Federal Reserve Bulletin, 1990-05
VOLUME 76 • NUMBER 5 • MAY 1990 FEDERAL RESERVE 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 267 U.S. INTERNATIONAL TRANSACTIONS liquidate its operations and offers his views IN 1989 on some issues that have emerged from the Drexel experience that might merit further In 1989, for the second year in a row, the consideration, before the Subcommittee on U.S. current account deficit narrowed, fall- Economic and Commercial Law of the ing to $104 billion (excluding capital gains House Committee on the Judiciary, March and losses). The trade deficit also fell, to 1, 1990. $113 billion. However, the pace of improvement slowed noticeably during the year. 304 Wayne D. Angell, Member, Board of Gov- The question for the year ahead is whether ernors, discusses the effects of the Expethe recent slowing merely interrupts a longer- dited Funds Availability Act on depository term improving trend or signals a more lasting institutions and on their customers, before reversal of current account adjustment. the Subcommittee on Consumer and Regulatory Affairs of the Senate Committee on 280 THE NONBANK ACTIVITIES OF BANK Banking, Housing, and Urban Affairs, HOLDING COMPANIES March 1, 1990. This article uses 1988 data from two rela- 308 Clyde H. Farnsworth, Jr., Director, Divitively new reporting forms to describe the sion of Federal Reserve Bank Operations, extent of the nonbank activities of bank comments on proposed legislation related holding companies and the contribution of to money laundering, before the Subcomnonbank subsidiaries to the financial condi- mittee on Financial Institutions Supervition of bank holding companies. It also sion, Regulation and Insurance of the provides some historical background on House Committee on Banking, Finance and these nonbank activities. Urban Affairs, March 8, 1990. 312 Manuel H. Johnson, Vice Chairman, Board 293 THE FEDERAL RESERVE IN THE of Governors, presents the views of the PAYMENTS SYSTEM Board on the report of the General Ac- This white paper, which was released on counting Office on the activities of securi- March 26, 1990, sets out the Federal Reties subsidiaries of bank holding companies serve's general policy regarding its role in and says that the study concurs in the the payments system. overall initial approach taken by the Board, before the Subcommittee on General Over- 299 INDUSTRIAL PRODUCTION sight and Investigations of the House Com- Industrial production rose 0.6 percent in mittee on Banking, Finance and Urban Af- February after a decline of 1.0 percent fairs, March 19, 1990. (revised) in January. 319 Chairman Greenspan discusses major issues involving the regulation of securities 301 STATEMENTS TO THE CONGRESS markets, including the appropriate level of Alan Greenspan, Chairman, Board of Gov- margins for stock index futures and the ernors, reviews the Federal Reserve's role need for federal authority over such marin the developments surrounding the recent gins, existing impediments to innovation, decision of Drexel Burnham Lambert to and whether there is a need to modify the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
existing regulatory system for stocks and velopments in foreign exchange and domesstock derivatives, before the Subcommittee tic financial markets. The reserve on Securities of the Senate Committee on conditions contemplated by the Committee Banking, Housing, and Urban Affairs, were expected to be consistent with growth March 29, 1990. of M2 and M3 at annual rates of around 7 and Vh percent respectively over the three- 324 ANNOUNCEMENTS month period from December to March. Reappointment of Edward W. Kelley, Jr. as The members agreed that the intermeeting a member of the Board of Governors. range for the federal funds rate should be left unchanged at 6 to 10 percent. Revisions to the policy statement regarding the System's role in the payments mecha- 341 LEGAL DEVELOPMENTS nism. Various bank holding company, bank ser- Amendments to Regulation T to accommovice corporation, and bank merger orders; date the settlement and clearance of transand pending cases. actions in foreign securities and to permit marginability of foreign securities at bro- 395 DIRECTORS OF FEDERAL RESERVE ker-dealers. BANKS AND BRANCHES Revisions to official staff commentaries on List of Directors by Federal Reserve Dis- Regulations B, E, and Z. trict. Revisions to the money stock data. AI FINANCIAL AND BUSINESS STATISTICS 331 RECORD OF POLICY ACTIONS OF THE FEDERAL OPEN MARKET COMMITTEE These tables reflect data available as At its meeting on February 6-7, 1990, the of March 28, 1990. Committee established ranges for growth of A3 Domestic Financial Statistics 3 to 7 percent for M2 and 2Vi to 6V2 percent A46 Domestic Nonfinancial Statistics for M3, measured from the fourth quarter of A55 International Statistics 1989 to the fourth quarter of 1990. A monitoring range for growth of total domestic A71 GUIDE TO TABULAR PRESENTATION, nonfinancial debt was set at 5 to 9 percent. STATISTICAL RELEASES, AND SPECIAL In carrying out policy, the Committee indi- TABLES cated that it would continue to evaluate the behavior of the monetary aggregates in light AH BOARD OF GOVERNORS AND STAFF of progress toward price stability, movements in their velocities, and developments A74 FEDERAL OPEN MARKET COMMITTEE in the economy and financial markets. AND STAFF; ADVISORY COUNCILS With regard to the implementation of policy immediately ahead, the Committee A76 FEDERAL RESERVE BOARD adopted a directive that called for an un- PUBLICATIONS changed degree of pressure on reserve positions. Some firming or some easing of A78 INDEX TO STATISTICAL TABLES reserve conditions would be acceptable during the intermeeting period depending A80 FEDERAL RESERVE BANKS, on progress toward price stability, the BRANCHES, AND OFFICES strength of the business expansion, the behavior of the monetary aggregates, and de- A8I MAP OF FEDERAL RESERVE SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
U.S. International Transactions in 1989 Guy V.G. Stevens, of the Board's Division of 2. External balance and gross U.S. saving International Finance, prepared this article. and investment In 1989, for the second year in a row, the U.S. current account deficit narrowed, falling to $104 billion (excluding capital gains and losses) (chart 1). The trade deficit fell to $113 billion. However, the pace of improvement slowed noticeably during the year; part of the reason may have been a deterioration in U.S. international price competitiveness. 1. U.S. external balances Billions of dollars Analysis, U.S. national income and product accounts. The data are seasonally adjusted annual rates. The current account is adjusted to exclude capital gains and losses. The inflow of direct investment generated pub- SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. international transaction accounts. lic debate about the desirability of the accumulation by foreigners of U.S. assets in this form; The overall improvement in the external ac- but it also bolstered the nation's ability to maincounts last year reflected a rapid expansion in tain the rate of capital formation in the face of a exports, much of which came early in the year. low national saving rate. In fact, the reduction of Imports also grew at a fairly strong pace, how- the current account deficit in 1989, both in absoever, led by an increase of nearly 30 percent in lute terms and as a percentage of gross national the value of oil imports. A modest improvement product, reflected a significant narrowing of the in the current account as the year went by gap between domestic investment and domestic stemmed from gains in net service transactions. savings. As chart 2 shows, the improvement in The United States continued to enjoy positive the external deficit was related to an increase in net investment income receipts despite a large the U.S. national saving rate, at a time when the and growing net foreign debt position. share of GNP devoted to investment was trend- The capital account counterpart to the cur- ing down.1 That increase included both a signifrent deficit included large foreign private purchases of U.S. Treasury and corporate securi- 1. In chart 2 the external deficit is equal to "net foreign ties and a continued large net inflow of foreign investment" in the national income and product accounts. direct investment. Net foreign investment differs from the current account Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
268 Federal Reserve Bulletin • May 1990 competitiveness declined), with much of the 3. Real exchange value of the dollar against currencies of selected countries movement coming during the first half of 1989. By the third quarter, the ratio was 13 percent Index, 1982 = 100 above its 1988 low. In the fourth quarter and early this year, the ratio dropped back, largely because of movement in the dollar's nominal exchange rate. The dollar rose against nearly all major currencies during the first half of 1989, under the impetus of tight U.S. monetary policy and favorable U.S. trade figures (chart 4). Political events in Japan and China also contributed to the dol- 1981 1983 1985 _1987 1989 lar's strength. In the second half of the year, The real exchange value of the dollar is calculated using weighted however, an easing of U.S. monetary policy nominal exchange rates adjusted with weighted consumer prices. The weights in the indexes are proportional to each country's share in contrasted sharply with further tightening of world exports plus imports during the years 1972-76. For the counmonetary policy and rising interest rates abroad, tries in the G-10 index, see the note to table 1; the countries in the developing-countries index are Brazil, Hong Kong, Korea, Malaysia, particularly in Germany and Japan. Late in the Mexico, the Philippines, Singapore, and Taiwan. year the dollar firmed against the yen, but it icant rise in the personal saving rate and a slight declined more sharply against the mark as politreduction in the federal budget deficit. ical developments in Eastern Europe promised to stimulate the West German economy. Despite the dollar's decline late in the year, for the year as a whole the dollar was noticeably above its ECONOMIC INFLUENCES ON U.S. average level in 1988. INTERNATIONAL TRANSACTIONS In addition to the movements of nominal ex- The proximate determinants of the changes in change rates, U.S. price competitiveness deteri- U.S. trade and current account flows include orated because domestic prices advanced somemovements in U.S. international price competi- what faster on average in the United States than tiveness, changes in aggregate demand or income in the other G-10 countries. This divergence was at home and abroad, and swings in the rates of particularly evident in 1988, when approximately return on real and financial assets at home and two thirds of the 2 percent deterioration in price abroad. The main factor in the recent slowing of competitiveness after the fourth quarter of 1987 U.S. external adjustment appears to have been was attributable to differences in inflation rates. the weakening of U.S. international price competitiveness, after its earlier gains. 4. Nominal exchange value of the dollar against A convenient measure of price competitive- selected currencies ness is the real exchange value of the dollar, the Index, 1982=100 ratio of U.S. prices to foreign prices expressed in dollars. As chart 3 shows, the real exchange value of the dollar with respect to the currencies of the other Group of Ten (G-10) countries (weighted by multilateral trade shares) reached a low in the first quarter of 1988; that low was more than 40 percent below the peak value in early 1985. The ratio subsequently rose (and price 1981 1983 1985 1987 1989 The nominal exchange value of the dollar for the G-10 countries is balance (exclusive of capital gains and losses) in the balance calculated using weighted exchange rates. The weights in the index of payments accounts by a small amount, reflecting differ- are proportional to each country's share in world exports plus imports ences in the treatment of shipments of gold and of transac- during the years 1978-83. For the countries in the G-10 index, see the tions with Puerto Rico and U.S. territories. note to table 1. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
U.S. International Transactions in 1989 269 By contrast, in 1989 most of the additional 5 States and has had an impact on the potential for percent decline resulted from the rise in nominal U.S. external adjustment in the longer run is exchange rates (some, but not all, of which was uncertain. For example, although the net inflow reversed by the end of the year). of direct investment into the United States has Vis-a-vis the developing countries that are been fairly strong in recent years and may have major U.S. trading partners, U.S. price compet- been increased by the labor cost advantage, itiveness continued to improve, about 7 percent much of this activity has involved takeovers in 1989 on average. Of the eight countries in the rather than net additions to U.S. capacity; any index of developing countries, only Malaysia positive effect on the rate of U.S. capacity forexperienced an improvement in price competi- mation could only have been an indirect one. tiveness with respect to the United States during Moreover, private fixed capital formation has the year as a whole, an improvement due to a been growing much more rapidly in Europe and superior domestic price performance. In the last Japan than in the United States. Clearly, relative three quarters of the year, however, Mexico was labor cost is just one of many variables that able to improve its price competitiveness; depre- influence investment decisions. ciation of the peso of approximately 16 percent Typically, an important factor in underlying over this period outweighed the difference in the movements in the trade balance is the change in inflation rates between the two countries. the relative rates of growth of the United States Despite its loss of price competitiveness with and its trading partners. In the past year, a respect to the other industrial countries, various slowing in U.S. growth, coupled with the mainmeasures of prices and costs suggest that the tenance of robust growth among most major United States continues to enjoy on average an groups of U.S. trading partners, has helped narabsolute price and cost advantage over its major row the U.S. deficit (table 1). An exception is the trading partners. One such measure is unit labor estimated reduction in growth among key develcosts in manufacturing, which in the United oping countries in 1989 to a rate approximately States are still more than 15 percent below those equal to that of the United States; this reduction in other major industrial countries (see chart 5). is attributable to very low growth in a number of Such a comparison is inexact, however, and whether the present gap in labor costs has yet 1. Growth of real GNP or GDP, selected countries, caused a shift in production toward the United 1987-89 Percent change at an annual rate, year to year except as noted 5. U.S. and foreign labor costs in manufacturing 1989:2 1989:4 Dollars per unit of output Country 1987 1988 1989 from from 1988:4 1989:2 Foreign^-w^ 9 GNP — United States 3.7 4.4 3.0 3.1 2.0 Foreign G-101 2.9 4.1 3.5 3.5 3.1 — / —.8 Othe c r o i u n n d t u ri s e tr s i 2 a l 3.3 3.2 3.6 3.7 3.0 —— — .7 GDP3 Developing countries .. 3.5 4.3 3.2e n.a. n.a. — .6 1. The GNP of foreign industrial countries is the weighted average 1 1 1 1 1 1 1 1 for the G-10 countries, excluding the United States; they are Belgium- Luxembourg, Canada, France, Germany, Italy, Japan, the Nether- 1981 1983 1985 1987 1989 lands, Sweden, Switzerland, and the United Kingdom. The weights are based on multilateral trade in 1972-76. The foreign index includes Belgium, Canada, France, Germany, 2. The GNP for other industrial countries is the weighted average Italy, Japan, the Netherlands, and the United Kingdom, and is for Australia, Austria, Denmark, Finland, Greece, Ireland, New constructed by weighting each country's unit labor costs by its share Zealand, Norway, Portugal, South Africa, Spain, and Turkey. The in total manufacturing output. weights are based on bilateral nonagricultural exports. SOURCE. Peter Hooper and Kathryn Larin, "International Compar- 3. The GDP for developing countries is a weighted average for the ison of Unit Labor Costs in Manufacturing," Review of Income and regions of Asia, Africa, the Middle East, and the Western Hemi- Wealth, series 35 (December 1989), pp. 335-55. Measures of unit labor sphere. The weights are based on gross domestic product. costs are based partly on data published by the Bureau of Labor n.a. Not available. Statistics. e Estimated using preliminary data, when available. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
270 Federal Reserve Bulletin • May 1990 Latin American countries and somewhat lower 6. U.S. exports growth in Asia. Index, 1982= 100 Billions of 1982 Nonagricultural exports Prices1 DEVELOPMENTS IN MERCHANDISE TRADE The U.S. trade deficit narrowed $14 billion to $113 billion in 1989. However, all the improvement took place early in the year; the deficit widened from $110 billion at an annual rate in the second quarter to $115 billion in the fourth (table 2). Export growth slowed dramatically in the Agricultural exports second half of the year after a strong first half. Though the pace was less rapid than it was during 120 ~ Prices1 1988, total imports continued to grow steadily. 110 This pattern resulted in part from special factors: The dollar's appreciation held down the increase 100 in the value of imports in the first half of the year, and the strike at Boeing reduced exports in the fourth quarter. Exports 1. Fixed-weight price indexes are from U.S. national income and product accounts. The value of agricultural exports increased 9 2. Seasonally adjusted annual rate. SOURCE. U.S. Department of Commerce, Bureau of Economic percent for the year, although most of that in- Analysis, U.S. national income and product accounts. crease came in the first half (table 2). A combination of factors caused a sharp drop in the from the drought-induced high of the third quarquantity of exports in the third quarter (chart 6): ter of 1988. a temporary halt in corn exports to the Soviet For separate reasons, the growth of nonagri- Union; and a decline in soybean exports because cultural exports, in both value and quantity, was of increases in supplies from South America and also bunched in the first half of the year (see table a shift away from soybean feed in the European 2 and chart 6). During that period, the value of Community. Prices of agricultural exports were nonagricultural exports expanded at an annual affected more than quantities by the drought of rate of almost 18 percent; but during the second 1988. Prices fell continuously during the year half, it increased at less than 4 percent. Though 2. U.S. merchandise trade, 1987-891 Billions of dollars, seasonally adjusted annual rate 1988 1989 TTyyppee ooff ttrraaddee 11998877 11998888 11998899 Q4 Ql Q2 Q3 Q4 Merchandise exports 250 319 362 335 351 365 363 369 Agricultural 30 38 41 39 43 44 39 40 Nonagricultural 221 281 320 2% 308 322 324 328 Merchandise imports 410 447 475 463 465 475 477 484 Oil 43 39 50 37 43 54 52 52 Non-oil 367 407 425 426 421 422 425 432 Trade balance -160 -127 -113 -128 -113 -110 -114 -115 1. Components may not add to totals because of rounding. SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, U.S. international transaction accounts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
U.S. International Transactions in 1989 271 less dramatic, the story for the quantity of ex- 7. Oil prices ports is similar: It grew 15 percent in the first half Dollars per barrel and 7 percent in the second. Part of the explanation for the slowdown was the Boeing strike, U.K. Brent — 40 which reduced exports in the fourth quarter; but more significant was a cumulative, if gradual, — 30 loss of price competitiveness after the second V quarter of 1988. The average price in dollars of > nonagricultural exports as a whole increased ^r U.S. import — 10 only 1.5 percent for 1989 (chart 6). However, 1 i with the 8 percent appreciation of the dollar in 1981 1983 1985 1987 1989 the first half of 1989, prices in foreign currency SOURCE. Petroleum Intelligence Weekly, various issues; U.S. Derose substantially, imposing a considerable, if partment of Commerce, Bureau of Economic Analysis. temporary, loss of price competitiveness. Estiquarter over fourth quarter; however, for the mates based on a Board staff model of the U.S. year the level was 30 percent higher than that in current account suggest that, had exchange rates 1988. The quantity of computer exports grew 8 remained at their level in the fourth quarter of percent; given the 10 percent reduction in the 1987, eliminating the run-up in exchange rates in quality-adjusted export price, the value of com- 1988 and 1989, the rate of growth of the value of puter exports did not change in 1989.2 Automononagricultural exports in the second half of 1989 tive exports showed virtually no growth because would have been between 7 and 8 percent instead of the predominance of trade with Canada; that of 4 percent. However, even this higher rate bilateral trade in turn is determined primarily by would have represented a significant slowing of conditions in the U.S. market, which were weak export growth. in 1989. Consumer goods and industrial supplies Although lower than in 1988 (and slowing in showed healthy growth for the year. the second half), the growth in the quantity of Industry by industry, in general export prices exports by major category was broad-based (tarose much less than they did in 1988; however, as ble 3). Capital goods grew a strong 9 percent for noted above, U.S. exports on average lost somethe year. The Boeing strike cut the quantity of what more in international price competitiveness aircraft exports somewhat when measured fourth in 1989 because the dollar was higher. 3. Changes in the quantity and price of U.S. Imports exports, 1988 and 19891 Percent change, fourth quarter to fourth quarter Led by a 28 percent increase in oil imports, the value of total imports increased 6.4 percent in Quantity Price TTyyppee ooff eexxppoorrtt 1989 (table 2). Non-oil imports rose a more 1988 1989 1988 1989 moderate 4.3 percent. The rise in the value of oil imports resulted Nonagricultural, total 17 12 5 1 from sharp increases in both price and quantity Capital goods 19 9 3 3 Computers 18 8 -1 -10 (charts 7 and 8). The quantity of oil imports Aircraft 28 13 3 4 Other 18 8 n.a. n.a. Automotive 7 13 3 2. Because of the rapid technical advances in computer Consumer goods 30 27 4 3 Industrial supplies 13 13 7 -3 products, it is particularly difficult to decompose changes in Other 15 15 5 -1 the value of computer exports and imports into price and quantity changes. In an attempt to account for the technical Agricultural 0 11 25 -7 advances, the Commerce Department has adopted a qualityadjusted or "hedonic" price index for the computer industry. 1. Prices are fixed-weight price indexes from the national income The same index is used to deflate domestic expenditures, and product accounts, imports, and exports. As a result, quantity and price breakn.a. Not available. downs for both exports and imports must be used with SOURCE. U.S. Department of Commerce, Bureau of Economic Analysis, national income and product accounts. caution. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
272 Federal Reserve Bulletin • May 1990 8. U.S. oil consumption, production, and imports 4. Changes in the quantity and price of U.S. imports, 1988 and 1989 Millions of barrels per day Percent change, fourth quarter to fourth quarter — 20 Quantity Price1 TTyyppee ooff iimmppoorrtt 1988 1989 1988 1989 Non-oil, total 4 6 7 -1 Computers 11 39 -1 -10 All other 3 0 7 -1 Industrial supplies -2 -3 14 -1 Other capital goods 9 7 6 -2 1981 1983 1985 1987 1989 Automotive 0 -11 6 2 SOURCE. Department of Energy, Energy Information Administra- Consumer goods 5 3 5 2 Foods, feeds, and beverages -5 11 4 -9 tion, Petroleum Supply Monthly, various issues. jumped partly because U.S. oil production de- 1. Prices are fixed-weight price indexes from the national income and product accounts. clined further, continuing the downward trend SOURCE. U.S. Department of Commerce, Bureau of Economic evident since 1986 (chart 8); production peaked Analysis, national income and product accounts. in the first quarter of 1986 at 11.4 million barrels per day, and thereafter gradually declined to 9.6 1987 and 1988 (table 4). Price changes ranged million barrels per day in the fourth quarter of between minus 2 and plus 2 percent for most 1989. Behind this trend is a long-term decline in categories. Through its effect on import prices, expenditures in the United States on oil explora- the rise in the dollar also had an initially favortion and development, which is likely to depress able impact on the value of imports and the trade domestic oil production for another three to five balance in the first half of 1989, the familiar years (chart 9). The price of imported oil re- J-curve effect. sponded last year to continued strong worldwide The decline in the relative price of non-oil demand and a series of interruptions in supply, imports stimulated the quantity imported, particnotably the oil spill in Alaska, accidents in the ularly in the second half of the year. Computers, North Sea, and disruptions in the oil sectors of other capital goods, and foods, feeds, and bev- Romania and the Soviet Union. An increase erages had robust growth. since 1985 in OPEC's share of world oil produc- The quantity of imports of automotive prodtion, as shown in chart 10, augurs for little, if ucts fell 11 percent, partly because significant any, near-term easing in oil prices. changes took place in the locus of production of The rise in the dollar in 1988 and 1989 actually cars sold in the United States. The value of lowered the dollar prices of many categories of imported automotive vehicles, as shown by the non-oil imports between the fourth quarters of green bars in chart 11, has fallen for the last two 9. Energy exploration and development expenditures 10. World oil production Billions of 1982 dollars Millions of barrels per day OPEC 1981 1983 1985 1987_ 1989 1979 _J985 1989 _ SOURCE. 1989—estimates in Oil and Gas Journal; 1980-88— Chase Manhattan Bank, Capital Investments of the World Petro- SOURCE. Department of Energy, Energy Information Administraleum Industry. tion, International Energy Annual, various issues. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
U.S. International Transactions in 1989 273 11. Imports of automotive vehicles and parts 6. U.S. production and imports from Japan Billions of dollars of passenger cars, 1986-89 Item 1986 1987 1988 1989 U.S. production (millions) 7.6 7.1 7.1 6.8 Big Three 7.5 6.4 6.3 5.7 Transplants .3 .7 .8 1.1 U.S. imports from Japan Units (millions) 2.6 2.4 2.1 2.0 Average price (dollars) 8,040 8,810 9,360 9,750 Value (billions of dollars) ... 21 21 20 20 Parts 6 7 9 11 SOURCES. U.S. Department of Commerce and Ward's Automotive Reports. 1986 1987 1988 1989 SOURCE. Department of Commerce, Bureau of Economic Analysis. imported from Japan has been falling, the average price per unit has increased. Meanwhile, years. The value of imported automotive parts, imports of automotive parts from Japan have on the other hand, has risen steadily. been rising strongly. Indeed, Japan accounted for This pattern reflects significant changes in the almost all of the increase in imported automotive U.S. automotive market in recent years. While parts in recent years (see table 6). the number of passenger cars imported from Canada increased between 1987 and 1989, imports from both Japan and Western Europe de- NONTRADE CURRENT ACCOUNT clined (table 5). The causes of the decline prob- TRANSACTIONS ably differ by area: In Western Europe it may be the continuing effects of the gain in U.S. price The nontrade portion of the current account competitiveness after 1985 associated with the balance increased $8 billion in 1989 to a net depreciation of the dollar against the currencies surplus (excluding capital gains and losses) of $10 of the countries in the European Monetary Sys- billion (table 7). Capital gains of $2 billion assotem; in Japan it was largely the increase in ciated with foreign direct investment in the production by U.S. subsidiaries of Japanese United States lowered the surplus to $8 billion firms. Such transplant production rose to 1.1 when net capital gains are included.3 All of the $8 million units in 1989. In fact, net sales of Japa- billion net improvement can be attributed to nese nameplate cars increased in 1989 because "other services, net." Of the many items afsales from transplant production rose more than fecting this account, significant positive changes imports declined. Whereas the number of units occurred in net travel ($2.6 billion), royalties and license fees ($1.3 billion), and other private ser- 5. Sources of U.S. imports of passenger cars and vices ($4.0 billion).4 Residents of Japan, Canada, parts, 1987 and 1989 Import and country 1987 1989 3. Capital gains have a negative sign on the payments side Number of passenger cars (millions) — of the accounts. Total 4.6 4.0 4. Other private services, net exports of which reached $17 Canada .9 1.2 billion in 1989, include education expenses, financial ser- Japan 2.4 2.1 Western Europe .7 .4 vices, insurance, telecommunications, and business, profes- Other .6 .3 sional, and technical services. Important changes in the methods of collecting data for a number of these items (and Parts (billions of dollars) for travel services) led to a substantial upward revision in the Total 27 31 Canada 9 10 gross and net flows for the years 1982 to 1988. These Japan 7 11 improvements may have contributed to the year-to-year Western Europe 4 4 change in the "other services, net" line in table 7, as well as Mexico 3 4 Other 4 2 to the higher level. For a detailed discussion of the changes, see Russell C. Krueger, "U.S. International Transactions, First Quarter 1989," Survey of Current Business, vol. 69 SOURCES. U.S. Department of Commerce, Bureau of Economic Analysis, and U.S. International Trade Commission. (June 1989), pp. 50-61. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
274 Federal Reserve Bulletin • May 1990 7. U.S. nontrade current account transactions, 1985-891 Billions of dollars Item 1985 1986 1987 1988 1989 Total nontrade current account2 3 0 -1 2 10 Service transactions, net2 18 16 14 16 24 Investment income, net2 19 10 6 3 3 Direct investment income, net2 .. 20 22 29 33 39 Portfolio income, net -1 -12 -23 -29 -35 Military, net -3 -4 -3 -5 -6 Other services, net 3 11 11 18 26 Total service receipts2 150 159 180 211 239 Investment2 84 79 89 108 125 Direct2 28 29 39 48 52 Portfolio 56 50 50 60 74 Military 9 9 11 10 9 Other 58 72 80 93 105 Total service payments2 132 143 166 194 215 Investment2 65 69 83 105 122 Direct2 8 7 10 16 13 Portfolio, private 36 39 49 60 75 Portfolio, government 21 23 24 29 34 Military 12 13 14 15 14 Other services 55 61 69 75 79 Unilateral transfers, net -15 -16 -14 -IS -14 MEMO Current account balance excluding capital gains and losses -120 -144 -160 -126 -104 Capital gains and losses on direct investment, net 7 1122 1177 -1 -2 1. Details may not add to totals because of rounding. SOURCE. U.S. Department of Commerce, Bureau of Economic 2. Excludes capital gains and losses on direct investment. Analysis, U.S. international transaction accounts. and Western Europe accounted for most of the explained by increases in both the foreign holdincrease in net travel receipts. Western Europe ings of U.S. portfolio assets and the rate of also was the source of the largest increase in net return earned on these assets. receipts of royalties and license fees and other Receipts from U.S. direct investors abroad, private services. defined as dividends and interest to the parent firm plus reinvested earnings, increased $4 bil- Investment Income Receipts and Payments lion, while payments to foreign direct investors in the United States actually decreased $3 bil- Net investment income remained at $3 billion in lion. This development is remarkable because 1989. This net flow was the sum of two dispar- the stock of foreign direct investment in the ate elements: Net income from direct invest- United States increased $60 billion in 1989. The ment contributed $39 billion; but net portfolio reduction in payments to direct investors in the income was a negative $35 billion, marking a United States mirrored the general decline in deterioration of $6 billion in 1989.5 Although U.S. corporate profits. U.S. receipts from portfolio holdings abroad increased $14 billion, this gain was more than offset by the increase in portfolio income payments to private and government investors. As U.S. INTERNATIONAL INVESTMENT discussed in more detail below, this latter is POSITION The U.S. net international investment position declined to an estimated negative $600 billion at 5. Because of rounding error, the net of $3 billion differs by the end of last year (table 8), reflecting gross $1 billion from the difference of the rounded flows for net direct investment income and net portfolio income. claims on foreigners amounting to $1.4 trillion, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
U.S. International Transactions in 1989 275 8. Net international investment position of the United States, 1985-891 Billions of dollars Item 1985 1986 1987 1988 1989 Net international investment position -111 -268 -378 -532 -603 U.S. assets abroad 950 1,073 1,170 1,254 1,380 Government 131 138 135 134 158 Private 819 935 1,035 1,120 1,222 Direct investment 230 260 308 327 359 Other 589 675 727 793 863 Foreign assets in the United States 1,061 1,341 1,548 1,786 1,983 Official 203 242 284 322 329 Private 858 1,099 1,264 1,464 1,654 Direct investment 185 220 272 329 390 Other 673 879 992 1,135 1,264 1. Details may not add to totals because of rounding. estimates by Federal Reserve staff based on net recorded position at SOURCES. 1985-88, net recorded position—Survey of Current the end of 1988 plus preliminary net capital flows from Bureau of Business, vol. 69 (June 1989); other data—U.S. Department of Com- Economic Analysis, U.S. international transaction accounts, merce, Bureau of Economic Analysis. All data for 1989 are minus gross liabilities of $2 trillion.6 Private abroad (used as the denominator in the rates of portfolio investments accounted for most of the return in table 9) is based on historical cost. At net debt position. The net private direct invest- least three studies have suggested that these ment position also declined last year, to about assets may be undervalued by as much as one negative $30 billion, defined as the difference half of their current market value, implying that between the value of U.S. assets held abroad, the implicit rate of return is overstated by a factor estimated at $359 billion, and foreign assets held of two.7 However, there is no clear consensus that in the United States, at $390 billion. The numbers the error in the data is that large.8 Even if it were, for private asset holdings in table 8, particularly and the rate of return on direct investment were those for direct investment, are subject to signif- halved, the rates of return on direct investment in icant error, as discussed below. the United States and abroad would still differ Given the magnitude of the U.S. net debt widely. Moreover, a more realistic valuation of position, it may seem surprising that U.S. net direct investment assets would also lower the rate investment income receipts remained positive of return on direct investment in the United last year. This outcome reflects significant differ- States. But because foreign direct investment in ences in the implicit rates of return on U.S. the United States is on average more recent, the international claims and liabilities (table 9). The estimated average rates of return on U.S. investments abroad, both direct and portfolio, are 7. The following studies reach broadly similar conclusions regarding the undervaluation of the stock of direct investment substantially higher than the rates on foreign abroad: Robert Eisner and Paul J. Peiper, "The World's investments in the United States. Greatest Debtor Nation," Review of Economics and Fi- The difference between U.S. and foreign rates nance, forthcoming; Lois Stekler, "U.S. Direct Investment Receipts and Payments: Models and Projections," Internaof return is most pronounced for direct investtional Finance Discussion Papers 140 (Board of Governors of ment. The implicit rate of return on U.S. direct the Federal Reserve System, Division of International Fiinvestments abroad, which was 15 percent in nance, 1979); Michael Ulan and William G. Dewald, The U.S. Net International Investment Position: The Numbers are Mis- 1989 and averaged almost 14 percent for the stated and Misunderstood (U.S. Department of State, 1989). period 1983-89, may be overstated substantially For an examination of the various estimates, see Lois because the value of U.S. direct investments Stekler and Guy V.G. Stevens, "The Adequacy of Direct Investment Data," in Peter Hooper and J. David Richardson, eds., International Economic Transactions: Issues in Measurement and Empirical Research (University of Chicago 6. As noted in the table, these estimates are based on data Press, forthcoming). for the 1988 year-end investment position published by the 8. In preliminary work, Walther Lederer has arrived at a Bureau of Economic Analysis and data on capital flows in much smaller replacement-cost measure of the value of direct 1989. investment abroad than have the studies mentioned above. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
