companies 40,790 52,066 48,451 48,863 49,197 49,650 49,847 50,784 51,187 51,906 52,066 79 Credit unions 40,102 41,615 41,785 42,094 42,228 42,036 42,025 41,880 41,776 41,606 41,615 30 Retailers 4,807 4,940 4,804 4,819 4,834 4,835 4,855 4,866 4,884 4,914 4,940 31 Savings institutions 22,981 20,830 22,638 22,347 21,773 21,769 21,390 21,593 21,249 21,036 20,830 32 Pools of securitized assets n.a. 6,014 4,471 4,853 4,879 4,927 5,296 5,288 5,411 5,865 6,014 Net change (during period) 33 Total 51,786 57,567 2,749 4,221 2,717 -505 2,657 1,371 3,191 4,598 4,913 By major holder 34 Commercial banks 36,015 16,011 2,216 2,904 1,076 -817 2,514 1,192 3,418 1,930 22,,226611 35 Finance companies2 4,899 -4,696 1,309 1,145 532 -567 -1,102 -198 -2,915 124 -913 36 Credit unions 6,031 3,768 815 560 184 -222 164 -124 -36 -179 209 37 Retailers3 2,523 -754 2 21 326 149 192 231 98 235 190 38 Savings institutions 2,248 -4,406 -815 -609 -1,390 172 -863 654 -993 -626 -571 39 Gasoline companies 69 148 104 110 120 -81 39 -89 -82 23 7 40 Pools of securitized assets4 n.a. 18,668 -882 89 1,870 861 1,713 -2% 3,701 3,091 3,729 By major type of credit 41 Automobile 15,198 8,285 804 1,087 -549 -1,667 7 -779 993 453 225599 42 Commercial banks 14,058 4,026 816 1,239 474 -711 1,716 162 1,479 416 -1,369 43 Credit unions 975 1,539 300 177 -3 -60 123 -14 28 -40 145 44 Finance companies -991 -13,632 701 708 208 -970 -775 -1,122 -3,503 -107 -1,135 45 Savings institutions 1,157 -2,053 -366 -300 -533 -61 -369 387 -298 -188 -172 46 Pools of securitized assets n.a. 3,362 -647 -737 -695 135 -688 -192 3,288 372 2,789 47 Revolving 20,908 28,509 1,670 2,002 3,120 1,406 3,370 904 1,076 2,861 4,062 48 Commercial banks 18,453 4,832 1,576 1,277 154 405 1,045 856 933 453 3,150 49 Retailers 2,303 -888 8 7 310 149 171 221 80 205 165 50 Gasoline companies 69 148 104 110 120 -81 39 -89 -82 23 7 51 Savings institutions -216 624 58 90 -57 225 30 -22 -185 -117 -107 52 Credit unions 300 715 88 74 53 30 52 35 40 32 55 53 Pools of securitized assets4 n.a. 12,588 -165 444 2,539 678 2,032 -96 290 2,265 791 54 Mobile home -643 -3,142 -174 -41 -267 -56 -692 53 -44 -380 35 55 Commercial banks -246 27 -7 42 -31 -18 -22 -20 -64 218 59 56 Finance companies -576 -2,340 -28 25 -10 -50 -524 -13 185 -489 63 57 Savings institutions 177 -827 -140 -108 -227 12 -146 86 -165 -109 -87 58 Other 16,323 23,913 449 1,173 413 -189 -29 1,192 1,166 1,664 557 59 Commercial banks 3,750 7,126 -169 346 478 -494 -226 194 1,071 843 420 60 Finance companies 6,466 11,276 635 412 334 453 197 937 403 719 159 61 Credit unions 4,758 1,513 428 309 133 -191 -11 -145 -104 -170 10 62 Retailers 221 133 -7 15 16 0 21 11 18 30 25 63 Savings institutions 1,131 -2,151 -368 -291 -574 -5 -379 203 -344 -212 -206 64 Pools of securitized assets n.a. 2,718 -70 382 26 48 369 -8 123 454 149 1. The Board's series cover most short- and intermediate-term credit extended 2. More detail for finance companies is available in the G. 20 statistical release. to individuals that is scheduled to be repaid (or has the option of repayment) in 3. Excludes 30-day charge credit held by travel and entertainment companies. two or more installments. 4. Outstanding balances of pools upon which securities have been issued; these These data also appear in the Board's G.19 (421) release. For address, see balances are no longer carried on the balance sheets of the loan originator. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • April 1990 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1989 IItteemm 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov. Dec. INTEREST RATES Commercial banks2 1 48-month new car 10.45 10.85 12.07 n.a. n.a. 12.13 n.a. n.a. 11.94 n.a. 2 24-month personal 14.22 14.68 15.44 n.a. n.a. 15.45 n.a. n.a. 15.42 n.a. 3 120-month mobile home3 13.38 13.54 14.11 n.a. n.a. 14.13 n.a. n.a. 13.97 n.a. 4 Credit card 17.92 17.78 18.02 n.a. n.a. 18.07 n.a. n.a. 18.07 n.a. Auto finance companies New car 10.73 12.60 12.62 11.96 11.94 12.22 12.42 13.04 13.27 13.27 6 Used car 14.60 15.11 16.18 16.45 16.37 16.31 16.22 16.17 16.09 16.10 OTHER TERMS4 Maturity (months) 7 New car 53.5 56.2 54.2 53.0 52.9 52.9 53.1 54.4 55.1 5555..11 8 Used car 45.2 46.7 46.6 46.5 46.4 46.2 46.2 45.8 45.6 45.5 Loan-to-value ratio 9 New car 93 94 91 91 91 90 88 88 89 89 10 Used car 98 98 97 97 97 96 96 % 96 96 Amount financed (dollars) 11 New car 11,203 11,663 12,001 12,065 12,108 11,949 11,841 11,965 12,279 12,301 12 Used car 7,420 7,824 7,954 7,921 7,988 7,874 7,856 7,904 8,063 8,0% 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 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 11998888 Q1 Q2 Q3 Q4 Qi 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 Nonfinancial Statistics • April 1990 1.57—Continued 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 11998888 Ql Q2 Q3 Q4 Ql 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 7 Total net advances 157.6 202.0 314.0 262.8 237.6 278.6 185.5 196.9 289.3 334488..77 2266..77 226677..44 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 55..22 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 221166..11 105.8 113377..44 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 70 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 71 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 77 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 73 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 75 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 77 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 78 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 79 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 225599..77 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 47 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 57 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 • April 1990 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998844 11998855 11998866 11998877 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 2 U.S. government 1,376.8 1,600.4 1,815.4 1,960.3 2,003.2 2,022.3 2,063.9 2,117.8 2,155.7 2,165.7 2,204.3 3 Treasury securities 1,373.4 1,597.1 1,811.7 1,955.2 1,998.1 2,015.3 2,051.7 2,095.2 2,133.4 2,142.1 2,180.7 4 Agency issues and mortgages 3.4 3.3 3.6 5.2 5.0 7.0 12.2 22.6 22.3 23.6 23.5 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 Debt capital instruments 3,038.0 3,485.5 3,957.5 4.428.0 4.511.0 4.652.6 4,782.0 4.902.1 4,979.2 5.078.3 5,187.8 7 Tax-exempt obligations 520.0 655.5 679.1 713.2 718.1 727.2 746.1 759.8 764.7 769.3 780.3 8 Corporate bonds 469.2 542.9 664.2 764.1 793.8 829.8 858.8 885.0 912.9 947.5 975.9 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 14 Other debt instruments 1,537.1 1,709.3 1,858.4 1,946.7 1,962.8 2,012.0 2,029.4 2,085.7 2,123.8 2,184.3 2,212.4 15 Consumer credit 519.3 601.8 659.8 692.7 688.9 705.8 721.2 743.7 745.0 761.0 775.3 16 Bank loans n.e.c 553.1 592.7 656.1 664.3 668.3 687.2 687.7 702.6 717.6 729.8 734.5 17 Open market paper 58.5 72.2 62.9 73.8 73.5 77.8 80.3 85.4 96.1 110.1 113.1 18 Other 406.2 442.6 479.6 516.0 532.1 541.2 540.2 554.0 565.1 583.5 589.5 19 By borrowing sector 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 20 State and local governments 383.0 473.9 510.1 543.7 547.1 556.0 565.7 573.5 578.5 584.8 595.1 21 Households 2.018.2 2.295.5 2,591.8 2,864.5 2,900.7 2,990.2 3,068.3 3,152.0 3,205.6 3,265.5 3,336.1 22 Nonfinancial business 2,173.9 2,425.4 2,714.0 2.966.5 3,026.0 3,118.5 3.177.5 3.262.4 3.319.0 3,412.3 3,469.0 23 Farm 187.9 173.4 156.6 145.5 141.3 143.9 143.6 137.6 135.9 139.5 140.7 24 Nonfarm noncorporate 769.0 898.3 1,001.6 1,109.4 1,131.7 1,151.9 1.172.6 1,205.3 1.229.1 1,245.9 1,261.6 25 Corporate 1,216.9 1.353.6 1,555.8 1.711.6 1,753.0 1,822.7 1,861.3 1.919.5 1,954.0 2,027.0 2,066.6 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 28 Bank loans n.e.c 30.8 27.9 26.9 23.3 22.8 22.4 22.7 21.5 21.6 22.7 22.9 29 Open market paper 27.7 33.9 37.4 41.2 42.5 44.0 46.3 50.9 54.9 52.7 57.5 30 U.S. government loans 107.1 101.1 97.1 96.1 93.1 93.5 89.8 88.1 83.0 81.4 80.4 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 41 Open market paper 219.5 252.4 284.6 323.8 330.6 353.4 358.0 377.4 392.0 398.3 400.9 42 Loans from Federal Home Loan Banks 74.6 88.8 108.6 133.1 129.5 134.8 141.6 152.8 163.8 161.9 151.1 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 44 Sponsored credit agencies 242.2 263.9 278.7 308.2 318.5 322.9 333.5 353.1 369.3 374.0 375.4 45 Mortgage pools 289.0 368.9 565.4 718.3 732.1 754.0 782.8 810.9 839.7 861.8 898.4 46 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 47 Commercial banks 84.1 79.2 75.6 82.7 76.4 77.2 76.6 78.8 73.3 74.5 75.8 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 ? 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 22,,333322..11 22,,334455..11 22,,441144..33 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 7,7 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 73 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 76 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 79 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 47 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 I 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 2/line 1 and 13. 19. Includes farm and commercial mortgages. 50. Line 2 Mine 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 • April 1990 2.10 NONFINANCIAL BUSINESS ACTIVITY Selected Measures1 1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted. 1989 1990 MMeeaassuurree 11998877 11998888 11998899 May June July Aug. Sept. Oct. Nov.' Dec.' Jan. 1 Industrial production 129.8 137.2 n.a. 141.6 142.0 141.9 142.5 142.3 141.8 142.2 142.5 140.9 Market groupings 2 Products, total 138.3 145.9 n.a. 151.7 152.5 151.8 152.5 152.4 151.5 152.3 153.5 151.3 3 Final, total 136.8 144.3 n.a. 150.4 151.2 150.2 151.1 150.8 149.4 150.2 151.5 148.8 4 Consumer goods 127.7 133.9 n.a. 139.2 139.9 138.7 139.3 139.0 140.2' 140.5 141.4 138.2 5 Equipment 148.8 158.2 n.a. 165.4 166.1 165.5 166.8 166.5 161.7' 163.2 164.9 162.9 6 Intermediate 143.3 151.5 n.a. 156.3 157.0 157.5 157.5 157.8 158.6' 159.5 160.3 159.9 7 Materials 118.3 125.3 n.a. 127.9 127.7 128.3 128.8 128.6 128.7' 128.4 127.6 126.6 Industry groupings 8 Manufacturing 134.6 142.8 n.a. 148.1 148.7 148.5 149.2 148.8 148.0 148.5 148.6 147.2 Capacity utilization (percent)2 9 Manufacturing 81.1 83.5 83.9' 84.3 84.4 84.0 84.2 83.7 83.1 83.1 82.9 81.9 10 Industrial materials industries 80.5 83.7 83.7 83.8 83.6 83.7 83.9 83.6 83.5 83.2 82.5 81.7 11 Construction contracts (1982 = 100)3 163.8 160.8 160.8' 159.0 157.0 163.0 160.0 175.0 165.0 158.0 160.0 154.0 12 Nonagricultural employment, total4 123.9 128.0 131.6 131.3 131.7 131.9 132.0 132.3 132.4 132.7 132.8 133.2 13 Goods-producing, total 101.5 103.7 105.3 105.5 105.4 105.4 105.5 105.2 105.2 105.2 104.9 104.9 14 Manufacturing, total 96.7 98.6 99.6 99.9 99.8 99.8 99.8 99.4 99.2 99.1 99.0 98.4 15 Manufacturing, production- worker ... 91.9 93.9 94.8 95.0 94.8 94.8 94.8 94.2 94.1 93.9 93.8 93.0 16 Service-producing 133.3 138.2 142.7 142.2 142.7 143.0 143.1 143.6 143.8 144.2 144.5 145.0 17 Personal income, total 235.0 252.8 275.5 273.5 274.8 276.4 277.3 277.9 280.3 282.9 284.2 n.a. 18 Wages and salary disbursements 226.3 244.4 264.8 262.0 263.8 266.1 266.7 268.5 271.4 271.6 273.3 n.a. 19 Manufacturing 183.8 196.5 207.3 205.8 207.0 207.5 208.8 208.8 211.1 208.9 209.8 n.a. 20 Disposable personal income 232.4 252.1 274.0 271.7 273.8 275.4 276.1 276.5 278.7 281.6 282.7 n.a. 21 Retail sales® 210.8 225.2' 237.5 237.4 237.3 239.1 241.3 242.0 238.9 240.5 239.9 243.8 Prices7 22 Consumer (1982-84 = 100) 113.6 118.3 124.0 123.8 124.1 124.4 124.6 125.0 125.6 125.9 126.1 127.4 23 Producer finished goods (1982 = 100) ... 105.4 108.0 113.5 114.2 114.3 114.1 113.4 113.6' 114.8 114.8 115.3 117.5 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 hAl 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1989 1990 CCaatteeggoorryy 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov. Dec.' Jan. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 185,010 186,837 188,601 188,518 188,672 188,808 188,948 189,096 189,238 189,381 189,506 2 Labor force (including Armed Forces)1 122,122 123,893 126,077 126,300 126,202 126,280 126,245 126,373 126,709 126,762 126,610 3 Civilian labor force 119,865 121,669 123,869 124,111 124,013 124,070 124,023 124,148 112244,,448888 124,546 112244,,339977 Employment 4 Nonagricultural industries 109,232 111,800 114,142 114,404 114,219 114,275 114,200 114,388 114,676 114,691 114,728 5 Agriculture 3,208 3,169 3,199 3,138 3,217 3,275 3,219 3,197 3,160 3,197 3,134 Unemployment 6 Number 7,425 6,701 6,528 6,569 6,577 6,520 6,604 6,563 6,652 6,658 6,535 7 Rate (percent of civilian labor force) .... 