276 Federal Reserve Bulletin • May 1990 9. Rates of return on U.S. assets abroad and foreign Even after identifying factors that bias the assets in the United States1 observed rates of return, one cannot conclude Percent that the consistently higher rates on U.S.-owned foreign assets are a statistical artifact. For one Foreign assets in the U.S. assets abroad United States thing, lower rates of return on recent investments YYeeaarr oorr are natural during a transition period. Moreover, aavveerraaggee Direct Portfolio Direct Portfolio the rates of return may reflect the reportedly investment investment poor profits from some takeovers. The discrep- 1983 12.9 9.7 4.0 7.8 ancy between the rates of return on U.S.-owned 1984 14.3 10.6 6.2 8.5 1985 12.6 8.7 4.3 7.3 and foreign-owned portfolio investments proba- 1986 11.8 7.0 3.7 6.2 bly reflects the activities of U.S. banks, which 1987 13.6 6.5 4.0 6.1 1988 15.2 7.1 5.3 6.6 account for a large part of both U.S. portfolio 19892 15.1 8.3 3.7 7.2 claims and liabilities: The banks make profits Average 13.6 8.2 4.4 7.1 only as they earn more on their claims than they 1. The rates of return are calculated as follows: pay on their liabilities. For direct investment, the numerator is direct investment receipts Finally, as a return to ownership or equity, the or payments, excluding capital gains and losses, from the U.S. international transaction accounts; data for recent years appear in return on direct investment moves with the bustable 7, above. The denominator is the average of year-end figures for iness cycle. In light of the weakness in U.S. the value of direct investment for the year in question and the previous year. These data are found in Survey of Current Business, vol. 69 corporate profits in 1989, the fall in the rate of (June 1989), table 2, p. 43. return on foreign direct investment in the United For U.S. portfolio assets abroad, the numerator is investment income receipts, other than direct investment, accruing to private States becomes understandable. U.S. residents. The denominator is the average of the year-end values for private claims on foreigners, excluding direct investment. For foreign portfolio assets in the United States, the numerator is investment income payments, other than direct investment, made by the U.S. government and private U.S. residents to foreigners. The denominator is the average of the year-end values for foreign assets in CAPITAL ACCOUNT TRANSACTIONS the United States other than direct investment. 2. The year-end values of claims or liabilities for 1989 that appear in denominators are estimates constructed by adding the recorded direct In 1989, the composition of the capital account investment or portfolio capital flows during 1989 to the recorded counterpart to the U.S. current account deficit year-end positions for 1988. SOURCE. U.S. Department of Commerce, Bureau of Economic shifted away from the pattern observed in recent Analysis, U.S. international transaction accounts and U.S. internayears (table 10). The substantial buildup of offitional investment position. cial reserves in the United States in 1986-88 was reversed, as $17 billion of official capital flowed market or replacement value of these holdings is out on net. Much of this outflow represented likely to be closer to historical cost than is that of intervention purchases of foreign currencies by U.S. direct investment abroad. the United States and other G-10 governments to These differences in rates of return on assets limit the appreciation of the dollar. may also reflect other factors. Many firms in the The three major sources of capital inflows in United States shift reported profits to foreign 1989 were net foreign purchases of U.S. securijurisdictions that have lower taxes. This practice ties ($66 billion), net direct investment ($31 biltends to reduce the observed rate of return on lion), and a statistical discrepancy amounting to foreign investment in the United States and to an unrecorded inflow of $35 billion. increase that on U.S. direct investment abroad. Securities transactions accounted for a large The differences may also reflect accounting prac- share of the net capital inflow in 1989. Private tices that increase interest, amortization, and foreign net purchases of U.S. Treasury securities depreciation charges when U.S. companies are rose to almost $30 billion, half again as much as acquired. Since much of the recent foreign direct in the previous year. Purchases of U.S. governinvestment in the United States has been associ- ment agency bonds were also strong (about $14 ated with takeovers, these practices may have billion). Net foreign private purchases of U.S. artificially reduced the observed rate of return on corporate bonds, particularly of Eurobonds, direct investment in the United States. were substantial. On the outflow side, U.S. net Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
U.S. International Transactions in 1989 277 10. U.S. net capital flows, 1983-89 Billions of dollars Item 1983 1984 1985 1986 1987 1988 1989 Current account balance 1 -37.6 -95.6 -119.6 -143.9 -160.3 -125.5 -103.8 Official capital, net -.4 -5.5 -7.8 33.9 55.3 38.3 -16.9 Foreign official assets in the United States 5.8 3.1 -1.1 35.6 45.2 38.9 7.4 U.S. official reserve assets -1.2 -3.1 -3.9 0.3 9.1 -3.6 -25.3 Other U.S. government assets -5.0 -5.5 -2.8 -2.0 1.0 3.0 1.0 Private capital, net 28.7 77.2 111.9 98.8 103.1 97.8 85.7 Net inflow reported by U.S. banking offices 20.4 22.7 39.7 19.8 46.9 14.4 10.7 Securities transactions, net 13.2 32.8 59.6 65.6 26.2 36.0 42.9 Private foreign net purchases 20.0 37.6 67.1 69.9 31.5 43.8 65.5 U.S. Treasury securities 8.7 23.0 20.4 3.8 -7.6 20.1 29.4 U.S. corporate and other bonds2'3 5.3 15.9 42.4 48.9 23.5 24.2 28.8 U.S. corporate stocks 6.0 -1.3 4.3 17.2 15.6 -.5 7.3 U.S. net purchases of foreign securities -6.8 -4.8 -7.5 -4.3 -5.3 -7.8 -22.6 Direct investment, net1 1.7 12.0 12.0 23.4 22.3 42.5 31.2 Foreign direct investment in U.S.1 11.5 25.6 20.5 36.2 47.3 57.4 59.6 U.S. direct investment abroad1, 3 -9.8 -13.6 -8.5 -12.8 -25.0 -14.9 -28.4 Other -6.6 9.7 .6 -10.0 7.7 4.9 .9 Statistical discrepancy 9.2 23.9 15.3 11.3 1.9 -10.6 34.9 1. Capital gains and losses are excluded from the direct investment have been excluded from direct investment outflows and added to receipts and payments components of the current account and (with foreign purchases of U.S. securities because they consist largely of the opposite sign) from direct investment capital flows. Eurobond proceeds. 2. Includes U.S. government agency bonds. SOURCE. Survey of Current Business, various issues, U.S. interna- 3. Transactions with finance affiliates in the Netherlands Antilles tional transaction accounts, tables 1 and 6. purchases of foreign securities reached a record facilitated direct, as well as portfolio, invest- $23 billion. ment. Inflows of foreign direct investment into the The rapid growth of foreign direct investment United States reached a record high of $60 bil- in the United States during the 1980s has stirred lion, exceeding slightly the high level of the public debate over the desirability of the continprevious year. U.S. direct investment outflows ued accumulation of U.S. assets by foreigners in also reached a peak, of $28 billion (excluding this form. Any rapid change should, perhaps, be capital gains and losses). scrutinized, but no evidence suggests that pre- The participation of foreign residents in U.S. sent or foreseeable levels of foreign ownership of financial markets and of U.S. residents in foreign U.S. industry should be troublesome. Two confinancial markets is far greater than these net cerns that have been emphasized are the takeflows suggest, and it is still growing. In 1989, the over of sensitive defense-related firms and the sum of foreign purchases and sales of U.S. accumulation of undesirable concentrations of Treasury securities amounted to over $4 trillion, market power by foreign firms. The first has been compared with $100 billion to $200 billion earlier addressed by the passage of the Exon-Florio in the decade. Foreign purchases and sales of amendment to the Omnibus Trade and Compet- U.S. stocks and bonds have also been dramati- itiveness Act of 1988. As to the second, current cally higher; and U.S. purchases and sales of antitrust laws should be adequate to deal with the foreign stocks and bonds have increased more accumulation of excessive market power, no than ten-fold in the same period. This surge in matter by whom. In fact, as table 11 shows, the cross-border financial transactions has paralleled concentration of market power in key industries a large advance in the magnitude of cross-border in the hands of foreign interests as a whole, let trade of goods and services and has been spurred alone individual foreign companies, is not large.9 by similar economic forces. Rapid technological advances, including virtually instantaneous transmission of information and sophisticated hedging techniques, have reduced the cost of 9. No single country accounts for a predominant portion of the holdings of 31 percent in the chemicals and stone, clay, managing operations around the globe and have and glass industries. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
278 Federal Reserve Bulletin • May 1990 11. Share of foreign direct investment assets in U.S. international claims and liabilities, discussed manufacturing, 1974, 1980, and 1987 above and shown in table 9, suggest that any shift Percent away from direct investment inflows as a counterpart to the current account deficit is likely to Type of manufacturing 1974 1980 1987 imply higher net investment income payments. Total manufacturing 66 88 1133 For example, one outcome of restrictions that Food and kindred products 55 77 1122 reduced the inflow of direct investment could be 1111 1188 3311 Primary metals 55 88 1199 an equal reduction in U.S. direct investment Electrical machinery 33 99 1111 Machinery, excluding electrical .. 22 55 66 abroad, which could result from a retaliatory Stone, clay, and glass nn..aa.. 1133 3311 imposition of restrictions by other countries. In this case, since the rate of return on U.S. direct SOURCE. For 1987, Survey of Current Business, vol. 69 (July 1989), table 15, p. 131; for 1974 and 1980, shares were calculated using asset investment holdings abroad has been substandata from the Survey of Current Business and from U.S. Department tially greater than that on foreign holdings in the of Commerce, Foreign Direct Investment in the United States (Government Printing Office, 1976). Data on assets of U.S. business are United States, the loss in net direct investment from U.S. Bureau of the Census, Quarterly Financial Report. income receipts could be significant. Moreover, An issue that has rarely been addressed in this the effects of a restriction imposed in any one debate is the effect on the U.S. current account year would cumulate, worsening the current acdeficit of potential restrictions on foreign direct count balance in every subsequent year until the investment. Given that current and prospective capital flow was reversed. U.S. trade deficits imply the necessity of a con- Alternatively, restrictions on the inflow of ditinued net accumulation of U.S. assets by for- rect investment could be offset by an increase in eigners, any policy action that restricts direct the inflow of portfolio investment. Since rates of investment in the United States would, at a payment on portfolio liabilities in the United minimum, shift the composition of this asset States are currently greater than those on direct accumulation toward portfolio capital. It also investment liabilities in the United States, such a would probably provoke retaliation against U.S. shift would also result in an increase in net paydirect investment abroad. Either of these out- ments, even without an increase in the rate of comes would tend to increase the burden of return on U.S. portfolio assets held by foreigners. servicing the growing U.S. international indebt- The average rates of return shown in table 9 edness, and it would have other undesirable are subject to considerable uncertainty, and effects on future current account deficits. these rates of return, even if accurate, may not First, in order to attract the additional portfolio apply to future investment flows. Nevertheless, inflows necessary to offset any restriction on the differences are large enough in some cases to direct investment, rates of return paid on foreign suggest that a shift away from direct investment portfolio investments would have to increase, inflows would have a negative effect on U.S. net worsening the servicing burden and the current investment income flows. account. Second, a shift in the composition of U.S. liabilities from the equity capital of direct investment to debt instruments would commit PROSPECTS FOR 1990 the United States to fixed payments, rather than payments that vary with the state of the The question for the year ahead is whether the economy.10 recent slowing of U.S. external adjustment Third, the apparent differences in the average merely interrupts a longer-term improving trend rates of return on different real and financial or reverses it in a more lasting way. Two factors favor further adjustment. One is that strong growth of aggregate demand abroad is apparently continuing, while growth in the United States is 10. Part of the increase in portfolio capital would be invested in U.S. common stock, which also has a flexible moderating; this difference should be a continureturn. However, assuming past proportions as a guide, a ing source of strength for exports relative to large percentage of the increase would be invested in debt imports. Second, since the third quarter of 1989, instruments. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
U.S. International Transactions in 1989 279 the dollar has retraced part of its earlier rise oration in the U.S. net investment position. against the major foreign currencies, thereby Sustained strength in receipts of net direct inrestoring some of the U.S. price competitiveness vestment income was an important component of that had been lost. But several other factors this performance. Whether the currently favorcloud this prospect. With U.S. prices now rising able differentials in rates of return will persist is somewhat faster than domestic prices abroad, not clear. Whatever future rates of return may the recent improvement in price competitiveness be, the overall flow of net investment income will may be short-lived unless the U.S. inflation sit- inevitably turn negative if the net international uation improves. Oil imports are another poten- investment position of the United States contintial problem. With the recent rise in oil prices and ues to deteriorate. the continued negative trend in domestic produc- At a more fundamental level, substantial furtion, rising U.S. consumption of oil will necessi- ther progress in reducing the U.S. external deficit tate higher imports, in both quantity and value. seems unlikely until private and government sav- The service account showed remarkable im- ing rates in the United States attain and maintain provement in 1989, despite the continued deteri- higher levels. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
280 The Nonbank Activities of Bank Holding Companies This article was prepared by J. Nellie Liang and activities prohibited to banks. Although a few Donald T. Savage, Division of Research and bank holding companies owned major nonbank Statistics, Board of Governors of the Federal subsidiaries, most bank holding companies that Reserve System. Ronnie McWilliams provided expanded beyond banking combined a small research assistance. bank with a company providing another financial service, such as an insurance agency.1 In 1970, Congress amended the Bank Holding Company Act of 1956 to establish a new frame- The Bank Holding Company Act of 1956 work for the expansion of bank holding companies into nonbank activities. This article pro- Although the Glass-Steagall Act of 1933 made vides some historical background on the some provision for the regulation of multibank nonbank activities of bank holding companies. holding companies, the opponents of holding It also uses 1988 data from two relatively new companies pressed for more restrictions. After bank holding company reporting forms to de- numerous unsuccessful attempts during and after scribe the extent of these nonbank activities World War II, additional legislation to restrict and their contribution to the financial condition the expansion of multibank holding companies of bank holding companies. was passed in 1956.2 The motivation for this legislation, the Bank Holding Company Act of 1956, has been ascribed to various factors; most explanations focus on the fear of financial con- HISTORICAL BACKGROUND centration resulting from a few multistate bank In the early 1900s, the bank holding company holding companies acquiring control over a large emerged as a new form of bank ownership. While the permissible business activities of banks were limited by state or federal law, bank holding 1. According to Klebaner, examples of bank holding comcompanies were not banks and therefore were pany ownership of large nonbank enterprises were the holdnot subject to those limitations. ings of Transamerica, including extensive insurance interests, a tuna and salmon canning plant, and a manufacturer of Relatively little is known about the extent of metal products; and the Trust Company of Georgia's ownernonbank activities of early bank holding compa- ship of a soft drink bottling company. See Benjamin J. nies, but many of the companies appear to have Klebaner, "The Bank Holding Company Act of 1956," Southern Economic Journal, vol. 24 (January 1958), pp. been formed as a means of expanding geograph- 313-26. ically into areas in which branch banking was 2. General histories of the bank holding company moverestricted, rather than as a means of engaging in ment include Gerald C. Fischer, Bank Holding Companies (Columbia University Press, 1961); Gerald C. Fischer, Robert A. Eisenbeis, and Joseph F. Sinkey, The Modern Bank Holding Company: Development, Regulation and Perfor- NOTE. This article is an update of an earlier study by the mance (Philadelphia: School of Business and Management, same authors, New Data on the Performance of Nonbank Temple University, 1986); Michael A. Jesse and Steven A. Subsidiaries of Bank Holding Companies, Staff Studies 159 Seelig, Bank Holding Companies and the Public Interest: An (Board of Governors of the Federal Reserve System, Febru- Economic Analysis (Lexington Books, 1977); and Donald T. ary 1990). Many of the more technical footnotes and data Savage, "A History of the Bank Holding Company Movereferences in the earlier paper are omitted here. Interested ment, 1900-78," in The Bank Holding Company Movement readers can obtain a copy of the earlier paper from the to 1978: A Compendium (Board of Governors of the Federal authors. Reserve System, 1978), pp. 21-68. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
281 percentage of nationwide banking assets. This In general, the law required that nonconforming concern was addressed by the restrictions on nonbank businesses be divested over a period of interstate banking in the Douglas Amendment to years, but the Federal Reserve Board was given the Bank Holding Company Act. The Douglas the power to allow retention of activities in the Amendment effectively prohibited interstate areas of banking, finance, or insurance if these bank holding companies unless individual states activities were ". . . so closely related to the specifically permitted their banks to be acquired business of banking or of managing or controlling by out-of-state holding companies. banks as to be a proper incident thereto. ..." In addition to the threat of concentration posed As required by the 1956 legislation, the Federal by extensive interstate banking, concentration Reserve Board evaluated applications to retain also could result from the affiliation of major existing nonbank subsidiaries throughout the penonfinancial corporations with leading banking riod between 1956 and the passage of the 1970 organizations. Many feared that huge banking Amendments. Fewer than thirty applications and industrial conglomerates of this type would were submitted, and most approvals were for dominate the economic system. Therefore, re- insurance-related subsidiaries; these affiliates strictions were placed on the nonbank activities were either insurance agencies to be operated in of bank holding companies. conjunction with a bank or underwriters of cred- Restrictions on the nonbank activities of multi- it-related insurance. The Board's analysis rebank holding companies were based on several quired that the nonbank subsidiaries be functionfactors besides the concern with economic con- ally or operationally related to the bank: The sale centration. First, some believed that a bank of insurance in conjunction with granting a loan holding company should not be permitted to was viewed as different from the general sale of perform activities that could not be performed insurance. The major denial during the period directly by a bank. By this line of reasoning, if was Transamerica Corporation's application to the activity was not safe or appropriate for a retain Occidental Life Insurance Company. bank, then it was not safe or proper for an The relatively restrictive provisions of the Bank organization owning a bank. Second, many non- Holding Company Act of 1956 effectively prohibbank businesses feared that firms affiliated with ited interstate banking and limited the expansion banks would gain a competitive advantage over of nonbank activities. The number of multibank unaffiliated competitors in the same industry. holding companies continued to grow, however. These businesses were concerned that firms af- Forty-seven separate multibank holding compafiliated with banks would receive preferential nies controlling 7.5 percent of insured commercial credit treatment from the banks and would have bank deposits were in operation at the end of access to low-cost funds provided by them from 1956. By the end of 1970, there were 111 multinon-interest-bearing deposits. Third, there was a bank holding companies controlling 16.2 percent persistent fear that a bank would tie access to of commercial bank deposits. Only a few of the credit to the purchase of services provided by its smaller multibank holding companies operating nonbank affiliates. For example, if all of the before the passage of the 1956 legislation divested bank's commercial borrowers were required, as banks after the law was enacted so as to become a condition of obtaining credit, to buy their one-bank holding companies and avoid regulation. business travel services from the bank holding The one-bank holding companies, although not yet company's travel agency, the independent travel regulated, were a potential source of many of the agencies would be unable to compete. same difficulties that their opponents associated Given these concerns, the framers of the Bank with multibank holding companies. Holding Company Act of 1956 restricted nonbank activities very severely and permitted The One-Bank Holding Company and the mainly those activities incidental to banking or 1970 Amendments performing services for banks. Approved activities included ownership of the bank's premises, In 1955, there were approximately 117 one-bank auditing and appraisal, and safe deposit services. holding companies with $11.6 billion of insured Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
282 Federal Reserve Bulletin • May 1990 commercial bank deposits, or approximately 6 activities. The second step in the test requires percent of the total of such deposits. These that the proposed activity be a proper incident to organizations were generally small and combined banking. For this test, the law established spesmall bank subsidiaries with a nonbanking activ- cific factors to be weighed by the Board in ity; the nonbanking activity most typically was making its decision. In weighing the public beninsurance. Because the one-bank holding compa- efits and costs, the Board was instructed to nies were not subject to the Bank Holding Company examine potential gains, such as greater public Act of 1956, the way was open to use this type of convenience, increased competition, and greater organization to expand into nonbank activities. In efficiency, and then to determine if these gains the mid-1960s, the rush to form one-bank holding would outweigh any possible costs, such as incompanies began; by 1968, there were 783 one-bank creased concentration, decreased competition, holding companies with $108.2 billion of deposits. unfair competition, conflicts of interest, or un- Thirty-four of the nation's 100 largest banking sound banking practices. organizations—including 7 of the top 10—had The Congress also had to resolve the future formed or announced plans to form one-bank status of those nonbank activities that were being holding companies. conducted by bank holding companies before the By the end of 1970, one-bank holding compa- passage of the 1970 Amendments. The law pronies owned nonbank subsidiaries operating in a vided ten years for bank holding companies to wide variety of industries. Most frequently these divest those impermissible activities begun after firms participated in financial activities, such as June 30, 1968. Activities conducted before June insurance and real estate, but they were also 30, 1968, were grandfathered, although the Fedengaged in businesses ranging from animal hus- eral Reserve was required to review the grandfabandry to water supply. In terms of the govern- ther status of otherwise impermissible activities ment's industrial classification system, 276 three- engaged in by a bank holding company with more digit Standard Industrial Classification codes were than $60 million of bank assets. represented on the list of nonbank activities being Under the rules established by the 1970 performed by one or more holding companies. Amendments to the Bank Holding Company Act The long-standing concerns about aggregate of 1956, holding companies have continued to concentration and the separation of banking and expand their role in the American banking syscommerce were revived as the nation's largest tem. More than 90 percent of domestic banking banking organizations formed one-bank holding assets are now held by banks owned by bank companies. The Congress responded by enacting holding companies: 70 percent of these assets the 1970 Amendments to the Bank Holding Com- are held by banks owned by multibank holding pany Act of 1956. The 1970 Amendments ex- companies, and 20 percent by one-bank holdtended bank holding company regulation to one- ing companies. Not all of these holding compabank holding companies and established rules for nies have been established for the purpose of nonbank activities that were applicable to all engaging in nonbank activities; many were esbank holding companies. tablished for tax reasons or for interstate or The 1970 Amendments established a two-part intrastate geographic expansion by banks. test for the permissibility of proposed nonbank Nearly all of the nonbank activities considered activities. First, a proposed nonbank activity permissible for bank holding companies are also must be closely related to banking. "Closely permissible for national banks. related to banking" has been interpreted by the Federal Reserve Board and the courts that have reviewed Board decisions to include the follow- THE DATA COLLECTION SYSTEM ing: (1) activities in which banks have tradition- FOR NONBANK ACTIVITIES ally engaged, (2) activities that are so closely related to traditional activities that banks are well Although considerable research has focused on equipped to engage in the activity, or (3) activi- the performance of banks owned by bank holding ties that are integrally related to permissible bank companies, little work has been done on the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
The Nonbank Activities of Bank Holding Companies 283 characteristics of the nonbank subsidiaries. In BANK HOLDING COMPANY INVOLVEMENT part, this lack of research is attributable to a lack IN NONBANK ACTIVITIES of consistent data. Beginning in 1986, however, data on the nonbank activities of bank holding The 1988 share of nonbank assets in total assets companies have been available from two new for the 284 reporting bank holding companies is forms, the FR-Y11Q and the FR-Y11AS, which relatively small. However, this share has inare filed by all bank holding companies with creased significantly since 1986, and a few large consolidated assets of more than $1 billion and bank holding companies have large holdings of by those with assets of more than $150 million nonbank assets. An examination of the types of and nonbank activities above certain levels. nonbank activities shows that many of the assets The FR-Y11Q, a quarterly report form filed by are held in what are considered to be traditional each covered bank holding company, consists of banking activities. Subsidiaries engaged in secua brief balance sheet and a profit and loss state- rities brokerage, a nontraditional activity, have ment that consolidate data for all of the nonbank experienced the largest rate of asset growth. subsidiaries of each bank holding company, excluding Edge and agreement corporations and Consolidated Nonbank Activities subsidiaries of the affiliated banks. The FR- Y11AS, which is filed annually by each covered At the end of 1988, total nonbank assets held by bank holding company, also consists of a brief the 284 bank holding companies reporting on the balance sheet and an income statement, but the FR-Y11Q were $175.5 billion, which was 7.43 data are aggregated by line of business. For percent of the consolidated bank and nonbank reporting purposes, the bank holding company assets of these firms (see table 1). Further, this assigns each of its nonbank subsidiaries, accord- amount represents an increase of 7.9 percent in ing to the primary activity of that subsidiary, to the volume of nonbank assets held by 298 firms one of eleven specified categories. The data are reporting on the FR-Y11Q at year-end 1987. In then aggregated within activity categories so that contrast, total bank holding company assets inall consumer finance subsidiaries are reported as creased only 1.3 percent. a unit, all commercial finance subsidiaries as a The values of nonbank assets reported on the group, and so on. This grouping of data by activity FR-Y11Q overestimate those actually devoted to permits an analysis of each category, although nonbank activities. The reported asset values there can be some mixing of activities within a include balances due to the nonbank subsidiaries given subsidiary or within categories. For exam- from their parent company and their affiliated ple, a holding company's commercial finance sub- banks. To calculate net nonbank assets, these sidiary may also engage in mortgage banking as a intrafirm balances should be subtracted from secondary line of activity, but all of its assets total assets, just as they are netted out in calcuwould be allocated to commercial finance. lating the total assets of the consolidated bank The FR-Y11Q and FR-Y11AS are filed by a holding company. The total volume of net nonrelatively small group made up mostly of very bank assets held by the 284 reporting firms was large bank holding companies. In 1988, 284 bank- $164.0 billion at the end of 1988, which repreing organizations filed these forms compared sents 6.94 percent of consolidated bank and with 298 organizations in the previous year. This nonbank assets of these firms. Comparable volnumber of organizations in 1988 represented less umes of net nonbank assets were $146.8 billion than 3 percent of all U.S. banking organizations for the end of 1987 and $133.9 billion at the end of and only 4.8 percent of all bank holding compa- 1986, representing increases in the volume of net nies. These 284 organizations, however, con- nonbank assets of 9.6 percent from 1986 to 1987 trolled $2.36 trillion of total assets, or 87 percent and 11.7 percent from 1987 to 1988. of the $2.72 trillion of assets (combined bank and The 1988 ratio of net nonbank to total bank nonbank) held by all 1,409 bank holding compa- holding company assets of 6.94 percent has nies filing on the consolidated financial state- grown significantly since 1986 and is substantial ment, the FR-Y9. enough to warrant attention. In particular, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
284 Federal Reserve Bulletin • May 1990 1. Assets held in nonbank subsidiaries by reporting bank holding companies Assets in billions of dollars; ratios in percent Percentage growth TTyyppee ooff aasssseett oorr rraattiioo 11998888 11998877 11998866 1987-88 1986-87 Asset Total nonbank 175.5 162.6 146.0 7.9 11.4 Net nonbank1 164.0 146.8 133.9 11.7 9.6 Total bank holding company 2,362.7 2,332.9 2,269.3 1.3 2.8 Ratio Total nonbank assets to total assets 7.43 6.97 6.43 6.6 8.4 Net nonbank assets to total assets 6.94 6.29 5.90 10.3 6.6 MEMO: Number of reporting bank holding companies 284 298 303 1. The values of nonbank assets reported on the FR-Y11Q overes- nonbank assets, these intrafirm balances should be subtracted from timate those actually devoted to nonbank activities. The reported total assets, just as they are netted out in calculating the total assets of asset values include balances due to the nonbank subsidiaries from the consolidated bank holding company, their parent company and their affiliated banks. To calculate net ratio of net nonbank assets to total assets for the percent; and the top one hundred, 99.5 percent. reporting bank holding companies increased 10.3 The remaining one hundred eighty-four firms percent from 1987 to 1988 and 6.6 percent from filing this report collectively held less than 1 1986 to 1987. By contrast, assets of the reporting percent of all net nonbank assets, and eleven of bank holding companies increased only 4.1 per- these firms reported that they had no nonbank cent over the 1986-88 period. Furthermore, large assets. disparities exist among organizations in the The data in table 2 also show that the top five amount of nonbank assets held, and total non- bank holding companies also averaged the largest bank assets are very large for a few bank holding totals of bank and nonbank assets. The average companies. size in terms of total assets of the top five firms The disparity in the holdings of nonbank assets ranked by net nonbank assets was $106.7 billion; is apparent in comparing them for banking orga- for the top ten, the average size was $67.5 billion, nizations ranked by net nonbank assets. As the while the average size for the two hundred data in table 2 indicate, the ownership of non- eighty-four reporting firms was only $8.3 billion. bank assets is highly concentrated. The top five Further, those organizations with large dollar firms (in terms of net nonbank assets) held 57.2 amounts of nonbank assets also had relatively percent of the total held by the 284 firms. The top high ratios of nonbank to total assets. The top ten firms held 73.4 percent; the top fifty, 96.9 five banking organizations in terms of total nonbank assets had 17.6 percent of their total assets 2. Concentration of net nonbank assets in nonbank activities, and the top ten had 17.8 in bank holding companies, 19881 percent; whereas the comparable figure for all Ratio of reporting firms was only 6.9 percent. Average Average nonbank Share of net bank assets to Considerable overlap exists between the fifty Companies net nonbank holding total bank ranked by net nonbank assets company holding largest bank holding companies in terms of connonbank assets (p a e s r s c e e t n s t) (millions (m as il s l e io ts n s company solidated bank and nonbank assets and the fifty of dollars) assets of dollars) (percent) largest in terms of nonbank assets. The fifty largest in terms of total assets collectively held Top 5 57.2 18,759.9 106,724.8 17.6 $154.4 billion, or 94.2 percent of the total net Top 10 73.4 12,038.0 67,535.8 17.8 Top 25 90.6 5,942.3 47,918.4 12.4 nonbank assets of $164.0 billion at year-end 1988. Top 50 96.9 3,177.0 31,130.9 10.2 Top 100 99.5 1,630.9 19,830.1 8.2 Three organizations had just over 20 percent of All reporting companies .. 100.0 577.4 8,319.4 6.9 their total assets in net nonbank assets; seven organizations had more than 10 percent; and 1. Based on the 284 bank holding companies filing the FR-Y11Q eight had more than 5 percent. Thus, only eighand FR-Y11AS reporting forms. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
The Nonbank Activities of Bank Holding Companies 285 teen of the fifty largest bank holding companies percent of aggregate nonbank assets. If the "othin terms of total assets held a significant percent- er depository institution" category is included, age of their total assets in nonbank activities. traditional banking activities account for 56 per- Many very large banking organizations had rela- cent of aggregate nonbank assets. tively small amounts of nonbank assets. By con- The remainder of nonbank assets is accounted trast, when all reporting organizations were for primarily by securities brokerage (15.4 perranked by net nonbank assets, thirty-nine orga- cent) and other nonbank (26.5 percent) subsidiarnizations had more than 5 percent of their total ies. Subsidiaries classified under securities broassets in nonbank activities. kerage include those engaged principally in discount brokerage and permissible securities Nonbank Activities by Type underwriting activities. Other nonbank subsidiaries are engaged mainly in the following activities: Table 3 shows the distribution of aggregate non- trust services; provision of general economic and bank assets among eleven categories of nonbank financial information and advice; sponsorship, activities. The aggregate of nonbank assets is organization, or control of a closed-end investdefined as the sum of total nonbank assets across ment company; investment to promote commuthe eleven types of nonbank subsidiaries, includ- nity welfare; courier services; management coning balances due from other types of nonbank sulting; sale of money orders, travelers' checks, subsidiaries and from the parent bank holding or savings bonds; personal property and real company and its affiliated banks. Aggregate non- estate services; foreign exchange services; and bank assets in 1989 totaled $209.8 billion. Thus, acting as futures commission merchants. In adbased on consolidated nonbank assets of $175.5 dition, this category includes nonbank activities billion, balances due from other types of non- conducted before the 1970 Amendments that are bank subsidiaries amounted to $34.3 billion in still being conducted under grandfather rights. 1988. Finally, one major bank holding company fi- A large percentage of nonbank assets is in- nances all of its subsidiaries through a funding vested in traditional banking activities that can subsidiary; the funding subsidiary is included be conducted within the bank. As the data in under other nonbank for purposes of this reporttable 3 indicate, subsidiaries engaged principally ing system. in commercial finance, mortgage banking, con- The data in table 3 also indicate that the other sumer finance, and leasing account for about 47 nonbank category is the one reported by the 3. Nonbank assets held by bank holding companies, by type of activity, 1988 Percentage of assets Total assets in Percentage of Number of bank Activity1 activity (millions aggregate nonbank holding companies Growth in assets, held by top five 1987-88 (percent) firms engaged of dollars) assets in activity engaged in activity in activity2 Commercial finance 37,128.3 17.7 58 8.99 63.6 Securities brokerage 32,320.9 15.4 83 53.99 86.1 Mortgage banking 27,470.8 13.1 110 -6.69 75.1 Consumer finance 24,043.7 11.5 51 -4.38 63.7 Other depository institutions 19,697.2 9.4 14 -8.70 95.0 Leasing 9,156.7 4.4 % 6.40 51.5 Data processing 1,838.0 .8 88 -9.42 68.9 Insurance underwriting 1,678.4 .8 111 -4.41 62.1 Small business investment company 650.6 .3 26 9.31 79.8 Insurance agency 340.0 .2 75 -28.51 61.2 Other nonbank 55,524.7 26.5 183 -2.35 71.0 Aggregated nonbank assets 209,849.3 1. As specified on FR-Y11 AS form. held by the top five firms engaged in the activity refers to the 2. Because the financial data reported on the FR-Y11AS are consolidated nonbank subsidiaries for each bank holding company consolidated within the eleven categories, the percentage of assets rather than to a single subsidiary. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
286 Federal Reserve Bulletin • May 1990 largest number of bank holding companies, re- nonbank activities exceeded profit rates for the flecting in part their continuation of nonbank affiliated bank subsidiaries and the consolidated activities conducted before the 1970 restrictions. bank holding company; in 1988, however, when Large numbers of bank holding companies also bank profits were not under pressure from loan report subsidiaries engaged in credit-related in- loss provisions for loans to developing countries, surance underwriting, mortgage banking, and nonbank profits were lower than bank profits. leasing. Profit rates varied widely across nonbank activ- Total nonbank activities have grown 7.4 per- ities and bank holding companies. The wide cent since 1987, largely because of the growth in variation reflected in part the different mixes of securities brokerage and commercial finance. nonbank activities engaged in by the firms, dif- The assets of securities brokerage subsidiaries ferent formulas for the allocation of joint costs, increased 54 percent, from $21.0 billion in 1987 to and different management abilities. $32.3 billion in 1988. This increase resulted primarily from the shifting of permissible govern- Consolidated Nonbank Activities ment securities underwriting activities previously conducted in banks to the securities The ratios of net income to assets and net income subsidiaries. The number of firms engaged in this to equity are the commonly used measures of the activity, however, fell from ninety-nine in 1987 to profitability of banking organizations and are eighty-three in 1988, reflecting the sale of broker- shown in table 4 for the consolidated nonbank age subsidiaries by many bank holding compa- subsidiaries of firms reporting on the FR-Y11Q. nies. Assets in small business investment com- The average of the ratios of nonbank net income panies and leasing also increased; in contrast, to assets was 0.69 percent and of nonbank net assets in insurance agency subsidiaries fell 29 income to equity was 6.24 percent over the percent, and assets in data processing subsidiar- 1986-88 period. The data also show some variies fell 9 percent. ability in nonbank profits: The ratio of nonbank Finally, table 3 also shows the percentage of net income to assets was 1.19 percent in 1986, assets in nonbank activities held by the top five 0.34 percent in 1987, and 0.61 percent in 1988. firms in each category. In nearly all of the nonbank activity categories, but particularly securities brokerage and other depository institu- 4. Profit rates for nonbank and bank subsidiaries and tions, the expected levels of concentration ap- for bank holding companies with nonbank activities, 1986-88 pear in that the largest five firms engaged in each Percent activity held the vast bulk of the total assets of those bank holding company subsidiaries en- Average. gaged in that activity. This result is consistent Organization 1986 1987 1988 1986with the concentration of nonbank assets revealed by the previous analysis of the consoli- Ratio of net income to assets dated nonbank data. Only twenty-seven bank Nonbank subsidiaries 1.19 .34 .61 .69 holding companies had nonbank subsidiaries that Bank subsidiaries' .52 .21 .79 .38 Consolidated bank holding ranked among the five largest in one or more companies .56 -.17 .77 .39 activity categories, and only five bank holding companies had nonbank subsidiaries among the Ratio of net income to equity five largest in more than three types of activities. Nonbank subsidiaries 10.23 3.11 5.66 6.24 Bank subsidiaries' 10.02 -4.25 14.46 7.39 Consolidated bank holding companies 10.05 -3.19 13.18 6.97 PROFITABILITY OF NONBANK ACTIVITIES 1. Bank data are calculated by subtracting nonbank activity from that of the consolidated holding company. Bank data can also be calculated by aggregating across the individual banks of the holding Data for 1986 through 1988 suggest that, in the company. Ratios of net income to assets and net income to equity aggregate, nonbank activities were relatively obtained by aggregating across banks are similar to those reported and were .60 and 10.07 in 1986; -.04 and -.64 in 1987; .88 and 14.48 in profitable. In 1986 and 1987, profit rates for 1988; and .48 and 8.18 for 1986 through 1988. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
The Nonbank Activities of Bank Holding Companies 287 The ratios of nonbank net income to equity have 5. Profit rates of nonbank subsidiaries and shown similar variability. consolidated bank holding companies with nonbank activities, by asset size, 1986-88 For comparison, table 4 also presents the Percent ratios of net income to assets and net income to equity for the affiliated bank subsidiaries and Organization1 1986 1987 1988 the consolidated holding companies. Based on the 1986-88 average ratio of net income to Ratio of net income to assets assets, nonbank subsidiaries appear to be fairly Nonbank subsidiaries profitable relative to the affiliated bank subsid- Largest 50 1.15 .26 .64 All other 1.51 1.13 .04 iaries and the consolidated bank holding com- Consolidated bank pany. Over the 1986-88 period, the average holding companies ratio of net income to assets was 0.69 percent Largest 50 .55 -.39 .86 All other .61 .44 .49 for the consolidated nonbank subsidiaries compared with 0.38 percent for the affiliated bank Ratio of net income to equity subsidiaries and 0.39 percent for the consoli- Nonbank subsidiaries dated bank holding company. Based on the Largest 50 10.46 2.62 6.18 1986-88 average ratio of net income to equity, All other 8.96 5.61 .22 however, nonbank subsidiaries appear to be Consolidated bank holding companies less profitable. The average ratio of net income Largest 50 10.27 -8.28 15.53 to equity was 6.24 percent for the consolidated All other 9.58 6.57 7.32 nonbank subsidiaries compared with 7.39 per- 1. Top fifty bank holding companies ranked by total assets and 234 cent for the affiliated bank subsidiaries and 6.97 remaining firms with nonbank activities. percent for the consolidated bank holding company. The differences between the ratios of net calculated separately for the top fifty firms based income to assets and of net income to equity on consolidated bank and nonbank assets and for reflect the higher equity capitalization of non- the remaining firms. These profit rates, shown in bank subsidiaries relative to bank subsidiaries. table 5, suggest that the profits of the top fifty Examining the two profit rates—the ratios of firms are similar to rates for the entire sample of net income to assets and net income to equity firms, as reported in table 4, because the top fifty capital—over the various years, the profit rates firms account for 75 percent of total assets of the of the nonbank subsidiaries exceeded those for reporting bank holding companies and for 94 the affiliated bank subsidiaries in both 1986 and percent of the total nonbank assets reported. The 1987; the profit rates for the nonbank subsidiar- data further suggest that the relationship between ies in 1988, however, were lower than those of bank and nonbank profits for the largest fifty the bank subsidiaries as bank profits increased firms differs from the comparable relationship for significantly from their 1987 lows. The relation- the other firms. In particular, when ratios of ship between bank profits and nonbank profits nonbank net income to assets for the fifty largest is also of interest. The data show that the profits firms fell substantially in 1987 to 0.26 from 1.15 in of nonbank subsidiaries fell in 1987 from 1986 1986, this ratio for the other firms fell only to 1.13 levels, and then rose in 1988, thus exhibiting the percent from 1.51 percent. In addition, the bank same pattern as bank profits. Given that the fall holding company ratio of net income to assets of in bank profits in 1987 was attributed in large the fifty largest firms fell in 1987 to -0.39 percent part to loan write-off provisions for developing- because of large loan write-off provisions by the country debt, it is not clear why profits of bank subsidiaries, whereas this ratio for the other nonbank subsidiaries also fell. Although only a firms remained relatively high, at 0.44 percent. few years' data are available for analysis, this pattern of profits raises questions about the Nonbank Profits by Type of Activity potential gains from diversification resulting from currently allowed nonbank activities. Profit rates for the eleven categories of nonbank The profit rates for nonbank activities are also activities vary widely. Table 6 presents the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
288 Federal Reserve Bulletin • May 1990 6. Median profit rates of bank holding company nonbank subsidiaries, by type of activity Percent Ratios, 19881 Ratios, 1986-88' AAccttiivviittyy Median net income Median net income Median net income Median net income to assets to equity to assets to equity (1st, 3rd quartile) (1st, 3rd quartile) (1st, 3rd quartile) (1st, 3rd quartile) Commercial finance .93 10.94 .80 8.97 (0; 2.2) (2.8; 38.3) (-.1; 2.0) (0; 20.4) Mortgage banking .92 2.93 .79 6.60 (-1.8; 3.3) (-11.2; 17.7) (-1.8; 3.2) (-6.1; 21.9) Consumer finance .70 8.61 1.38 13.1 (-.3; 2.4) (-.9; 2.2) (0; 3.3) (0; 22.3) Securities brokerage 0 0 5.54 12.4 (-7.1; 9.4) (-15.4; 14.7) (-.8; 21.6) (-3.8; 30.4) OOtthheerr ddeeppoossiittoorryy iinnssttiittuuttiioonnss .43 3.80 .72 6.16 (-0.0; 1.3) (-.4; 11.1) (0; 1.3) (0; 12.1) Leasing 1.38 7.1 1.26 7.46 (0; 4.1) (0; 23.8) (-.5; 3.4) (0; 23.9) Data processing 2.21 11.7 3.1 12.8 (-4.4; 14.4) (0; 33.5) (-1.5; 13.3) (0; 38.0) Insurance underwriting 7.20 13.7 8.0 15.9 (4.4; 10.5) (7.6; 21.4) (4.9; 11.0) (9.1; 22.7) SSmmaallll bbuussiinneessss iinnvveessttmmeenntt ccoommppaannyy...... 2.61 3.68 .20 1.2 (-1.0; 6.7) (.1; 14.6) (-6.4; 4.8) (-5.6; 7.2) IInnssuurraannccee aaggeennccyy 8.85 20.4 9.07 20.94 (1.1; 21.4) (3.3; 40.4) (1.2; 19.4) (5.0; 39.4) Other nonbank .90 6.0 1.1 6.5 (-1.5; 5.3) (-.1; 24.2) (-1.4; 5.5) (-.1; 24.6) 1. The numbers separated by semicolons in parentheses are the profit rates at the first and third quartile respectively. median ratios of net income to assets and net commercial loans) or provide services (such as income to equity in 1988 for the bank holding insurance). Profit rates may also vary because of company subsidiaries engaged in the eleven differences among activities in their equity capinonbank activities, along with the profit rates at talization ratios. Although somewhat lower than the first quartile (25th percentile) and at the bank profits in 1988, profit rates for the nonbank third quartile (75th percentile). The table also activities most like traditional bank activities— reports 1986-88 median ratios of net income commercial finance, mortgage banking, conto assets and of net income to equity for the sumer finance, and leasing—are similar to profit bank holding company nonbank subsidiaries. rates for banks. Collectively, the ratio of net For the most part, activities that were rela- income to assets for these activities was 0.68 tively profitable in 1988 were relatively profit- percent in 1988; with other depository instituable over the entire period. Overall, securities tions included, the ratio was 0.65 percent. The brokerage firms were the least profitable and ratio of net income to assets for the affiliated insurance agencies were the most profitable bank subsidiaries (shown in table 4) was 0.79 nonbank activities. The median securities bro- percent in 1988. kerage firm earned 0 percent on assets and The median profit rates for the nonbank subequity, and the median insurance agency sidiaries in 1988 are similar to the 1986-88 earned 8.85 percent on assets and 20.4 percent rates, except for the securities brokerage firms on equity. and small business investment companies. The variation in profit rates of the nonbank Based on data for three years, these subsidiarsubsidiaries may reflect more than just differ- ies appear to have the highest variability in ences in performance across activity categories. income among the nonbank subsidiaries. Com- Profit rates may differ across activities based on paring 1986-88 median ratios across activities, whether the subsidiaries hold assets (such as small business investment companies were the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
The Nonbank Activities of Bank Holding Companies 289 least profitable, and insurance agencies were or higher costs. The use of this ratio as an the most profitable.3 indicator of risk across different types of organizations, however, is not straightforward. For example, differences in capital-to-assets ratios SOME RISK MEASURES may simply reflect different ways in which firms OF NONBANK ACTIVITIES in various activities are typically funded. Thus, higher capital-to-assets ratios may indicate ac- The overall riskiness of the bank holding com- tivities with higher risk rather than lower risk pany is affected by the riskiness of its nonbank because firms engaging in activities with high activities. The most frequently used measure of expected profits and high variability of profits risk, the standard deviation of profits for the need high levels of capital to protect against individual nonbank subsidiaries, cannot be used insolvency. to assess risk in this case because data are The data in table 7 indicate that nonbank available for only three years. As an alterna- subsidiaries appear to be better capitalized than tive, some indirect measures of risk—the equity affiliated bank subsidiaries are. Specifically, the capitalization of the nonbank subsidiaries and capital-to-assets ratio for the consolidated nonthe riskiness of loans made by them—provide bank subsidiaries, as reported on the FR-Y11Q some indication of the riskiness of nonbank forms, is 10.83 percent for 1988. In contrast, the activities. In addition, a measure of the proba- capital-to-assets ratio for the 284 consolidated bility of insolvency can be calculated assuming bank holding companies is only 5.84 percent, that the cross-section distribution of net income and for the aggregated bank subsidiaries, it is to assets is representative of the distribution of 5.44 percent. These ratios are similar to those net income to assets for an average firm. for the 1986-88 period. The capital-to-assets ratios shown in table 7 Ratios of Equity Capital to Assets vary widely across the different types of nonbank subsidiaries. Mortgage banking, securities The equity capital-to-assets ratio is often used as an indicator of risk in banks and bank holding 7. Ratios of equity capital to assets for consolidated companies because high levels of capital pro- bank holding companies and bank and nonbank vide protection against large declines in in- subsidiaries come. Thus, better capitalized organizations Percent will, other things equal, incur less risk of insol- Ratios of capital vency because of loan losses, lower revenues, to assets OOrrggaanniizzaattiioonn 1988 1986-88 Consolidated bank holding companies .. 5.84 5.59 Bank subsidiaries' 5.44 5.17 3. The median profit rates shown in table 6 may differ Nonbank subsidiaries 10.83 11.13 substantially from weighted average profit rates because of Nonbank subsidiaries by type the relatively small numbers of subsidiaries engaged in some Commercial finance 9.44 10.60 nonbank activities, extreme performances by a few large Mortgage banking 5.15 6.14 Consumer finance 9.55 9.18 subsidiaries, and because net income, which is a flow mea- Securities brokerage 5.29 5.79 sure, is measured against assets or equity, which are stock Other depository institutions 17.43 19.28 measures. For comparison, the weighted average net income- Leasing 7.06 7.64 to-assets ratios in 1988 were (in percent) the following: 1.43 Data processing 20.01 21.55 for commercial finance, -0.71 for mortgage banking, 0.78 for Insurance underwriting 50.50 46.67 consumer finance, -0.62 for securities brokerage, 0.51 for Small business investment company 67.68 67.13 other depository institutions, 1.60 for leasing, -4.29 for data Insurance agency 29.74 26.08 processing, 8.10 for insurance underwriting, 8.93 for small Other nonbank 16.38 17.81 business investment companies, 6.71 for insurance agencies, and 1.12 for other nonbank activities. In several cases, the 1. The bank data are calculated by subtracting nonbank equity capital and assets from consolidated holding company data. The bank relative profitability of the activities depends on whether capital-to-assets ratio is also calculated by aggregating across the profits are measured by the weighted average or median, equity capital and total assets of individual banks of the holding suggesting that the profit data for the different types of company, yielding ratios of 6.10 for 1988 and 5.91 for 1986 through nonbank subsidiaries should be used carefully. 1988. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
290 Federal Reserve Bulletin • May 1990 brokerage, and leasing subsidiaries have rela- Net charge-off rates (charge-offs less recovtively low capital-to-assets ratios of about 5 to 7 eries as a percentage of total loans) and past due percent. The high ratio for other depository rates (loans past due 90 days or more and institutions reflects the large amount of capital nonaccruing loans as a percentage of total kept in the savings and loan associations owned loans) are calculated for the nonbank subsidiarby the single bank holding company that ac- ies engaged in commercial finance, mortgage counts for 90 percent of the assets in this banking, consumer finance, and leasing that category. Small business investment and insur- reported values of more than zero for loans and ance underwriting subsidiaries have very high leases. The net charge-off and past-due rates for capital-to-assets ratios of 67.7 and 50.5 percent loans made by commercial finance subsidiaries respectively, which are more similar to norms are compared with net charge-off and past-due in those industries than to bank ratios. rates on commercial and industrial loans made Capital-to-assets ratios are commonly used by the bank subsidiaries of the same bank as indicators of risk. However, in the case of holding company. Comparable ratios for mortholding company subsidiaries, these ratios re- gage banking subsidiaries are compared with flect any double leveraging practices of the rates on the affiliated commercial banks' loans parent bank holding company, whereby the secured by real estate. The rates for consumer holding company issues debt and invests the finance subsidiaries are compared with rates on funds in the nonbank subsidiaries as equity. commercial bank loans to individuals for house- However, if capital-to-assets ratios are reliable hold, family, and other personal expenditures, indicators of risk in the comparison of holding and the comparable rates for leasing subsidiarcompany subsidiaries engaged in different ac- ies are compared with rates on commercial tivities, nonbank subsidiaries appear less risky bank lease financing receivables. Table 8 shows than the affiliated bank subsidiaries. Further, these rates. rather than reflecting just risk and double lever- As the data indicate, the 1988 net charge-off aging, these differences in capital-to-assets ra- rates on loans made by nonbank subsidiaries tios may reflect differences in typical funding are higher than the net charge-off rates on patterns for firms engaged in various activities. similar loans made by the affiliated bank sub- Indeed, those subsidiaries engaged in so-called sidiaries, except for commercial finance subsidtraditional banking activities—commercial fi- iaries. These net charge-off rates suggest that nance, mortgage banking, consumer finance, loans and leases made by the consumer finance, and leasing—collectively have a capital- mortgage banking, and leasing subsidiaries are to-assets ratio of 8.0 percent, similar to capital- riskier than similar loans and leases made by to-assets ratios of banks, although still some- the affiliated bank subsidiaries. The past-due what higher. rates suggest the same relationship. Specifi- 8. Rates of net charge-offs and past-due loans of Measures of Loan Risk nonbank and bank subsidiaries of bank holding companies, 1988 Given the difficulties associated with the use of Percent, except as noted capital-to-asset ratios as measures of risk, loan Comrisk measures were also calculated for those Type of rate Mortgage Consumer mercial Leasing and subsidiary banking finance nonbank subsidiaries that hold a large portion finance of their assets in loans. The loan-to-asset ratios Net charge-off in 1988 were 88.0 percent for the fifty-eight Nonbank .78 1.20 2.44 1.26 Bank 1.01 .29 1.83 .37 commercial finance subsidiaries; 58.4 percent for the one hundred ten mortgage banking sub- Past due Nonbank 3.14 3.47 1.82 7.20 sidiaries; 89.1 percent for the fifty-one con- Bank 4.17 2.47 1.58 .59 sumer finance subsidiaries; and 83.7 percent for MEMO: Number of the ninety-six leasing subsidiaries. firms 46 88 38 60 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
The Nonbank Activities of Bank Holding Companies 291 cally, the past-due rates are higher for the 9. Indicators of the probability of insolvency for consumer finance, mortgage banking, and leas- nonbank and affiliated bank subsidiaries of bank holding companies, selected activities1 ing nonbank subsidiaries and lower for the commercial finance subsidiaries than for the Risk ratio (g) for selected activities affiliated bank subsidiaries, although these re- TTyyppee ooff sults tend to be heavily influenced by the very ssuubbssiiddiiaarryy Commercial Mortgage Consumer Leasing finance banking finance poor performance of a few firms. Overall, loans made by mortgage banking, Nonbank 1.28 1.15 5.15 1.38 Bank 4.29 9.46 4.34 9.30 consumer finance, and leasing subsidiaries appear to be riskier than similar loans made by the 1. The sample includes only those subsidiaries engaged in these affiliated bank subsidiaries. In contrast, com- activities in both 1987 and 1988. mercial finance loans made by the bank subsid- iaries engaged in commercial finance, mortgage iaries appear to be riskier than those made by banking, consumer finance, and leasing. Only the nonbank subsidiaries. subsidiaries that were engaged in these activities in both 1987 and 1988 are included in the sample Probability of Insolvency for purposes of calculating g so that start-up and exiting firms are not included when calculating the Finally, the risk of nonbank subsidiaries can be standard deviation of the net-income-to-assets ratio. measured by an indicator of the probability of These measures are then compared with g measures insolvency. This conceptual measure assumes an constructed for the bank subsidiaries of those holdindependent firm, whereas in a holding company ing companies with nonbank subsidiaries that make a parent organization would likely assist a sub- commercial and industrial loans, loans secured by sidiary by providing additional capital. The mea- real estate, loans to individuals, and leases. Table sure is derived from the probability that income 9 shows these g measures. losses will exhaust capital and assumes that The calculated g ratios indicate that the comincome returns are normally distributed. Specif- mercial finance, mortgage banking, and leasing ically, risk can be measured by nonbank subsidiaries are riskier than their affiliated bank subsidiaries. For these three types of g = [E(PIA) + ClA]ls. activities, the g ratios are lower (suggesting higher risk) for the nonbank subsidiaries than for where the affiliated bank subsidiaries. In the case of consumer finance, bank subsidiaries may be E(P/A) = the expected ratio of net income to more risky although the difference in the g ratios assets is small. These relationships are particularly in- CIA = the ratio of capital to assets teresting because these nonbank subsidiaries s = the standard deviation of net income to have higher capital-to-assets ratios and higher assets. net-income-to-assets ratios (except for mortgage banking subsidiaries) than the affiliated bank The standard deviation of net income to assets is subsidiaries do, which, other things equal, would calculated based on the cross-section distribution suggest lower risk. However, the nonbank subof net income to assets, assuming that it is sidiaries have a much higher standard deviation representative of the time-series distribution for of net income to assets; the higher standard an average firm. The g ratio is appealing because deviation offsets the risk-reducing effects of it incorporates the three financial variables most higher capital and higher profits. closely associated with the financial health of a firm. Those firms with higher CIA, higher E(P/A), and lower s will have a higher g measure and CONCLUSION lower overall insolvency risk. As with the loan risk measures reported above, To date, the new data provided by the FR-Y11Q the g measure of risk is constructed for subsid- and FR-Y11AS on nonbank activities of bank Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
292 Federal Reserve Bulletin • May 1990 holding companies are only available for three circumvent restrictions on geographic expanyears. Nevertheless, the available data indicate sion. Thus, the growth in the relative share of that some of the nation's largest banking organi- nonbank activities could have important implicazations have large holdings of nonbank assets. tions for the safety and soundness of banking Furthermore, the overall share of holding company organizations. assets devoted to nonbank activities has increased The future share of nonbank assets within the significantly since data collection began in 1986. consolidated bank holding company is difficult to Available evidence on nonbank activities of predict. As barriers to intrastate and interstate bank holding companies suggests that nonbank banking are reduced, lending activities consubsidiaries are more profitable than bank sub- ducted in nonbank subsidiaries may be moved to sidiaries, but nonbank profits have moved in bank subsidiaries, thus reducing the amount of parallel with bank profits over the 1986-88 pe- activities conducted in nonbank subsidiaries. On riod. Furthermore, nonbank subsidiaries appear the other hand, any differences in the nature of to be better capitalized than bank subsidiaries, the lending done by bank and nonbank subsidiaralthough this may reflect double leveraging. ies may justify their continued existence and However, various measures of risk involving growth. Finally, bank holding companies may loans or insolvency appear to indicate that non- wish to expand their nonbank activities to inbank subsidiaries are riskier than bank subsidiar- clude those that are even more removed from ies and therefore may be more than a device to traditional banking activities. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
293 The Federal Reserve in the Payments System The following white paper was released on in 1913. At that time the Congress envisioned March 26, 1990, and updates a general policy that the Federal Reserve would play a dual role statement first issued by the Federal Reserve as an operator and a regulator of the payments Board in 1984. system. The Congress has reaffirmed its commitment to this dual role for the Federal Reserve in This paper sets out the Federal Reserve's general the Monetary Control Act of 1980 and in the policy regarding its role in the payments system. Expedited Funds Availability Act, enacted in The Federal Reserve's objective in describing its 1987. policy is to encourage closer cooperation among The Federal Reserve has a wide-ranging parall participants in improving the payments sys- ticipatory role in the payments system. Reserve tem and to facilitate the business planning of Banks process checks and provide a nationwide users and providers of payment services. The network for the collection of items ineligible for paper also outlines the procedure the Federal processing through normal check collection Reserve will ordinarily follow in reviewing its channels, such as matured coupons, bonds, and service offerings. The Board, at its sole discre- bankers acceptances. The Federal Reserve astion, will determine when the procedure is appli- sisted in developing the automated clearinghouse cable and will make the decisions related to the (ACH) system for small-dollar electronic payprocedure. ments and now provides a nationwide electronic In summary, the role of the Federal Reserve in ACH network. Depository institutions transfer providing payment services is to promote the large-dollar payments over the Federal Reserve's integrity and efficiency of the payments mecha- nationwide wire transfer system (Fedwire). The nism and to ensure the provision of payment Federal Reserve also operates a book-entry seservices to all depository institutions on an equi- curities service for the safekeeping and transfer table basis, and to do so in an atmosphere of of U.S. Treasury and agency securities. Finally, competitive fairness. Given the size, speed, and the Federal Reserve supports a variety of private interdependencies of payments, this mission is, clearing arrangements by providing settlement and will likely continue to be, even more impor- services through its nationwide network of actant than it was when the Federal Reserve was count relationships. established in 1913. This participatory role has served the nation well, contributing directly and indirectly to widespread public confidence in a payments system ROLE OF THE FEDERAL RESERVE that is quick, sure, and efficient. The Federal Reserve's participatory role is well suited to the Background structure of the U.S. financial industry. This country has a highly fractionalized banking sys- Since the Federal Reserve's inception, its active tem spread over wide areas, with different types involvement in payments processing has been an of institutions having differing payments needs. integral part of the development of the nation's As interstate banking spreads, the underlying financial system. The Congress, responding in public policy rationale for the Federal Reserve's part to the breakdown of the check collection operational presence in the payments system will system in the early 1900s, made the Federal continue to be an important consideration. The Reserve an active participant in the payments Federal Reserve will continue to bring to paysystem when it established the Federal Reserve ments markets an overall concern for safety and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