6.2 5.5 5.3 5.3 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 62,218 62,470 62,528 62,703 62,723 62,529 62,619 62,896 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 102,200 105,584 108,573 108,607 108,767 108,887 109,096 109,171 109,452' 109,548 109,823 10 Manufacturing 19,024 19,403 19,611 19,650 19,649 19,644 19,559 19,537 19,517' 19,489 19,377 11 Mining 717 721 722 715 706 729 730 731 737 739 740 12 Contract construction 4,967 5,125 5,302 5,283 5,314 5,321 5,325 5,335 5,355' 5,305 5,409 13 Transportation and public utilities 5,372 5,548 5,703 5,716 5,736 5,618 5,709 5,729 5,753' 5,832 5,859 14 Trade 24,327 25,139 25,807 25,781 25,823 25,877 25,896 25,957 26,044' 26,022 26,163 15 Finance 6,547 6,676 6,814 6,808 6,815 6,836 6,852 6,851 6,871' 6,882 6,892 16 Service 24,236 25,600 26,889 26,931 26,973 27,058 27,159 27,188 27,345' 27,416 27,522 17 Government 17,010 17,372 17,726 17,723 17,751 17,804 17,866 17,843 17,830' 17,863 17,861 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 • April 1990 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1989 1989 1989 SSeerriieess Q1 Q2 Q3 Q4' Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4' Output (1977 = 100) Capacity (percent of 1977 output) Utilization rate (percent) 1 Total industry 140.7 141.8 142.2 142.2 167.5 168.7 169.9 171.1 84.0 84.1 83.7 83.1 2 Mining 101.8 102.0 102.7 103.8 125.1 124.7 124.3 123.8 81.3 81.8 82.6 83.8 3 Utilities 116.0 115.7 113.9 117.9 141.0 141.4 141.7 142.0 82.3 81.8 80.4 83.0 4 Manufacturing 147.0 148.3 148.8 148.4 174.3 175.7 177.2 178.7 84.4 84.4 84.0 83.0 5 Primary processing 1 15 2 8 7 . . 6 8 116207..86 1 1 6 2 0 8 . . 9 8 116208..37 1 1 4 9 6 1 . . 5 0 1 1 9 4 2 7 . . 6 8 119449..21 1 1 9 5 5 0. . 4 8 8837..03 8 8 6 3 . . 4 5 8 8 2 6 . . 9 4 8 8 1 5 . . 9 6 6 Advanced processing 127.6 127.9 128.6 128.2 151.7 152.6 153.5 154.4 84.1 83.9 83.8 83.0 7 Materials 138.6 139.0 140.4 138.5 170.1 171.3 172.5 173.7 81.5 81.1 81.4 79.7 8 Durable goods 1 9 3 8 6 . . 4 3 1 9 3 6 7 . . 0 1 1 9 3 7 7 . . 8 9 1 9 3 3 8 . . 1 0 1 1 1 5 0 2 . . 2 7 1 1 1 5 0 4 . . 6 2 1 1 1 5 1 5 . . 0 8 1 1 1 5 1 7 . . 4 4 8 8 3 9 . . 8 3 8 8 1 8 . . 4 9 8 88 2 . . 5 3 7 8 8 7 . . 1 7 9 Metal materials 139.2 139.8 141.1 140.6 153.5 155.3 157.0 158.8 90.7 90.0 89.8 88.5 10 Nondurable goods 148.4 146.1 149.8 151.6 154.0 155.8 157.6 159.4 96.4 93.8 95.1 95.1 11 Textile, paper, and chemical 145.4 145.7 146.5 145.9 161.4 163.7 165.9 168.2 90.1 89.0 88.3 86.7 12 Paper 1134 EnerCgyh emmaitcearli als 100.7 100.7 99.8 101.7 118.4 118.3 118.1 118.0 85.0 85.1 84.5 86.2 Previous cycle Latest cycle 1989 1989 1990 High Low High Low Jan. May June July Aug. Sept. Oct/ Nov/ Dec/ Jan. Capacity utilization rate (percent) 11115555 TTTToooottttaaaallll iiiinnnndddduuuussssttttrrrryyyy 8888..66 7722..11 8866..99 6699..55 8844..33 8844..00 8844..00 8833..77 8833..99 8833..66 8833..11 8833..11 8833..11 81.9 11116666 MMMMiiiinnnniiiinnnngggg 9922..88 8877..88 9955..22 7766..99 8822..22 8811..88 8811..55 8822..11 8822..44 8833..44 8844..22 8844..44 8822..88 84.7 11117777 UUUUttttiiiilllliiiittttiiiieeeessss 9955..66 8822..99 8888..55 7788..00 8800..99 8811..88 8800..88 8800..55 8800..00 8800..88 8811..44 8811..33 8866..44 77.1 11118888 MMMMaaaannnnuuuuffffaaaaccccttttuuuurrrriiiinnnngggg 8877..77 6699..99 8866..55 6688..00 8844..77 8844..33 8844..44 8844..00 8844..22 8833..77 8833..11 8833..11 8822..99 81.9 11119999 PPPPrrrriiiimmmmaaaarrrryyyy pppprrrroooocccceeeessssssssiiiinnnngggg 9911..99 6688..33 8899..11 6655..00 8888..44 8866..22 8866..22 8866..77 8866..66 8855..88 8866..22 8855..66 8844..99 84.9 8866..00 7711..11 8855..11 6699..55 8833..11 8833..44 8833..55 8822..99 8822..66 8811..66 8811..99 8822..11 80.7 8833..22 22220000 AAAAddddvvvvaaaannnncccceeeedddd pppprrrroooocccceeeessssssssiiiinnnngggg........ 9922..00 7700..55 8899..11 6688..55 8844..66 8833..88 8833..66 8833..77 8833..99 8833..66 8833..55 8833..22 8822..55 81.7 22221111 MMMMaaaatttteeeerrrriiiiaaaallllssss 22222222 DDDDuuuurrrraaaabbbblllleeee ggggooooooooddddssss 9 9 9 999 11 .. .. 22 88 66 66 44 77 .. .. 44 11 8 9 8 9 99 33 .. .. 88 66 6 4 6 4 00 55 .. .. 99 77 8 8 8 8 2 6 2 6 . . . . 1 1 1 1 8 7 8 799 11 .. .. 88 00 88 88 11 00 .. .. 11 66 8 8 8 8 1 2 1 2 . . . . 3 3 3 3 88881212....7777 88 88 11 11 .. .. 22 99 8 8 8 8 00 11 .. .. 33 55 7 7 7 7 99 77 .. .. 99 77 7 7 7 7 8 4 8 4 . . . . 9 9 9 9 7 7 8 7 . . 2 3 22223333 MMMMeeeettttaaaallll mmmmaaaatttteeeerrrriiiiaaaallllssss ,,,, 9911..11 6666..77 8888..11 7700..77 9900..11 8888..77 8888..77 8899..22 8888..88 8877..55 8888..33 8877..77 8877..11 86.7 2 2 2 2 2 2 2 2 4 5 4 5 4 5 4 5 NNNNoooo TTTT nnnn eeee dddd xxxx uuuu tttt rrrr iiiillll aaaa eeee bbbb ,,,, lllleeee pppp aaaa gggg pppp oooo eeee oooo rrrr dddd ,,,, ssss aaaa nnnndddd 9922..88 6644..88 8899..44 6688..88 9911..55 8899..66 8899..88 9900..66 9900..11 8888..88 8899..44 8888..55 8877..88 87.1 cccchhhheeeemmmmiiiiccccaaaallll 9988..44 7700..66 9977..33 7799..99 9988..11 9933..22 9933..77 9955..00 9955..11 9955..11 9966..44 9944..77 9944..22 22226666 PPPPaaaappppeeeerrrr 9922..55 6644..44 8877..99 6633..55 9900..77 8888..44 8888..55 8899..55 8888..66 8866..77 8877..44 8866..99 8855..99 28 Energy materials.. 9944..66 8866..99 9944..00 8822..33 8844..99 8855..55 8833..88 8833..99 8844..33 8855..44 8866..11 8866..33 8866..22 84.8 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 hAl 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1977 1989 1990 pro- 1989 GGrroouuppss por- avg. tion Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct/ Nov. Dec.p Jan/ Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 140.8 140.5 140.7 141.7 141.6 142.0 141.9 142.5 142.3 141.8 142.2 142.5 140.9 2 Products 57.72 150.1 150.0 150.5 151.6 151.7 152.5 151.8 152.5 152.4 151.5 152.3 153.5 151.3 3 Final products 44.77 148.2 148.6 148.9 150.2 150.4 151.2 150.2 151.1 150.8 149.4 150.2 151.5 148.8 4 Consumer goods 25.52 138.5 138.7 138.4 139.5 139.2 139.9 138.7 139.3 139.0 140.2 140.5 141.4 138.2 5 Equipment 19.25 161.1 161.6 162.8 164.3 165.4 166.1 165.5 166.8 166.5 161.7 163.2 164.9 162.9 6 Intermediate products 12.94 156.6 155.1 156.1 156.5 156.3 157.0 157.5 157.5 157.8 158.6 159.5 160.3 159.9 7 Materials 42.28 128.1 127.4 127.3 128.2 127.9 127.7 128.3 128.8 128.6 128.7 128.4 127.6 126.6 Consumer goods 8 Durable consumer goods 6.89 131.5 131.6 130.1 132.2 131.2 130.8 127.3 128.7 127.9 127.9 127.4 128.5 119.7 9 Automotive products 2.98 132.5 131.6 128.9 131.7 128.6 125.6 120.2 122.3 120.6 119.2 120.3 123.6 99.5 10 Autos and trucks 1.79 135.6 133.1 128.3 131.7 127.4 123.3 114.6 119.3 117.1 113.1 114.7 118.3 78.5 11 Autos, consumer 1.16 99.6 96.0 95.0 98.8 96.0 91.4 81.2 86.4 92.7 91.5 84.3 84.2 56.1 12 Trucks, consumer .63 202.3 201.9 190.0 192.8 185.5 182.5 176.7 180.5 162.4 153.3 171.2 181.7 120.2 13 Auto parts and allied goods 1.19 127.9 129.4 129.8 131.7 130.4 129.1 128.7 126.7 125.9 128.3 128.8 131.4 131.1 14 Home goods 3.91 130.7 131.6 131.1 132.6 133.3 134.8 132.7 133.5 133.4 134.4 132.8 132.2 135.0 15 Appliances, A/C and TV 1.24 151.0 153.9 151.6 151.7 151.3 155.6 148.1 152.1 151.9 151.7 145.0 142.0 149.8 16 Appliances and TV 1.19 149.5 153.0 152.3 152.5 151.4 155.0 147.0 149.4 148.3 147.3 142.3 137.9 17 Carpeting and furniture .96 141.1 141.3 140.7 142.8 144.3 143.1 141.3 139.8 139.9 141.9 142.9 144.2 18 Miscellaneous home goods 1.71 110.1 110.1 110.9 113.0 114.1 115.0 116.8 116.6 116.5 117.8 118.2 118.4 19 Nondurable consumer goods 18.63 141.1 141.4 141.4 142.2 142.1 143.3 142.8 143.2 143.1 144.7 145.3 146.1 145.1 20 Consumer staples 15.29 149.4 149.7 149.9 150.7 150.7 151.9 151.4 152.0 151.8 153.8 154.8 156.0 154.7 21 Consumer foods and tobacco 7.80 144.8 144.3 143.3 144.7 144.7 145.7 144.2 145.6 145.9 147.9 149.1 149.3 22 Nonfood staples 7.49 154.2 155.4 156.9 156.9 156.9 158.4 158.9 158.7 157.9 160.0 160.7 162.9 160.2 23 Consumer chemical products 2.75 187.6 187.8 188.9 187.3 189.1 191.0 193.1 192.5 187.9 192.0 190.7 191.5 24 Consumer paper products 1.88 174.2 177.0 180.4 180.9 180.9 183.6 183.0 184.7 186.6 188.3 192.3 193.1 25 Consumer energy 2.86 109.1 110.1 110.7 112.0 110.1 110.7 110.4 109.2 110.3 110.8 111.1 115.7 107.5 26 Consumer fuel 1.44 96.7 95.0 95.6 97.3 93.6 95.6 97.0 96.0 95.7 96.1 95.7 94.8 27 Residential utilities 1.42 121.7 125.4 126.1 127.0 127.0 126.1 124.0 122.7 125.1 125.8 126.8 Equipment 28 Business and defense equipment 18.01 167.1 167.9 168.9 170.3 171.5 172.0 171.3 172.5 172.1 167.1 168.6 170.6 168.3 29 Business equipment 14.34 163.8 165.0 166.3 167.8 169.1 169.6 168.5 169.9 169.6 164.8 166.6 168.8 165.9 30 Construction, mining, and farm 2.08 74.3 75.6 76.9 77.6 76.3 74.8 73.0 72.1 74.7 75.2 75.4 76.4 77.5 31 Manufacturing 3.27 136.3 137.8 138.6 139.7 140.9 142.8 143.8 143.5 143.1 142.0 141.8 141.6 142.1 32 Power 1.27 92.8 92.7 93.0 93.6 93.3 92.5 92.8 94.2 93.8 94.8 95.1 94.7 95.0 33 Commercial 5.22 252.4 254.3 257.6 260.1 263.2 264.5 263.8 265.6 265.1 259.3 262.4 263.4 261.3 34 Transit 2.49 125.7 125.2 123.9 124.8 125.3 124.8 120.1 124.4 122.2 107.7 111.2 121.5 107.4 35 Defense and space equipment 3.67 180.0 179.3 178.7 179.9 180.7 181.1 182.0 182.7 182.1 176.0 176.6 177.7 177.7 Intermediate products 36 Construction supplies 5.95 142.3 139.5 139.3 140.2 140.2 141.2 142.2 141.5 140.9 142.6 143.9 143.7 144.0 37 Business supplies 6.99 168.8 168.4 170.4 170.4 170.0 170.4 170.6 171.2 172.3 172.3 172.8 174.4 38 General business supplies 5.67 175.9 175.4 177.4 177.9 177.3 177.9 177.8 178.8 180.1 179.9 181.0 181.6 39 Commercial energy products 1.31 138.2 138.3 140.3 138.0 138.2 138.4 139.6 138.1 138.5 139.5 137.5 143.2 Materials 40 Durable goods materials 20.50 139.4 138.6 137.9 139.0 138.7 139.4 139.9 140.9 140.4 139.2 138.9 137.5 136.6 41 Durable consumer parts 4.92 111.7 112.1 110.7 110.8 111.8 111.6 109.9 111.9 110.7 108.9 108.4 105.7 100.4 42 Equipment parts 5.94 175.2 175.2 175.3 176.9 177.1 177.5 179.1 180.0 179.6 177.6 179.1 179.0 179.0 43 Durable materials n.e.c 9.64 131.5 129.7 128.8 130.0 128.9 130.0 131.0 131.6 131.4 131.1 129.6 128.1 128.9 44 Basic metal materials 4.64 100.8 98.4 95.9 98.0 94.4 95.5 97.7 98.4 97.4 96.4 92.7 90.2 93.1 45 Nondurable goods materials 10.09 137.1 135.9 136.0 137.1 136.8 137.3 138.5 138.3 136.7 138.4 138.0 137.5 137.4 46 Textile, paper, and chemical materials 7.53 139.9 138.6 139.0 140.3 139.1 140.0 141.8 141.5 140.0 141.4 140.5 139.9 139.5 47 Textile materials 1.52 112.1 110.7 111.8 114.6 116.4 117.2 116.4 117.0 115.6 115.1 113.3 113.6 48 Pulp and paper materials 1.55 150.4 147.5 147.3 146.7 145.2 146.5 149.1 149.9 150.5 153.1 151.0 150.7 49 Chemical materials 4.46 145.7 145.0 145.4 146.8 144.7 145.5 147.9 147.0 144.6 146.3 146.2 145.2 50 Miscellaneous nondurable materials ... 2.57 129.1 128.0 127.2 127.8 129.9 129.4 129.0 128.9 127.3 129.8 130.6 51 Energy materials 11.69 100.5 100.5 101.0 101.7 101.1 99.1 99.1 99.5 100.9 101.7 101.9 101.7 100.0 52 Primary energy 7.57 105.2 104.4 103.7 104.1 104.6 103.0 103.2 104.2 105.6 107.0 107.0 104.9 53 Converted fuel materials 4.12 92.0 93.3 96.1 97.4 94.7 92.0 91.6 91.0 92.2 91.9 92.5 95.7 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • April 1990 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1977 1990 Groups SIC propor- 1989 code tion avg. Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct.r Nov. Dec.p Index (1977 = 100) MAJOR INDUSTRY 1 Mining and utilities . 15.79 107.2 106.8 107.5 107.9 107.2 106.3 106.6 106.5 107.7 108.6 108.7 110.1 106.5 2 Mining 9.83 103.0 100.9 101.5 102.4 102.0 101.5 102.1 102.4 103.5 104.4 104.5 102.4 104.6 3 Utilities 5.96 114.0 116.5 117.5 117.1 115.6 114.3 114.0 113.3 114.5 115.6 115.5 122.8 109.6 4 Manufacturing 84.21 147.2 146.8 147.0 148.0 148.1 148.7 148.5 149.2 148.8 148.0 148.5 148.6 147.2 5 Nondurable 35.11 148.5 148.1 148.6 149.6 149.5 150.5 150.8 151.1 151.1 152.4 152.7 152.4 152.7 6 Durable 49.10 146.2 145.9 145.8 146.9 147.1 147.4 146.8 147.8 147.2 144.9 145.5 145.9 143.3 Mining 7 Metal 10 .50 106.9 98.6 98.1 96.8 94.0 101.2 106.2 103.7 104.3 104.0 104.4 8 Coal 11.12 1.60 144.7 134.7 137.7 145.5 137.1 129.2 130.2 135.4 144.2 144.4 144.4 138.3 153.3 9 Oil and gas extraction 13 7.07 88.9 89.5 89.6 89.1 90.5 90.6 90.8 90.3 90.0 90.9 91.2 89.7 10 Stone and earth minerals. 