294 Federal Reserve Bulletin • May 1990 soundness, promotion of operating efficiency, can be resolved in an orderly fashion, with and equitable access. Indeed, those consider- minimum disruptive effects. ations relating to integrity, efficiency, and access to the payments system will remain at the core of the Federal Reserve's role and responsibilities Efficiency of the Payments System regarding the operation of the payments system. Federal Reserve involvement in the payments Integrity of the Payments System system promotes efficiency for a variety of reasons. The Federal Reserve has a public-interest A reliable payments system is crucial to the motivation in seeking to stimulate improvements economic growth and stability of the nation. The in the efficiency of the payments system. The smooth functioning of markets for virtually every Federal Reserve has worked closely with other good and service is dependent on the smooth providers of payment services to develop and use functioning of banking and financial markets, advanced technology and procedures. Because which, in turn, is dependent on the integrity of of its day-to-day operating presence in the paythe nation's payments system. History shows ments system, it has the know-how to contribute that the fragility of a country's payments system to technical advances as well as the ability to can precipitate or intensify a general economic help promote their implementation. Federal Recrisis. The breakdown of the payments machin- serve involvement may be particularly appropriery in the United States during the Panic of 1907, ate for advances that require widespread coopwhich helped precipitate the creation of the Fed- eration among depository institutions (for eral Reserve System, is a case in point. More example, the introduction and implementation of recently, the 1974 failure of a relatively small Magnetic Ink Character Recognition (MICR) en- German financial institution, Bankhouse I.D., coding of checks). Moreover, Federal Reserve Herstatt, and the consequent uncertainty regard- involvement as a neutral and trusted intermediing payments through private clearing networks, ary can facilitate acceptance of innovations that temporarily caused substantial disruption in the improve the efficiency of the payments system. U.S. payments system. This occurrence clearly Additional efficiencies result from the scope of demonstrated that financial failures, including the Federal Reserve's participation in the paythose abroad, can transmit systemic effects, via ments system. the payments system, to financial institutions in As the Congress anticipated in the Monetary all parts of the world. Control Act of 1980, competition between the As a payments system participant and central Federal Reserve and other providers of payment bank, the Federal Reserve's roles are integrally services has resulted in a more efficient payments related. The Federal Reserve's direct and ongo- system. Both the Federal Reserve and other ing participation in the operation of the payments service providers have been prompted by comsystem enhances the integrity of the payment petition to process payments as efficiently as process. For example, the Federal Reserve's possible and to improve the quality of the serfinal and irrevocable Fedwire funds transfer ser- vices offered. vice reduces the risk that the failure of one It is recognized that the most significant furinstitution could be transmitted rapidly to other ther gains in payment efficiency are likely to institutions. In addition, to carry out its respon- come from the application of advances in elecsibilities as central bank, the Federal Reserve tronic technology. These gains will become more frequently provides payment services to troubled widespread as new technology becomes availdepository institutions that other providers of able to all depository institutions, regardless of payment services may not serve because of the their size or location. The Federal Reserve will risks involved. This provision helps to ensure continue to promote the use of electronics in that the inability of a depository institution to providing payment services when it can demonmake or process payments will not trigger its strate that this technology will enhance the effiinsolvency and that the institution's problems ciency or effectiveness of its services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
The Federal Reserve in the Payments System 295 Provision of Payment Services to All (including all operating and float costs and im- Depository Institutions puted taxes and return on capital) for each service line.1 This internal objective of cost recov- Federal Reserve payment services are available ery for each service line was subsequently to all depository institutions, including smaller modified to provide that revenues for each serinstitutions in remote locations that other provid- vice line must cover all operating costs, float ers might choose not to serve. Under the Mone- costs, and certain imputed costs, such as the cost tary Control Act, in making payment services of interest on short- and long-term debt, as well available to depository institutions, the Federal as make some contribution to the pretax return Reserve must give due regard to the provision of on equity. Thus, each service line must be at an adequate level of services nationwide. Since least marginally "profitable," and all service implementation of the act, the Reserve Banks lines combined must, in the aggregate, cover all have provided access to Federal Reserve services production costs, float costs, and the private to nonmember banks, mutual savings banks, sav- sector adjustment factor. ings and loan associations, and credit unions. The Federal Reserve establishes cost-recovery objectives, rather than targeted volume objec- Fiscal Agency Functions tives, for its services. In a dynamic payments environment, circumstances might arise, such as Besides providing payment services to deposi- changes in technology or banking structure, that tory institutions, the Federal Reserve, as fiscal could jeopardize the Federal Reserve's ability to agent, provides a variety of services on behalf of meet its cost-recovery objectives in a particular the U.S. Treasury and other government agen- service. If a service experiencing such developcies. These services include the creation, safe- ments can be improved to be responsive to the keeping, and transfer of book-entry records evi- market, it would continue to be offered. If it dencing ownership of the public debt and the becomes clear, however, that the service cannot processing of government payments. be expected to meet cost-recovery objectives, Depository institutions benefit from production the Federal Reserve would reassess the approefficiencies that result when the facilities and priateness of continuing to provide the service expertise required to provide these fiscal agency after taking into account its other objectives, services are used to produce other similar services including the requirement to provide equitable for depository institutions. Similarly, paper and access and an adequate level of services nationelectronic payment services are supplied to the wide. For example, several Reserve Banks have Treasury and other government agencies more stopped offering cash transportation in areas efficiently because the Federal Reserve also offers where an adequate level of this service is otherthese services to depository institutions. wise provided by the private sector. More efficient operations or aggressive pricing by other service providers could also result in the CRITERIA FOR EVALUATING PROPOSED „ Federal Reserve's failing to meet cost-recovery PAYMENTS SYSTEM CHANGES objectives. Because the Monetary Control Act directs the Federal Reserve to give due regard to Cost Recovery competitive factors, a decision would have to be made as to whether the public benefits of con- In offering payment services, the Federal Re- tinuing to offer the service justify the shortfall. serve must satisfy the cost-recovery objective of The Federal Reserve might also continue to the Monetary Control Act: In the long run, provide a service that did not meet cost-recovery aggregate revenues should match costs. The pric- objectives if the revenue shortfall were caused by ing principles adopted by the Board of Governors in 1980 added to the aggregate cost-recovery objective specified in the Monetary Control Act 1. See the appendix for details on calculation of costs and the more stringent objective of full-cost recovery fees. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
296 Federal Reserve Bulletin • May 1990 a temporary situation that could be corrected. In service or a change to Regulation J, if that change any event, a decision to continue to provide a would have a direct and material adverse effect service that could not reasonably be expected to on the ability of other service providers to commeet cost-recovery objectives would be made by pete effectively with the Federal Reserve in the Federal Reserve Board only after seeking providing similar services due to differing legal public comment and only when there were clear powers or constraints or due to a dominant public benefits to such a course of action. Simi- market position of the Federal Reserve deriving larly, any decision to withdraw from a particular from such legal differences. All operational or service line would have to be undertaken in an legal changes having a substantial effect on payorderly way, giving due regard to the transition ments system participants will be subject to a problems associated with the discontinuation of a competitive impact analysis even if competitive service. effects are not apparent on the face of the proposal. New Services and Service Enhancements In conducting the competitive impact analysis, the Board would first determine whether the The Federal Reserve's operational presence in proposal has a direct and material adverse effect the payments system can be expected to change on the ability of other service providers to comas the payments system evolves. Increased inter- pete effectively with the Federal Reserve in state banking activity, technological develop- providing similar services. Second, if such an ments, developments in law and regulation, and adverse effect on the ability to compete is identhe entry of new participants in the payments tified, the Board would then ascertain whether system will all influence the evolution of the the adverse effect is due to legal differences or Federal Reserve's role. due to a dominant market position deriving from As the Federal Reserve considers the introduc- such legal differences. Third, if it were detertion of new services or major service enhance- mined that legal differences or a dominant market ments, all of the following criteria must be met: position deriving from such legal differences • The Federal Reserve must expect to achieve were judged to exist, then the proposed change full recovery of costs over the long run. would be further evaluated to assess its benefits, • The Federal Reserve must expect that its such as contributing to payments system effiproviding the service will yield a clear public ciency or integrity or other Board objectives, and benefit, including, for example, promoting the to determine whether the proposal's objectives integrity of the payments system; improving the could be reasonably achieved with a lesser or no effectiveness of financial markets; reducing the adverse competitive impact. Fourth, the Board risk associated with payments and securities would then either modify the proposal to lessen transfer services; or improving the efficiency of or eliminate the adverse impact on competitors' the payments system. ability to compete or determine that the pay- • The service should be one that other provid- ments system objectives may not be reasonably ers alone cannot be expected to provide with achieved if the proposal were modified. If reareasonable effectiveness, scope, and equity. For sonable modifications would not mitigate the example, it may be necessary for the Federal adverse effect, the Board would then determine Reserve to provide a payment service to ensure whether the anticipated benefits were significant that an adequate level of service is provided enough to proceed with the change even though nationwide or to avoid undue delay in the devel- it may adversely affect the ability of other service opment and implementation of the service. providers to compete with the Federal Reserve in that service. Competitive Impact Analysis Process for Communicating Concerns The Board will also conduct a competitive impact analysis when considering an operational or If a depository institution or other payments a legal change, such as a change to a price or system participant believes that the Federal Re- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
The Federal Reserve in the Payments System 297 serve's priced services policies or practices are sector, and also to serve as a vehicle for evalunot in accord with the competitive analysis or ating the cost effectiveness and relative efficiency other criteria described above, it should commu- of the Reserve Banks. nicate its concerns to the First Vice President of PACS provides the Federal Reserve with an the local Federal Reserve Bank. If the institution important management tool for budgeting and wishes to pursue the matter further after discuss- expense control by ensuring that similar exing the issue with the Reserve Bank staff mem- penses are recorded by Reserve Banks in the bers, it may address its concern to the Board same way and that all Reserve Banks report member designated as Chairman of the Board's operating expenses under a set of common and Committee on Federal Reserve Bank Activities. uniform definitions. Like most expense accounting systems used in the private sector, expenses under PACS are CONCLUSION classified by type or "object" of expense, such as salaries, supplies, equipment, and travel, and The Federal Reserve recognizes its responsibili- by the "output" to which the expense is reties to cooperate with other providers in improv- lated, such as fiscal services to the Treasury or ing the payments system and, through the proce- the provision of check collection services to dures described above, to maintain a depositing institutions. Classification of exfundamental commitment to competitive fair- penses by type enables the Federal Reserve to ness. These responsibilities must, in the final collect necessary information for external and analysis, be viewed as an extension of the Fed- internal financial reporting and control pureral Reserve's underlying responsibility for pre- poses. Classification of expenses by output serving the safety and soundness of, and public service enables Federal Reserve management confidence in, the payments system. to analyze the overall costs of Reserve Bank operations in terms of ongoing service responsibilities, the programs instituted to fulfill these service responsibilities, and the basic activities APPENDIX: METHODOLOGY FOR or processes included in the provision of each COMPUTING FEDERAL RESERVE BANK service. COSTS AND FEES There are subsidiary services within each area In accordance with the Monetary Control Act, of responsibility (service line). "Services to fithe Federal Reserve establishes prices for its nancial institutions and the public," for example, payment services to recover costs and a private encompasses priced services such as commercial sector adjustment factor (PSAF). The PSAF is an check, electronic funds transfer, securities, and allowance for the taxes that would have been noncash collection. Within each of these subsidpaid and the return on capital that would have iary services, PACS identifies specific "activibeen provided had the Federal Reserve's priced ties" that reflect the basic operations or proservices been furnished by a private-sector firm. cesses within the services. Costs for providing services are derived from PACS classifies all costs into three categories: the Federal Reserve's Planning and Control Sys- direct, support, and overhead costs. Direct costs tem (PACS). PACS is the uniform cost account- are those costs directly attributable to a given ing system that the Reserve Banks use for deter- service. Support costs are those costs, such as mining the full costs of fulfilling their four basic computer programming and building operations, areas of responsibility: (1) monetary policy, (2) that, although not directly used in priced service supervision and regulation, (3) fiscal agency ser- operations, are required to support such activivices, and (4) services to financial institutions ties. All support costs are fully charged to the and the public (the last includes both priced and benefiting activities on a usage basis. Overhead nonpriced services). The system was developed costs represent all remaining Federal Reserve in the mid-1970s to serve as a cost-accounting costs that cannot be charged directly to an output system, similar to systems used in the private service on a usage basis. Examples of overhead Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
298 Federal Reserve Bulletin • May 1990 functions include the personnel department, pro- are based on estimates made by the individual tection, and budget control. Overhead costs are Reserve Banks. allocated to benefiting services based on formu- The proposed Reserve Bank fees are reviewed las that reflect relative usage. by the System's Pricing Policy Committee and All Federal Reserve fees are reviewed annu- the staff of the Board of Governors. The purpose ally and revised if necessary. The annual review of the review is to ensure that the cost and takes place during the third quarter of the year. volume estimates are reasonable, that the PSAF Each Reserve Bank forecasts its costs and vol- calculation is consistent with System guidelines, umes for each priced service for the upcoming and that proposed prices meet the cost-recovery year. Included in the cost estimate are all direct, policies of the Board of Governors. Finally, the support, overhead, and float costs that are to be Board of Governors reviews and approves the allocated to each priced service. The cost and proposed prices and PSAF. volume estimates are based on a combination of By order of the Board of Governors of the historical experience and projections. At the Federal Reserve System, March 23, 1990. same time, the Federal Reserve calculates a proposed PSAF for the year. Aggregate cost and (signed) William W. Wiles volume estimates for nationally priced services Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
299 Industrial Production Released for publication March 16 Excluding motor vehicles and related industries, production was little changed in February. At Industrial production rose 0.6 percent in Febru- 141.8 percent of the 1977 annual average, the ary following a revised decline of 1.0 percent in total index in February was 0.9 percent higher January. The output of motor vehicles and parts than it was a year earlier. Manufacturing output increased sharply in February following the sub- increased 0.7 percent in February, and the facstantial cut in January, although the level of tory operating rate rose 0.4 percentage point to motor vehicle production in February was still 82.4 percent. Detailed data for capacity utilizamore than 5 percent below its December level. tion are shown separately in "Capacity Utiliza- Ratio scale, 1977=100 Ratio scale, 1977=100 Products 140 Materials Materials Durable ' - — Nondurable Energy Consumer Goods Intermediate Business supplies^ Products / - * Construction supplies Motor Vehicles and Parts Final Products Business equipment_ Consumer goods 1984 1986 1988 1990 1984 1986 1988 1990 All series are seasonally adjusted. Latest series: February. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
300 Federal Reserve Bulletin • May 1990 1977 = 100 Percentage change from preceding month Percentage cchhaannggee,, Group 1990 1989 1990 FFeebb.. 11998899 ttoo FFeebb.. 11999900 Jan. Feb. Oct. Nov. Dec. Jan. Feb. Major market groups Total industrial production 141.0 141.8 -.3 .3 .1 -1.0 .6 .9 Products, total 151.5 152.8 -.6 .7 -1.2 .8 1.8 Final products 148.9 150.5 -.9 .7 -1.5 1.1 1.3 Consumer goods 138.0 139.7 .9 .5 -2.2 1.3 .7 Durable 119.6 127.2 .0 -.3 .6 -6.8 6.4 -3.4 Nondurable 144.8 144.4 1.2 .5 -.6 -.3 2.1 Business equipment 166.6 168.3 -2.8 1.3 -1.3 1.0 2.0 Defense and space 177.9 178.2 -3.4 .6 .4 .1 -.6 Intermediate products 160.5 160.6 .5 .5 -.3 .1 3.5 Construction supplies 145.8 145.3 1.2 .9 .0 -.3 4.2 Materials 126.7 126.8 .0 — .1 -1.0 -.5 .1 -.5 Major industry groups Manufacturing 147.4 148.5 -.6 .4 -.1 -.7 .7 1.1 Durable 143.7 145.8 -1.6 .5 .2 -1.5 1.4 -.1 Nondurable 152.5 152.2 .8 .1 -.5 .4 -.2 2.8 Mining 104.7 104.2 .8 .3 -2.4 2.5 -.5 3.3 Utilities 111.0 110.1 .9 -.1 7.5 -10.6 -.8 -5.5 NOTE. Indexes are seasonally adjusted. tion," Federal Reserve monthly statistical re- equipment was about unchanged, and the output lease G.3. of commercial equipment, which includes com- In market groups, output of consumer goods puters, fell about 0.5 percent. Output of construcadvanced 1.3 percent, reflecting the rebound in tion supplies has changed little so far in 1990, after auto and light truck production; auto assemblies having risen sharply during the fourth quarter of jumped to an annual rate of 5.8 million units from last year. a rate of 4.1 million units in January. However, The production of materials edged up last the output of home goods, such as appliances, month, as gains in motor vehicle-related induswas unchanged in February and has changed tries more than offset declines in nondurable and little, on balance, since last fall. The index for energy materials. The drop in nondurables was nondurable consumer goods decreased 0.3 per- widespread, with the most significant declines cent, as the output of food and clothing declined. occurring in textiles and chemicals. The decrease The rise in the production of business equipment in energy materials mainly reflected the decline in was the result of the pickup in output of motor coal mining. vehicles for business use, which are components In industry groups, apart from the gain in motor of transit equipment. Production of manufacturing vehicles and parts, manufacturing output was little changed in February. Among durables, the Total industrial production—Revisions production of primary metals, mainly steel and Estimates as shown last month and current estimates lumber, posted declines, while the output of aerospace industries rose as commercial aircraft and Percentage change related industries increased again. Among nondu- Index (1977=100) from previous MMoonntthh months rables, significant declines occurred in apparel and textiles, but gains in the output of printing and Previous Current Previous Current publishing continued to be robust. Outside of Nov 142.2 142.3 .3 .3 manufacturing, mining output fell, and production Dec 142.5 142.4 .2 .1 at utilities declined further in February as a result Jan 140.9 141.0 -1.2 -1.0 Feb 141.8 .6 of the relatively mild weather. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
301 Statements to the Congress Statement by Alan Greenspan, Chairman, Board the financial health of the firm. The seriousness of Governors of the Federal Reserve System, of those risks deepened as the problems multibefore the Subcommittee on Economic and Com- plied for issuers in the junk bond market—a mercial Law of the Committee on the Judiciary, market in which Drexel had played a leading role U.S. House of Representatives, March 1, 1990. and a market that itself loomed so large in the fortunes of the firm. My testimony this morning will review the Fed- The interest of the Federal Reserve in Drexel eral Reserve's role in the developments sur- grew, in part, out of our business relationship rounding the recent decision of Drexel Burnham with its government securities subsidiary. This Lambert to liquidate its operations. In addition, I subsidiary is a primary dealer—that is, it was will touch on some possible implications of this sufficiently strong financially and sufficiently acevent. tive in the government securities market to war- My remarks will have to be fairly general in rant its use as one of the forty-four firms with nature. The situation is still unfolding and re- which the Federal Reserve Bank of New York mains in many respects quite sensitive. As you conducts transactions relating to open market know, Drexel, in cooperation with the authori- operations. The Federal Reserve Bank of New ties, is endeavoring to unwind its business. This York carefully monitors the condition of all the process is being undertaken in what we hope will primary dealers to ensure that they remain sound be the least disruptive manner to the markets and counterparties and reliable marketmakers. to Drexel's creditors. As I will be detailing later, Our concern about the condition of Drexel also markets appear to have taken the Drexel prob- reflected our more general interest in the continlems well in stride, but we cannot be certain that ued smooth overall functioning of the financial the full repercussions are as yet entirely appar- markets. The Congress has given us authority to ent. While it is still too early to draw conclusions, act as lender of last resort through our discount the events of the past few weeks do suggest some window for depository institutions, recognizing issues that might merit further consideration, and their central position in the payments system and I shall indicate what some of those are. One their use as a repository for a key portion of the further caveat is necessary: These views are my wealth of households and businesses. Our direct own and do not necessarily represent those of the authority to lend outside of depositories is se- Board of Governors, which has not had an op- verely circumscribed—and we have not done so portunity to consider the contents of this testi- since the 1930s. mony owing to the short time between your But we do recognize a broader responsibility invitation and the hearing. to the financial system. After the stock market break of 1987, we carried out this responsibility by providing an extra measure of funds through BACKGROUND open market operations. These operations were designed to meet any unusual demands for liquid- The Federal Reserve, especially the Federal Re- ity, and, more importantly, by doing so in an serve Bank of New York, has been giving the open manner, to assuage fears and bolster confisituation at Drexel extra attention for some time. dence. At that time, we also monitored carefully In that time frame, difficulties arising out of the provision of credit in securities markets. criminal indictments involving key Drexel per- Then, as now, our concern was not with the sonnel raised concerns about potential risks to fortunes of a particular firm; rather it was and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
302 Federal Reserve Bulletin • May 1990 remains the orderly operation of the financial breadth of the problem. To be sure, the firm markets because that is a prerequisite for the defaulted on a relatively small proportion of its orderly functioning of the economy. We were obligations, but this was seen by many as only monitoring Drexel in part to ascertain whether its the tip of the iceberg, an indication that many difficulties, should they mount, might have more more such problems and difficulties would be general implications for the functioning of finan- forthcoming absent drastic action. Continuous cial markets. and unimpeded access to credit is the lifeblood of any financial concern, which must, in effect, refinance itself on a daily basis, and creditor THE DEVELOPING SITUATION AT DREXEL confidence is the foundation on which such ac- AND THE ROLE OF THE FEDERAL RESERVE cess is built. Drexel recognized the need for action to re- Against this background, late last year and store confidence in its ability to continue as a early in 1990 the Federal Reserve Bank of New going concern over the longer run. The firm York began to receive reports that creditors and apparently explored several options, including counterparties to Drexel were becoming more raising fresh external capital and selling all or a cautious in the amounts, terms, and conditions portion of its operations. In the face of its lack of of credit extensions—including intraday cred- success, the government authorities, after careit—to Drexel. In this same period, Drexel's ful and frequent consultation, determined that commercial paper was downgraded, effectively consideration should be given to an orderly reducing its access to this source of funds. It shrinkage of the firm to minimize the chance of also came to our attention that as funding for spillovers from Drexel's difficulties, helping to the parent corporation ran off, the firm was maintain the integrity and smooth functioning of upstreaming excess capital from its broker- our financial system more generally. There were dealer subsidiary. Consultations were stepped likely to be some dislocations caused by the up among concerned agencies and parties, in- dissolution of Drexel, for creditors, employees, cluding the Federal Reserve Bank of New and customers. Nonetheless, the fundamental York, the Board of Governors, the Securities structure and soundness of the securities markets and Exchange Commission (SEC), the U.S. and financial system and its ability to channel Treasury, and the New York Stock Exchange funds to those who could make the best use of (NYSE), as well as Drexel. them was unlikely to be impaired by the failure of By early this month, it became apparent that this single firm, provided it was carried out in a Drexel had lost the confidence of many of its generally orderly way. lenders and clients. In these circumstances, it is Consequently, the Federal Reserve, working important to note that the precise financial con- with other federal authorities, the NYSE, and dition of the firm rested on an evaluation of a numerous private parties, focused on an orderly large portfolio of loans and securities—including winding down of Drexel's business, especially bridge loans and "junk" bonds—whose worth that done in the regulated entities—the governwas difficult to assess. Moreover, the ongoing ment securities subsidiary and the brokerprofitability of the firm was likely to be impaired dealer. These entities were not included in the by the declining prices and dwindling activity in bankruptcy filing of the parent corporation. The junk bonds. As doubts emerged about the ability Federal Reserve gave particular emphasis to of Drexel to meet its obligations in a timely and efforts aimed at the orderly shrinkage of the predictable way, it suffered what in banking government securities affiliate, in light of our terms would be called a "run." The run extended primary dealer relationship with this affiliate, across the various units that make up Drexel— and our heavy involvement in this market as a including both regulated and unregulated affil- key participant and fiscal agent for the Treaiates, and including affiliates that seemed to be sury, and continuing concern for its orderly solvent, as well as those whose status was in functioning. The Federal Reserve Bank of New doubt. It is important to recognize the depth and York issued a statement to let the market and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 303 the public know that we were monitoring the weeks ago, and important off-balance-sheet posituation carefully, and its staff was in close and sitions havel^een transferred to other parties or continuing contact with Drexel and other mar- unwound. Still, the process is far from complete, ket participants to help facilitate the orderly both in the regulated entities and elsewhere in the winding down of its position. Moreover, we firm. With the easiest and cleanest transactions cooperated closely with the SEC, the NYSE, having naturally been completed first, remaining banks, and other market participants as they positions may be slower and more difficult to worked to resolve the broker-dealer. Through- resolve. out this process there was close and continuous The orderly nature of the unwinding process consultation among the federal authorities, in- probably has contributed to the relatively calm cluding the Treasury Department and the SEC, reaction in financial markets. In addition, to exchange information and discuss issues. Drexel's difficulties had been building for some Our activities had several dimensions. For time, and in certain respects were well known. one, we kept our wire facilities open unusually As a result, the firm's demise was not entirely a long hours, as did the banks that cleared for surprise, though the particular timing and speed Drexel. Through extraordinary efforts of both the of the downfall may have been. There was a private and public sectors, the complex mecha- small flight to government securities when the nisms for transferring securities and funds situation seemed particularly uncertain, but worked, at least in a mechanical sense. Other that was quickly reversed. In the market in problems arose, however, that threatened to which Drexel had been most prominent, that for derail the process of winding down the firm. junk bonds, price reaction also was fairly mild. Many firms doing business with Drexel, quite Drexel had begun to reduce its participation in naturally and understandably, were exercising this market some time before, and the market extreme caution in their transactions with was focused on the effects of the difficulties of Drexel. One effect of this attitude was a possible some prominent issuers rather than those of "gridlock" in the exchange of securities, foreign investment banks. exchange positions, and cash, which could have This market reaction tends to validate the hindered the orderly sale of assets and unwinding judgment that the failure of Drexel, while a of positions. We had numerous discussions with tragedy for the many involved, did not present the private parties involved in these transactions undue risks to the orderly functioning of the to determine what the problems were and solicit financial system or the economy. It is highly suggestions for their resolution. In our discus- likely that other firms will step in to fill the gaps sions we made it clear that these parties needed left by Drexel, including picking up that part of to make their own strategic and business judg- the issuance of high-yield bonds that represents ments. We looked for ways in which we could be a legitimate source of funds for smaller and helpful to facilitate the resolution of problems, riskier businesses. Yet, complacency would be including offering to provide space at the Federal a mistake. Lenders to investment banks and Reserve Bank of New York where parties could other intermediaries may become more caumeet. In addition, we had in place detailed con- tious. In moderation, this caution should protingency arrangements to assist directly in the mote greater efforts to enhance the soundness exchange and settlement of mortgage-backed se- of these borrowers, by capital infusions and curities and other instruments had such arrange- other means, but a more general and indiscrimments proved necessary. inate loss of confidence would impair the ability Owing to the efforts of all concerned, substan- of institutions and markets to perform needed tial progress has been made in winding down the functions. I stress that we see no evidence of firm. The government securities entity has little this, but clearly it is a situation that will have to remaining on its balance sheet and has very small be carefully monitored. Moreover, the task of residual financing needs, which should be re- winding down a firm of this size is always one duced even further in coming days. The broker- that entails at least some risk of more generaldealer also is considerably smaller than a few ized problems and dislocations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
304 Federal Reserve Bulletin • May 1990 ISSUES FOR FURTHER CONSIDERATION the separation of activities in financial holding companies and about the possible need for an As I noted in my introduction, it is far too early overview of the entire holding company, both to draw hard conclusions for public policy from regulated and nonregulated entities. In this rethe experience with Drexel. Nonetheless, certain gard, collecting information from the nonreguissues have emerged that might merit further lated entities to get a fix on their risk profile, consideration. though not without its pitfalls, might be a sensi- First, is the need for our financial institutions ble first step to consider. to have ample capital and to have arrangements A third category of issues arises from our in place to obtain more capital in an emergency. experience with the various clearing and settle- Capital, and in particular tangible net worth, is ment systems as the firm was unwound. The the bedrock of lender confidence that funds can combination of huge positions on the balance be repaid. To the extent that a financial interme- sheet and substantial off-balance-sheet activity diary is holding assets that may be hard to for any diversified financial intermediary implies liquidate on short notice, or whose price may massive flows of funds and securities on a daily fluctuate or is difficult to determine, greater lev- basis. The clearing and settlement systems for els of capital will be required to maintain the these flows work reasonably well in the ordinary needed degree of confidence. Capital adequacy is course of business. As in October 1987, it takes an issue that we have stressed in our oversight of extraordinary circumstances to bring to the fore the banking system, and it has been a key ele- potential problems with these systems. As ment in the SEC's regulation of broker-dealers, Drexel attempted to sell its securities positions, but it is a more general problem in our econo- to unwind its foreign exchange book, and to my—for both financial and nonfinancial firms. manage various positions in commodities mar- A second set of issues arises out of the struc- kets, it became clear that the time lag between ture of Drexel. Drexel was a holding company exchanges of financial instruments and the delivwith both regulated and nonregulated subsidiar- ery of payment for those instruments in most ies, separately incorporated and capitalized, settlement systems was a problem when parties though engaged in complex transactions among to the transaction were concerned that an event, themselves. Problems in one area of the firm like bankruptcy, might intervene. One system could not be isolated and quickly spilled over that did not experience such problems was the into other areas, some of which may have been book-entry system for government securities. fundamentally sound. The government securities This system works on the basis of payment affiliate, for example, seems to have been ade- against delivery, eliminating the time lag, and quately capitalized, and engaged in no unusually facilitating deliveries in the unusual circumrisky activities. Yet it, too, found its access to stances prevailing. Although it would embody a credit curtailed when questions were raised major change to current practices, thought might about the health of the parent company and other be given to the feasibility of extending this type affiliates. of settlement and bookkeeping procedure to This experience raises several questions about other markets. • Statement by Wayne D. Angell, Member, Board Expedited Funds Availability Act. This act limits of Governors of the Federal Reserve System, the length of a hold an institution may place on its before the Subcommittee on Consumer and Reg- customers' deposits, requires disclosure of an ulatory Affairs of the Committee on Banking, institution's funds availability policy, and gives Housing, and Urban Affairs, U.S. Senate, the Federal Reserve Board the authority to make March 1, 1990. improvements to the check-clearing system. We have now had eighteen months of experience I am pleased to appear today to discuss the with this new law, and I agree that it is time to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 305 undertake an assessment of its effect on both inform customers of when funds they deposit in depository institutions and their customers. I transaction accounts will be available for withbelieve that it is particularly appropriate to as- drawal. The act requires an institution to disclose sess what changes to the act should be adopted to its specific funds availability policy to new cusdecrease the costs and risks to depository insti- tomers when an account is established; institututions without jeopardizing the act's objectives. tions provided this disclosure to existing custom- I would like to begin by discussing the objec- ers when the act became effective. Notices of the tives of the act and whether these objectives availability policy of an institution must also be have been met. Next, I will describe several posted in its branches, at automated teller maamendments to the act that the Board recom- chines (ATMs), and on deposit slips. If an instimends that the Congress adopt. I will conclude tution delays availability of a particular deposit by relating some lessons that I believe can be beyond the times established in its general pollearned from our experience with the act. icy, it must notify the customer of the imposition First, I believe it is important to evaluate of the longer hold. In addition, institutions must whether the objectives of the Expedited Funds provide a copy of their availability policy disclo- Availability Act have been successfully sure to any person upon request. This requireachieved. The central objective of the act is to ment facilitates comparison shopping for those ensure prompt availability of funds deposited in customers that consider availability an important transaction accounts. The minority of institu- criterion in selecting an institution in which to tions that, before the act, had been placing very establish a transaction account. long holds on their customers' deposits (some- Examinations of institutions by the federal times of several weeks or more) must now make bank regulatory agencies have shown a high level funds available to their customers for withdrawal of compliance with the act's availability and in much shorter time frames. Thus, the abusive disclosure requirements. Of course, requiring practices of a few institutions that prompted the institutions to provide disclosures to customers Congress to enact this law have been eliminated. will not ensure that the customers will read them. Surveys that have been conducted in the wake of A recent survey conducted by TransData Corpothe act indicate that most institutions—75 per- ration for the American Banker revealed that cent or more—provide their customers with only 53 percent of consumers were aware that same-day or next-day availability and therefore their institution had a formal funds availability do not impose holds as long as those permitted policy. Nonetheless, customers who are interby the act, except in unusual circumstances. The ested have access to information regarding when remaining institutions place blanket holds on they may start drawing against their deposited their customers' deposits, because they perceive funds. Therefore, disclosure of an institution's a higher risk of fraud loss from making funds funds availability policy is a very important available for withdrawal before having an oppor- achievement of the act. tunity to learn whether deposited checks are Improved access to customers' funds and imbeing returned. These holds are limited by the proved information as to when funds are availavailability schedules of the act. Overall, most able for withdrawal may enhance economic effiinstitutions did not need to make significant ciency if the benefits exceed the cost. To the changes to their availability policies to comply extent that these goals have been achieved withwith the act's requirements. Of particular con- out a corresponding increase in risk and cost to cern to me, however, is the evidence that some banks in their provision of payment services, institutions actually lengthened the holds that they represent a positive step in the development they place on deposits in response to the act. of our payments system. In recognition of the Some bankers have indicated that this phenom- importance of achieving these benefits without enon is due to the fear that disclosure of a prompt increasing risks, the act's third main objective is availability policy would increase the risk of to minimize the increase in risk to institutions fraud loss. from making funds available for withdrawal The second primary objective of the act is to promptly by giving the Board authority to im- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
306 Federal Reserve Bulletin • May 1990 prove the check collection and return system. the day on which they must make funds available The Board has used this authority to implement for withdrawal under the temporary availability changes to expedite the collection of checks and schedule. More than 90 percent of nonlocal rethe return of unpaid checks. These rules appear turns and nearly two-thirds of local returns surin Subpart C of the Board's Regulation CC. veyed were delivered to the institution of first Before the implementation of Regulation CC, deposit by the day funds must be made available the check return system was a slow, labor- for withdrawal under the temporary schedule. intensive operation that relied on visual inspec- The situation changes dramatically, however, tion of endorsements on the check instead of when the shorter permanent schedule established machine-readable information that allows for by the act becomes effective in September 1990. high-speed automated processing. In addition, While almost three-quarters of nonlocal checks returns were often transported by mail rather in the survey were returned to the institution of than by courier, further slowing their trip to the first deposit by the day funds must be made institution of first deposit. A check was generally available for withdrawal under the permanent returned through each of the institutions that availability schedule, virtually no local checks collected the check, even though this may not were returned within this time frame (although it have been the most efficient path to route the may be possible to return many checks that are return. Under the old check return procedures, exchanged directly through local clearinghouse most returned checks would not have been re- arrangements within this time). I should note, ceived by the institution of first deposit by the however, that the act requires that funds be made time the act requires that funds be made available available for withdrawal by the start of business for withdrawal under the temporary schedule. on the day specified in the availability schedules An even higher percentage would not have been and that few returned checks are delivered to the returned within the time frames established in the institution of first deposit by the start of its permanent schedule. business day. Under the rules established in Subpart C of We believe that the improvements already Regulation CC, institutions have a responsibility made have helped to control the level of check to return checks expeditiously. The regulation is fraud that could have resulted from the tempodesigned to encourage the return of checks by rary availability schedule; however, we cannot the most direct route (rather than returning a be sanguine regarding the potential for fraud that check through each institution that handled the could occur after the permanent schedule becheck for forward collection), to encourage the comes effective in September of this year. It is use of couriers rather than the mail to transport difficult to assess the magnitude of check losses returned checks, and to provide for the auto- in the industry because these losses are often mated processing of returned checks. These aggregated with other types of losses and are rules have generally speeded the return of unpaid difficult to isolate. The Board does not have any checks. They also have increased the cost to industrywide data on how the act has affected institutions handling returned checks, particu- check losses. The anecdotal evidence that we larly during this transition period. This increased have received indicates a very disparate impact cost is offset, at least in part, by the fact that a from institution to institution. While some instigiven returned check is now handled by fewer tutions have stated that their losses after the institutions than was the case before the imple- implementation of the act are relatively unmentation of the new procedures. We believe changed from those experienced before the act that as banks become more familiar with the new took effect, other institutions have reported very procedures, and as further efficiencies are intro- large increases in fraud losses. The results sugduced, the cost of handling returned checks will gest that while the act has not encouraged widedecline. spread check fraud, some banks have been subject to increased losses, and continued attention A recent survey of returned checks processed needs to be devoted to this issue. by the Federal Reserve indicates that institutions receive most checks that are returned unpaid by Generally, the act envisions two mechanisms Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 307 to protect institutions from risk of loss when they to the availability of funds deposited at nonpromust make funds available for withdrawal on a prietary ATMs should be reassessed and directed prompt basis. First, the act permits institutions the Board to study this issue and report to the to extend the hold on deposits in certain specified Congress on its findings. During consideration of higher-risk situations. These "safeguard excep- the act, banks reported to the Congress on the tions" include deposits to new accounts, large- processing limitation associated with accepting dollar deposits, deposits to accounts of repeated deposits at nonproprietary ATMs; specifically, overdrafters, and deposits that the institution has that the account-holding institution does not reasonable cause to believe are uncollectible. have information regarding the composition of However, the act does not allow institutions to the deposit that is necessary to place differential apply these safeguard exceptions to certain holds. Given this limitation, the act, in effect, check deposits that must be given next-day avail- allows the account-holding institution to treat ability. This risk exposure is addressed in the any such deposits as though they were composed Board's recommended amendments to the act, of nonlocal checks under the temporary availwhich I will discuss shortly. ability schedule. The Congress anticipated that Second, the act attempts to link the availability technological advances would eliminate the need schedules (with the exception of the next-day for special treatment of these deposits, once the availability requirements) with the time that most permanent schedule became effective. The returned checks would be received by the insti- Board has investigated a number of potential tution of first deposit. A depositor attempting to alternatives with ATM networks and participatdefraud an institution should not be able to rely ing institutions and has concluded that there is on the availability schedules to ensure that funds currently no viable solution to address this proare available for withdrawal before a fraudulent cessing limitation. check is returned. As noted earlier, institutions Based on this analysis, the Board recommends will not be protected by this second mechanism that the Congress amend the act to treat nonprowith respect to most local checks under the prietary ATM deposits under the permanent permanent schedule. schedule in the same manner as they are treated Overall, the Board believes that the act al- under the temporary schedule. This treatment ready has increased somewhat the risk expo- would help ensure that deposit-taking at nonprosure to institutions, despite efforts to improve prietary ATMs is not restricted or discontinued the check return process. The act places up- by those institutions that believe they need the ward pressure on institutions' costs, and pro- flexibility to place longer holds on these deposits vides greater incentives for institutions to con- to limit their risk exposure. If such an amendsider customers' creditworthiness before ment were enacted, consumers would continue allowing them to establish transaction ac- to be able to choose between the convenience of counts. These factors may have curtailed ser- making a deposit at a nonproprietary ATM and vices to customers, and undoubtedly will do so the marginally prompter availability that may be to a greater degree in the future. provided if the deposit were made by other The Board believes that the Congress can means. alleviate some of these risks without jeopardizing Besides this amendment, the Board recomthe objectives of the act and hopes you will mends that the act also be amended in several amend the act to reduce compliance costs and other respects. Specifically, the Board recomotherwise further its purposes. In this regard, the mends amendments that would accomplish the Board has recommended several proposed following: amendments to the act. These amendments have • Expand the scope of the safeguard excepbeen described in reports to the Congress that tions to include deposits of checks subject to have been submitted by the Board pursuant to next-day availability. the act. • Provide the Board with greater flexibility to For example, when the act was adopted, the tailor the requirements of the exception hold Congress indicated that the requirements related notices to the exception invoked. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
308 Federal Reserve Bulletin • May 1990 • Apply the same condition to next-day avail- legislation. Virtually no institution, however, ability of Treasury checks and "on-us" checks had a policy that was in complete conformance as is currently applied to other deposits (includ- with the detailed requirements that were subseing deposits of cash, state and local government quently included in the act. Compliance with checks, and official checks) that generally must the act required all institutions to analyze the receive next-day availability. implementing regulations, make certain policy • Resolve the long-run operational and disclo- and operational changes, issue numerous types sure difficulties associated with the determina- of disclosures, and conduct extensive staff tion of whether payable-through checks are local training. Surveys have indicated that the cost of or nonlocal checks. this compliance was not inconsequential. Over • Clarify the Board's ability to allocate liability the long term, institutions are likely to pass among depository institutions as well as among these costs on to their customers and may other participants in the payments system and become more selective in determining the cusclarify the damages for which payments system tomers they will serve. participants may be liable. The second lesson learned is that the speci- • Provide for direct review in the U.S. Court of ficity of the act has limited the ability of the Appeals of any Board regulation or any other Board to adopt regulations that carry out the Board order issued pursuant to this act. intent of the law in the most efficient, cost- The appendix to this testimony includes the effective manner. Had the act provided greater specific amendments proposed by the Board and flexibility to the Board in carrying out the law's the rationale for their adoption.1 objectives (as was the case with the Senate In conclusion, I believe that we have learned version of the act), many of the problems several lessons from our experience in imple- identified by the Board could have been rementing the Expedited Funds Availability Act. solved by regulation rather than by statutory The first lesson is that, in legislation as well as amendment. While we believe that the act's regulation, there are costs and benefits that objectives, for the most part, have been must be balanced but that are often unrecog- achieved, these lessons suggest that they might nized at the time the laws or rules are adopted. have been accomplished at a lower cost. Fi- In this instance, the act has imposed, and will nally, our experience with implementing the act impose, significant costs on all institutions, indicates that the short lead time between enincluding those institutions that were already in actment and the effective date of the law fursubstantial compliance with the law's require- ther increased the industry's and the Federal ments. Most depository institutions provided Reserve System's implementation costs, parprompt availability before the implementation ticularly given the complexity of the act's of the act; only a small portion of institutions requirements. As is often the case, if you imposed the unduly long holds on their custom- need something fast, you usually pay more ers' deposits that were the impetus of the for it. I appreciate this opportunity to discuss our experience in implementing the Expedited Funds 1. The attachments to this statement are available on Availability Act and to suggest certain modificarequest from Publications Services, Board of Governors of tions that should be made to the act. • the Federal Reserve System, Washington, D.C. 20551. Statement by Clyde H. Farnsworth, Jr., Direc- Urban Affairs, U.S. House of Representatives, tor, Division of Federal Reserve Bank Opera- March 8, 1990. tions, Board of Governors of the Federal Reserve System, before the Subcommittee on Financial Institutions Supervision, Regulation and Insur- I am pleased to appear before the Subcommittee ance of the Committee on Banking, Finance and on Financial Institutions Supervision, Regulation Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 309 and Insurance to comment on proposed legisla- ther, the procedures for imposing any such sanction related to money laundering. tions should take into consideration require- As indicated to the subcommittee in recent ments for due process. correspondence, the Federal Reserve places a It should be self-evident that the sanction of high priority on supporting efforts to attack the revocation of an institution's charter or terminalaundering of proceeds from illegal activities. In tion of its insurance would not be appropriate an effort to further increase its contribution to when the violation was due to the totally unaustopping money laundering, the Federal Reserve thorized acts of mid- or low-level employees and is exploring ways of using resources more effec- did not involve conscious corporate activity. To tively within the framework of current law. do so would inflict unjust and detrimental pun- We have reviewed the various legislative pro- ishment on an institution. posals, and we appreciate the opportunity to Similarly, it may not be appropriate to revoke provide you with comments on these proposals. the charter or terminate the insurance of an institution when the revocation or termination would lead to sudden and immediate closure and REVOCATION OF CHARTERS AND liquidation of the institution. Such a liquidation TERMINATION OF INSURANCE could cause serious liquidity problems and, possibly, losses for creditors of the closed institu- The Federal Reserve recognizes that depository tion. These creditors may include depositors and institutions are typically used in money launder- other insured depository institutions whose soling transactions. For this reason, we also recog- vency may be jeopardized by the closing. If other nize that it is necessary for depository institu- institutions must be closed because of their relations to take an aggressive role in the battle tionship with the institution whose charter was against money laundering. However, we believe revoked, the federal deposit insurance funds may that H.R. 3848, the "Depository Institution ultimately bear the costs of these closings. The Money Laundering Amendments of 1990," poses insurance funds and the public should not berisks to the nation's financial system. While we come indirect victims of efforts to curtail money recognize that the intent of H.R. 3848 is to place laundering. the responsibility for policing for possible money When the Congress enacted the Financial Inlaundering violations with the depository institu- stitutions Reform, Recovery, and Enforcement tions, we believe that the potential harm associ- Act of 1989, federal bank regulators were given ated with the implementation of H.R. 3848 out- significantly enhanced enforcement powers. weighs the benefits of giving depository These powers include the authority to accominstitutions an increased incentive to detect plish the following: (1) remove and permanently money laundering activity. prohibit from association or involvement with H.R. 3848 would require the mandatory revo- any financial institution a wider variety of indication of a federally chartered depository insti- viduals who are associated with financial institutution's banking license or the mandatory termi- tions and who may commit violations of criminal nation of federal insurance for a state-chartered laws, as well as civil statutes and regulations; and depository institution convicted of money laun- (2) impose extremely large civil money penalties, dering or a cash transaction reporting offense. ranging up to $1 million per day, against any While there may be circumstances in which the institution or individual who knowingly violates a revocation of the charter or termination of insur- law, such as the money laundering statutes or the ance of a depository institution may be an appro- Bank Secrecy Act, and as a result causes a priate sanction for money laundering violations, substantial loss to the institution or causes the we believe that this sanction should not be man- individual to receive a substantial pecuniary datory. Moreover, any proposed sanctions gain. An expansion of these enforcement powshould take into consideration the nature of the ers, coupled with the banking regulators' tradiviolation and the effect of the sanction on the tional cease-and-desist authority would permit depositors and creditors of the institution. Fur- banking regulators to eliminate the ability of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
310 Federal Reserve Bulletin • May 1990 persons and institutions to continue the illegal this complicated area. In addition, a regulatory, practices and to deter others as intended by H.R. rather than a statutory, approach provides the 3848 without inequitable and severe effects, as flexibility that is often needed to adapt requirewell as costs associated with the mandatory ments to an evolving environment. The Congress sanctions. could specify the general goals of such record- As an alternative to mandatory sanctions keeping requirements and direct the Treasury against institutions, we believe that the Congress Department to implement regulations to carry might consider enhancement of the banking out these goals. agencies' enforcement powers over individuals H.R. 4044 and H.R. 4064 would impose comof banking organizations. As a means of deter- prehensive recordkeeping requirements on instiring money laundering and permanently barring tutions involved in wire transfers. The Federal wrongdoers from the banking industry, the exist- Reserve has a continuing interest in ensuring the ing authority for bank regulators to remove bank efficiency and integrity of the payments system. officials from association with their financial in- In this context, we agree that it may be beneficial stitutions could be expanded. These authorities to use information from wire transfers to help could include mandatory suspension, removal, detect money laundering, to investigate such and permanent prohibition from involvement activity once detected, or to trace the proceeds with any financial institution for money launder- of such activity. Although information from wire ing or significant violations of the Bank Secrecy transfers may be useful for all these purposes, Act; or suspension, removal, and prohibition each purpose is likely to be best served by without showing that the institution suffered a different information or different approaches to loss and that the violator profited, as is now collecting or using the information. required. This expansion of authority can easily The nature of wire transfers makes the develbe accomplished by simple amendments to the opment of requirements for recordkeeping signifbanking agencies' existing suspension, removal, icantly more complex than those for currency and prohibition authority. transactions. Whereas information that institu- Charter revocation or insurance termination tions must report regarding currency transaccould be an additional tool in the arsenal of tions can be obtained from the institution's cusweapons available to federal regulators if regula- tomer, the proposals under consideration require tors have the discretion to invoke such sanctions recording of information pertaining to wire transafter (1) reviewing the particular facts regarding fers that is not within the purview of the instituthe violation; (2) considering factors regarding tion subject to the requirements for recordkeepthe soundness of the institution and the conve- ing. While a currency transaction is essentially a nience and needs of the communities served by two-party transaction, a wire transfer generally the institution, including the potential harm to involves four or more parties, including institudepositors and creditors of the institution; and (3) tions and customers with no relationship to the affording the institution the same due process institution that would be required to keep recprotections available before the imposition of ords. existing penalties. The formats used by the nation's large-dollar wire transfer systems already accommodate the general categories of information required by the WIRE TRANSFER RECORDKEEPING proposals; however, the current message size does not allow for the very detailed nature of the The design of recordkeeping requirements for information that is envisioned. Wire transfer wire transfers is a very complex and technical messages are designed to provide information undertaking. Given the potential ramifications to necessary to complete the payment and to enable the payments systems, the Federal Reserve be- the beneficiary to determine the source of the lieves that the ongoing rulemaking process for payment. The proposed recordkeeping requirewire transfers by the Department of the Treasury ments would necessitate substantial modificais the most efficient means by which to regulate tions to the information transmitted through the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 311 wire transfer systems to ensure that institutions are also intended to apply to the Federal Rerequired to keep records of such wire transfers serve's book-entry transfer system. If such rewill have all of the necessary information avail- cordkeeping requirements are intended to apply able to produce such records. Such modifications to these transactions, we believe that it is even would entail major systems changes, both for the more important that such regulations be devel- Fedwire and Clearinghouse Interbank Payments oped through the Treasury rulemaking process. System (CHIPS) networks and for the thousands The Federal Reserve will continue to offer its of depository institutions that have automated assistance to the Treasury Department in its their wire transfer operations. The cost of these development of rules to achieve the objectives of changes would be substantial, and their imple- the Congress in the most effective manner. mentation would require substantial lead time for wire transfer systems, the institutions that use them, and their customers. Even with these FEDERAL RESERVE ANALYSIS modifications to the wire transfer systems, there OF CURRENCY SURPLUS is no assurance that wire transfers originating in foreign countries will contain information suffi- H.R. 4044 also includes a provision requiring that cient to satisfy the proposed recordkeeping re- the Federal Reserve provide currency surplus quirements. data to the Attorney General. The Federal Re- The additional data collection and data entry serve currently provides currency flow data to that would be required by these proposals could various units of the Department of Justice, as impede the origination of wire transfers, thereby well as to the Department of the Treasury. impeding the efficiency of the hundreds of tril- On a monthly basis, the Federal Reserve prolions of dollars of economic transactions that are vides data on currency receipts and payments for made over these systems annually. It is impor- each Federal Reserve office to the following: the tant that the impact of any recordkeeping re- Department of the Treasury, Financial Crimes quirements for wire transfers be carefully as- Enforcement Network; the Department of the sessed to ensure that they do not result in a Treasury, Office of Financial Enforcement; the degradation in the efficiency and attractiveness U.S. Customs Service; the Department of Jusof the nation's large-dollar payment systems. tice, Criminal Division; and the Drug Enforce- Extensive recordkeeping requirements could ment Administration. These law enforcement cause parties engaged in legitimate transactions agencies have consistently indicated that the to use less efficient means of payment, such as information from the Federal Reserve is useful checks. for statistical analysis and as potential targeting More important, these requirements could information for their investigations. Also, on a have adverse consequences for the competitive case-by-case basis, additional information has position of U.S. financial institutions and, at the been provided by the Federal Reserve Banks in margin, for the attractiveness of the dollar as a support of major law enforcement initiatives. vehicle for international payments. For example, We continue to engage in a meaningful diaoverly burdensome requirements could drive logue with federal law enforcement officials retransactions tied to money laundering into off- garding the types of data collected by the Federal shore clearing systems where they would be even Reserve System and the utility of such data to more difficult to detect. These burdensome re- law enforcement. This dialogue, along with interquirements could also drive legitimate transac- nal Federal Reserve initiatives, serves to refine tions offshore as well. Networks have already and produce meaningful information and permit been established in several foreign countries to the law enforcement community to focus on facilitate the transfer of dollar-denominated pay- important investigative matters rather than be ments. burdened by large amounts of useless data. Finally, we are very concerned about the po- The Federal Reserve willingly provides availtential negative impact on the government secu- able currency flow data, at any level of detail, to rities market if these recordkeeping requirements all federal law enforcement agencies on request, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