14 .66 150.8 142.5 143.5 144.5 146.6 150.2 152.1 151.5 148.8 151.8 151.1 153.6 Nondurable manufactures 11 Foods 7.96 146.6 146.3 145.4 146.6 147.2 147.9 147.3 148.3 148.8 150.3 151.6 151.7 12 Tobacco products .62 105.0 104.7 101.5 109.2 105.9 104.2 97.1 99.9 97.3 99.2 13 Textile mill products 2.29 120.2 119.4 119.7 122.5 123.6 123.8 123.5 123.2 123.2 123.5 121.5 122.3 14 Apparel products 2.79 110.2 110.2 109.9 111.3 111.5 111.9 111.4 111.1 111.2 110.0 109.3 108.2 15 Paper and products 3.15 153.8 151.7 151.7 150.7 150.1 150.2 152.4 152.8 153.4 155.5 153.5 154.1 16 Printing and publishing 4.54 193.0 194.6 198.5 200.1 199.0 200.5 199.9 200.6 203.1 204.8 206.8 207.7 209.0 17 Chemicals and products 8.05 159.0 158.5 159.2 159.3 158.2 159.9 162.2 161.5 159.3 161.3 162.1 161.6 18 Petroleum products 2.40 98.0 96.3 97.0 97.3 96.9 97.9 98.3 97.7 98.4 98.1 98.2 95.5 99^0 19 Rubber and plastic products . 2.80 175.9 175.0 176.4 178.0 180.5 182.3 182.3 183.6 184.2 186.0 185.2 184.1 20 Leather and products .53 62.9 62.9 61.2 61.4 60.3 60.5 60.8 60.2 60.4 60.0 57.5 55.6 Durable manufactures 21 Lumber and products 24 2.30 139.9 132.8 133.4 135.1 135.5 137.2 136.9 136.5 135.7 137.4 138.9 139.0 22 Furniture and fixtures 25 1.27 166.3 164.8 165.8 168.0 170.2 170.8 169.0 168.0 167.6 167.5 167.9 168.5 23 Clay, glass, and stone products 32 2.72 126.6 125.4 125.5 124.7 123.9 123.9 122.9 123.9 123.4 123.6 124.3 123.6 24 Primary metals 33 5.33 93.2 91.1 88.4 90.1 87.2 87.3 89.2 90.3 89.2 89.0 85.1 83.0 84.8 25 Iron and steel 331.2 3.49 82.2 79.1 75.9 77.0 73.2 72.9 75.4 75.9 75.4 76.4 72.0 70.2 26 Fabricated metal products. 34 6.46 124.5 124.5 123.8 123.1 124.8 125.2 125.4 125.5 124.4 124.1 125.4 124.7 123^4 27 Nonelectrical machinery .. 35 9.54 178.7 180.8 183.0 184.7 186.5 187.5 186.7 187.8 188.2 184.1 187.5 188.2 186.6 28 Electrical machinery 36 7.15 180.9 181.7 181.6 182.2 181.6 181.9 181.4 183.7 182.7 182.2 181.3 180.9 181.9 29 Transportation equipment 37 9.13 136.7 136.4 134.8 136.4 135.5 134.2 131.3 133.2 131.9 123.9 125.1 128.6 115.1 30 Motor vehicles and parts 371 5.25 124.9 123.4 120.4 122.0 119.7 116.4 110.4 114.2 112.7 110.1 110.4 110.7 87.0 31 Aerospace and miscellaneous transportation equipment.. 372-6.9 3.87 152.7 154.0 154.4 155.9 157.1 158.4 159.6 159.0 157.9 142.7 145.2 152.9 153.3 32 Instruments 38 2.66 161.0 161.3 161.8 163.0 164.3 165.7 166.0 164.1 163.1 162.5 161.9 160.8 161.6 33 Miscellaneous manufactures 39 1.46 111.8 107.6 110.0 114.5 114.7 117.1 119.6 118.5 119.2 122.9 125.5 127.3 Utilities 34 Electric . 131.0 135.3 137.0 137.1 135.8 135.5 136.8 129.6 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 1,885.1 1,879.2 1,878.0 1,893.9 1.885.5 1,886.2 1,868.0 1,875.4 1,874.8 1,875.0 1,883.8 1,895.8 1.849.8 36 Final 405.7 1,447.5 1,449.6 1,442.8 1,460.4 1.449.6 1,450.2 1,430.0 1,438.1 1,436.5 1,432.7 1,439.4 1,451.2 1.406.9 37 Consumer goods 272.7 935.6 934.3 928.0 939.4 928.5 929.3 915.5 919.9 917.7 926.2 930.6 939.4 908.5 38 Equipment 133.0 511.9 515.2 514.8 521.1 521.1 520.9 514.5 518.2 518.8 506.5 508.8 511.8 498.4 39 Intermediate 111.9 437.7 429.6 435.3 433.5 435.9 436.0 438.0 437.3 438.3 442.3 444.4 444.6 443.0 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 hAl 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1989 IItteemm 11998877 11998888 11998899 Mar. Apr. May June July Aug. Sept. Oct.' Nov.' Dec. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,535 1,456 1,332 1,230 1,334 1,347 1,308 1,281 1,328 1,319 1,356 1,342 1,376 2 1-family 1,024 994 934 870 954 905 874 906 927 946 961 979 970 3 2-or-more-family 511 462 398 360 380 442 434 375 401 373 395 363 406 4 Started 1,621 1,488 1,374 1,405' 1,341' 1,308 1,414' 1,424' 1,325' 1,263' 1,423 1,347 1,254 1-family 1,146 1,081 1,002 979' 1,028' 977 971' 1,029' 987' 969' 1,023 1,010 911 6 2-or-more-family 474 407 373 426' 313' 331 443' 395' 338' 294' 400 337 343 7 Under construction, end of period1 . 987 919 855 942 924 911 914 918 902 893 894 883 887 8 1-family 591 570 537 586 579 572 572 576 565 566 565 559 567 9 2-or-more-family 397 350 317 356 345 339 342 342 337 327 329 324 320 10 Completed 1,669 1,530 1,421 1,459 1,552 1,442 1,355 1,372 1,439 1,368 1,317 1,479 1,290 11 1-family 1,123 1,085 1,025 1,050 1,115 1,041 964 965 1,040 960 987 1,075 916 12 2-or-more-family 546 445 397 409 437 401 391 407 399 408 330 404 374 13 Mobile homes shipped 233 218 198 209' 202' 205 200' 179' 194 186' 190 189 189 Merchant builder activity in 1-family units 14 Number sold 672 675 649 555 607 653 647 738 723 640' 637 696 629 15 Number for sale, end of period 365 366 362 377 377 380 377 369 364 364' 364 363 362 Price (thousands of dollars)2 Median 16 Units sold 104.7 113.3 120.8 123.0 116.7 119.0 122.8 116.0 122.9 120.0' 123.0 125.0 130.1 17 Units sold 127.9 139.0 148.8 149.0 144.7 145.1 153.6 140.3 158.6 151.1' 147.5 152.1 159.8 EXISTING UNITS (1-family) 18 Number sold 3,530 3,594 3,438 3,400 3,400 3,210 3,360 3,330 3,480 3,520 3,490 3,560 3,560 Price of units sold ^ (thousands of dollars)' 19 Median 85.6 89.2 93.0 92.0 92.9 92.6 93.4 96.7 94.8 94.3 92.4 93.1 9922..55 20 Average 106.2 112.5 118.0 116.1 118.0 118.0 118.8 122.1 120.8 118.4 117.2 118.3 117.0 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 397,721 409,663 414,677 416,779 411,891 416,540 412,523 410,269 416,279 416,176 414,590 417,294 414,588 27 Private 320,108 328,738 330,661 338,065 332,537 330,591 329,035 328,785 331,884 329,564 329,782 328,762 323,525 23 Residential 194,656 198,101 163,865 202,083 200,735 196,984 194,229 195,165 194,393 192,765 193,124 192,279 190,974 24 Nonresidential, total 125,452 130,637 166,796 135,982 131,802 133,607 134,806 133,620 137,491 136,799 136,658 136,483 132,551 Buildings 25 Industrial 13,707 14,931 16,771 15,698 16,245 15,945 16,302 16,424 17,526 17,927 17,746 17,812 17,498 26 Commercial 55,448 58,104 57,549 60,653 55,581 56,796 57,434 56,640 57,680 57,132 58,238 57,688 55,128 77 Other 15,464 17,278 17,402 17,634 16,645 17,343 17,179 16,768 18,455 17,962 17,277 17,761 16,622 28 Public utilities and other 40,833 40,324 75,074 41,997 43,331 43,523 43,891 43,788 43,830 43,778 43,397 43,222 43,303 7.9 Public 77,612 80,922 44,223 78,714 80,420 85,130 81,914 81,484 84,395 86,612 84,807 88,532 91,062 30 Military 4,327 3,579 3,669 3,740 2,054 3,870 4,324 3,194 3,779 4,916 3,342 3,955 3,959 31 Highway 25,343 28,524 27,597 26,091 27,772 27,432 27,321 26,128 27,367 27,581 26,062 28,894 31,565 32 Conservation and development... 5,162 4,474 4,755 4,210 3,068 6,053 4,699 4,567 4,708 4,906 5,860 4,414 5,581 33 Other 42,780 44,345 25,995 44,673 47,526 47,775 45,570 47,595 48,541 49,209 49,543 51,269 49,957 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 • April 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 Change from 1 months earlier (at annual rate) month earlier IIIttteeemmm 1989 1990 11998899 11999900 JJaann.. JJaann.. Mar/ June' Sept/ Dec/ Sept/ Oct/ Nov / Dec/ Jan. Jan. CONSUMER PRICES2 (1982-84=100) 1 All items 4.7 5.2 6.1 5.3 2.3 4.9 .2 .5 .3 .4 1.1 127.4 2 Food 5.6 6.7 7.8 5.6 3.6 5.5 .3 .4 .5 .5 2.0 130.4 3 Energy items 1.8 9.7 9.7 22.7 -12.6 3.9 -.6 1.0 -.3 .3 5.1 97.6 4 All items less food and energy 4.6 4.4 5.5 3.8 3.5 4.7 .3 .5 .4 .3 .6 132.0 5 Commodities 4.2 2.6 3.8 2.4 1.3 3.4 .5 .4 .2 .2 .4 121.0 6 Services 5.0 5.3 5.9 4.6 4.5 5.7 .2 .5 .4 .4 .7 138.4 PRODUCER PRICES (1982=100) 7 Finished goods 4.5 5.8 9.0 5.8 .4 5.0 .7 .5 .1 .6 1.8 117.5 8 Consumer foods 5.6 5.9 11.2 -2.3 .7 12.0 -.3 1.4 .9 .6 2.1 123.6 9 Consumer energy 2.7 19.7 33.0 34.3 -15.3 -4.8 6.6 .2 -3.2 1.9 13.6 72.8 10 Other consumer goods 4.6 4.1 5.4 6.0 2.3 4.6 .3 .3 .2 .6 .0 126.9 11 Capital equipment 3.7 3.4 4.6 4.5 4.4 1.7 .7 -.2 .4 .2 .2 121.1 12 Intermediate materials3 6.0 2.7 7.9 2.9 -.7 .4 .4 .2 -.1 .0 1.2 113.4 13 Excluding energy 7.0 .3 5.5 .3 -.7 -1.3 .1 .1 .0 -.4 .1 119.9 Crude materials 14 Foods 15.7 1.0 14.8 -16.9 -2.2 18.4 -.6 -.6 2.3 2.5 1.0 113.6 15 Energy .6 15.7 48.3 23.6 -7.0 13.2 3.5 .7 .3 2.2 5.0 82.4 16 Other 8.6 -5.8 9.7 -7.7 .6 -16.3 .4 -.1 -2.2 -2.1 .2 132.1 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 hAl 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 7 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 777.6 863.6 911.6 808.5 894.7 905.2 930.1 916.5 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 -20.5' -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 • April 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 11998899 Q4 Ql 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' income1 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 16,566.4 16,629.8 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 profits1 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 -20.5' -6.3 -8.9 Capital consumption allowances 32 Corporate 303.1 321.7 344.8 329.7 335.2 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 suiplus, 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 Q3" 1 Balance on current account --113333,,224499 --114433,,770000 -126,548 -32,340 -28,677 -30,390 -32,084 -22,687 2 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 assets5 -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 1111,,330088 11,,887788 -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 • April 1990 3.11 U. S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1989 IItteemm 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov/ Dec." 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 254,073 322,426 364,610 31,286 30,468 30,562 30,680 31,034 30,374 31,109 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 406,241 440,952 473,309 39,293 38,709 40,662 39,194 41,283 40,666 38,278 Trade balance 3 Customs value -152,169 -118,526 -108,699 -8,007 -8,241 -10,101 -8,513 -10,249 -10,292 -7,169 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 1990 TTyyppee 11998866cc 11998877cc 11998888cc July Aug. Sept. Oct. Nov. Dec. Jan.p 1 Total 48,511 45,798 47,802 63,462 62,364 68,418 70,560 70,560 74,609 75,506 2 Gold stock, including Exchange Stabilization Fund1 11,064 11,078 11,057 11,066 11,066 11,065 11,062 11,060 11,059 11,059 3 Special drawing rights2'3 8,395 10,283 9,637 9,340 9,240 9,487 9,473 9,751 9,951 10,041 4 Reserve position in International Monetary Fund 11,730 11,349 9,745 9,055 8,644 8,786 8,722 9,047 9,048 9,173 5 Foreign currencies4 17,322 13,088 17,363 34,001 33,413 39,080 41,552 42,702 44,551 45,233 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- 3. Includes allocations by the International Monetary Fund of SDRs as follows: tional accounts is not included in the gold stock of the United States; see table $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 3.13. Gold stock is valued at $42.22 per fine troy ounce. 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based million on Jan. 1, 1981; plus transactions in SDRs. on a weighted average of exchange rates for the currencies of member countries. 4. Valued at current market exchange rates. From July 1974 through December 1980, 16 currencies were used; from January 1981, 5 currencies have been used. The U.S. SDR holdings and reserve position in the IMF also are valued on this basis beginning July 1974. 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1989 1990 AAsssseettss 11998866 11998877 11998888 p July Aug. Sept. Oct. Nov. Dec. Jan. 1 Deposits 287 244 347 371 265 325 252 307 589 251 Assets held in custody 2 U.S. Treasury securities 155,835 195,126 232,547 233,170 238,007 235,597 230,804 231,059 224,911 225,618 3 Earmarked gold 14,048 13,919 13,636 13,530 13,516 13,506 13,460 13,458 13,456 13,458 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 June July Aug. Sept. Oct. Nov.' Dec. All foreign countries 1 Total, all currencies 456,628 518,618 505,595 523,674 534,425' 522,489 520,845 533,641 548,039 545,266 2 Claims on United States 114,563 138,034 169,111 177,445 179,839r 177,299 182,440 184,505 195,878 198,732 Parent bank 83,492 105,845 129,856 132,380 133,359r 134,479 142,339 145,034 154,790 156,989 4 Other banks in United States 13,685 16,416 14,918 14,218 15,744 15,225 14,164 14,248 15,301 17,042 5 Nonbanks 17,386 15,773 24,337 30,847 30,736 27,595 25,937 25,223 25,787 24,701 6 Claims on foreigners 312,955 342,520 299,728 303,720 310,426 299,265 289,9% 300,814 303,356 300,789 7 Other branches of parent bank 96,281 122,155 107,179 115,913 117,438 108,893 104,683 110,684 111,053 113,810 8 Banks 105,237 108,859 96,932 94,902 95,621 92,465 90,510 93,357 95,098 90,703 9 Public borrowers 23,706 21,832 17,163 16,709 16,948 16,656 16,215 16,721 16,148 16,456 10 Nonbank foreigners 87,731 89,674 78,454 76,196 80,419 81,251 78,588 80,052 81,057 79,820 11 Other assets 29,110 38,064 36,756 42,509 44,160' 45,925 48,409 48,322 48,805 45,745 12 Total payable in U.S. dollars 317,487 350,107 357,573 367,562 372,076' 369,287 359,924 369,898 380,247 382,314 H Claims on United States 110,620 132,023 163,456 169,520 171,265' 170,497 174,628 176,228 188,070 191,081 14 Parent bank 82,082 103,251 126,929 127,352 128,287' 130,168 137,481 139,224 149,873 152,191 15 Other banks in United States 12,830 14,657 14,167 13,207 14,734 14,688 13,217 13,597 14,543 16,386 16 Nonbanks 15,708 14,115 22,360 28,961 28,244 25,641 23,930 23,407 23,654 22,504 17 Claims on foreigners 195,063 202,428 177,685 180,013 181,441 177,911 164,461 171,691 168,677 169,780 18 Other branches of parent bank 72,197 88,284 80,736 88,874 90,077 83,036 77,858 83,945 79,585 82,949 19 Banks 66,421 63,707 54,884 50,627 49,913 50,885 46,786 47,349 48,%6 48,396 20 Public borrowers 16,708 14,730 12,131 11,815 11,616 11,774 11,646 11,579 11,446 10,961 21 Nonbank foreigners 39,737 35,707 29,934 28,697 29,835 32,216 28,171 28,818 28,680 27,474 22 Other assets 11,804 15,656 16,432 18,029 19,370' 20,879 20,835 21,979 23,500 21,453 United Kingdom 23 Total, all currencies 140,917 158,695 156,835 153,968 161,882 158,860 157,673 164,155 164,916 161,947 24 Claims on United States 24,599 32,518 40,089 38,014 42,147 41,914 40,085 42,424 44,661 39,212 25 Parent bank 19,085 27,350 34,243 33,763 37,713 38,031 36,046 38,938 40,848 35,847 26 Other banks in United States 1,612 1,259 1,123 1,125 1,121 1,112 1,265 1,200 1,199 1,058 27 Nonbanks 3,902 3,909 4,723 3,126 3,313 2,771 2,774 2,286 2,614 2,307 28 Claims on foreigners 109,508 115,700 106,388 103,773 106,586 102,231 102,097 106,430 105,349 107,657 29 Other branches of parent bank 33,422 39,903 35,625 34,948 35,440 32,392 32,611 35,252 35,064 37,728 30 Banks 39,468 36,735 36,765 37,357 36,519 36,073 37,146 38,048 36,317 36,159 31 Public borrowers 4,990 4,752 4,019 3,599 3,788 3,586 3,265 3,346 3,181 3,293 32 Nonbank foreigners 31,628 34,310 29,979 27,869 30,839 30,180 29,075 29,784 30,787 30,477 33 Other assets 6,810 10,477 10,358 12,181 13,149 14,715 15,491 15,301 14,906 15,078 34 Total payable in U.S. dollars 95,028 100,574 103,503 99,028 103,512 104,036 99,238 106,869 106,086 103,427 35 Claims on United States 23,193 30,439 38,012 34,990 38,506 39,135 37,108 39,715 41,504 36,404 36 Parent bank 18,526 26,304 33,252 32,059 36,041 36,375 34,537 37,404 39,304 34,329 37 Other banks in United States 1,475 1,044 964 844 821 1,007 1,017 951 861 843 38 Nonbanks 3,192 3,091 3,7% 2,087 1,644 1,753 1,554 1,360 1,339 1,232 39 Claims on foreigners 68,138 64,560 60,472 58,746 59,137 57,706 55,340 59,389 56,872 59,062 40 Other branches of parent bank 26,361 28,635 28,474 26,541 27,955 25,368 25,542 28,084 26,961 29,872 41 Banks 23,251 19,188 18,494 18,745 17,080 18,298 17,612 18,275 16,884 16,579 42 Public borrowers 3,677 3,313 2,840 2,606 2,702 2,679 2,521 2,553 2,404 2,371 43 Nonbank foreigners 14,849 13,424 10,664 10,854 11,400 11,361 9,665 10,477 10,623 10,240 44 Other assets 3,697 5,575 5,019 5,292 5,869 7,195 6,790 7,765 7,710 7,961 Bahamas and Caymans 45 Total, all currencies 142,592 160,321 170,639 171,780 173,014' 165,401 164,684 164,836 172,762 175,949 46 Claims on United States 78,048 85,318 105,320 109,800 108,055' 106,693 111,043 109,910 118,037 124,148 47 Parent bank 54,575 60,048 73,409 70,735 67,641' 69,404 76,426 75,900 82,605 87,825 48 Other banks in United States 11,156 14,277 13,145 12,116 13,712 13,294 12,141 12,059 13,185 15,071 49 Nonbanks 12,317 10,993 18,766 26,949 26,702 23,995 22,476 21,951 22,247 21,252 50 Claims on foreigners 60,005 70,162 58,393 54,537 57,135 50,808 45,962 47,214 46,391 44,168 51 Other branches of parent bank 17,296 21,277 17,954 22,324 24,462 16,802 14,688 16,961 14,414 11,309 52 Banks 27,476 33,751 28,268 21,202 21,591 20,688 20,162 19,579 21,641 22,611 53 Public borrowers 7,051 7,428 5,830 5,540 5,405 5,407 5,435 5,289 5,340 5,217 54 Nonbank foreigners 8,182 7,706 6,341 5,471 5,677 7,911 5,677 5,385 4,9% 5,031 55 Other assets 4,539 4,841 6,926 7,443 7,824' 7,900 7,679 7,712 8,334 7,633 56 Total payable in U.S. dollars 136,813 151,434 163,518 165,676 167,484' 160,821 160,274 159,643 167,182 170,723 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 • April 1990 3.14—Continued Liability account 1986 1987 1988 June July Aug. Sept. Oct. All foreign countries 57 Total, all currencies 456,628 518,618 505,595 523,674 534,425' 522,489 520,845 533,641 548,039 545,266 58 Negotiable CDs 31,629 30,929 28,511 28,116 28,882 29,524 26,679 26,776 26,555 23,500 59 To United States 152,465 161,390 185,577 179,902 177,769' 177,542 183,203 183,576 190,149 197,182 60 Parent bank 83,394 87,606 114,720 113,395 110,326 110,917 121,003 123,229 128,799 138,130 61 Other banks in United States 15,646 20,355 14,737 12,951 13,353r 13,269 13,015 11,476 10,811 11,462 62 Nonbanks 53,425 53,429 56,120 53,556 54,090 53,356 49,185 48,871 50,539 47,590 63 To foreigners 253,775 304,803 270,923 289,559 301,583' 288,566 283,435 294,486 302,346 296,850 64 Other branches of parent bank 95,146 124,601 111,267 118,950 119,765' 113,752 104,853 114,180 115,484 119,591 65 Banks 77,809 87,274 72,842 74,209 80,069 75,589 77,618 75,758 81,200 76,452 66 Official institutions 17,835 19,564 15,183 17,559 18,846 17,591 17,349 19,361 18,938 16,750 67 Nonbank foreigners 62,985 73,364 71,631 78,841 82,903 81,634 83,615 85,187 86,724 84,057 68 Other liabilities 18,759 21,496 20,584 26,097 26,191' 26,857 27,528 28,803 28,989 27,734 69 Total payable in U.S. dollars ... 336,406 361,438 367,483 378,331 382,104' 379,771 371,301 384,495 392,948 396,182 70 Negotiable CDs 28,466 26,768 24,045 24,129 24,914 25,483 22,927 22,260 22,539 19,619 71 To United States 144,483 148,442 173,190 167,261 163,834' 166,041 170,512 171,458 179,927 187,229 72 Parent bank 79,305 81,783 107,150 105,074 100,726 103,3% 112,255 115,314 122,910 132,281 73 Other banks in United States 14,609 18,951 13,468 11,537 11,875' 11,964 11,837 10,273 9,512 10,277 74 Nonbanks 50,569 47,708 52,572 50,650 51,233 50,681 46,420 45,871 47,505 44,671 75 To foreigners 156,806 177,711 160,766 175,349 181,166' 175,270 165,321 177,703 177,459 176,460 76 Other branches of parent bank 71,181 90,469 84,021 90,850 91,907' 87,123 77,987 85,781 82,912 87,636 77 Banks 33,850 35,065 28,493 29,682 31,215 31,939 30,232 31,986 33,370 30,537 78 Official institutions 12,371 12,409 8,224 9,852 11,176 10,680 10,195 11,445 11,713 9,873 79 Nonbank foreigners 39,404 39,768 40,028 44,965 46,868 45,528 46,907 48,491 49,464 48,414 80 Other liabilities 6,651 8,517 9,482 11,592 12,190' 12,977 12,541 13,074 13,023 12,874 United Kingdom 81 Total, all currencies 140,917 158,695 156,835 153,968 161,882 158,860 157,673 164,155 164,916 161,947 82 Negotiable CDs 27,781 26,988 24,528 24,3% 25,342 25,905 23,122 23,152 22,837 20,056 83 To United States 24,657 23,470 36,784 30,013 29,954 31,551 31,076 34,181 33,101 36,036 84 Parent bank 14,469 13,223 27,849 22,037 19,885 21,841 24,013 25,061 25,430 29,726 85 Other banks in United States 2,649 1,536 2,037 1,648 1,852 1,767 1,687 2,002 1,0% 1,256 86 Nonbanks 7,539 8,711 6,898 6,328 8,217 7,943 5,376 7,118 6,575 5,054 87 To foreigners 79,498 98,689 86,026 88,381 94,335 88,661 91,101 93,700 %,509 92,307 88 Other branches of parent bank 25,036 33,078 26,812 24,974 26,556 24,326 24,769 26,936 26,656 27,397 89 Banks 30,877 34,290 30,609 31,066 33,047 30,790 31,330 30,688 33,016 29,780 90 Official institutions 6,836 11,015 7,873 8,650 9,586 8,868 8,878 10,132 9,724 8,551 91 Nonbank foreigners 16,749 20,306 20,732 23,691 25,146 24,677 26,124 25,944 27,113 26,579 92 Other liabilities 8,981 9,548 9,497 11,178 12,251 12,743 12,374 13,122 12,469 13,548 93 Total payable in U.S. dollars 99,707 102,550 105,907 101,742 105,700 106,915 102,361 110,358 109,116 108,178 94 Negotiable CDs 26,169 24,926 22,063 22,324 23,132 23,679 21,156 20,433 20,715 18,143 95 To United States 22,075 17,752 32,588 25,401 24,618 27,232 26,592 30,433 30,130 33,056 96 Parent bank 14,021 12,026 26,404 19,556 16,909 19,580 21,588 23,247 24,578 28,812 97 Other banks in United States 2,325 1,308 1,752 1,393 1,477 1,502 1,511 1,835 863 1,065 98 Nonbanks 5,729 4,418 4,432 4,452 6,232 6,150 3,493 5,351 4,689 3,179 99 To foreigners 48,138 55,919 47,083 48,491 52,179 49,913 48,557 52,902 52,135 50,517 100 Other branches of parent bank 17,951 22,334 18,561 16,467 18,388 17,060 16,673 18,926 16,845 18,384 101 Banks 15,203 15,580 13,407 13,545 14,173 13,578 12,331 13,177 13,587 12,244 102 Official institutions 4,934 7,530 4,348 5,579 6,131 5,825 5,532 6,605 6,755 5,454 103 Nonbank foreigners 10,050 10,475 10,767 12,900 13,487 13,450 14,021 14,194 14,948 14,435 104 Other liabilities 3,325 3,953 4,173 5,526 5,771 6,091 6,056 6,590 6,136 6,462 Bahamas and Caymans 105 Total, all currencies 142,592 160,321 170,639 171,780 173,014' 165,401 164,684 164,836 172,762 175,949 106 Negotiable CDs 847 885 953 696 717 691 669 669 671 678 107 To United States 106,081 113,950 122,332 117,781 116,324' 113,179 117,611 114,701 121,021 124,802 108 Parent bank 49,481 53,239 62,894 61,642 61,263 58,765 64,859 66,292 70,107 74,906 109 Other banks in United States 11,715 17,224 11,494 10,034 10,227' 10,076 10,026 8,088 8,438 8,641 110 Nonbanks 44,885 43,487 47,944 46,105 44,834 44,338 42,726 40,321 42,476 41,255 111 To foreigners 34,400 43,815 45,161 50,433 53,042' 48,712 43,818 46,906 47,521 47,382 112 Other branches of parent bank 12,631 19,185 23,686 27,763 29,279' 25,770 20,678 23,086 23,352 23,414 113 Banks 8,617 10,769 8,336 8,318 8,308 8,613 8,802 8,985 9,137 8,823 114 Official institutions 2,719 1,504 1,074 1,102 1,223 1,081 928 1,003 1,131 1,097 115 Nonbank foreigners 10,433 12,357 12,065 13,250 14,232 13,248 13,410 13,832 13,901 14,048 116 Other liabilities 1,264 1,671 2,193 2,870 2,931' 2,819 2,586 2,560 3,549 3,087 117 Total payable in U.S. dollars ... 138,774 152,927 162,950 165,593 167,213' 160,800 160,133 160,028 167,835 171,193 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 June July Aug. Sept. Oct/ Nov/ Dec.p 1 Total1 259,556 299,782 302,299 307,516 317,591 314,782 315,501 314,899 307,463 By type 2 Liabilities reported by banks in the United States 31,838 31,519 37,490 39,216 38,171 36,393 42,561 39,013 35,647 3 U.S. Treasury bills and certificates 88,829 103,722 87,190 87,734 88,325 86,350 81,465 82,474 77,062 U.S. Treasury bonds and notes 4 Marketable 122,432 149,056 160,462 163,281 173,238 174,037 173,017 174,703 176,006 5 Nonmarketable4 300 523 545 549 553 557 561 564 568 6 U.S. securities other than U.S. Treasury securities 16,157 14,962 16,612 16,736 17,304 17,445 17,897 18,145 18,180 By area 7 Western Europe1 124,620 125,097 122,670 126,533 134,232 133,694 134,336 137,708 134,134 8 Canada 4,961 9,584 9,604 9,424 9,560 8,989 8,609 9,051 9,474 9 Latin America and Caribbean 8,328 10,099 5,925 7,166 7,986 9,511 10,014 9,908 88,,889988 10 Asia 116,098 145,608 155,454 155,786 157,197 154,315 154,110 149,708 114466,,998833 11 1,402 1,369 1,271 949 810 867 910 1,019 982 12 Other countries 4,147 7,501 6,830 7,113 7,257 6,849 6,962 6,941 6,422 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 • April 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 11998877 11998888 11998899 June July Aug. Sept. Oct/ Nov/ Dec." 1 All foreigners 618,874 685,339 731,886 673,402 665,330 679,994 694,304 704,598 726,793 731,886 2 Banks' own liabilities 470,070 514,532 574,849 511,877 503,147 516,883 530,517 543,946 563,701 574,849 3 Demand deposits 22,383 21,863 21,710 21,223 21,363 19,718 21,550 21,069 21,312 21,710 4 Time deposits 148,374 152,164 170,186 153,783 149,753 155,494 157,273 162,372 165,319 170,186 5 Other. 