312 Federal Reserve Bulletin • May 1990 and, therefore, it is unnecessary to mandate the the importance of these services to those segprovision of this information. ments of the community that might choose not to use banking services and must ensure that the STUDY OF METHODS FOR TRACING supervisory burdens do not discourage the avail- FEDERAL RESERVE NOTES ability of legitimate services. The proposed bills would likely bring under licensing and regulation H.R. 4044 would require a study of various such businesses as supermarkets and other esmethods for the tracing of Federal Reserve tablishments that provide check-cashing services notes. The Federal Reserve is fully prepared to as a courtesy to their customers but that are participate in a study to determine appropriate ancillary to their primary business. and viable methods of tracing Federal Reserve notes and the costs associated with those methods if it is the sense of the Congress that such a CONCLUSION study is appropriate. In closing, let me state that we realize that the UNIFORM STATE LICENSING AND Congress faces a difficult task of improving the REGULATION OF CHECK-CASHING ability of the law enforcement authorities to SERVICES detect money laundering activities while, at the same time, protecting the public from overly The Federal Reserve believes that it is important intrusive and potentially harmful laws. I want to for states to adequately supervise the providers reaffirm the Federal Reserve's commitment to of financial services, including money transmit- deter money laundering and to be cooperative in ters and check-cashing services, to ensure that providing assistance to law enforcement officials they do not serve as a vehicle for avoiding the who are charged with the very important task of controls applicable to financial institutions. Nev- uncovering money laundering wherever it may ertheless, the form of supervision must recognize exist. • Statement by Manuel H. Johnson, Vice Chair- The GAO study concurs in the overall initial man, Board of Governors of the Federal Reserve approach taken by the Board, the principal ele- System, before the Subcommittee on General ments being the reliance on the holding company Oversight and Investigations of the Committee structure and a careful, incremental expansion of on Banking, Finance and Urban Affairs, U.S. securities activities within that structure to insu- House of Representatives, March 19, 1990. late affiliated banks and thrift institutions, and the resources of the federal safety net, from any I appreciate the opportunity to be here today to potential risk arising from the activity, to minipresent the views of the Federal Reserve Board mize harmful conflicts of interest, and to address on the report by the General Accounting Office competitive equity issues. (GAO) entitled "Bank Powers: Activities of Se- In my remarks today, I will provide a brief curities Subsidiaries of Bank Holding Compa- summary of the Board's decisions with respect to nies." I should say at the outset that this report expanded securities activities for bank holding provides an excellent discussion of the approach companies as well as a discussion of the rationale that the Board has taken with respect to ex- underlying the structure adopted by the Board. I panded securities activities for banking organiza- will then address the issues raised by the GAO tions as well as of some of the outstanding issues report and the committee's invitation letter. regarding these activities. The report also includes some initial statistical information on se- BOARD'S DECISIONS ON curities activities that should serve as good base- SECURITIES SUBSIDIARIES line data for those who seek to track the In April 1987, the Board approved applications development of these activities. by three bank holding companies for separately Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 313 incorporated and separately capitalized nonbank revenues of the affiliate, the ineligible securities subsidiaries of the holding companies to under- activities would not be substantial. The Board write and deal in municipal revenue bonds, mort- initially allowed only a 5 percent threshold, congage-related securities, and commercial paper. sistent with its view that a conservative, step- These are securities that, under the Glass- by-step approach was most appropriate in ad- Steagall Act, may not be underwritten or dealt in dressing the issues raised by these new activities. by a member bank directly. The underwriting of In addition, although not required by the these securities is, however, functionally similar Glass-Steagall Act, the Board exercised its auto securities activities conducted by banks. The thority under the Bank Holding Company Act to Board's decision, as well as its subsequent deci- establish capital adequacy requirements, as well sion authorizing the underwriting of consumer- as a number of prudential limitations or "fire receivable-related securities, was based on sec- walls," for holding companies engaging in extion 20 of the Glass-Steagall Act, which allows panded securities activities. These fire walls limit affiliates of member banks—but not the member transactions between a section 20 subsidiary and banks themselves—to participate in otherwise its affiliates to address the potential risks, conimpermissible securities underwriting and deal- flicts of interest, and competitive issues raised by ing activity so long as the affiliates are not the activity. The Board's decisions on these "engaged principally" in this activity. It is from section 20 applications were upheld by U.S. this provision of the Glass-Steagall Act—section courts of appeals. 20—that the underwriting subsidiaries autho- In January 1989, the Board expanded the range rized by the Board have derived their name—the of securities that could be underwritten in a so-called section 20 subsidiaries. section 20 subsidiary to include any debt or Because of the precedent-setting nature of the equity security except shares of mutual funds. applications, the Board reached its decision only Because of the broadened range of activities after considerable deliberations and debate, ex- permitted, the Board felt it prudent to strengthen tending nearly two years. During that time, the further the capital requirements for holding comstatutory language, the legislative history, and panies seeking to enter this field as well as the fire the implications of these proposals for banking walls between the section 20 subsidiary and its organizations, the financial markets generally, affiliates. Also, the Board required that before and the federal safety net were carefully ana- the section 20 subsidiaries could commence the lyzed by the Board. As part of this analysis, a expanded securities activities, they must have in hearing was conducted before the Board mem- place policies and procedures to ensure complibers to obtain the most thorough public comment ance with the operating conditions of the Board's possible on these issues. order, and demonstrate that they possess the The ability of bank holding companies to enter necessary managerial and operational infrastructhe underwriting field depended in large measure ture to conduct the activity. The Board delayed on the meaning of the term "engaged principal- for one year the commencement of equity activly" in section 20 of the Glass-Steagall Act. The ities to allow adequate time for the section 20 Board devoted a considerable effort to evaluation subsidiaries to establish, and gain experience of the factors that should be used to determine with, the managerial and operational infrastructhe level of underwriting and dealing activity that ture and other policies and procedures necessary would not exceed this "engaged principally" to comply with the requirements of the 1989 threshold. The Board concluded that a member order. bank affiliate would not be engaged principally in The 1987 and 1989 orders were the most imunderwriting or dealing in ineligible securities if portant determinations by the Board establishing those activities were not a substantial part of the the structure for allowing bank holding compaaffiliate's business. In particular, the Board nies to engage in securities underwriting and found that when an affiliate's gross revenue from dealing activities in the United States. The Board ineligible securities activities did not exceed a has more recently made several determinations range of between 5 to 10 percent of the total gross that have adjusted the provisions of these earlier Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
314 Federal Reserve Bulletin • May 1990 orders. For instance, in September 1989, the vestment banking services, foster product inno- Board raised from 5 to 10 percent the revenue vation to meet customer financing needs, and limit on the amount of total revenues that a enhance liquidity in these markets. Greater cussection 20 subsidiary could derive from under- tomer convenience and gains in efficiency may writing and dealing in ineligible securities. Under also be realized through possible economies of this higher limit, the ineligible securities activi- scale and scope from coordinated commercial ties are still relatively small compared with the and investment banking business. bank-eligible securities activities of a section 20 The Board recognized at the outset, however, company. The Board also permitted, under cer- that this expansion of powers must be soundly tain narrow conditions, the underwriting of asset- grounded upon a framework that ensures that backed securities issued by affiliates. new activities are conducted in a manner fully In January 1990, the Board approved applica- consistent with traditional and essential U.S. tions by three foreign banking organizations to concepts of bank safety and soundness; the establish U.S. section 20 subsidiaries. These avoidance of conflicts of interest, partiality in the decisions required a careful balancing of two credit-granting process, and unfair competition; somewhat competing concepts: (1) national treat- and the minimization of undue risk to the rement on the one hand, and (2) limiting the sources of the federal safety net. After considerextraterritorial effects that might be caused by able reflection on the complex issues of exfull application of the fire walls on the other. panded powers in light of these fundamental Finally, in February this year, the Board au- concepts, the Board concluded that an expansion thorized the Federal Reserve Bank of New York of the securities powers of banking organizations to conduct, as its supervisory resources permit, in a manner that is faithful to these essential the infrastructure reviews required by the public policy objectives could be achieved within Board's January 1989 order before section 20 the current constraints of the law. This decision companies could commence the equity securities took into account four principal factors: (1) the underwriting and dealing activities approved in separation of the new activity from federally that order. insured affiliates that could be achieved through the bank holding company organizational structure, (2) the need for prudential limitations to manage risks and harmful conflicts of interest, (3) RATIONALE GOVERNING the necessity for strong capital, and (4) the need THE BOARD'S DECISIONS for careful supervision of the entry by banking organizations into the expanded activities. The Board has long been of the view that banking organizations should, to maintain their basic competitiveness, be permitted to expand their 1. Bank Holding Company Structure. The apactivities in response to the challenges and op- plications presented to the Board proposed that portunities that market forces and recent ad- the expanded securities activities be conducted vances in computer and communications tech- in a subsidiary of the holding company. The nology are creating in the financial services applicants did not seek to engage in the activity marketplace, both domestically and abroad. directly through the insured bank or a subsidiary Broadened securities powers, besides helping to of that bank. This holding company structure maintain the domestic and international compet- was dictated in major part by the constraints of itiveness of U.S. banks, may also produce the the Glass-Steagall Act, which, as I have noted, potential for other substantial public benefits. generally prohibits a bank from underwriting and These include increased competition through de dealing in securities (other than certain governnovo entry of banking organizations into what ment securities) and limits the affiliation of a can sometimes be moderately concentrated secu- member bank with a company engaged princirities markets. Such entry may be expected to pally in such activities. reduce concentration levels, lower customer and The holding company structure also lends itfinancing costs, increase the availability of in- self to a phased-in and prudent approach to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 315 expanded securities activities. The holding com- could be achieved and banking competitiveness pany organizational format provides an effective maintained, with the potential for substantial structure to address the potential for risk and public benefits, through the combination of inharmful conflicts of interest and competitive in- vestment and commercial banking. The Board equities that might flow through close association recognized, however, that certain of the prudenof the expanded activities with the resources and tial limitations implemented to curtail risk could support, direct or indirect, of the federal safety lessen somewhat the anticipated synergies, as net. The effectiveness of the bank holding com- well as increase the cost of doing business for a pany format for this purpose derives from the bank-affiliated securities company. Neverthefact that it offers the ability to separate from the less, the Board believed that it was important to bank the ownership and the financial, manage- proceed cautiously in these areas, and that until rial, and operational control of the expanded sufficient experience was gained, the effect of the activity. Thus, the potential for transference of prudential limitations on the attainment of the risk and other harmful effects to the bank, and to expected synergies was to be balanced against the federal safety net, is thereby reduced. An potential risks to the federal safety net. important element in this analysis is that in a The Board's decision was not, however, inbank holding company structure, losses in a tended to be static. The Board recognized the subsidiary are isolated from the bank and are not need to reformulate the limitations on the basis of reflected in the bank's financial statements and experience. Thus, the Board's orders state that capital accounts. when experience shows that adjustments to the The structure also takes advantage of the ben- fire walls are warranted, by way of tightening, efits of functional regulation. A section 20 sub- loosening, or other modification, the Board residiary—as a nonbank entity separate from its tains the flexibility to do so, consistent with the affiliated banks and thrift institutions—is re- underlying goals of the Board's order. In this quired under the Securities Exchange Act of 1934 vein, the Board has already made several adjustto register with the Securities and Exchange ments to the fire walls in which it determined that Commission (SEC) as a broker-dealer. Under certain transactions between the section 20 subthis regulatory system, the section 20 subsidiary sidiary and its affiliated banks or thrift instituis subject to the net capital rules and other tions could be permitted without increasing the regulations of the commission and will be super- risks to these institutions. vised by that agency and self-regulatory bodies The GAO has recognized the importance of operating under its purview. this process and has endorsed this approach in its report. The report states, "When bank holding 2. Prudential Limitations. Building on the ad- companies can demonstrate adequate capital, vantages of corporate separateness achieved effective internal controls, and ability to manage through the holding company structure, the new powers in a responsible manner, consider- Board developed certain prudential limitations ation can be given to reducing regulatory burden on transactions between the subsidiary engaging by relaxing some of the fire walls in light of the in the expanded securities activities and its in- other regulatory controls that are in place and sured bank affiliates. These fire walls are de- provided that sufficient regulatory resources are signed to ensure that the potential for risk and available." conflicts of interest and other adverse effects of the activity do not spill over to the insured 3. Capital Adequacy. It has long been Board affiliate through lending or other intercorporate policy that strong capital is indispensable to any financial transactions, and that the benefits de- proposal for banking expansion. A sound capital rived by the bank from the federal safety net are base is fundamental in ensuring the safety and not inappropriately extended to the section 20 soundness of individual institutions, and thereby subsidiary. providing real protection for its customers and As I have noted, an important element in the the resources of the federal safety net. Equally Board's decision was the belief that synergies important in the Board's mind, the requirement Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
316 Federal Reserve Bulletin • May 1990 for a strong capital base promotes sound and troduction of new activities—could have a potenresponsible operation, and controls the moral tially deleterious effect on the institutions and the hazards, such as undue risktaking, that tend to resources of the federal safety net. In this regard, arise when an institution operates in reliance on the Board has also required annual inspections of the resources of the federal safety net rather than section 20 subsidiaries to ensure compliance with with its own funds at stake. the prudential limitations. Moreover, examiners Thus, it is not surprising that the Board are required to monitor the risk profile and adopted as a prerequisite to expanded debt and financial condition of a bank holding company's equity securities activities the requirement that section 20 subsidiary to evaluate its impact on there be no impairment of the capital strength of the consolidated banking organization. the banking organization. To ensure that essential banking capital is not diverted to support the new activity, a holding company is required to GAO REPORT deduct from its consolidated primary capital any investment that it makes in the underwriting While the GAO has not endorsed the Board's subsidiary. This requirement serves to ensure entire system of prudential limitations as an that even if there should be losses resulting from essential part of expanded securities activities for the new activity, the losses do not detract from bank holding companies, the GAO found that the the capital needed to support the organization's overall approach of the Board was consistent banking operations. with that suggested by the GAO in a 1988 report In addition, in authorizing the debt and equity on repeal of the Glass-Steagall Act. The GAO underwriting powers in 1989, the Board required suggests, however, several areas in which the a bank holding company to deduct from its Board might consider the need for further capital any credit that it extends to an underwrit- changes in the operations of section 20 subsidiaring subsidiary unless such lending is fully se- ies. I will discuss the major areas cited by the cured. The Board also took the additional step of GAO. requiring a bank holding company seeking to avail itself of these powers either to demonstrate Organizational Structure. The GAO report that it is strongly capitalized and will remain so supports, at least in the near term, using bank after the required capital deductions or to raise holding company subsidiaries—as opposed to additional capital to support the expanded activ- subsidiaries of banks—to expand the securities ity. In most cases the applicants were required to powers of banking organizations. While not enraise additional capital to offset the investment in dorsing any particular organizational structure in the section 20 subsidiary. the long run, the GAO would advocate the following: (1) retaining a separate corporate identity 4. Supervision. The final element in the for the firm engaging in the ineligible securities Board's decision on expanded securities powers activities; (2) regulation of the banking and secuhas been a phased-in approach based on the rities affiliates by a federal bank regulator and the section 20 subsidiary's experience, including a SEC respectively; and (3) regulation by the Feddemonstrated managerial and operational infra- eral Reserve of the financial holding company structure, and the development by the Federal that owns the bank and securities affiliates. As Reserve of appropriate procedures for supervis- discussed, these are all positions with which the ing these new activities. This gradual approach Board agrees. allows review of the growth and operations of the The GAO states that there is currently some section 20 subsidiaries and provides opportuni- legal question regarding the extent to which a ties for adjustments and modifications to the bank holding company may be required to use conditions placed on the activities, as circum- nonbanking assets to support bank subsidiaries, stances warrant. and therefore funds upstreamed to the parent The Board believes that its approach is appro- bank holding company may not be available to priate when the alternative—the large-scale in- support a bank subsidiary if the parent decides Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 317 not to so invest them. The GAO states, "Clari- mine the level of ineligible underwriting and fication of the operational basis of this source of dealing activity that would not exceed the substrength policy would help in providing a clearer stantiality threshold incorporated in the "enperspective on how the fire walls and source of gaged principally" language in section 20 of the strength policy work together in strengthening Glass-Steagall Act. The Board determined that banks affiliated with a Section 20 firm." the 5 to 10 percent limit was an appropriate The Federal Reserve Board agrees with the quantitative level of ineligible activity under that GAO that clarification in this area is desirable statute. This measure has been reviewed by and would support efforts to ensure that bank several courts of appeals and found to be consisholding companies and their subsidiaries con- tent with the statutory provision. tinue to serve as a source of strength to troubled Except for the "engaged principally" language subsidiary banks. in the Glass-Steagall Act, the Board would not have chosen to have a revenue limit on the level Purposes, Regulatory Burden, and Effective- of ineligible securities activity of a section 20 ness of Fire Walls and Other Limitations. The subsidiary. While this limit has a prudential ef- GAO report states that it is important that each fect, it was placed on the section 20 subsidiaries of the fire walls and the purpose served by each for legal, not prudential, reasons. Although one of the limitations on the powers of section 20 might disagree with the precise level of ineligible companies be as clear as possible. In its lengthy activity that may be allowed and still be within orders, the Board has tried to set forth in detail the "engaged principally" test in section 20 of its rationale for each such limitation. In addition, the Glass-Steagall Act, only the Congress, by the Board has been, and will be, reviewing the amending or repealing that provision, can refire walls periodically, on the basis of holding move the requirement entirely. company experience in the activity, to ensure that they serve the intended purpose without International Perspective. The GAO report unnecessarily hampering the operations of the points out that U.S. banking organizations ensection 20 subsidiary. In this regard, the Board gage in securities activities overseas in a different has modified or interpreted several of the fire structural framework than has been required in walls to allow certain transactions that would not the United States. What the report does not state be deemed to cause any financial risk to affiliated is that one of the basic reasons for these differbanks and, in its January 1990 order, the Board ences is that the Glass-Steagall Act does not stated that it would review the fire walls regard- apply overseas, and that there are virtually no ing management interlocks and marketing as well statutory restrictions on the activities in which as the condition requiring prior approval for U.S. banking organizations may engage abroad. additional holding company financial support of a Moreover, the Edge Act directs the Board to section 20 company. create a regulatory climate in which Edge corpo- With respect to the amount of securities activ- rations may compete effectively with foreign ities allowed, the GAO noted that the Office of banks. Because direct competitors of U.S. banks the Comptroller of the Currency and the Associ- in foreign markets offer not only commercial ation of Bank Holding Companies, in comments banking but also capital market services, the on the GAO report, suggested that either a higher Board has permitted U.S. banking organizations limit could be set, or alternative measures could to engage in securities activities abroad to be in a be explored, for defining "engaged principally." position to compete with local banks. This au- The GAO stated, however, that it agreed with the thority may be exercised through indirect subsid- Board's policy of using the revenue limit to phase iaries of a member bank as well as through bank in bank-ineligible securities activities. The GAO holding company subsidiaries. did not have a position on the percentage of It should be noted, however, that the equity revenue that ultimately should be allowed. underwriting and dealing activities of U.S. bank- The Board devoted considerable effort to eval- ing organizations have been constrained overuating the factors that should be used to deter- seas, with dealing positions for a U.S. banking Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
318 Federal Reserve Bulletin • May 1990 organization being limited to $15 million in the securities subsidiaries and the capital deduction securities of any one issuer, and underwriting for unsecured lending by a bank holding comlimits not covered by binding commitments by pany to a securities subsidiary. subunderwriters also being limited to that amount. Proposals regarding these limitations Reciprocal Treatment of Securities Firms. The are to be presented to the Board in the near GAO notes that an issue that needs to be studied future, and a question that is logically raised by is whether there are comparable opportunities any expansion of this authority is the extent to for domestic securities firms to expand into dowhich a section 20 approach should be required mestic banking. The GAO recommends that any overseas. This issue and its ramifications for structure that is adopted needs to include appro- U.S. bank competitiveness will be considered priate controls over the entire holding company when the Board requests comments on amend- comparable to the Federal Reserve's current ments to the current rules. control over bank holding company operations. The GAO report also notes that in its January As recognized by the GAO, the ability of 1990 order allowing three foreign banks to estab- investment banks to affiliate with commercial lish securities subsidiaries in the United States, banks—while possible under the current state of the Board did not apply the fire walls exactly the the law—is best accomplished by legislation. The same way that it had applied them to U.S. bank repeal of the Glass-Steagall Act would open the holding companies one year earlier. Those appli- opportunity for the Congress to determine how cations raised substantial issues of national treat- these relationships should be structured. ment, primarily because most foreign banks do Besides asking for comments on the GAO not have a holding company parent but rather report, the committee's letter also asked for our hold their U.S. investments through the foreign views on whose responsibility it should be to bank itself. Because the foreign bank also acts as enforce the fire walls and how they should be a bank holding company, the Board had to decide enforced. In the bank holding company context, whether the bank holding company fire walls or the Federal Reserve Board is the appropriate the bank fire walls were more appropriate. This is agency to enforce the fire walls separating a further complicated by the fact that the rationale section 20 company from its affiliated banks and for some of the fire walls, such as protecting the nonbanks. As the agency responsible for superfederal safety net, does not apply when the vising and regulating the holding company on a holding company in question is a foreign bank. consolidated basis, the Board is also the appro- The Board examined carefully how the fire priate agency to review the operational and manwalls should be applied to foreign bank appli- agerial infrastructure of the section 20 company cants, making sure to the greatest extent possible to ensure that the fire walls are in place and being that pertinent safety and soundness and compet- observed. This does not mean, however, that the itive equity considerations were fully taken into Board would be examining those companies to account, while at the same time trying to limit the ensure that they are in compliance with the extent to which application of the fire walls securities laws and regulations. As I discussed would interfere with the responsibilities of the earlier, the Board's orders rely on functional home country supervisor and the non-U. S. oper- regulation; as a broker-dealer, the section 20 ations of the foreign banks. Admittedly, this task company is and should be subject to regulation cannot be accomplished perfectly, and one might by the SEC. Indeed, the Board's supervisory argue that under the Board's order it is easier for procedures are designed, to the extent feasible, foreign organizations to fund their U.S. securi- to avoid duplicating the efforts of a section 20 ties operations than it is for U.S. bank holding subsidiary's designated self-regulatory organizacompanies, although the foreign banks would tion. This dual regulation by function is a concept argue otherwise. The Board, however, stated in endorsed by the GAO report. its January 1990 order that it would review for With respect to how these fire walls should be both domestic and foreign banking organizations enforced, the Board believes it has adequate the prior approval requirements for all funding of authority under the Bank Holding Company Act Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 319 and other enforcement laws, especially in light of existing law, to act on applications within manthe increased penalty provisions contained in the dated time periods. In acting on applications by Financial Institutions Reform, Recovery, and bank holding companies to engage in expanded Enforcement Act of 1989, to ensure that bank securities activities, the Board is proceeding cauholding companies adhere to the requirements of tiously and with due regard to the potential for Board orders. risk to federally insured institutions and the federal safety net. The Board believes that this is appropriate when banking organizations are ex- CONCLUSION panding their powers into nontraditional activities. This process is a continuing one, and the In the absence of legislation establishing a com- Board will be reviewing periodically the operaprehensive framework for the conduct of securi- tions of the section 20 subsidiaries and the effect ties underwriting activities by banking organiza- that the prudential limitations have on their tions, the Board is required, as provided in operations. • Statement by Alan Greenspan, Chairman, Board tory authority has increased volatility in the of Governors of the Federal Reserve System, securities markets, nor in this regard is it a threat before the Subcommittee on Securities of the to the capital-formation process. We continue to Committee on Banking, Housing, and Urban view the primary purpose of margins to be to Affairs, U.S. Senate, March 29, 1990. protect the clearing organizations, brokers, and other intermediaries from credit losses that could It is a pleasure to appear on this panel this jeopardize contract performance. While we think morning to discuss issues involving the regula- that federal oversight of margins is appropriate tion of securities markets. While your committee for prudential purposes, there are different views is addressing a broad range of matters in this among Board members on whether that authority area, you have asked me to focus on whether the is best vested in the Commodity Futures Trading existing split regulation of equities and index Commission (CFTC) or the Securities and Exfutures may have contributed to market volatil- change Commission (SEC). ity, interfered with the process of innovation, or On the broader issue of consolidating jurisdicled to enforcement problems. You also have tion for stocks and stock index futures (or all asked for comment on certain proposals for financial futures) in one agency, there are good regulatory consolidation. I would like to focus arguments for and against such a consolidation my remarks on three major issues: first, the and, accordingly, differences of views on adequacy of margin requirements on stock index whether such consolidation would, on balance, futures as a prudential safeguard and the impact be beneficial. We believe some changes to the of existing margin-setting procedures and other existing regulatory system are necessary to avoid differences in regulation on market volatility; the prospect that jurisdictional disputes among second, existing impediments to innovation; and regulators will impede innovation in our financial third, whether there is a need to modify the markets, but consolidation of jurisdiction is not existing regulatory system for stocks and stock necessary to achieve this objective. derivatives. My evaluation will be done against the objective of a regulatory structure that, while limiting risks to the system, results in highly FEDERAL MARGIN REGULATION efficient and innovative U.S. financial markets that can compete effectively in the global mar- A prominent area of disagreement among those ketplace. interested in the smooth functioning of our cap- As I will discuss in more detail, the Board does ital markets has been the appropriate level of not believe that the existing division of regula- margins for stock index futures and the need for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