51,677 51,366 65,228 60,916 64,303 63,732 56,157 64,979 65,802 65,228 6 Own foreign offices4 247,635 289,138 317,724 275,955 267,728 277,939 295,536 295,526 311,267 317,724 7 Banks' custody liabilities5 148,804 170,807 157,037 161,524 162,184 163,111 163,787 160,652 163,093 157,037 8 U.S. Treasury bills and certificates6 101,743 115,056 90,578 98,893 99,365 99,683 99,209 95,278 %,356 90,578 9 Other negotiable and readily transferable instruments 16,776 16,426 17,199 17,077 16,893 17,260 17,091 16,741 16,819 17,199 10 Other 30,285 39,325 49,260 45,555 45,925 46,168 47,487 48,633 49,918 49,260 11 Nonmonetary international and regional organizations 4,464 3,224 4,772 3,817 4,240 4,418 4,945 5,769 5,841 4,772 1 1 2 3 Ba D n e k m s' a o n w d n d e li p a o b s il i i t t s i es 2,7 1 0 2 2 4 2,52 7 7 1 3,1 % 56 2,89 3 5 2 2,71 4 6 1 3,40 6 2 6 3,34 8 7 9 3,73 5 3 3 4,52 6 3 2 3,15 % 6 14 Time deposits 1,538 1,183 927 1,454 918 1,079 1,702 1,043 1,012 927 15 Other 1,040 1,272 2,132 1,409 1,756 2,257 1,555 2,638 3,449 2,132 16 Banks' custody liabilities5 1,761 698 1,616 922 1,524 1,016 1,598 2,036 1,318 1,616 17 U.S. Treasury bills and certificates6 265 57 197 181 345 107 84 568 321 197 18 Other negotiable and readily transferable instruments 1,497 641 1,417 731 1,179 909 1,479 1,454 996 1,417 19 Other 0 0 2 10 0 1 35 14 0 2 20 Official institutions9 120,667 135,241 112,709 124,680 126,951 126,4% 122,743 124,026 121,486 112,709 21 Banks' own liabilities 28,703 27,109 30,298 32,167 34,132 33,238 31,615 37,524 34,082 30,298 22 Demand deposits 1,757 1,917 2,175 1,801 1,959 1,625 2,026 2,057 1,838 2,175 23 Time deposits 12,843 9,767 10,465 10,033 10,072 8,837 8,994 12,078 11,182 10,465 24 Other3 14,103 15,425 17,658 20,332 22,101 22,776 20,595 23,389 21,063 17,658 25 Banks' custody liabilities5 91,965 108,132 82,411 92,513 92,818 93,258 91,127 86,502 87,404 82,411 26 U.S. Treasury bills and certificates6 88,829 103,722 77,062 87,190 87,734 88,325 86,350 81,465 82,474 77,062 27 Other negotiable and readily transferable instruments 2,990 4,130 4,988 5,080 4,821 4,735 4,588 4,734 4,805 4,988 28 Other 146 280 361 244 263 198 189 303 125 361 29 Banks10 414,280 459,523 513,868 452,396 443,172 457,463 476,027 482,104 505,672 513,868 30 Banks' own liabilities 371,665 409,501 453,343 396,662 387,306 400,975 415,761 420,918 443,340 453,343 31 Unaffiliated foreign banks 124,030 120,362 135,618 120,707 119,578 123,036 120,225 125,392 132,073 135,618 32 Demand deposits 10,898 9,948 10,347 9,677 10,145 9,101 10,695 9,884 10,742 10,347 33 Time deposits 79,717 80,189 92,184 77,874 75,166 80,603 80,789 83,913 87,354 92,184 34 Other3 33,415 30,226 33,087 33,156 34,267 33,333 28,741 31,594 33,978 33,087 35 Own foreign offices4 247,635 289,138 317,724 275,955 267,728 277,939 295,536 295,526 311,267 317,724 36 Banks' custody liabilities5 42,615 50,022 60,525 55,734 55,865 56,488 60,265 61,186 62,332 60,525 37 U.S. Treasury bills and certificates6 9,134 7,602 9,278 7,759 7,674 7,838 9,032 9,251 9,499 9,278 38 Other negotiable and readily transferable instruments 5,392 5,725 4,715 5,314 5,326 5,284 5,095 4,770 4,446 4,715 39 Other 28,089 36,694 46,531 42,662 42,866 43,365 46,138 47,165 48,388 46,531 40 Other foreigners 79,463 87,351 100,538 92,509 90,968 91,617 90,590 92,699 93,794 100,538 41 Banks' own liabilities 67,000 75,3% 88,052 80,153 78,992 79,268 79,793 81,771 81,756 88,052 42 Demand deposits 9,604 9,928 9,091 9,714 9,218 8,926 8,739 9,075 8,671 9,091 43 Time deposits 54,277 61,025 66,610 64,422 63,596 64,975 65,787 65,338 65,772 66,610 44 Other. 3,119 4,443 12,351 6,018 6,179 5,367 5,267 7,357 7,312 12,351 45 Banks' custody liabilities5 12,463 11,956 12,486 12,355 11,976 12,349 10,796 10,928 12,038 12,486 46 U.S. Treasury bills and certificates6 3,515 3,675 4,041 3,763 3,612 3,413 3,743 3,993 4,062 4,041 47 Other negotiable and readily transferable instruments 6,898 5,929 6,079 5,952 5,566 6,332 5,929 5,783 6,572 6,079 48 Other 2,050 2,351 2,366 2,639 2,797 2,604 1,125 1,152 1,405 2,366 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 7,314 6,425 5,061 5,337 5,261 5,199 5,237 5,160 4,815 5,061 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 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov.' Dec/ 1 Total 618,874 685,339 731,886 673,402 665,330 679,994 694,304 704,598r 726,793 731,886 2 Foreign countries 614,411 682,115 727,115 669,585 661,091 675,576 689,359 698,829r 720,953 727,115 3 Europe 234,641 231,912 236,518 222,164 222,146 226,366 222,040 232,513r 241,658 236,518 4 Austria 920 1,155 1,223 1,508 1,417 1,404 1,345 1,193 1,467 1,223 5 Belgium-Luxembourg 9,347 10,022 10,147 8,631 8,949 9,286 10,158 10,841 10,322 10,147 6 Denmark 760 2,200 1,409 1,179 1,348 1,956 1,265 l,442r 1,912 1,409 7 Finland 377 285 639 451 436 460 519 464 577 639 8 France 29,835 24,777 26,686 23,868 22,290 24,864 23,031 23,882' 25,923 26,686 9 Germany 7,022 6,772 7,305 9,363 8,875 7,651 8,345 8,700 9,088 7,305 10 Greece 689 672 1,012 889 862 828 797 845' 1,024 1,012 11 Italy 12,073 14,599 16,138 13,965 12,892 14,597 14,542 14,220 14,649 16,138 12 Netherlands 5,014 5,316 6,565 4,875 5,029 5,106 4,989 5,426' 7,204 6,565 13 Norway 1,362 1,559 2,399 1,485 1,522 1,453 1,698 1,342 1,952 2,399 14 Portugal 801 903 2,405 1,100 1,419 1,945 2,206 2,292' 2,248 2,405 15 Spain 2,621 5,494 4,341 5,090 5,910 5,390 5,277 4,986 4,888 4,341 16 Sweden 1,379 1,284 1,987 1,478 1,248 2,002 1,680 1,663 1,920 1,987 17 Switzerland 33,766 34,199 34,278 28,811 28,581 28,931 29,001 29,554' 31,497 34,278 18 Turkey 703 1,012 1,815 737 1,053 1,022 1,085 1,199 1,370 1,815 19 United Kingdom 116,852 111,811 101,746 103,173 105,310 104,055 102,210 106,285' 108,483 101,746 20 Yugoslavia 710 529 1,490 558 604 691 774 858 1,016 1,490 21 Other Western Europe 9,798 8,598 13,468 14,342 13,667 13,824 12,312 16,389' 15,163 13,468 22 U.S.S.R 32 138 350 164 175 201 244 338 286 350 23 Other Eastern Europe 582 591 1,115 499 559 699 562 595' 668 1,115 24 Canada 30,095 21,062 18,754 17,514 17,472 16,958 17,960 16,670 18,182 18,754 25 Latin America and Caribbean 220,372 271,146 308,483 271,445 266,403 275,557 284,9% 286,588' 296,595 308,483 26 Argentina 5,006 7,804 7,184 6,320 7,397 8,047 8,446 8,069' 7,693 7,184 27 Bahamas 74,767 86,863 100,093 82,312 84,526 90,317 90,622 93,171' %,294 100,093 28 Bermuda 2,344 2,621 2,972 2,321 2,269 2,209 2,124 2,458 2,549 2,972 29 Brazil 4,005 5,314 6,059 5,004 5,3% 5,539 5,892 6,080' 6,228 6,059 30 British West Indies 81,494 113,840 136,484 121,385 113,243 115,870 122,677 120,932' 128,324 136,484 31 Chile 2,210 2,936 3,172 2,690 2,683 2,739 2,765 3,014' 3,061 3,172 32 Colombia 4,204 4,374 4,513 4,127 4,235 4,365 4,199 4,887 4,681 4,513 33 Cuba 12 10 10 10 9 10 14 10 15 10 34 Ecuador 1,082 1,379 1,370 1,351 1,411 1,376 1,363 1,342 1,324 1,370 35 Guatemala 1,082 1,195 1,290 1,251 1,297 1,279 1,293 1,276 1,289 1,290 36 Jamaica 160 269 276 294 227 231 233 206 189 276 37 Mexico 14,480 15,185 14,800 14,270 13,705 13,769 14,981 14,642' 13,847 14,800 38 Netherlands Antilles 4,975 6,420 6,263 6,316 6,434 6,071 6,062 5,939' 6,249 6,263 39 Panama 7,414 4,353 4,193 4,278 4,357 4,400 4,424 4,393 4,359 4,193 40 Peru 1,275 1,671 1,945 1,761 1,770 1,778 1,828 1,902' 1,921 1,945 41 Uruguay 1,582 1,898 2,261 2,429 2,152 2,121 2,340 2,214 2,315 2,261 42 Venezuela 9,048 9,147 9,405 9,423 9,500 9,398 9,520 9,552' 9,799 9,405 43 Other 5,234 5,868 6,191 5,903 5,790 6,039 6,213 6,503' 6,459 6,191 44 112211,,228888 147,838 155,076 148,449 144,106 114455,,991177 153,564 150,975' 150,964 155,076 China 45 Mainland 1,162 1,895 1,870 1,432 1,522 1,700 1,804 1,985 1,635 1,870 46 Taiwan 21,503 26,058 19,472 27,025 27,128 25,427 24,119 22,403' 21,231 19,472 47 Hong Kong 10,180 12,248 12,119 12,134 11,346 12,268 12,292 12,127' 12,028 12,119 48 India 582 699 774 812 871 940 875 836 984 774 49 Indonesia 1,404 1,180 1,276 1,232 1,096 1,042 1,042 1,144 1,300 1,276 50 Israel 1,292 1,461 1,229 11,,008888 1,058 953 1,041 2,221 1,081 1,229 51 Japan 54,322 74,015 80,837 7711,,119988 68,700 71,028 78,824 73,573' 75,215 80,837 52 Korea 1,637 2,541 3,022 3,047 3,556 2,907 3,037 3,099 3,339 3,022 53 Philippines 1,085 1,163 1,608 984 936 1,083 1,055 1,158' 1,242 1,608 54 Thailand 1,345 1,236 2,071 1,274 1,254 1,776 1,430 1,686 1,887 2,071 55 Middle-East oil-exporting countries 13,988 12,083 13,324 13,612 12,368 12,524 13,021 13,450 13,574 13,324 56 Other 12,788 13,260 17,475 14,612 14,271 14,270 15,024 17,293 17,448 17,475 57 3,945 3,991 3,783 3,904 3,618 3,265 3,536 3,486 3,747 3,783 58 Egypt 1,151 911 679 748 738 549 574 577 633 679 59 Morocco 194 68 75 67 66 72 % 71 75 75 60 South Africa 202 437 202 188 231 201 246 220 291 202 61 Zaire 67 85 86 98 92 87 81 71 60 86 62 Oil-exporting countries 1,014 1,017 1,122 1,100 942 897 1,036 1,047' 1,118 1,122 63 Other 1,316 1,474 1,618 1,702 1,548 1,459 1,502 1,501 1,569 1,618 64 Other countries 4,070 6,165 4,501 6,108 7,346 7,513 7,262 8,597 9,807 4,501 65 Australia 3,327 5,293 3,833 5,192 6,620 6,721 6,518 8,046 9,115 3,833 66 All other 744 872 668 916 726 792 744 552' 692 668 67 Nonmonetary international and regional organizations 4,464 3,224 4,772 3,817 4,240 4,418 4,945 5,769' 5,841 4,772 68 International 2,830 2,503 3,825 3,030 2,881 3,084 3,390 4,450' 4,704 3,825 69 Latin American regional 1,272 589 684 613 961 690 1,201 919 586 684 70 Other regional 362 133 263 175 397 644 353 400 551 263 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 • April 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 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov.' Dec/' 1 Total 459,877 491,165 534,186 491,103 481,051 488,861 499,388 514,686r 534,375 534,186 2 Foreign countries 456,472 489,094 530,554 487,626 477,264 485,737 496,466 512,009' 531,638 530,554 3 Europe 102,348 116,928 118,930 112,201 106,459 107,359 111,180 113,398' 111,992 118,930 4 Austria 793 483 505 809 854 549 480 575' 559 505 5 Belgium-Luxembourg 9,397 8,515 6,388 7,781 7,558 7,510 7,404 7,497' 6,606 6,388 6 Denmark 717 483 582 774 562 768 557 513 609 582 7 Finland 1,010 1,065 1,026 1,175 1,395 1,401 1,233 1,707 1,129 1,026 8 France 13,548 13,243 16,146 15,575 16,008 16,415 16,249 16,391 16,055 16,146 9 Germany 2,039 2,329 2,850 3,695 3,461 3,316 3,463 3,371 2,657 2,850 10 Greece 462 433 788 632 602 624 634 650 700 788 11 Italy 7,460 7,936 6,661 6,813 5,994 5,494 6,043 5,577 5,718 6,661 12 Netherlands 2,619 2,541 1,902 2,032 1,957 1,454 1,994 1,886' 2,259 1,902 13 Norway 934 455 611 667 796 665 644 647 635 611 14 Portugal 477 261 375 328 283 264 252 258 275 375 15 Spain 1,853 1,823 1,868 2,190 2,092 1,738 1,684 1,733 1,840 1,868 16 Sweden 2,254 1,977 1,840 1,946 2,003 2,046 2,286 2,087 2,555 1,840 17 Switzerland 2,718 3,895 6,137 5,485 4,123 4,479 5,018 4,522 4,940 6,137 18 Turkey 1,680 1,233 1,049 886 891 960 1,028 1,021 1,044 1,049 19 United Kingdom 50,823 65,706 65,401 56,844 53,464 54,809 57,187 59,838' 59,919 65,401 20 Yugoslavia 1,700 1,390 1,329 1,359 1,406 1,346 1,338 1,373 1,281 1,329 21 Other Western Europe2 619 1,152 1,302 1,161 974 1,247 1,312 1,504 1,245 1,302 22 U.S.S.R 389 1,255 1,234 1,212 1,227 1,456 1,574 1,453 11,,008800 1,234 23 Other Eastern Europe 852 754 937 838 810 819 799 794 888833 937 24 Canada 25,368 18,889 16,181 16,236 14,493 15,073 14,763 13,800 16,177 16,181 25 Latin America and Caribbean 214,789 214,264 230,212 219,855 217,371 216,073 219,948 220,182' 231,958 230,212 26 Argentina 11,996 11,826 9,444 10,840 10,705 10,730 10,460 10,444' 10,274 9,444 27 Bahamas 64,587 66,954 78,108 66,611 70,488 68,113 70,906 71,420' 78,568 78,108 28 Bermuda 471 483 1,315 391 463 522 1,104 804 842 1,315 29 Brazil 25,897 25,735 23,891 25,675 25,824 25,597 24,999 25,075 24,418 23,891 30 British West Indies 50,042 55,888 67,991 65,359 59,670 61,493 63,543 63,023' 68,530 67,991 31 Chile 6,308 5,217 4,353 4,863 4,793 4,803 4,707 4,601 4,474 4,353 32 Colombia 2,740 2,944 2,707 2,583 2,525 22,,550044 22,,447777 22,,880000 22,,778844 22,,770077 33 Cuba 1 1 1 1 9 11 11 11 11 11 34 Ecuador 2,286 2,075 1,698 1,895 1,933 1,918 1,905 1,864 1,858 1,698 35 Guatemala4 144 198 197 201 189 203 196 188 190 197 36 Jamaica 188 212 297 286 270 272 282 270 260 297 37 Mexico 29,532 24,637 23,520 23,703 23,369 23,169 22,813 22,751 23,292 23,520 38 Netherlands Antilles 980 1,306 1,835 1,179 1,159 1,022 1,103 1,120' 1,018 1,835 39 Panama 4,744 2,521 1,739 2,423 2,320 2,030 1,834 1,832' 1,792 1,739 40 Peru 1,329 1,013 770 874 867 870 823 851 836 770 41 Uruguay 963 910 928 896 854 866 899 903 915 928 42 Venezuela 10,843 10,733 9,688 10,569 10,269 10,024 10,064 10,269 10,119 9,688 43 Other Latin America and Caribbean 1,738 1,612 1,729 1,503 1,665 1,936 1,833 1,965' 1,787 1,729 44 Asia 106,096 130,881 156,987 130,590 113300,,336699 113377,,668877 