320 Federal Reserve Bulletin • May 1990 federal authority over such margins. In part, prudential purposes. Although no futures clearthese disagreements reflect different views as to inghouse has ever suffered a loss from a default the purposes of margins and the appropriate on a stock index futures contract, certain actions objectives of federal margin regulation. Accord- by futures exchanges and their clearinghouses in ingly, at the outset I would like to clarify the recent years raise questions about the adequacy position of the Board of Governors on these of futures margins from a public policy perspecissues. tive. Specifically, we have concerns about the We continue to believe that the primary objec- tendency for these organizations to lower martive of federal margin regulation should be to gins on stock index futures to such a degree in protect the financial integrity of market partici- periods of price stability that they feel compelled pants and thereby ensure contract performance. to raise them during periods of extraordinary Margins should be adequate to protect clearing price volatility. While such a practice has hereorganizations, brokers, and other lenders from tofore protected the financial interests of the credit losses arising from changes in securities clearinghouses and their members, it tends to prices. As such, they are one important element compound already substantial liquidity pressures of a package of prudential safeguards, including on their customers, on lenders to their customcapital requirements, liquidity requirements, and ers, and on other payment and clearing systems. operational controls, aimed at limiting the vul- In the Board's view, somewhat higher margin nerability of the financial markets to losses or levels on stock index futures would obviate the disruptions arising from the failure of one or need to raise them in a crisis and thereby reduce more key participants. The failure of, or even the concerns about the reliability of our market loss of public confidence in, a major intermediary mechanisms, especially clearing and payment in any of the stock, futures, or options markets systems, in times of adversity. could immediately place significant strains on The Board believes that federal oversight is other markets, their clearing systems, and on our appropriate to ensure that margins on stocks and nation's payment system. stock index futures are established at levels that The Board remains skeptical, however, of are adequate under a wide range of market whether setting margins on stock index futures at conditions. Futures self-regulatory organizations levels higher than necessary for prudential pur- (SROs) should continue to have primary responposes will reduce excessive stock price volatility. sibility for developing and refining margin poli- We, too, are concerned about what seems to be cies. But the appropriate federal agency should a higher frequency of large price movements in have both the authority to initiate changes in the equity markets, but we are not convinced margins on stock index futures and the authority that such movements can be attributed to the to veto changes proposed by the relevant SRO. introduction of stock index futures and the op- That authority should not be limited to emerportunities they offer for greater leverage. Al- gency authority such as the CFTC currently has though available statistical evidence on the rela- over futures margins. tionship between margins and stock price Either the CFTC or the SEC could play this volatility is mixed, the preponderance of that role. The principal argument in favor of assigning evidence suggests that neither margins in the oversight responsibility for stock index futures to cash markets nor in the futures markets have the CFTC is that it has overall responsibility for affected volatility in any measurable manner. prudential supervision of futures exchanges and Moreover, we are concerned that raising mainte- clearing organizations and futures commission nance margins on stock index futures to levels merchants (FCMs). Assignment of oversight rewell above those necessary for prudential pur- sponsibility to the CFTC would avoid certain poses could substantially reduce futures market regulatory burdens and potential conflicts that liquidity or drive business offshore. could arise if responsibility for critical aspects of prudential oversight of such entities were divided Thus, in the Board's view, the critical question between the CFTC and the SEC. is whether margins on stock index futures have been maintained at levels that are adequate for The principal argument for assigning oversight Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 321 responsibility for stock index futures margins to underlying stocks. More generally, it has been the SEC is that it would foster consistency of suggested that other inconsistencies in market margins in the stock and stock derivative mar- mechanisms involving, for example, circuit kets. The Board believes that margins in these breakers and short-selling rules, contribute to markets should be consistent in the sense that market instability. It is feared that increased they provide comparable protection against ad- price volatility, in turn, will reduce the attractiveverse price movements. The degree of protection ness of equity markets and could impede the provided by margin requirements depends on the capital-formation process. These concerns have magnitude of potential future price volatility. prompted calls for one regulator who will take Although studies of past price movements can steps to remove inconsistencies that may conshed light on potential movements in the future, tribute to sharp price swings. the forecasting of future volatility necessarily The Board does not share the view that split involves elements of judgment. Because different regulatory authority over equity instruments has agencies are likely to come to different judg- in any meaningful way contributed to volatility. ments, there is a case to be made for having only As I noted earlier, we have found no substantial one regulator with margin authority over all the evidence linking margin levels to price volatility equity products markets to achieve consistency in the cash or the index product markets. Nor of margins across these markets. have studies revealed a clear understanding of On balance, the Board does not see a clear how circuit breakers and other market rules basis for choosing between CFTC and SEC over- affect price movements in the different markets. sight of stock index futures margins. The Board In a more fundamental sense, we believe that it feels strongly, however, that authority should is counterproductive to lay blame on one sector, not be given to the Federal Reserve because it in this case the market for stock index derivadoes not have overall prudential responsibility tives, for the increasing occurrence of wide and for any of the futures commission merchants rapid price swings in equity markets. Rather, the (FCMs), broker-dealers, or clearing organiza- volatility we observe reflects more basic changes tions that margins are intended to protect. The in economic and financial processes prompted by existing margin authority for stock and stock technological advances and the increasing conoptions assigned to the Board under the Securi- centration of assets in institutional portfolios. ties Exchange Act of 1934 should be transferred The delegation by the public of the management to the SROs and the SEC. of a large proportion of its assets to professional managers through pension funds and other institutions and the desire of these managers for ISSUES OF REGULATORY JURISDICTION low-cost methods to manage risk and adjust portfolios has spurred growth in the new instru- The question of regulatory responsibility for mar- ments; improvements in telecommunications and gins is one element of the broader question of computer technology mean that information on regulatory jurisdiction over futures and options economic fundamentals will be received and markets. In light of the strong linkages among the translated by these managers more quickly into markets for futures, options, and their underlying market prices. To the extent that price moveinstruments, some have argued that the division ments reflect these basic forces, efforts to reof oversight responsibilities among agencies may strain volatility by imposing more restrictions on impede the effective regulation and supervision particular markets or instruments could have that is essential to ensure sound and efficient unintended effects, resulting in significant costs financial markets. to the system and a shifting of transactions activity offshore. One particular concern relates to volatility. It is frequently argued that leveraged trading in A second issue frequently raised in evaluating stock index futures and options, encouraged by the adequacy of our current regulatory system low margin requirements on derivative products, concerns product innovation. Many of the new has led to increased volatility in the prices of the products being developed on futures and options Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
322 Federal Reserve Bulletin • May 1990 markets are not easy to classify. They have future price volatility in the linked markets for important similarities to, or are otherwise linked stocks and derivative products. One regulator to, a variety of existing instruments subject to would provide a single view of potential future different regulators; and, as a consequence, var- volatility in these markets and thereby foster ious uncertainties and frictions have emerged consistency of margins across the various segabout the appropriate exchanges that should ments of the equity markets. Others would go trade these instruments and the agencies that further and transfer all regulatory authority over should provide regulatory oversight. One recent stock index futures and options on such futures example involves the "index participation" or IP to the SEC. This alternative is one of the possicontracts that were introduced by several of the bilities recently identified by Treasury Secretary stock exchanges, approved by the SEC for secu- Brady. rities trading, and, in essence, disapproved when This would help achieve consistent prudential the courts ruled that IPs were futures products regulation across these tightly linked markets for subject to the exclusive jurisdiction of the CFTC equity instruments. However, such a measure and could not be traded off exchanges regulated would result in two regulators of futures exby the CFTC. changes and futures clearinghouses, and hence Under the Commodities Exchange Act (CEA), would still require a considerable amount of any commodity contract with an element of coordination on the part of the SEC and the futurity cannot be entered into except on a CFTC. One must recognize that stock index CFTC-regulated exchange. Moreover, this act futures are but one of many futures contracts defines the term "commodity" very broadly to offered by these organizations—indeed, only one include not only physical commodities, like corn of many financial futures contracts. Should and wheat, but intangible contractual interests, losses from stock index futures trading—to be including financial instruments. This restriction, subject to SEC regulation under this alternawhen interpreted broadly, serves to discourage tive—jeopardize the financial integrity of a clearthe development of new financial products that ing organization or futures brokerage firm might be offered outside of the futures exchanges (FCM), it would threaten contract performance and tends to stifle the innovation process. In a on all of the futures traded by the entity, includvery general sense, all financial instruments have ing tangible commodity futures. Similarly, a failan element of futurity in them, in that their value ure in the commodity futures markets could, depends on future events. We believe that the because of the effects on the clearing organiza- CEA can be modified in ways that preserve the tion or brokerage firm, have consequences for public safeguards that motivated this provision, the equity markets. In another area, many exwhile preventing conflicts in this area from hav- change rules related to trading and clearing cut ing to be dealt with by the courts and without across a wide range of contracts rather than impeding the process of innovation in equity and being specific to stock index contracts, and close other instruments. Such modifications might in- coordination between the SEC and the CFTC clude an exemption for transactions subject to would be important in evaluating such rules. other regulatory safeguards, sophisticated trader Thus, the SEC would have an important interexemptions, or more stringent fraud liability. est in other aspects of futures market regulation while the CFTC would continue to have a strong interest in the regulation of stock index futures. ALTERNATIVE REGULATORY STRUCTURES The logic of transferring stock index futures to the SEC because of their tight linkage to the cash As I have noted, a case can be made for having market suggests that futures contracts on other only one federal agency with oversight authority instruments also might be regulated differently. over margins in the equity and equity derivative That is, Treasury futures would be regulated by markets. This case rests not on the issue of the Treasury and Eurodollar and foreign curvolatility but on the fact that setting prudential rency futures by the Federal Reserve. Such a change, however, would increase the regulatory margins requires judgments concerning potential Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Statements to the Congress 323 fragmentation in the securities markets and regulation of exchanges and clearinghouses, and would not appear to be a particularly useful the transfer of all financial instruments to the realignment. Consequently, the benefits of trans- SEC might be accompanied by the separate ferring regulatory jurisdiction to the SEC for clearing of all financial futures subject to only purposes of achieving more consistency of regu- one regulator. However, these solutions would lation across equity instruments must be bal- concentrate a great deal of regulatory authority anced against these drawbacks, and there is over the financial system in a single agency and scope for legitimate differences of view on this has been a concern of the Congress for a long whether such a measure would be a net improve- time. Besides the potential management diffiment. culties of a larger organization, there is the risk Secretary Brady also has suggested much that bureaucratic inertia in a larger agency could more far-reaching measures to deal with the be an impediment to the process of innovation. jurisdictional issue—the transferring of all finan- We should not lose sight of the fact that under the cial products to the SEC or the merging of the existing system of split jurisdiction over financial two agencies. We would urge caution in consid- instruments, our financial markets have been the ering these alternatives. A full merger of the two most innovative in the world, with many of the agencies would avoid many of the problems just new products spurred by the introduction of mentioned about overlapping jurisdiction in the index futures and other futures. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
324 Announcements EDWARD W. KELLEY, JR.: Federal Reserve in the Payments System," was REAPPOINTMENT AS A MEMBER OF THE first issued by the Board in 1984.1 BOARD OF GOVERNORS The white paper has been updated to address explicitly recommendations made by the General On January 19, 1990, President Bush announced Accounting Office in 1989 that the Board define his intention to reappoint Edward W. Kelley, Jr., its commitment to competitive fairness in the as a member of the Board of Governors. Gover- check collection system and establish a forum for nor Kelley was subsequently confirmed by the hearing concerns raised by the private sector. Senate on April 4 and took the oath of office, The policy revisions apply to all Federal Readministered by Chairman Alan Greenspan, on serve services. April 20, 1990. The text of the President's announcement of January 19, follows: REGULATION T: AMENDMENTS The President today announced his intention to nominate Edward W. Kelley, Jr., to be a member of the The Federal Reserve Board has approved Board of Governors of the Federal Reserve System for amendments to Regulation T (Credit by Brokers a term of 14 years, from February 1, 1990. This is a and Dealers) to accomodate the settlement and reappointment. clearance of transactions in foreign securities and to permit marginability of foreign securities at Since 1987, Mr. Kelley has served as a member of the broker-dealers. The amendments are effective Board of Governors of the Federal Reserve System. April 30, 1990. Prior to this, he was chairman of the board of Investment Advisors, Inc., in Houston, Texas, from 1981 to The amendments will accomplish the follow- 1987. In addition, he has served as chairman of the ing: board of the Shoreline Companies, Inc., and director • Permit foreign equity and debt securities that of Texas Industries, Inc. meet prescribed criteria to be eligible for margin at broker-dealers on the same basis as margin Mr. Kelley graduated from Rice University (B.A., securities. 1954) and Harvard University (M.B.A., 1959). He was • Permit recognition and isolation of debt deborn January 27, 1932, in Eugene, Oregon. He served in the U.S. Naval Reserve, from 1954 to 1956. Mr. nominated in foreign currencies and allow for- Kelley is married, has three children, and resides in eign securities denominated in that currency to Washington, D.C. be used as margin for the debt without conversion into dollars. • Ease restrictions on payment and settlement for foreign securities to accommodate the prac- REVISIONS TO POLICY STATEMENT tices of the market where the trade occurs. REGARDING THE SYSTEM'S ROLE IN THE • Allow a broker-dealer subject to Regulation PAYMENTS MECHANISM T to arrange with foreign persons to extend credit on foreign securities. The Federal Reserve Board announced on March 26,1990, revisions to its general policy statement regarding the System's role in the payments 1. The policy statement is reprinted on pages 293-98 of this mechanism. The revised white paper, titled "The Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
325 Foreign equity securities will be eligible for The Federal Reserve Board published in final margin treatment if they meet the following cri- form on March 30,1990, an official staff commenteria: tary to Regulation Z (Truth in Lending). The • Trading for at least six months on an ex- revisions become effective April 1, but complichange or in a recognized foreign securities mar- ance is optional until October 1, 1990. ket outside the United States. The majority of the revisions address the Reg- • Continuous availability to U.S. broker-deal- ulation Z amendments implementing the Fair ers of quotations of both bid and asked or last- Credit and Charge Card Disclosure Act and the sale prices for the security through an electronic Home Equity Loan Consumer Protection Act. quotation system. Most of the interpretations have been developed • An aggregate market value for the security of in response to requests by creditors for addiat least $1 billion. tional guidance. Some of the issues discussed • An average weekly trading volume of at least include tax refund anticipation loans, the price- 200,000 shares or the equivalent of $1 million. level adjusted mortgage (a new mortgage prod- • The existence of the issuer or a predecessor uct), and open-end credit advertising. in interest for at least five years. The Board will publish quarterly a list of foreign equity securities that are marginable to- PROPOSED ACTIONS gether with its regularly scheduled List of Marginable OTC Stocks. The Federal Reserve Board on March 19, 1990, Foreign corporate debt securities will be mar- requested comment on whether it should delete ginable if the original issue had outstanding a or revise a provision in Regulation Z (Truth in principal amount of at least $100 million, the Lending) that permits creditors to freeze the issue is not in default on interest or principal credit line when the rate cap on a home equity payments, and the issue is rated in one of the two line of credit is reached. The Board also requests highest rating categories by a nationally recog- comment on the timing of providing disclosures nized statistical rating service. to consumers regarding the repayment phase in an agreement. Comment on these two provisions in Regulation Z is requested by April 20, 1990. REVISIONS TO OFFICIAL STAFF COMMENTARIES REVISIONS TO MONEY STOCK DATA The Federal Reserve Board published in final form on March 29,1990, an official staff commen- Measures of the money stock were revised in tary to Regulation B (Equal Credit Opportunity). February of this year as a result of the annual The majority of the revisions implement the benchmark and seasonal factor review, as well as Equal Credit Opportunity Act amendments on a minor adjustment to the composition of M2. business credit that were part of the Women's Data in tables 1.10 and 1.21 in the statistical Business Ownership Act of 1988. The revisions appendix to the Bulletin reflected these changes pertain to data collection and become effective beginning with the issue for April 1990. April 1. Deposits of commercial banks and thrift insti- The Federal Reserve Board also published in tutions were benchmarked using call reports final form on March 29, 1990, an official staff through June 1989 and other sources. commentary to Regulation E (Electronic Fund Changes in seasonal factors were based on the Transfers). The revisions address questions that X-11-ARIMA procedure used in recent years. have arisen about the revocation of authority for Beginning with this review, separate seasonal preauthorized transfers. The revisions become factors were computed for other checkable deeffective April 1. posits (OCDs) at commercial banks and thrift Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
326 Federal Reserve Bulletin • May 1990 institutions. (Previously, OCDs were season- The set of components of M2 has been exally adjusted as a whole.) Also, for the first panded to include overnight repurchase agreetime, seasonal factors were computed sepa- ments issued by thrift institutions, formerly inrately for money market deposit accounts cluded with term repurchase agreements in the (MMDAs) at commercial banks and at thrift non-M2 component of M3. (Overnight repurinstitutions, and for general purpose and bro- chase agreements issued by commercial banks ker-dealer money market mutual funds (a com- have been included in M2 since 1980.) ponent of M2) and institution-only money mar- More detail on the revisions is available in the ket mutual funds (a component of M3). These H.6 release, "Money Stock, Liquid Assets and procedures had a small effect on seasonally Debt Measures," dated February 15, 1990. Hisadjusted Ml, but no effect on the non-Mi torical data are available from the Money and component of M2 or the non-M2 component Reserves Projections Section, Division of Monof M3 as these components of the broader etary Affairs, mail stop 72, Board of Governors aggregates continue to be seasonally adjusted of the Federal Reserve System, Washington, as a whole. D.C. 20551. 1. Monthly seasonal factors used to construct Ml, M2, and M3, January 1989-March 1991 Other Nontransactions components NNoonnbbaannkk checkable deposits DDeemmaanndd YYeeaarr aanndd mmoonntthh CCuurrrreennccyy ttrraavveelleerrss'' ddeeppoossiittss cchheecckkss At thrift At banks In M2 In M3 only institutions 1989—January .9930 .9298 1.0211 1.0220 .9945 1.0018 .9970 February .9894 .9482 .9683 1.0010 .9751 1.0006 1.0014 March .9935 .9604 .9722 1.0054 .9876 1.0015 1.0047 April .9974 .9557 1.0070 1.0323 1.0256 1.0006 .9945 May 1.0003 .9716 .9787 .9881 .9974 .9976 .9991 June 1.0054 1.0427 1.0017 .9910 1.0060 .9986 .9955 July 1.0083 1.1196 1.0082 .9873 1.0082 1.0011 .9915 August 1.0024 1.1216 .9953 .9876 .9999 1.0008 1.0001 September .9969 1.0654 .9936 .9910 .9986 .9987 1.0048 October .9952 1.0026 1.0023 .9867 .9989 1.0002 1.0031 November 1.0028 .9520 1.0100 .9951 1.0028 1.0005 1.0074 December 1.0151 .9281 1.0423 1.0119 1.0035 .9982 1.0015 1990—January .9924 .9318 1.0205 1.0224 .9954 1.0017 .9967 February .9897 .9497 .9684 1.0013 .9762 1.0005 1.0008 March .9940 .9608 .9725 1.0060 .9890 1.0016 1.0049 April .9973 .9556 1.0071 1.0326 1.0261 1.0005 .9943 May 1.0002 .9727 .9781 .9877 .9968 .9976 .9991 June 1.0058 1.0429 1.0014 .9905 1.0050 .9986 .9956 July 1.0075 1.1171 1.0082 .9872 1.0078 1.0011 .9917 August 1.0036 1.1199 .9951 .9874 .9992 1.0009 1.0002 September .9969 1.0641 .9934 .9909 .9984 .9986 1.0046 October .9944 1.0029 1.0030 .9866 .9989 1.0000 1.0035 November 1.0034 .9526 1.0100 .9952 1.0029 1.0007 1.0075 December 1.0144 .9293 1.0429 1.0120 1.0038 .9983 1.0015 1991—January .9923 .9331 1.0198 1.0226 .9958 1.0017 .9967 February .9899 .9501 .9683 1.0013 .9768 1.0005 1.0004 March .9950 .9606 .9729 1.0063 .9895 1.0017 1.0050 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Announcements 327 2. Monthly seasonal factors for selected components of the monetary aggregates, January 1989-March 1991 Money market Commercial bank deposits Thrift institution deposits mutual funds Year and month Money Small Large Money Small Large Savings d m e a p r o k s e i t t d n e a n t o io m n i - d n e a n t o io m n i - Savings d m e a p r o k s e i t t d n e a n t o i m on i - d n e a n t o io m n i - In M2 In o n M ly 3 accounts time time accounts time time 1989—January ... .9952 1.0103 .9994 .9948 .9924 1.0019 1.0037 1.0065 .9959 1.0262 February.. .9928 1.0045 1.0010 .9995 .9893 .9990 1.0039 1.0024 1.0048 1.0309 March .9984 1.0044 1.0020 1.0073 .9977 1.0025 .9995 .9954 1.0134 1.0147 April 1.0024 1.0007 .9999 .9999 1.0021 .9955 .9993 .9904 1.0112 .9936 May 1.0035 .9890 .9975 1.0010 1.0017 .9944 .9969 .9943 .9982 .9948 June 1.0064 .9941 1.0013 .9985 1.0071 .9970 .9980 .9904 .9945 .9867 July 1.0089 .9931 1.0026 .9943 1.0109 .9979 1.0023 .9900 .9923 .9921 August — 1.0025 .9957 1.0018 1.0015 1.0023 1.0015 1.0005 .9959 .9967 .9925 September .9972 .9963 1.0012 1.0036 .9985 1.0002 .9983 1.0023 .9967 .9763 October... 1.0003 .9971 .9992 1.0028 1.0047 1.0020 1.0000 1.0098 .9954 .9771 November .9988 1.0054 .9976 1.0011 .9997 1.0035 1.0001 1.0138 1.0022 1.0098 December. .9934 1.0098 .9960 .9960 .9931 1.0048 .9978 1.0091 .9992 1.0057 1990—January ... .9954 1.0110 .9989 .9942 .9927 1.0032 1.0034 1.0076 .9964 1.0272 February.. .9932 1.0050 1.0008 .9994 .9896 .9995 1.0036 1.0027 1.0049 1.0319 March .9990 1.0046 1.0021 1.0072 .9986 1.0028 .9988 .9942 1.0137 1.0129 April 1.0023 1.0005 1.0006 1.0000 1.0019 .9950 .9995 .9902 1.0110 .9912 May 1.0029 .9881 .9981 1.0012 1.0013 .9935 .9971 .9945 .9976 .9940 June 1.0060 .9935 1.0019 .9988 1.0067 .9959 .9984 .9903 .9935 .9886 July 1.0086 .9926 1.0027 .9945 1.0106 .9972 1.0025 .9896 .9916 .9932 August — 1.0024 .9954 1.0018 1.0016 1.0023 1.0012 1.0007 .9953 .9970 .9930 O Se c p t t o e b m e b r e .. r . 1 . .0 9 0 9 0 70 0 . .9 9 9 9 6 5 9 9 1 . . 9 0 9 0 9 0 1 8 1 1 . . 0 0 0 0 3 3 5 1 1 . . 9 0 9 0 8 4 8 1 1 1. .0 0 0 02 0 0 1 1 . .0 9 0 9 0 83 1 1 1 . . 0 0 0 0 9 1 8 9 . .9 9 9 9 7 4 1 9 . . 9 9 7 7 6 5 6 5 November .9991 1.0061 .9974 1.0011 .9996 1.0039 1.0002 1.0146 1.0030 1.0097 December. .9939 1.0103 .9957 .9957 .9935 1.0057 .9977 1.0096 .9995 1.0060 1991—January ... .9954 1.0115 .9986 .9939 .9930 1.0039 1.0034 1.0080 .9967 1.0285 February.. .9934 1.0053 1.0008 .9992 .9898 .9997 1.0034 1.0026 1.0046 1.0317 March .9992 1.0045 1.0021 1.0073 .9990 1.0029 .9984 .9935 1.0139 1.0106 3. Weekly seasonal factors used to construct Ml, M2, and M3, December 1989-March 1991 Other Nontransactions components NNoonnbbaannkk checkable deposits DDeemmaanndd WWeeeekk eennddiinngg CCuurrrreennccyy ttrraavveelleerrss'' ddeeppoossiittss cchheecckkss At thrift At banks In M2 In M3 only institutions 1989—December 4 1.0038 .9306 1.0260 1.0063 1.0146 1.0004 1.0033 11 1.0139 .9294 1.0275 1.0156 1.0252 1.0008 .9990 18 1.0129 .9282 1.0332 1.0121 1.0029 .9977 .9980 25 1.0260 .9271 1.0330 1.0052 .9861 .9940 1.0078 1.0001 11999900——JJaannuuaarryy 11 1.0078 .9259 1.0858 1.0104 .9921 .9983 88 1.0077 .9275 1.0703 1.0500 1.0325 1.0029 .9883 15 .9970 .9302 1.0345 1.0417 1.0097 1.0039 .9991 22 .9891 .9328 1.0022 1.0166 .9843 1.0019 .9993 29 .9798 .9355 .9742 .9911 .9528 .9993 .9992 February 5 .9896 .9391 .9902 1.0083 .9924 .9998 .9986 12 .9947 .9411 .9733 1.0065 .9857 1.0005 1.0028 19 .9926 .9478 .9657 .9984 .9699 1.0010 .9998 26 .9813 .9545 .9487 .9910 .9565 1.0006 1.0007 March 5 .9925 .9596 .9754 1.0123 .9944 1.0007 1.0036 12 .9986 .9611 .9769 1.0137 .9981 1.0013 1.0041 19 .9947 .9625 .9750 1.0058 .9874 1.0012 1.0028 26 .9890 .9638 .9545 .9949 .9704 1.0005 1.0081 April 2 .9900 .9652 .9884 1.0022 .9959 1.0049 1.0055 9 1.0071 .9585 1.0118 1.0400 1.0460 1.0048 .9966 16 1.0003 .9563 1.0213 1.0487 1.0452 1.0012 .9938 23 .9941 .9542 1.0091 1.0422 1.0227 .9973 .9898 30 ... .9870 .9521 .9866 1.0038 .9942 .9974 .9937 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
328 Federal Reserve Bulletin • May 1990 3. Weekly seasonal factors used to construct Ml, M2, and M3, December 1989-March 1991—Continued Other Nontransactions components NNoonnbbaannkk checkable deposits WWeeeekk eennddiinngg CCuurrrreennccyy ttrraavveelleerrss'' DDeemmaanndd ddeeppoossiittss cchheecckkss At thrift At banks institutions In M2 In M3 only 1990 May 7 1.0051 .9564 .9840 1.0068 1.0143 .9954 .9955 14 1.0041 .9656 .9863 .9896 1.0095 .9972 .9975 21 .9994 .9748 .9746 .9844 .9925 .9983 .9999 28 .9981 .9840 .9607 .9740 .9726 .9981 1.0042 June 4 1.0045 .9952 1.0078 .9993 1.0212 1.0004 .9977 11 1.0121 1.0184 1.0108 1.0069 1.0242 .9990 .9954 18 1.0054 1.0414 1.0065 .9988 1.0096 .9979 .9962 25 .9983 1.0643 .9805 .9717 .9776 .9972 .9955 July 2 1.0022 1.0870 1.00% .9698 .9904 .9997 .9932 9 1.0198 1.1005 1.0269 1.0051 1.0382 1.0006 .9883 16 1.0103 1.1125 1.0237 .9927 1.0162 1.0013 .9900 23 1.0041 1.1244 .9911 .9788 .9936 1.0013 .9930 30 .9967 1.1363 .9824 .9726 .9794 1.0015 .9944 August 6 1.0109 1.1388 1.0060 .9991 1.0277 1.0011 .9958 13 1.0112 1.1287 1.0078 .9931 1.0108 1.0016 1.0002 20 1.0048 1.1186 .9990 .9859 .9962 1.0013 .9992 27 .9937 1.1086 .9746 .9762 .9719 1.0005 1.0034 September 3 1.0010 1.0985 .9903 .9892 1.0011 .9993 1.0027 10 1.0059 1.0829 1.0140 1.0137 1.0302 .9997 1.0024 17 .9971 1.0672 1.0050 1.0041 1.0077 .9990 1.0041 24 .9892 1.0516 .9705 .9748 .9733 .9974 1.0060 October 1 .9863 1.0361 .9889 .9652 .9751 .9981 1.0072 8 1.0051 1.0227 1.0099 1.0004 1.0235 .9998 1.0030 15 .9994 1.0101 1.0227 .9946 1.0123 1.0000 1.0043 22 .9934 .9976 .9932 .9834 .9904 .9998 1.0025 29 .9855 .9850 .9828 .9710 .9694 1.0001 1.0035 November 5 .9986 .9729 1.0142 .9984 1.0209 1.0017 1.0040 12 1.0080 .9624 1.0136 1.0026 1.0128 1.0017 1.0080 19 1.0041 .9519 1.0150 .9948 1.0044 1.0014 1.0046 26 1.0024 .9415 .9962 .9847 .9822 .9978 1.0136 December 3 .9982 .9312 1.0173 .9972 1.0014 1.0014 1.0050 10 1.0149 .9304 1.0292 1.0228 1.0295 .9999 1.0007 17 1.0134 .9295 1.0392 1.0126 1.0041 .9986 .9975 24 1.0239 .9287 1.0383 1.0077 .9873 .9962 1.0015 31 1.0082 .9279 1.0685 1.0056 .9846 .9971 1.0047 1991—January 7 1.0072 .9290 1.0872 1.0486 1.0357 1.0027 .9915 14 .9984 .9313 1.0423 1.0436 1.0153 1.0038 .9986 21 .9913 .9337 1.0078 1.0217 .9913 1.0007 .9976 28 .9814 .9361 .9649 .9937 .9560 1.0002 .9983 February 4 .9869 .9389 .9839 1.0042 .9902 .9999 .9984 11 .9958 .9448 .9734 1.0107 .9891 1.0003 1.0016 18 .9942 .9506 .9698 .9996 .9729 1.0004 1.0001 25 .9825 .9564 .9505 .9908 .9569 1.0008 .9996 March 4 .9891 .9613 .9720 1.0068 .9888 1.0012 1.0027 11 .9998 .9610 .9799 1.0134 .9998 1.0016 1.0031 18 .9957 .9606 .9751 1.0049 .9896 1.0017 1.0037 25 .9909 .9603 .9562 .9967 .9734 1.0009 1.0091 April 1 .9889 .9599 .9835 1.0025 .9886 1.0030 1.0057 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Announcements 329 4. Weekly seasonal factors for selected components of the monetary aggregates, December 1989-March 1991 Money market Commercial bank deposits Thrift institution deposits mutual funds Week ending Money Small Large Money Small Large market denomi- denomi- market denomi- denomi- In M3 Savings deposit nation nation Savings deposit nation nation In M2 only accounts time time accounts time time 1989—December 4 .9964 1.0094 .9970 .9951 .9975 1.0045 .9994 1.0103 1.0021 1.0147 11 .9967 1.0121 .9962 .9957 .9968 1.0069 .9976 1.0094 1.0041 1.0062 18 .9928 1.0117 .9938 .9942 .9925 1.0062 .9961 1.0088 1.0018 1.0079 25 .9897 1.0089 .9922 .9990 .9882 1.0053 .9961 1.0083 .9978 1.0021 1990—January 1 .9915 1.0041 1.0015 .9958 .9913 .9993 1.0008 1.0099 .9902 1.0006 8 ,. . .9990 1.0154 1.0004 .9915 .9985 1.0076 1.0036 1.0078 .9819 .9968 15 .9973 1.0148 .9991 .9937 .9958 1.0071 1.0033 1.0081 1.0001 1.0338 22 .9941 1.0102 .9976 .9935 .9909 1.0009 1.0025 1.0071 1.0028 1.0387 29 .9929 1.0061 .9979 .9970 .9865 .9987 1.0040 1.0076 1.0011 1.0409 February 5 .9918 1.0063 .9993 .9965 .9909 1.0009 1.0060 1.0052 .9981 1.0348 12 , , .9938 1.0060 1.0007 .9994 .9915 1.0003 1.0051 1.0043 1.0035 1.0376 19 . . .9936 1.0042 1.0013 .9992 .9888 .9987 1.0038 1.0033 1.0058 1.0279 26 .9931 1.0036 1.0014 1.0005 .9868 .9977 1.0012 1.0001 1.0084 1.0307 March 5 .9943 1.0059 1.0019 1.0029 .9927 1.0022 1.0003 .9971 1.0109 1.0229 12 .9982 1.0066 1.0027 1.0046 .9976 1.0053 .9989 .9959 1.0143 1.0186 19 .9987 1.0041 1.0019 1.0052 .9996 1.0034 .9973 .9927 1.0140 1.0064 26 .9998 1.0012 1.0016 1.0117 .9981 1.0013 .9970 .9928 1.0158 1.0081 April 2 1.0041 1.0058 1.0023 1.0116 1.0051 1.0011 1.0020 .9931 1.0126 1.0109 9 1.0102 1.0115 1.0015 1.0061 1.0109 1.0050 1.0009 .9904 1.0144 .9984 16,. . 1.0035 1.0081 1.0002 .9995 1.0047 .9989 .9990 .9880 1.0157 .9935 23,, ,. .9984 .9953 1.0003 .9947 .9966 .9885 .9987 .9883 1.0122 .9764 30 .9965 .9857 1.0001 .9965 .9945 .9856 .9987 .9930 1.0015 .9909 May 7 1.0006 .9847 .9988 .9961 1.0002 .9901 .9981 .9927 .9931 .9852 14 1.0025 .9875 .9978 .9977 1.0025 .9939 .9972 .9957 .9970 .9854 21 1.0037 .9885 .9974 1.0021 1.0016 .9945 .9966 .9948 .9999 .9960 28 1.0037 .9888 .9981 1.0086 .9994 .9934 .9964 .9959 1.0006 1.0075 June 4 1.0060 .9948 .9989 1.0022 1.0056 .9981 .9970 .9920 .9966 .9979 11 1.0090 .9981 1.0010 1.0001 1.0091 1.0006 .9974 .9917 .9970 .9867 18 , 1.0055 .9946 1.0022 .9962 1.0069 .9965 .9970 .9896 .9935 .9870 25 1.0041 .9891 1.0030 .9985 1.0031 .9918 .9978 .9881 .9930 .9902 July 2 1.0054 .9905 1.0035 .9982 1.0090 .9925 1.0035 .9909 .9867 .9840 9 1.0122 .9942 1.0031 .9931 1.0164 .9984 1.0036 .9879 .9850 .9834 16 1.0106 .9935 1.0025 .9908 1.0141 .9981 1.0026 .9887 .9933 .9900 23 1.0086 .9914 1.0024 .9946 1.0091 .9968 1.0022 .9901 .9935 .9999 30 1.0046 .9915 1.0026 .9982 1.0039 .9964 1.0015 .9913 .9955 1.0015 August 6 1.0052 .9944 1.0022 .9973 1.0066 1.0017 1.0017 .9907 .9947 .9982 13 1.0051 .9960 1.0022 1.0002 1.0057 1.0029 1.0012 .9933 .9962 .9955 20 1.0027 .9951 1.0015 1.0015 1.0023 1.0009 1.0007 .9965 .9979 .9867 27 1.0000 .9949 1.0012 1.0051 .9975 .9994 .9998 .9981 .9992 .9977 September 3 .9975 .9972 1.0017 1.0042 .9981 1.0010 .9997 .9982 .9968 .9837 10, . 1.0000 1.0010 1.0010 1.0022 1.0007 1.0043 .9984 .9972 .9952 .9785 17. ,,. .9973 .9988 1.0001 1.0009 .9992 1.0011 .9970 .9998 .9984 .9727 24 .9954 .9907 1.0001 1.0038 .9964 .9966 .9962 1.0024 .9986 .9654 October 1 .9950 .9921 1.0016 1.0071 .9991 .9976 1.0012 1.0109 .9963 .9832 8, 1.0026 .9965 1.0008 1.0057 1.0093 1.0030 1.0015 1.0079 .9911 .9687 15 1.0020 .9986 1.0000 1.0024 1.0074 1.0031 .9999 1.0093 .9949 .9754 22 1.0001 .9957 .9985 1.0021 1.0026 1.0010 .9994 1.0099 .9964 .9777 29 .9968 .9960 .9971 1.0021 .9986 1.0006 .9995 1.0116 .9957 .9799 November 5 .9980 1.0030 .9983 1.0012 1.0021 1.0044 1.0005 1.0119 .9986 .9897 12 1.0007 1.0058 .9976 1.0037 1.0027 1.0058 1.0008 1.0149 1.0016 1.0062 19, , .9997 1.0062 .9966 1.0021 .9996 1.0030 1.0004 1.0150 1.0018 1.0091 26 .9991 1.0058 .9972 1.0003 .9961 1.0021 .9994 1.0166 1.0076 1.0229 December 3 .9968 1.0104 .9976 .9959 .9972 1.0052 .9997 1.0131 1.0046 1.0187 10. , .9985 1.0130 .9969 .99% .9987 1.0083 .9983 1.0108 1.0043 1.0067 17 .9948 1.0112 .9950 .9926 .9932 1.0066 .9956 1.0099 1.0022 1.0042 24 .9900 1.0063 .9947 .9941 .9876 1.0030 .9948 1.0067 .9983 1.0021 31. . .9912 1.0108 .9952 .9963 .9928 1.0050 1.0011 1.0096 .9913 1.0057 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
330 Federal Reserve Bulletin • May 1990 4. Weekly seasonal factors for selected components of the monetary aggregates, December 1989-March 1991 —Continued Commercial bank deposits Thrift institution deposits Money market mutual funds Week ending Money Small Large Money Small Large market denomi- denomi- market denomi- denomi- In M3 Savings deposit nation nation Savings deposit nation nation In M2 only accounts time time accounts time time 1991—January 7 .9988 1.0183 .9973 .9934 .9996 1.0093 1.0042 1.0072 .9805 .9901 14 .9976 1.0156 .9981 .9943 .9962 1.0072 1.0031 1.0084 .9993 1.0361 21 .9944 1.0095 .9985 .9919 .9905 1.0013 1.0017 1.0081 1.0034 1.0416 28 .9929 1.0051 .9999 .9954 .9870 .9992 1.0036 1.0091 1.0030 1.0425 February 4 .9909 1.0057 1.0003 .9953 .9900 1.0009 1.0054 1.0066 .9977 1.0364 11 .9943 1.0059 1.0008 .9989 .9916 1.0005 1.0047 1.0054 1.0028 1.0383 18 .9939 1.0045 1.0007 .9988 .9892 .9988 1.0037 1.0037 1.0058 1.0293 25 .9932 1.0047 1.0008 1.0003 .9873 .9982 1.0017 .9994 1.0071 1.0290 March 4 .9935 1.0062 1.0012 1.0036 .9922 1.0021 1.0009 .9953 1.0097 1.0218 11 .9983 1.0062 1.0018 1.0053 .9982 1.0051 .9989 .9938 1.0140 1.0108 18 .9995 1.0039 1.0013 1.0062 1.0000 1.0030 .9966 .9919 1.0147 1.0009 25 1.0003 1.0017 1.0019 1.0101 .9983 1.0014 .9962 .9939 1.0175 1.0079 April 1 1.0023 1.0055 1.0042 1.0100 1.0044 1.0025 1.0006 .9934 1.0116 1.0175 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
331 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON FEBRUARY 6-7, 1990 derlying support for manufacturing output over the near term. Total industrial capacity utiliza- 1. Domestic Policy Directive tion remained at a relatively high level in the fourth quarter but was down somewhat from its The information reviewed at this meeting sug- level a year earlier. gested continued but sluggish expansion in over- Adjusted for inflation, consumer spending was all economic activity, with conditions uneven little changed in the fourth quarter. Strong gains across sectors. Industrial activity remained in spending for services offset declines in purweak, partly because of the depressing effects of chases of consumer goods, especially new cars an inventory correction on manufacturing out- and light trucks. Although some of the strength in put, while the service-producing sector of the the services category reflected temporarily high economy continued to grow moderately. Aggre- energy-related expenditures, spending for medigate price measures had increased more slowly cal and transportation services apparently reover most of the second half of 1989, but unusu- mained strong throughout the fourth quarter. ally cold weather in December put temporary Near the end of the year, consumers responded upward pressure on food and energy prices. The positively to incentive programs introduced by latest data on labor compensation suggested no automakers to reduce bloated inventories, and significant change in prevailing trends. higher sales of domestically produced cars car- Total nonfarm payroll employment increased ried over to January. Residential construction in substantially in January after growing at a re- the fourth quarter was little changed from its duced pace on average in previous months. Em- third-quarter level, partly because December's ployment surged in the service-producing sector, unusually cold weather depressed single-family and unusually warm weather brought a rebound housing starts in that month. Multifamily starts in hiring in the construction industry. These remained at a low level as vacancy rates for such increases more than offset a large decline in units moved still higher. factory jobs associated with sizable short-term Business capital spending, adjusted for inflalayoffs in the motor vehicle and related indus- tion, declined in the fourth quarter because of tries. The civilian unemployment rate remained strike activity in the aircraft industry and sharply at the 5.3 percent level that had prevailed over lower outlays for motor vehicles. Spending for most of 1989. equipment other than motor vehicles and aircraft Partial data for January indicated that indus- rose; sizable increases were registered for comtrial production fell sharply. Automobile produc- puters and communications equipment, and ers cut back temporarily on assemblies to help moderate gains were evident for a wide variety of reduce bulging inventories of unsold vehicles, heavy machinery. A pickup toward the end of and the January thaw in the weather apparently 1989 in new orders for equipment other than brought a reduction in the generation of electric- aircraft and the return to work of striking aircraft ity that more than reversed a December surge. workers pointed to some improvement in equip- Abstracting from a number of transitory factors ment spending in the current quarter. Nonresiaffecting production in recent months, industrial dential construction activity apparently weakactivity had changed little since the third quarter, ened a little in the fourth quarter, partly reflecting although recent orders data suggested some un- the persisting high vacancy rates for office and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