114400,,770044 115533,,773377'' 115588,,775522 115566,,998877 China Mainland 968 762 635 920 644 575 615 594 610 635 46 Taiwan 4,592 4,184 2,734 4,058 3,949 3,356 3,331 2,831 2,677 2,734 47 Hong Kong 8,218 10,143 11,119 8,557 8,153 8,800 10,358 10,047' 10,442 11,119 48 India 510 560 621 537 477 547 638 617 637 621 49 Indonesia 580 674 651 671 645 614 615 685 655 651 50 Israel 1,363 1,136 812 1,021 964 911 859 1,185 758 812 51 Japan 68,658 90,149 110,876 91,103 91,806 96,118 97,699 110,425' 114,498 110,876 52 Korea 5,148 5,213 5,332 5,608 5,774 6,007 5,686 5,713 5,838 5,332 53 Philippines 2,071 1,876 1,344 1,763 1,607 1,543 1,617 1,549 1,478 1,344 54 Thailand 496 848 1,153 1,056 1,060 1,117 1,203 1,058 1,076 1,153 55 Middle East oil-exporting countries 4,858 6,213 10,150 6,550 5,550 8,879 8,581 8,365' 8,675 10,150 56 Other Asia 8,635 9,122 11,559 8,745 9,741 9,221 9,502 10,669 11,408 11,559 57 Africa 4,742 5,718 5,929 6,075 6,066 6,032 6,028 5,763 6,009 5,929 58 Egypt 521 507 502 534 577 494 501 475 471 502 59 Morocco 542 511 559 531 518 535 524 538 547 559 60 South Africa 1,507 1,681 1,628 1,746 1,702 1,713 1,709 1,679 1,686 1,628 61 Zaire 15 17 16 17 17 16 20 15 16 16 62 Oil-exporting countries6 1,003 1,523 1,689 1,503 1,587 1,608 1,629 1,546 1,641 1,689 63 Other 1,153 1,479 1,535 1,744 1,664 1,666 1,645 1,510 1,648 1,535 64 Other countries 3,129 2,413 2,315 2,670 2,505 3,512 3,843 5,129 6,750 2,315 65 Australia 2,100 1,520 1,785 1,307 1,518 2,499 3,078 4,301 6,174 1,785 66 All other 1,029 894 530 1,363 987 1,013 765 828 576 530 67 Nonmonetary international and regional organizations' 3,404 22,,007711 3,631 3,477 3,787 3,124 2,922 2,677' 2,737 3,631 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 11998877 11998888 11998899 June July Aug. Sept. Oct/ Nov/ Dec.p 1 Total 444444499999997777777,,,,,,,666666633333335555555 555555533333338888888,,,,,,,666666688888889999999 555555544444440000000,,,,,,,666666633333334444444 555555555555551111111,,,,,,,555555544444443333333 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444455555559999999,,,,,,,888888877777777777777 444444499999991111111,,,,,,,111111166666665555555 534,186 444444499999991111111,,,,,,,111111100000003333333 481,051 488,861 444444499999999999999,,,,,,,333333388888888888888 514,686 534,375 534,186 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666664444444,,,,,,,666666600000005555555 66666662222222,,,,,,,666666655555558888888 60,484 66666663333333,,,,,,,111111166666664444444 62,832 62,765 66666662222222,,,,,,,000000055555551111111 63,425 62,259 60,484 44 OOwwnn ffoorreeiiggnn ooffffiicceess 222222222222224444444,,,,,,,777777722222227777777 222222255555557777777,,,,,,,444444433333336666666 295,567 222222255555558888888,,,,,,,555555544444448888888 248,987 252,281 222222266666665555555,,,,,,,777777788888886666666 276,547 2%,754 295,567 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222227777777,,,,,,,666666600000009999999 111111122222229999999,,,,,,,444444422222225555555 134,725 111111122222228888888,,,,,,,222222299999995555555 128,919 132,478 111111133333331111111,,,,,,,111111122222224444444 131,249 133,909 134,725 66 DDeeppoossiittss 66666660000000,,,,,,,666666688888887777777 66666665555555,,,,,,,888888899999998888888 77,826 66666668888888,,,,,,,111111177777777777777 68,888 72,576 77777772222222,,,,,,,666666655555554444444 72,048 75,595 77,826 77 OOtthheerr 66666666666666,,,,,,,999999922222222222222 66666663333333,,,,,,,555555522222227777777 56,899 66666660000000,,,,,,,111111111111119999999 60,031 59,903 55555558888888,,,,,,,444444477777770000000 59,200 58,314 56,899 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444442222222,,,,,,,999999933333336666666 44444441111111,,,,,,,666666644444446666666 43,410 44444441111111,,,,,,,000000099999995555555 40,313 41,336 44444440000000,,,,,,,444444422222228888888 43,464 41,452 43,410 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 33333337777777,,,,,,,777777755555558888888 44444447777777,,,,,,,555555522222224444444 44444449999999,,,,,,,555555533333331111111 55555552222222,,,,,,,111111155555554444444 3333333,,,,,,,666666699999992222222 8888888,,,,,,,222222288888889999999 11111111111111,,,,,,,111111155555553333333 11111111111111,,,,,,,222222255555559999999 11 Negotiable and readily transferable 22222226666666,,,,,,,666666699999996666666 22222225555555,,,,,,,777777700000000000000 22222222222222,,,,,,,000000011111117777777 22222224444444,,,,,,,222222288888886666666 12 Outstanding collections and other 7777777,,,,,,,333333377777770000000 11111113333333,,,,,,,555555533333335555555 11111116666666,,,,,,,333333366666662222222 11111116666666,,,,,,,666666600000009999999 13 MEMO: Customer liability on 22222223333333,,,,,,,111111100000007777777 11111119999999,,,,,,,5555555%%%%%%% 11111116666666,,,,,,,888888811111110000000 11111112222222,,,,,,,888888822222228888888 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States .... 40,909 45,568 n.a. 46,740 48,485 49,575 46,486r 44,665 46,220 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 Total 227,903 232,295 235,130 233,184 231,686 231,374 236,330 By borrower 2 Maturity of 1 year or less 160,824 160,555 163,997 172,634 168,608 167,307 169,100 3 Foreign public borrowers 26,302 24,842 25,889 26,562 24,479 23,759 24,200 4 All other foreigners 134,522 135,714 138,108 146,071 144,129 143,548 144,900 5 Maturity over 1 year 67,078 71,740 71,133 60,550 63,078 64,067 67,230 6 Foreign public borrowers 34,512 39,103 38,625 35,291 37,935 38,108 41,839 7 All other foreigners 32,567 32,637 32,507 25,259 25,142 25,959 25,391 By area Maturity of 1 year or less 8 Europe 56,585 61,784 59,027 55,909 57,741 58,340 52,437 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 52,010 11 Asia 27,966 29,457 35,919 46,224 45,727 45,303 51,195 12 Africa 3,753 2,882 2,833 3,337 3,610 3,601 3,516 13 All other3 2,791 4,267 4,003 22,,889911 3,143 33,,776655 3,735 Maturity of over 1 year 14 Europe 7,634 6,737 6,6% 4,666 4,508 4,664 8,856 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 48,627 17 Asia 4,502 4,043 3,830 3,613 3,699 3,823 4,232 18 Africa 1,538 1,539 1,747 2,301 2,292 2,408 2,472 19 All other3 926 111 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 • April 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 389.1 386.5 387.9 382.4 370.9' .ISl^ 354.0' 346.3' 345.3' 339.2 344.6 2 G-10 countries and Switzerland 147.0 156.6 154.8 159.7 156.3'" 150.7' 148.7' 152.7' 145.1' 144.7 145.7 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 5.4 6.1 10 United Kingdom 63.3 70.9 72.0 68.8 71.7 70.4 67.6 66.2 65.3 64.2 63.3 11 Canada 6.8 5.2 4.6 5.5 4.7 5.3 4.9 5.0 4.0 5.1 5.9 12 Japan 24.1 25.1 26.4 29.8 29.2' 27.3' 31.6' 34^ 30.4' 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 21.1 20.9 14 Austria 1.6 1.7 1.8 1.9 1.6 1.6 1.6 1.5 1.4 1.7 1.5 15 Denmark 2.4 1.7 1.6 1.7 1.4 1.1 1.2 1.1 1.1 1.4 1.1 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 6.9 21 Turkey 2.0 2.0 1.9 2.0 2.0 1.8 1.6 1.5 1.3 1.1 1.1 22 Other Western Europe 2.0 1.5 1.6 1.6 1.9 1.7 1.9 1.3 1.1 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 2.1 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 Peru 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 2.6 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 2.4 2.7 42 Israel 1.6 1.5 1.3 1.0 1.0 1.0 1.0 1.2 .9 .8 .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 1.0 11..00 1.3 47 Other Asia 1.0 .7 .7 .7 .7 .8 .8 .9 .8 ..88 1.0 Africa 48 Egypt 1.0 .7 .6 .6 .5 .6 .5 .4 .5 .6 .5 49 Morocco .9 .9 .9 .9 .9 .9 .8 .9 .9 .9 .8 50 Zaire .1 .1 .1 .0 .1 .1 .0 .0 .0 ..00 .0 51 Other Africa4 1.9 1.6 1.3 1.3 1.2 1.2 1.2 1.1 1.1 11..11 1.0 52 Eastern Europe 4.4 3.5 3.6 3.2 3.1 3.3 3.1 3.6 3.5 3.4 3.5 53 U.S.S.R .1 .1 .4 .3 .3 .4 .4 .7 .7 .6 .8 54 Yugoslavia 2.4 2.0 1.9 1.8 1.9 1.9 1.8 1.8 1.7 1.7 1.7 55 Other 1.9 1.4 1.2 1.1 1.0 1.0 1.0 1.1 1.1 1.1 1.1 56 Offshore banking centers 64.0 61.5 63.7 54.5 51.5 43.0 47.3 44.2 48.5 43.1 48.7 57 Bahamas 21.5 22.4 25.7 17.3 15.9 8.9 12.9 11.0 15.8 11.0 11.2 58 Bermuda .7 .6 .6 .6 .8 1.0 .9 .9 1.1 .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 12.0 10.8 15.1 60 Netherlands Antilles 2.2 1.8 1.2 1.2 1.3 1.2 1.2 1.0 .9 .9 1.0 61 Panama 6.0 4.0 3.7 3.7 3.2 3.0 2.6 2.5 2.2 11..99 11..55 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 ..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 30,154 32,405 33,624 37,440 36,967 34,855 2 Payable in dollars 24,2% 21,749 22,785 24,852 27,176 28,037 31,649 31,894 30,042 3 Payable in foreign currencies 3,529 3,838 5,517 5,302 5,229 5,586 5,790 5,073 4,813 By type 4 Financial liabilities 13,600 12,133 12,424 13,934 15,079 15,118 17,532 16,920 16,028 5 Payable in dollars 11,257 9,609 8,643 10,274 11,485 11,250 13,452 13,060 12,224 6 Payable in foreign currencies 2,343 2,524 3,781 3,660 3,594 3,868 4,080 3,860 3,804 7 Commercial liabilities 14,225 13,454 15,878 16,220 17,325 18,506 19,908 20,047 18,827 8 Trade payables 6,685 6,450 7,305 6,768 6,480 6,454 7,009 6,339 6,415 9 Advance receipts and other liabilities .. 7,540 7,004 8,573 9,452 10,845 12,052 12,899 13,708 12,412 10 Payable in dollars 13,039 12,140 14,142 14,578 15,691 16,788 18,197 18,834 17,818 11 Payable in foreign currencies 1,186 1,314 1,737 1,642 1,635 1,718 1,711 1,213 1,009 By area or country Financial liabilities 12 Europe 7,700 7,917 8,320 9,071 10,497 9,912 12,511 11,217 10,135 13 Belgium-Luxembourg 349 270 213 282 339 289 320 357 308 14 France 857 661 382 371 372 267 249 274 262 15 Germany 376 368 551 544 690 749 741 838 807 16 Netherlands 861 542 866 862 9% 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 6,859 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 1,315 21 Bahamas 1,123 614 318 250 238 184 189 165 186 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 3,878 28 Japan 1,198 1,398 22,,004422 2,331 2,435 2,563 2,950 3,082 3,130 29 Middle East oil-exporting countries . 82 8 88 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 other" Commercial liabilities 4,074 4,446 5,516 5,755 6,688 7,348 7,944 7,865 7,985 33 Europe 62 101 132 147 206 170 134 117 138 34 Belgium-Luxembourg 453 352 426 408 438 459 579 549 767 35 France 607 715 909 791 1,185 1,699 1,372 1,190 1,196 36 Germany 364 424 423 508 647 591 670 689 549 37 Netherlands 379 385 559 482 486 417 458 458 416 38 Switzerland 976 1,341 1,599 1,804 2,110 2,063 2,585 2,709 2,729 39 United Kingdom 40 Canada 1,449 1,405 1,301 1,167 1,109 1,218 1,163 1,132 1,191 41 Latin America and Caribbean 1,088 924 864 1,035 997 1,118 1,267 1,669 1,092 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 6,838 49 Japan 1,799 2,042 2,578 2,659 2,763 3,091 3,059 2,712 2,639 50 Middle East oil-exporting countries ' 2,829 1,679 1,964 1,320 1,298 1,386 1,526 1,431 1,406 51 Africa 587 619 574 626 477 578 706 768 643 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 1,078 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 Bulletin, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 5. Revisions include a reclassification of transactions, which also affects the United Arab Emirates (Trucial States). totals for Asia and the grand totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • April 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 37,924 38,465 33,574 31,667 33,833 32,110r 2 Payable in dollars 26,574 33,867 28,502 35,828 35,967 31,252 29,371 31,727 29,873r 3 Payable in foreign currencies 2,302 2,399 2,462 2,097 2,498 2,323 2,296 2,106 2,Til' By type 4 Financial claims 18,891 26,273 20,363 26,537 27,341 21,638 19,743 21,774 19,403' 5 Deposits 15,526 19,916 14,903 19,750 19,383 15,906 14,838 17,043 13,007' 6 Payable in dollars 14,911 19,331 13,775 18,964 18,370 14,820 13,942 16,131 12,093' V Payable in foreign currencies 615 585 1,128 786 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 6,396' 9 Payable in dollars 2,330 5,005 4,646 5,892 7,016 5,001 4,012 4,016 5,556' 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 12,707' 12 Trade receivables 8,696 8,783 9,535 10,347 10,124 10,858 10,660 10,857 11,343' 13 Advance payments and other claims 1,290 1,209 1,065 1,040 1,000 1,079 1,265 1,202 1,364' 14 Payable in dollars 9,333 9,530 10,081 10,971 10,581 11,432 11,417 11,581 12,225'' 15 Payable in foreign currencies 652 462 519 415 543 505 507 479 483' By area or country Financial claims 16 Europe 6,929 10,744 9,531 11,580 10,719 10,051 9,208 8,629 7,764' 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 6,567' 23 Canada 3,260 4,808 2,844 2,917 3,612 2,339 2,210 2,606 2,428' 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 1,707' 26 Bermuda 6 6 7 87 188 19 25 125 33' 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 1,082 801' 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 35 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 4,713 4,313 5,016 4,930 4,934 5,168' 38 Belgium-Luxembourg 175 133 178 158 172 177 201 201 208 39 France 426 431 650 687 544 673 760 775 817' 40 Germany 346 444 562 774 615 612 646 642 668' 41 Netherlands 284 164 133 172 146 208 158 194 175' 42 Switzerland 284 217 185 262 183 322 249 220 217 43 United Kingdom 898 999 1,073 1,107 1,191 1,306 1,283 1,355 1,466' 44 Canada 1,023 934 936 939 979 975 1,114 1,181 1,221' 45 Latin America and Caribbean 1,753 1,857 1,930 2,067 2,104 2,229 2,103 2,083 2,112' 46 Bahamas 13 28 19 13 12 36 34 14 10 47 Bermuda 93 193 170 174 161 229 234 236 270 48 Brazil 206 234 226 232 234 298 277 313 231' 49 British West Indies 6 39 26 25 22 21 23 29 32 50 Mexico 510 412 368 411 463 457 477 428 499' 51 Venezuela 157 237 283 304 266 226 211 228 187 52 Asia 2,982 2,755 2,915 2,992 3,028 2,954 3,097 3,115 3,443' 53 Japan 1,016 881 1,158 1,169 967 934 1,038 990 1,176' 54 Middle East oil-exporting countries2 638 563 450 446 437 441 421 423 398' 55 Africa 437 500 401 425 425 435 386 401 387' 56 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 1988 1989 Jan.- June July Aug. Sept. Oct. Nov/ Dec.p Dec. U.S. corporate securities STOCKS 1 Foreign purchases 181,185 213,778 213,778 24,316 17,122 22,112 19,595 22,350 13,829 16,211 2 Foreign sales 183,185 203,386 203,386 20,646 15,087 20,942 17,047 20,988 14,947 16,868 3 Net purchases, or sales (—) -2,000 10,392 10,392 3,670 2,035 1,171 2,548 1,363 -1,118 -657 4 Foreign countries -1,825 10,636 10,636 3,688 2,052 1,154 2,599 1,340 -1,116 -609 5 Europe -3,350 1,049 1,049 418 779 -98 1,461 -107 -1,655 520 6 France -281 -700 -700 -15 75 -251 -5 -265 -296 -255 7 Germany 218 -865 -865 -155 -79 -238 -65 -117 -119 -41 8 Netherlands -535 168 168 131 12 -63 37 226 -34 -9 9 Switzerland -2,243 -3,470 -3,470 -114 -23 -333 64 -244 -509 -442 10 United Kingdom -954 4,528 4,528 329 546 773 894 -34 -718 1,193 11 Canada 1,087 -864 -864 168 8 14 -265 -140 -137 -459 12 Latin America and Caribbean 1,238 3,101 3,101 166 109 250 602 149 -24 -478 13 Middle East1 -2,474 3,530 3,530 1,679 456 554 110 112 303 69 14 Other Asia 1,365 3,414 3,414 1,201 729 423 631 1,138 342 -124 15 Japan 1,922 3,348 3,348 1,215 626 424 611 975 310 -53 16 Africa 188 131 131 16 2 22 24 -6 19 9 17 Other countries 121 274 274 40 -30 -11 38 193 37 -147 18 Nonmonetary international and regional organizations -176 -245 -245 -18 -17 17 -52 23 -1 --4488 BONDS2 19 Foreign purchases 86,381 120,346 120,346 10,855 10,045 10,944 8,603 10,930 11,133 13,587 20 Foreign sales 58,417 86,254 86,254 9,185 7,552 9,361 6,857 6,772 6,656 9,300 21 Net purchases, or sales (-) 27,964 34,093 34,093 1,670 2,494 1,583 1,746 4,158 4,476 4,287 22 Foreign countries 28,506 33,748 33,748 1,542 2,516 1,607 1,740 4,106 4,464 4,235 23 Europe 17,239 19,791 19,791 2,132 1,976 -138 1,400 1,986 2,712 1,328 74 France 143 372 372 6 121 -35 78 -41 -14 6 7A Germany 1,344 -239 -239 -162 -53 -121 -33 113 -117 -33 76 Netherlands 1,514 850 850 395 -22 96 28 30 143 41 7,7 Switzerland 505 -165 -165 -110 81 -201 -27 74 54 -277 78 United Kingdom 13,084 18,405 18,405 1,881 1,937 -9 1,311 1,711 2,328 1,852 2.9 Canada 711 1,112 1,112 -188 79 76 155 175 -86 204 30 Latin America and Caribbean 1,931 3,682 3,682 271 300 63 233 247 539 492 31 Middle East1 -178 -171 -171 -619 19 44 20 140 -57 242 37, Other Asia 8,900 9,060 9,060 -59 35 1,574 -108 1,553 1,343 1,954 33 Japan 7,686 6,331 6,331 -209 -44 1,167 -179 1,263 1,045 1,728 34 Africa -8 56 56 1 3 5 -3 0 8 27 35 Other countries -89 218 218 4 103 -17 42 4 4 -11 36 Nonmonetary international and regional organizations -542 345 345 128 -22 -24 6 53 12 52 Foreign securities 37 Stocks, net purchases, or sales (-)3 -1,959 -13,683 -13,683 -2,100 -808 -1,706 -648 -L,341R -921 -2,008 38 Foreign purchases 75,356 103,054 103,054 9,124 7,640 9,489 8,473 10,309 9,417 9,637 39 Foreign sales 77,315 116,737 116,737 11,225 8,448 11,195 9,121 11,650' 10,338 11,645 40 Bonds, net purchases, or sales (-) -7,434 -5,462 -5,462 -1,506 -1,406 1,005 -1,845 -615 514 -18 41 Foreign purchases 218,521 234,183 234,183 21,061 20,222 24,106 18,325 21,266 20,492 18,668 42 Foreign sales 225,955 239,645 239,645 22,567 21,628 23,101 20,170 21,881 19,977 18,686 43 Net purchases, or sales (—), of stocks and bonds .... -9,393 -19,145 -19,145 -3,607 -2,214 -701 -2,493 -l,956r -407 -2,026 44 Foreign countries -9,873 -19,120 -19,120 -3,407 -2,366 -887 -1,926 -484 -2,034 45 Europe -7,864 -18,409 -18,409 -3,945 -2,534 -860 -2,099 -2,487 -181 -563 46 Canada -3,747 -4,066 -4,066 -705 -697 -250 -201 924 -325 -967 47 Latin America and Caribbean 1,384 435 435 27 -75 314 -61 187R -102 -269 48 979 3,014 3,014 1,262 921 327 412 -232 3 -458 49 Africa -54 93 93 3 12 -4 -3 12 13 56 50 Other countries -571 -187 -187 -49 8 -414 26 -21 108 168 51 Nonmonetary international and regional organizations 480 -25 -25 -200 152 186 -568 -338 77 8 1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait, ties sold abroad by U.S. corporations organized to finance direct investments Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States). abroad. 2. Includes state and local government securities, and securities of U.S. 3. As a result of the merger of a U.S. and U.K. company in July 1989, the government agencies and corporations. Also includes issues of new debt securi- former stockholders of the U.S. company received $5,453 million in shares of the new combined U.K. company. This transaction is not reflected in the data above. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A68 International Statistics • April 1990 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1989 1989 Country or area 1988 1989 J D a e n c .- . June July Aug. Sept. Oct. Nov. Dec.p Transactions, net purchases or sales (-) during period1 1 Estimated total2 48,832 54,691 54,691 -5,202 -1,317 21,979 4,616 -2,050r 8,196 1,149 2 Foreign countries2 48,170 52,714 52,714 -5,322 -761 22,409 5,698 -3,304r 8,312 -362 3 Europe2 14,319 36,035 36,035 -1,305 4,357 15,191 2,494 —2,137r 4,260 2,434 4 Belgium-Luxembourg 923 1,053 1,053 13 82 413 216 90 210 -85 5 Germany -5,268 7,922 7,922 -1,106 2,622 2,503 510 137 1,666 1,735 6 Netherlands -356 -1,137 -1,137 -674 100 1,304 302 -1,200 54 -386 7 Sweden -323 889 889 647 110 241 -50 140 -232 29 8 Switzerland2 -1,074 1,097 1,097 378 -361 -748 374 -187 -780 -355 9 United Kingdom 9,640 20,217 20,217 -133 1,024 9,863 339 -9iy 3,799 1,277 10 Other Western Europe 10,786 5,982 5,982 -423 786 1,614 802 -199 -481 209 11 Eastern Europe -10 14 14 -6 -5 0 0 0 26 10 12 Canada 3,761 621 621 -478 -533 1,028 -373 150 375 164 13 Latin America and Caribbean 713 494 494 643 839 -280 23 -1,439 1,372 -886 14 Venezuela -109 311 311 1 71 120 29 72 163 -36 15 Other Latin America and Caribbean 1,130 -292 -292 -14 104 217 -506 34 576 -610 16 Netherlands Antilles -308 475 475 656 665 -617 500 -1,545 634 -240 17 Asia 27,603 14,008 14,008 -5,581 -4,941 7,121 2,857 -131r 1,646 -2,669 18 Japan 21,750 2,393 2,393 -7,780 -5,360 3,009 2,402 1,330 1,085 -1,036 19 -13 116 116 66 -5 -48 0 13 9 39 20 Mother 1,786 1,439 1,439 1,332 -478 -602 697 240 650 555 21 Nonmonetary international and regional organizations 661 1,978 1,978 120 -557 -431 -1,082 1,254 -116 1,511 22 International 1,106 1,473 1,473 -253 -546 -576 -719 1,158 -143 1,335 23 Latin America regional -31 231 231 191 3 75 -228 160 0 0 Memo 24 Foreign countries2 48,170 52,714 52,714 -5,322 -761 22,409 5,698 -3,304' 8,312 -362 25 Official institutions 26,624 26,949 26,949 449 2,819 9,957 799 -1,02c 1,686 1,303 26 Other foreign 21,546 25,764 25,764 -5,772 -3,580 12,452 4,900 —2,284r 6,627 -1,665 Oil-exporting countries 27 Middle East3 1,963 8,146 8,146 667 435 3,681 695 -2,183 -26 -640 28 Africa4 1 -1 -1 0 0 0 0 0 -1 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 Feb. 28, 1990 Rate on Feb. 28, 1990 Rate on Feb. 28, 1990 CCoouunnttrryy CCoouunnttrryy CCoouunnttrryy Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e 666666......000000 JJJJJJuuuuuunnnnnneeeeee 111111999999888888999999 111111000000......000000 DDDDDDeeeeeecccccc...... 111111999999888888999999 888...000 JJJuuunnneee 111999888333 111111000000......222222555555 OOOOOOcccccctttttt...... 111111999999888888999999 GGeerrmmaannyy,, FFeedd.. RReepp.. ooff...... 666666......000000 OOOOOOcccccctttttt...... 111111999999888888999999 666...000 OOOcccttt... 111999888999 444444999999......000000 MMMMMMaaaaaarrrrrr...... 111111999999888888111111 IIttaallyy 111111333333......555555 MMMMMMaaaaaarrrrrr...... 111111999999888888999999 111111333333......222222555555 FFFFFFeeeeeebbbbbb...... 111111999999999999000000 444444......222222555555 DDDDDDeeeeeecccccc...... 111111999999888888999999 888...000 OOOcccttt... 111999888555 111111000000......555555 OOOOOOcccccctttttt...... 111111999999888888999999 777777......000000 OOOOOOcccccctttttt...... 111111999999888888999999 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 corndiscounts 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 1990 CCoouunnttrryy,, oorr ttyyppee 11998877 11998888 11998899 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Eurodollars 7.07 7.85 9.16 8.71 8.85 8.67 8.42 8.39 8.22 8.24 2 United Kingdom 9.65 10.28 13.87 13.86 13.99 15.03 15.07 15.07 15.13 15.07 3 Canada 8.38 9.63 12.20 12.30 12.32 12.29 12.35 12.34 12.24 12.96 4 Germany 3.97 4.28 7.04 6.99 7.37 8.08 8.22 8.06 8.22 8.27 5 Switzerland 3.67 2.94 6.83 7.01 7.42 7.63 7.68 8.14 9.35 9.31 6 Netherlands 5.24 4.72 7.28 7.15 7.53 8.08 8.40 8.47 8.82 8.93 7 France 8.14 7.80 9.27 8.95 9.20 9.89 10.41 10.71 11.19 10.93 8 Italy 11.15 11.04 12.44 12.52 12.40 12.63 12.67 12.83 12.88 13.22 9 Belgium 7.01 6.69 8.65 8.44 8.66 9.51 9.81 10.03 10.48 10.54 10 Japan 3.87 3.96 4.73 4.80 4.88 5.25 5.71 5.80 6.02 6.22 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 • April 1990 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1989 1990 Country/currency 11998877 11998888 11998899 Sept. Oct. Nov. Dec. Jan. Feb. 1 Australia/dollar^ 70.137 78.409 79.186 77.271 77.421 78.295 78.586 78.111 75.932 2 Austria/schilling 12.649 12.357 13.236 13.733 13.140 12.860 12.241 11.904 11.803 3 Belgium/franc 37.358 36.785 39.409 40.841 39.197 38.403 36.544 35.451 34.998 4 Canada/dollar 1.3259 1.2306 1.1842 1.1828 1.1749 1.1697 1.1613 1.1720 1.1965 5 China, P.R./yuan 3.7314 3.7314 3.7673 3.7314 3.7314 3.7314 4.1825 4.7339 4.7339 6 Denmark/krone 6.8478 6.7412 7.3210 7.5872 7.2781 7.1138 6.7610 6.5620 6.4729 7 Finland/markka 4.4037 4.1933 4.2963 4.4219 4.2817 4.2619 4.1231 4.0080 3.9642 8 France/franc 6.0122 5.9595 6.3802 6.5855 6.3339 6.2225 5.9391 5.7568 5.6897 9 Germany/deutsche mark 1.7981 1.7570 1.8808 1.9502 1.8662 1.8300 1.7378 1.6914 1.6758 10 Greece/drachma 135.47 142.00 162.60 169.03 165.88 164.97 160.32 157.68 158.04 11 Hong Kong/dollar 7.7986 7.8072 7.8008 7.8078 7.8081 7.8140 7.8102 7.8116 7.8103 12 India/rupee 12.943 13.900 16.213 16.745 16.819 16.925 16.932 16.963 16.990 13 Ireland/punt 148.79 152.49 141.80 136.71 142.50 144.73 151.65 156.31 158.28 14 Italy/lira ,297.03 1,302.39 1,372.28 1,404.18 1,369.24 1,343.83 1,291.93 1,261.87 1,243.68 15 Japan/yen 144.60 128.17 138.07 145.07 142.21 143.53 143.69 144.98 145.69 16 Malaysia/ringgit 2.5186 2.6190 2.7079 2.6980 2.6945 2.7028 2.7032 2.7041 2.7137 17 Netherlands/guilder 2.0264 1.9778 2.1219 2.1992 2.1072 2.0652 1.9619 1.9073 1.8892 18 New Zealand/dollar2 ... 59.328 65.560 59.354 59.144 55.937 56.301 59.458 60.220 59.156 19 Norway /krone 6.7409 6.5243 6.9131 7.1264 6.9502 6.9010 6.7021 6.5462 6.4760 20 Portugal/escudo 141.20 144.27 157.53 163.36 159.08 157.65 152.34 149.17 147.71 21 Singapore/dollar 2.1059 2.0133 1.9511 1.9769 1.9622 1.9588 1.9183 1.8873 1.8641 22 South Africa/rand 2.0385 2.2773 2.6215 2.7882 2.6403 2.6295 2.5679 2.5532 2.5449 23 South Korea/won 825.94 734.52 674.29 672.73 673.86 674.94 677.66 686.18 692.47 24 Spain/peseta 123.54 116.53 118.44 122.14 118.77 116.58 112.24 109.71 108.27 25 Sri Lanka/rupee 29.472 31.820 35.947 39.572 40.018 40.017 40.018 40.018 40.018 26 Sweden/krona 6.3469 6.1370 6.4559 6.6103 6.4580 6.4306 6.2920 6.1776 6.1250 27 Switzerland/franc 1.4918 1.4643 1.6369 1.6865 1.6302 1.6189 1.5686 1.5175 1.4879 28 Taiwan/dollar 31.753 28.636 26.407 25.737 25.739 26.029 26.139 26.081 26.118 29 Thailand/baht . 25.775 25.312 25.725 26.012 25.868 25.877 25.778 25.745 25.733 30 United Kingdom/pound2 163.98 178.13 163.82 157.15 158.74 157.26 159.65 165.12 169.61 MEMO 31 United States/dollar3... 96.94 92.72 98.60 101.87 98.92 97.99 94.88 93.00 92.25 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://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A72 Federal Reserve Board of Governors ALAN GREENSPAN, Chairman MARTHA R. SEGER MANUEL H. JOHNSON, Vice Chairman WAYNE D. ANGELL OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director BOB STAHLY MOORE, Special Assistant to the Board CHARLES J. SIEGMAN, Senior Associate Director DAVID H. HOWARD, Deputy Associate Director ROBERT F. GEMMILL, Staff Adviser DONALD B. ADAMS, Assistant Director LEGAL DIVISION PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel RALPH W. SMITH, JR., Assistant Director RICHARD M. ASHTON, Associate General Counsel OLIVER IRELAND, Associate General Counsel RICKI R. TIGERT, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS SCOTT G. ALVAREZ, Assistant General Counsel MARYELLEN A. BROWN, Assistant to the General Counsel MICHAEL J. PRELL, Director EDWARD C. ETTIN, Deputy Director THOMAS D. SIMPSON, Associate Director OFFICE OF THE SECRETARY LAWRENCE SLIFMAN, Associate Director DAVID J. STOCKTON, Associate Director MARTHA BETHEA, Deputy Associate Director WILLIAM W. WILES, Secretary PETER A. TINSLEY, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary MYRON L. KWAST, Assistant Director BARBARA R. LOWREY, Associate Secretary PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director JOYCE K. ZICKLER, Assistant Director DIVISION OF CONSUMER LEVON H. GARABEDIAN, Assistant Director AND COMMUNITY AFFAIRS (Administration) GRIFFITH L. GARWOOD, Director DIVISION OF MONETARY AFFAIRS GLENN E. LONEY, Assistant Director ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director BRIAN F. MADIGAN, Assistant Director RICHARD D. PORTER, Assistant Director DIVISION OF BANKING NORMAND R.V. BERNARD, Special Assistant to the Board SUPERVISION AND REGULATION OFFICE OF THE INSPECTOR GENERAL WILLIAM TAYLOR, Staff Director DON E. KLINE, Associate Director FREDERICK M. STRUBLE, Associate Director BRENT L. BOWEN, Inspector General WILLIAM A. RYBACK, Deputy Associate Director BARRY R. SNYDER, Assistant Inspector General STEPHEN C. SCHEMERING, Deputy Associate Director RICHARD SPILLENKOTHEN, Deputy Associate Director HERBERT A. BIERN, Assistant Director JOE M. CLEAVER, Assistant Director ROGER T. COLE, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSS AN, Assistant Director LAURA M. HOMER, Securities Credit Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A73 and Official Staff EDWARD W. KELLEY, JR. JOHN P. 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 DIVISION OF FEDERAL RESERVE Director, National Information Center BANK OPERATIONS PORTIA W. THOMPSON, Equal Employment Opportunity Programs Officer CLYDE H. FARNSWORTH, JR., Director DAVID L. ROBINSON, Associate Director DIVISION OF HUMAN RESOURCES C. WILLIAM SCHLEICHER, JR., Associate Director MANAGEMENT BRUCE J. SUMMERS, Associate Director CHARLES W. BENNETT, Assistant Director DAVID L. SHANNON, Director JACK DENNIS, JR., Assistant Director JOHN R. WEIS, Associate Director EARL G. HAMILTON, Assistant Director ANTHONY V. DIGIOIA, Assistant Director JOHN H. PARRISH, Assistant Director JOSEPH H. HAYES, JR., Assistant Director LOUISE L. ROSEMAN, Assistant Director FRED HOROWITZ, 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 MARIANNE M. EMERSON, Assistant 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 ROBERT J. ZEMEL, Associate Director Po KYUNG KIM, Assistant Director RAYMOND H. MASSEY, Assistant Director RICHARD C. STEVENS, Assistant Director Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

74 Federal Reserve Bulletin • April 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 DAVID J. STOCKTON, 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 THOMAS H. O'BRIEN, President PAUL HAZEN, Vice President IRA STEPANIAN, 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 RONALD G. STEINHART, Eleventh District KENNETH L. ROBERTS, Sixth District PAUL HAZEN, Twelfth District HERBERT V. PROCHNOW, Secretary WILLIAM J. KORSVIK, Associate Secretary Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A75 and Advisory Councils CONSUMER ADVISORY COUNCIL 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 ELLIOT 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

A76 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. CONSUMER EDUCATION PAMPHLETS ANNUAL REPORT: BUDGET REVIEW, 1988-89. Short pamphlets suitable for classroom use. Multiple copies FEDERAL RESERVE BULLETIN Monthly. $25.00 per year or $2.50 are available without charge. each in the United States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $3.00 each. Consumer Handbook on Adjustable Rate Mortgages BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint Consumer Handbook to Credit Protection Laws of Part I only) 1976. 682 pp. $5.00. Federal Reserve Glossary ANNUAL STATISTICAL DIGEST A Guide to Business Credit and the Equal Credit Opportunity 1974-78. 1980. 305 pp. $10.00 per copy. Act 1981. 1982. 239 pp. $ 6.50 per copy. A Guide to Federal Reserve Regulations 1982. 1983. 266 pp. $ 7.50 per copy. How to File A Consumer Credit Complaint 1983. 1984. 264 pp. $11.50 per copy. Series on the Structure of the Federal Reserve System 1984. 1985. 254 pp. $12.50 per copy. The Board of Governors of the Federal Reserve System 1985. 1986. 231 pp. $15.00 per copy. The Federal Open Market Committee 1986. 1987. 288 pp. $15.00 per copy. Federal Reserve Bank Board of Directors 1987. 1988. 272 pp. $15.00 per copy. Federal Reserve Banks 1988. 1989. 256 pp. $25.00 per copy. Organization and Advisory Committees SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- A Consumer's Guide to Mortgage Lock-Ins RIES OF CHARTS. Weekly. $30.00 per year or $.70 each in A Consumer's Guide to Mortgage Settlement Costs the United States, its possessions, Canada, and Mexico. A Consumer's Guide to Mortgage Refinancing Elsewhere, $35.00 per year or $.80 each. Making Deposits: When Will Your Money Be Available? THE FEDERAL RESERVE ACT and other statutory provisions When Your Home is on the Line: What You Should Know affecting the Federal Reserve System, as amended About Home Equity Lines of Credit through August 1988. 608 pp. $10.00 REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- ERAL RESERVE SYSTEM. ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— PAMPHLETS FOR FINANCIAL INSTITUTIONS Regulation Z) Vol. I (Regular Transactions). 1969. 100 Short pamphlets on regulatory compliance, primarily suitpp. Vol. II (Irregular Transactions). 1969. 116 pp. Each able for banks, bank holding companies, and creditors. volume $2.25; 10 or more of same volume to one address, $2.00 each. Limit of 50 copies INTRODUCTION TO FLOW OF FUNDS. 1980. 68 pp. $1.50 each; 10 or more to one address, $1.25 each. The Board of Directors' Opportunities in Community Rein- FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; up- vestment dated at least monthly. (Requests must be prepaid.) The Board of Directors' Role in Consumer Law Compliance Consumer and Community Affairs Handbook. $75.00 per Combined Construction/Permanent Loan Disclosure and year. Regulation Z Monetary Policy and Reserve Requirements Handbook. Community Development Corporations and the Federal Re- $75.00 per year. serve Securities Credit Transactions Handbook. $75.00 per year. Construction Loan Disclosures and Regulation Z The Payment System Handbook. $75.00 per year. Finance Charges Under Regulation Z Federal Reserve Regulatory Service. 3 vols. (Contains all How to Determine the Credit Needs of Your Community three Handbooks plus substantial additional material.) Regulation Z: The Right of Rescission $200.00 per year. The Right to Financial Privacy Act Rates for subscribers outside the United States are as Signature Rules in Community Property States: Regulation B follows and include additional air mail costs: Signature Rules: Regulation B Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

A78 Index to Statistical Tables References are to pages A3-A70 although the prefix "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Demand deposits—Continued Agricultural loans, commercial banks, 19, 20 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 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) EMPLOYMENT, 47 New issues, 34 Eurodollars, 24 Rates, 24 Branch banks, 21, 57 FARM mortgage loans, 38 Business activity, nonfinancial, 46 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business expenditures on new plant and equipment, 35 Federal credit agencies, 33 Business loans (See Commercial and industrial loans) Federal finance Debt subject to statutory limitation, and types and CAPACITY utilization, 48 ownership of gross debt, 30 Capital accounts Receipts and outlays, 28, 29 Banks, by classes, 18 Treasury financing of surplus, or deficit, 28 Federal Reserve Banks, 10 Treasury operating balance, 28 Central banks, discount rates, 69 Federal Financing Bank, 28, 33 Certificates of deposit, 24 Federal funds, 6, 17, 19, 20, 21, 24, 28 Commercial and industrial loans Federal Home Loan Banks, 33 Commercial banks, 16, 19 Federal Home Loan Mortgage Corporation, 33, 37, 38 Weekly reporting banks, 19-21 Federal Housing Administration, 33, 37, 38 Commercial banks Federal Land Banks, 38 Assets and liabilities, 18-20 Federal National Mortgage Association, 33, 37, 38 Commercial and industrial loans, 16, 18, 19, 20, 21 Federal Reserve Banks Consumer loans held, by type and terms, 39, 40 Condition statement, 10 Loans sold outright, 19 Discount rates (See Interest rates) Nondeposit funds, 17 U.S. government securities held, 4, 10, 11, 30 Real estate mortgages held, by holder and property, 38 Federal Reserve credit, 4, 5, 10, 11 Time and savings deposits, 3 Federal Reserve notes, 10 Commercial paper, 23, 24, 36 Federal Savings and Loan Insurance Corporation insured Condition statements (See Assets and liabilities) institutions, 26 Construction, 46, 51 Federally sponsored credit agencies, 33 Consumer installment credit, 39, 40 Finance companies Consumer prices, 46, 48 Assets and liabilities, 36 Consumption expenditures, 53, 54 Business credit, 36 Corporations Loans, 39, 40 Nonfinancial, assets and liabilities, 35 Paper, 23, 24 Profits and their distribution, 35 Financial institutions Security issues, 34, 67 Loans to, 19, 20, 21 Cost of living (See Consumer prices) Selected assets and liabilities, 26 Credit unions, 27, 39. (See also Thrift institutions) Float, 4 Currency and coin, 18 Flow of funds, 41, 43, 44, 45 Currency in circulation, 4, 13 Foreign banks, assets and liabilities of U.S. branches and Customer credit, stock market, 25 agencies, 21 Foreign currency operations, 10 DEBITS to deposit accounts, 15 Foreign deposits in U.S. banks, 4, 10, 19, 20 Debt (See specific types of debt or securities) Foreign exchange rates, 70 Demand deposits Foreign trade, 56 Banks, by classes, 18-21 Foreigners Ownership by individuals, partnerships, and Claims on, 57, 59, 62, 63, 64, 66 corporations, 22 Liabilities to, 20, 56, 57, 59, 60, 65, 67, 68 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

A80 Federal Reserve Banks, Branches, and Offices FEDERAL RESERVE BANK Chairman President Vice President branch, or facility Zip Deputy Chairman First Vice President in charge of branch BOSTON* 02106 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 James O. Aston 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. Meniman 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 To be announced 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. Breen' 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. Hemminghaus 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

A81 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories April 1984 ii >>ii ALASKA ii ii ii ii © i As? •AN LEGEND " Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch * Federal Reserve Branch Cities Territories Federal Reserve Bank Facility ^ Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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

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