332 Federal Reserve Bulletin • May 1990 other commercial space. Manufacturers' inven- intermeeting period. Accordingly, the Committories fell in December after moderate increases tee agreed that slightly greater or slightly lesser in the two previous months; for the fourth quar- reserve restraint would be acceptable during the ter as a whole, increases in factory stocks were intermeeting period, depending on progress well below those for previous quarters in 1989. toward price stability, the strength of the busi- By contrast, nonauto retail stockbuilding accel- ness expansion, the behavior of the monetary erated late in the year, and there were reports aggregates, and developments in foreign exthat inventory-sales ratios at general merchandis- change and domestic financial markets. The coners were higher than desired. templated reserve conditions were expected to The nominal U.S. merchandise trade deficit be consistent with growth of M2 and M3 over the rose slightly in November from a revised Octo- four-month period from November 1989 to ber level. For the two months together, the March 1990 at annual rates of about SV2 percent deficit was up substantially from the averages for and 5V2 percent respectively. both the third quarter and the first nine months of Immediately after the Committee meeting, 1989. Total exports for the two-month period open market operations were directed toward were little changed from their third-quarter level implementing the slight easing in the degree of as a reduction in exports of aircraft, resulting pressure on reserve positions called for by the from strike activity, offset moderate increases in Committee. Reserve conditions then remained a broad array of other products. Total imports essentially unchanged over the rest of the interincreased rapidly in October-November, with meeting period. Adjustment plus seasonal borimports of capital goods being especially strong. rowing averaged a little more than $300 million Indicators of economic activity in major foreign for the intermeeting period; the volume was industrial countries were mixed during the fourth boosted by reserve shortfalls, borrowing by large quarter of 1989. Growth continued strong in banks over the long holiday weekends, and, in Japan, and most indicators pointed to renewed the latter part of the interval, borrowing by a strength for Germany, Italy, and France. By sizable bank whose normal access to liquidity contrast, growth was sluggish in the United had been impaired. The federal funds rate de- Kingdom and Canada. clined from about SV2 percent at the time of the Producer prices for finished goods jumped in December meeting to around SLA percent shortly December, largely reflecting higher prices for thereafter; except for some firming in the last energy products, most notably for heating oil. week of 1989 owing to reserve shortfalls and Abstracting from food and energy items, pro- year-end pressures, the funds rate remained in ducer prices rose faster in December than in the vicinity of that lower level. Other private November, but the rate of increase in the fourth short-term market rates also declined over the quarter as a whole remained at the reduced period, including a Vi percentage point drop in third-quarter pace. At the consumer level, prices the prime rate to 10 percent, while Treasury bill rose somewhat more rapidly toward the end of rates increased somewhat. 1989, and food and energy prices apparently Yields on intermediate- and long-term debt increased substantially further in January. instruments rose considerably over the inter- Among nonfood, non-energy categories, dis- meeting period. Some stronger-than-anticipated counting of apparel and home furnishings was economic data and rising food and energy prices more than offset by a sharp rise in prices of new were interpreted in the financial markets as cars and by another month of sizable price in- pointing away from recession and as suggesting creases for services. little if any moderation in underlying inflation At its meeting on December 18-19, 1989, the trends. Increases in interest rates abroad proba- Committee adopted a directive that called for a bly also had an influence on U.S. interest rates. slight easing in the degree of pressure on reserve Stock prices approached new highs at the start of positions but that provided for giving equal the year but had fallen substantially since then. weight to subsequent developments that might In foreign exchange markets, the traderequire some easing or tightening during the weighted value of the dollar in terms of the other Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Record of Policy Actions of the Federal Open Market Committee 333 G-10 currencies declined further over the inter- that fiscal policy would be moderately restrictive meeting period, as monetary conditions abroad and that net exports would make little contributightened somewhat on average while those in tion to growth of domestic production in 1990. the United States eased slightly. The dollar's The expansion of consumer demand would be movements against individual currencies were damped by slow gains in employment and assomixed; most of its depreciation occurred against ciated limited growth in real disposable incomes. the German mark, which continued to be buoyed With pressures on labor and other production by developments in Eastern Europe, and against resources expected to ease only gradually, little related European currencies. On net, the U.S. improvement was anticipated in the underlying dollar remained relatively firm against the yen trend of inflation over the next several quarters. and the Canadian dollar; the latter declined In their discussion of the economic situation sharply as Canadian short-term interest rates and outlook, the Committee members generally edged lower amid signs of slow growth in the agreed that continuing growth in economic activ- Canadian economy and a consequent easing of ity remained a reasonable expectation for the inflation pressures. year ahead. Several observed that, on the whole, Growth of M2, measured on a benchmarked recent indicators of business conditions provided and seasonally revised basis, remained relatively some assurance that the expansion was no longer strong in the fourth quarter of 1989; for the year, weakening and indeed that a modest acceleration this aggregate expanded at a rate a little below might be under way from the considerably rethe middle of the Committee's annual range. duced growth experienced in the fourth quarter. Partly as a result of further contraction in the The members acknowledged that there were conassets and associated funding needs of thrift siderable risks, stemming mainly from the finaninstitutions, M3 grew more slowly in the fourth cial side, of a weaker-than-projected expansion, quarter and, for the year, expanded at a rate just and some did not rule out the possibility of a below the lower bound of its annual range. In downturn. In the latter connection, several com- January, both of the broader aggregates in- mented that they had observed a sense of unease creased at slower rates. A sharp drop in transac- and fragility in the business and financial comtions deposits damped expansion of M2, even munities arising from such factors as declining though retail-type savings deposits remained profit margins, heavy debt burdens, and probstrong and money market funds evidently bene- lems in certain sectors of the financial markets fited from funds flowing out of weakening stock that were contributing to greater caution on the and bond markets. Growth of M3 in January part of lenders and a reduced availability of slowed by less than that of M2. credit to some borrowers. With regard to the The staff projection prepared for this meeting outlook for inflation, members remained genersuggested that the economy was likely to expand ally optimistic that moderating pressures on larelatively slowly over the next several quarters. bor and other resources would lead in time to a In the near term, production adjustments to lower rate of inflation. However, most members eliminate excess inventories, most notably in the saw little prospect that significant progress, if motor vehicles industry, were expected to de- any, would be made in reducing the underlying press manufacturing activity and overall growth; rate of inflation in the quarters immediately some pickup in the expansion was anticipated ahead. Indeed, in part because of temporary after the inventory correction was completed, pressures in the food and energy sectors, key but final sales were projected to continue grow- measures of inflation might well register larger ing at a relatively sluggish pace. Homebuilding increases in the near term before turning down might rebound somewhat in the near term after later. being disrupted by December's cold weather, but In keeping with the usual practice at meetings prevailing interest rates and possible cutbacks in when the Committee establishes its longer-run construction lending by thrift institutions likely ranges for growth of the monetary and debt would restrain residential construction activity aggregates, the members of the Committee and throughout the year. The projection assumed the Federal Reserve Bank presidents not cur- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
334 Federal Reserve Bulletin • May 1990 rently serving as members had prepared projec- ing in the current quarter, largely reflecting sharp tions of economic activity, the rate of unemploy- declines in stocks of motor vehicles, but once the ment, and inflation for the year 1990. In making correction in that industry was completed, some these forecasts, the members took account of the renewed increases in overall inventory invest- Committee's policy of continuing restraint on ment were anticipated in line with expanding demand to resist any increase in inflation pres- sales. Current indicators suggested that business sures and to foster price stability over time. For fixed investment might be reasonably well mainthe period from the fourth quarter of 1989 to the tained, but it also was noted that overbuilding of fourth quarter of 1990, the forecasts for growth of commercial real estate in many areas would real GNP had a central tendency of 13A to 2 restrain overall nonresidential construction and percent, a pace close to that experienced in 1989 more generally that depressed profits and cash excluding the direct effects of the rebound in flows could limit gains in business investment. farm output after the drought in 1988. Estimates Concerning the outlook for residential construcof the civilian rate of unemployment in the fourth tion, conditions in local housing markets varied quarter of 1990 were concentrated in a range of markedly and the prospects for the nation were 5VI to 5% percent. The associated pressures on difficult to assess. Negative developments inprices resulted in projected increases in the con- cluded higher mortgage interest rates, a reduced sumer price index centered on rates of 4 to 4l/i availability of financing for many developers, and percent for the year, compared with a rise of 4V2 the overhang of large inventories of housing units percent in 1989. Forecasts for growth of nominal held by the Resolution Trust Corporation (RTC). GNP had a central tendency of 5l/z to 6V2 per- Nonetheless, housing demand was holding up in cent. The forecasts assumed that changes in the many areas and booming in a few, and on balance foreign exchange value of the dollar would not be most members expected little change this year in of sufficient magnitude to have a significant effect overall expenditures for residential construction. on the economy or prices during 1990. A number commented that the prospects for exports were relatively bright; foreign demand In the Committee's discussion of developwas reported to be robust for many types of ments bearing on the economic outlook, the goods, and overall exports would be given some members emphasized that despite indications of impetus over time by the depreciation of the continuing growth in overall business activity, dollar over the past several months. there were obvious areas of weakness in the economy, notably in manufacturing across much Turning to the outlook for inflation, members of the nation and in construction in many locali- noted that broad measures of labor compensation ties. Business sentiment appeared to have dete- did not suggest any lessening of pressures. Unit riorated in some areas, perhaps more than was labor costs appeared to be rising at a faster pace justified by actual developments. While local recently than the underlying rate of inflation, business conditions were clearly uneven, busi- squeezing profit margins. Commodity prices disness activity was generally characterized as played mixed changes but generally remained on growing on an overall basis in the various re- a high plateau. Business contacts and broader gions, including recent evidence of a modest surveys indicated a widespread expectation that pickup in some previously depressed parts of the the current rate of inflation would continue. country. Moreover, with higher social security taxes and a With regard to individual sectors of the econ- rising minimum wage adding to labor costs and omy, the outlook for retail sales was clouded to earlier increases in producer food and energy some extent by the uncertain prospects for motor costs not yet fully transmitted to retail prices, vehicles and the financial problems being expe- some measures of inflation were expected to rienced by some major retailers; nonetheless, in show sharper increases over the near term. On the context of expected further gains in dispos- the other hand, reports from a number of busiable incomes, many members expected overall ness contacts indicated that input prices, especonsumer spending to be relatively well main- cially for raw materials, had stabilized or detained. Business inventories probably were fall- clined in recent months. More generally, a Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Record of Policy Actions of the Federal Open Market Committee 335 number of members commented that continued faster progress against inflation without impairlimited growth in business activity at a time of ing the forward momentum of the economy. uncertainties and concerns associated with vari- Thus, although the Committee recognized that ous financial problems and declining real estate over time lower ranges and slower M2 growth values in many areas should contribute to some would be compatible with price stability, retenrestraint in overall inflationary behavior. tion of the current range did not signal a dimin- Against the background of the members' views ished determination to move toward the objecon the economic outlook and in keeping with the tive of price stability. requirements of the Full Employment and Bal- Preferences for slightly higher or somewhat anced Growth Act of 1978 (the Humphrey- lower ranges for M2 also were expressed. The Hawkins Act), the Committee reviewed the arguments in favor of a higher range focused on ranges that it had established on a tentative basis the risks of a weaker economy than was anticiin July 1989 for growth of the monetary and debt pated currently and the related desirability of aggregates in 1990. The tentative ranges, which more maneuvering room for an easing of shortwere unchanged from those for 1989, included run policy if such were needed to help avert a expansion of 3 to 7 percent for M2 and 2>Vi to IVi cumulative deterioration in economic activity. In percent for M3, measured from the fourth quar- those circumstances, faster monetary growth ter of 1989 to the fourth quarter of 1990. The would not be inconsistent with the Committee's monitoring range for growth of total domestic long-term commitment to price stability. Other nonfinancial debt had been set at 6V2 to 10V2 members believed that a somewhat reduced percent, also unchanged from 1989. range would allow adequate growth in M2 to With regard to M2, on which much of the sustain moderate expansion in economic activity discussion was focused, a majority of the mem- and would provide a desirable signal of the bers concluded that retention of the tentative System's commitment to an anti-inflationary polrange of 3 to 7 percent would best assure the icy. In this connection, the credibility of the flexibility that the Committee was likely to need System's anti-inflationary policy was seen as an to implement its policy objectives during the important channel for reducing inflationary exyear. A staff analysis prepared for this meeting pectations directly and thereby lessening the indicated that, were interest rates to remain near economic costs and time needed to achieve price recent levels, a somewhat higher rate of M2 stability. These members expressed concern that growth than had occurred in any of the past three growth around the upper end of a 3 to 7 percent years was likely to be consistent with some range might well preclude any progress in reducreduction in the expansion of nominal GNP. ing inflation this year and might make it more According to this analysis, the lagged effects of difficult to achieve such progress later. For some earlier declines in market interest rates would of these members, however, a 3 to 7 percent continue to boost M2 growth in the first part of range would be acceptable if its upper limit was 1990, and the velocity of M2 was likely to fall for viewed as a firm constraint on actual growth and the year as a whole. To the extent that the if a clear explanation was made of the Commitprojected weakness in M2 velocity turned out to tee's commitment to achieve price stability over be correct, it implied M2 growth toward the time. upper end of the tentative range on the basis of Turning to the ranges for M3 and debt, most of the central tendency of the members' forecasts of the members indicated that they favored or could nominal GNP. accept reductions from the tentative ranges that Given this outlook, an unchanged range for M2 had been adopted in July 1989 for this year. Some still left considerable leeway for the Committee reduction in the range for M3 was thought to be to embark on a more aggressive policy to restrain consistent with an unchanged range for M2 for inflation, should developments during the year technical reasons associated with the restructursuggest an intensification of inflationary pres- ing of the thrift industry and related shrinkage in sures or provide an opportunity to tilt the imple- thrift institution balance sheets. Declines in thrift mentation of policy toward greater restraint and institution assets and associated funding needs, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
336 Federal Reserve Bulletin • May 1990 including liabilities in M3, now seemed likely to ranges. It also agreed that the implementation of be larger in 1990 than had been anticipated last policy should continue to take into account, in summer, reflecting continued efforts of solvent addition to monetary growth and its velocity, institutions to meet capital standards as well as indications of inflationary pressures in the econthe closing of insolvent institutions. Beyond that, omy, the strength of business activity, and dewhile a reduction in the M3 range, especially if it velopments in domestic and international finanwas limited, might have little implication for cial markets. policy, many members believed that the Commit- At the conclusion of the Committee's discustee should take advantage of every opportunity sion, a majority of the members indicated that to reduce its ranges toward levels that were they favored or could accept the M2 range for consistent with price stability. With regard to the 1990 that had been established on a tentative monitoring range for total domestic nonfinancial basis in July 1989 and reductions of 1 percentage debt, the members expected the expansion of point and lVi percentage points respectively in such debt to moderate for a fourth year in 1990, the tentative ranges for M3 and nonfinancial in large measure because of anticipated reduc- debt. Accordingly, the Committee approved the tions in debt creation associated with corporate following paragraph relating to its 1990 ranges for merger and acquisition activities but also be- inclusion in the domestic policy directive: cause of some probable ebbing in the growth of household debt. The prospect of slower growth The Federal Open Market Committee seeks moneof debt was welcome, given concerns about tary and financial conditions that will foster price strains associated with highly leveraged borrow- stability, promote growth in output on a sustainable ers and high debt servicing obligations. basis, and contribute to an improved pattern of international transactions. In furtherance of these objec- A few members indicated a preference for tives, the Committee at this meeting established retaining the somewhat higher ranges for M3 and ranges for growth of M2 and M3 of 3 to 7 percent and debt that had been adopted on a tentative basis 2Vi to 6V2 percent respectively, measured from the for this year. In their view, lowering those ranges fourth quarter of 1989 to the fourth quarter of 1990. The monitoring range for growth of total domestic would tend to send potentially confusing signals, nonfinancial debt was set at 5 to 9 percent for the year. raising questions as to why the M2 range was not The behavior of the monetary aggregates will continue reduced. Also, disparate adjustments in the to be evaluated in the light of progress toward price ranges for the various aggregates could foster an stability, movements in their velocities, and developunwarranted impression of the precision with ments in the economy and financial markets. which the Committee felt it could evaluate the ranges. Votes for this action: Messrs. Greenspan, Corrigan, Angell, Boehne, Boykin, Johnson, Kelley, The members generally agreed that setting and LaWare. Votes against this action: Mr. 1990 target ranges for M2 and particularly for M3 Hoskins, Ms. Seger, and Mr. Stern. was rendered more difficult by uncertainty about developments affecting thrift institutions, espe- Messrs. Hoskins and Stern dissented because cially given the relatively limited basis in past they wanted a lower range for M2. They were experience for gauging the likely impact of such concerned that growth around the upper end of a developments. The establishment of an appropri- 3 to 7 percent range would not be compatible ate range for the growth of nonfinancial debt also with progress in reducing the rate of inflation this was complicated by uncertainty about the extent year. An upper limit of 6 percent would be to which Treasury borrowing would be used to preferable and would provide adequate room in carry the assets of failed thrift institutions as their view for policy to foster sustained economic opposed to funding from financial-sector sources expansion. Mr. Hoskins also stressed the desirthrough the RTC. With these questions adding to ability of a predictable and credible monetary the usual uncertainty about the relationship of policy, which he believed should include persismovements in the aggregates to broad measures tent reductions in the ranges to levels that would of economic performance, the Committee de- be consistent with stable prices. The favorable cided to retain the 4 percentage point width of the effects of such a policy on inflationary expecta- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Record of Policy Actions of the Federal Open Market Committee 337 tions would tend to lessen the costs and also tages of a change in policy somewhat differently. accelerate the achievement of price stability. In one view, the risks of a recession argued for a Ms. Seger dissented because she believed that prompt adjustment toward somewhat less monethe M2 range should be raised to at least V/i to tary restraint, especially given the need to bolster IVi percent. In her view, the considerable down- relatively interest-sensitive sectors of the econside risks to the expansion called for some added omy such as housing and motor vehicles. A room to accommodate the possible need for a differing view focused on the desirability of a more stimulative policy and somewhat faster M2 somewhat tighter policy at this juncture, particgrowth than was contemplated by an unchanged ularly in light of the outlook for relatively little range. In particular, a shortfall in aggregate de- progress against inflation as the business expanmands during the first half of the year might well sion tended to strengthen. One member gave require some easing of policy aimed at counter- special emphasis to the desirability of limiting M2 ing developing weakness in the economy. In such growth to a path closer to the middle of the circumstances, M2 growth somewhat above 7 Committee's range for 1990 to help assure that percent would not be inconsistent with the Com- progress would be made this year in moderating mittee's anti-inflation objective. She could ac- inflationary pressures. cept unchanged ranges for growth of M3 and In the Committee's consideration of possible nonfinancial debt, given the outlook for some- adjustments to the degree of reserve pressure what slower expansion of both aggregates in during the intermeeting period, a majority of the relation to M2 than the Committee had antici- members supported a directive that did not conpated in July 1989. tain any bias toward tightening or easing. They Turning to policy implementation for the inter- felt that a symmetric instruction was consistent meeting period ahead, a majority of the members at this point with their general preference for a favored steady reserve conditions. Given indica- stable policy and that an intermeeting adjustment tions of some pickup in activity from the latter should be made only in the event of particularly part of 1989, such a policy offered the best conclusive economic or financial evidence, inprospects at this point of reconciling the Com- cluding a substantial deviation in monetary mittee's objective of acceptable and sustained growth from current expectations. One member economic growth with that of some reduction who preferred a slightly tighter policy indicated over time in inflationary pressures on labor and that an unchanged policy that was biased toward other resources. A tightening of policy might restraint would be acceptable. have some advantages in terms of moderating Members noted that seasonal borrowing was monetary growth and improving inflationary ex- likely to turn up from its January lows so that pectations, but in this view such a policy would some increase in the total of adjustment plus incur too much risk of creating financial condi- seasonal borrowing would be associated with a tions that could lead to a weaker economy. given degree of reserve restraint and a given Conversely, significantly lower interest rates federal funds rate. It was understood that some could have inflationary consequences in an econ- increase in the borrowing assumption would be omy that already was operating at relatively high made at the start of the intermeeting period and employment levels, partly through their effects that further adjustments might be made later on the dollar in the foreign exchange markets. during the period, subject to the Chairman's Conditions in the economy and in financial mar- review. In keeping with the usual practice, perkets, both in the United States and abroad, sisting borrowings by troubled depository instisuggested that monetary policy needed to convey tutions that had not been classified as extended a sense of stability. credit would be treated as nonborrowed reserves Other members acknowledged that adjust- in setting target growth paths for reserves. More ments in monetary policy needed to be made generally, in light of the uncertainties that were with a special degree of caution in current cir- involved, the Manager would continue to exercumstances, but on balance they assessed the cise flexibility in his approach to the borrowing risks and the related advantages and disadvan- assumption. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
338 Federal Reserve Bulletin • May 1990 At the conclusion of the Committee's discus- increased substantially further in January. The latest sion, a majority of the members indicated that data on labor compensation suggest no significant they favored or could accept a directive that change in prevailing trends. Interest rates have risen in intermediate- and longcalled for an unchanged degree of pressure on term debt markets since the Committee meeting on reserve positions. Some firming or some easing December 18-19; in short-term markets, the federal of reserve conditions would be acceptable during funds rate has declined, and other short-term rates the intermeeting period depending on progress show mixed changes over the period. In foreign toward price stability, the strength of the busi- exchange markets, the trade-weighted value of the dollar in terms of the other G-10 currencies declined ness expansion, the behavior of the monetary further over the intermeeting period; most of the aggregates, and developments in foreign exdepreciation was against the German mark and rechange and domestic financial markets. The re- lated European currencies, and there was little serve conditions contemplated by the Committee change against the yen. were expected to be consistent with growth of Growth of M2 slowed in January, almost entirely reflecting a drop in transaction deposits. Growth of M3 M2 and M3 at annual rates of around 7 and 3V2 also slowed in January as assets of thrift institutions percent respectively over the three-month period and their associated funding needs apparently continfrom December to March. The members agreed ued to contract. For the year 1989, M2 expanded at a that the intermeeting range for the federal funds rate a little below the middle of the Committee's rate, which provides one mechanism for initiat- annual range, and M3 grew at a rate slightly below the lower bound of its annual range. ing consultation of the Committee when its The Federal Open Market Committee seeks moneboundaries are persistently exceeded, should be tary and financial conditions that will foster price left unchanged at 6 to 10 percent. stability, promote growth in output on a sustainable At the conclusion of the Committee's meeting, basis, and contribute to an improved pattern of international transactions. In furtherance of these objecthe following domestic policy directive was istives, the Committee at this meeting established sued to the Federal Reserve Bank of New York: ranges for growth of M2 and M3 of 3 to 7 percent and 2Vz to 6V2 percent respectively, measured from the fourth quarter of 1989 to the fourth quarter of 1990. The information reviewed at this meeting suggests The monitoring range for growth of total domestic that economic activity is continuing to expand de- nonfinancial debt was set at 5 to 9 percent for the year. spite weakness in the industrial sector. Total non- The behavior of the monetary aggregates will continue farm payroll employment increased substantially in to be evaluated in the light of progress toward price January after growing at a reduced pace on average level stability, movements in their velocities, and in previous months; a surge in the service-producing developments in the economy and financial markets. sector and a weather-related rebound in construction In the implementation of policy for the immediate were only partly offset by a large decline in the future, the Committee seeks to maintain the existing manufacturing sector. The civilian unemployment degree of pressure on reserve positions. Taking acrate was unchanged at 5.3 percent. Partial data count of progress toward price stability, the strength suggest that industrial production in January was of the business expansion, the behavior of the moneappreciably below its average in the fourth quarter. tary aggregates, and developments in foreign exchange Adjusted for inflation, strong gains in consumer and domestic financial markets, slightly greater respending on services in the fourth quarter offset serve restraint or slightly lesser reserve restraint declines in consumer purchases of goods, especially would be acceptable in the intermeeting period. The motor vehicles. Unusually cold weather depressed contemplated reserve conditions are expected to be housing starts appreciably in December, and residen- consistent with growth of M2 and M3 over the period tial construction in the fourth quarter was little from December through March at annual rates of changed from its third-quarter level. Business capital about 7 and 3V2 percent respectively. The Chairman spending, adjusted for inflation, declined in the may call for Committee consultation if it appears to the fourth quarter as a result of lower expenditures on Manager for Domestic Operations that reserve condimotor vehicles and strike activity in the aircraft tions during the period before the next meeting are industry; spending on other types of capital goods likely to be associated with a federal funds rate perwas strong, however, and new orders for equipment sistently outside a range of 6 to 10 percent. picked up toward the end of the year. The nominal U.S. merchandise trade deficit widened in October- November from the third-quarter rate. Consumer Votes for the paragraph on short-term policy imprices had risen somewhat more rapidly toward the plementation: Messrs. Greenspan, Corrigan, Anend of 1989, and prices of food and energy apparently gell, Boehne, Johnson, Kelley, LaWare, and Stern. 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Record of Policy Actions of the Federal Open Market Committee 339 Votes against this action: Messrs. Boykin and Votes for this action: Messrs. Greenspan, Cor- Hoskins and Ms. Seger. rigan, Angell, Boehne, Boykin, Hoskins, Johnson, Kelley, LaWare, Ms. Seger, and Mr. Stern. Votes While taking account of the various elements against this action: None. of weakness and fragility in the economy, Mr. Boykin dissented because he preferred a policy 3. Authorization for Domestic Open directive tilted toward increased reserve pres- Market Operations sures should economic and financial conditions warrant. This view was based on his concerns On the recommendation of the Manager for Doregarding the lagged effects of policy actions and mestic Operations, the Committee amended the risks of delaying decisions until there was full paragraph 1(a) of the authorization for domestic confirmation of inflationary pressures. In this open market operations to raise from $6 billion to context, Mr. Boykin expressed his preference for $8 billion the limit on intermeeting changes in dealing promptly with inflation if the Committee System account holdings of U.S. government wished to make progress toward its long-stated and federal agency securities. The increase was goal of lowering the rate of inflation. the first permanent change in the limit since Mr. Hoskins dissented because he preferred March 1985 when it was raised from $4 billion to some firming of reserve conditions. He recog- $6 billion. The Manager indicated that temporary nized that there was some financial fragility in the increases had been authorized more frequently in economy, but he believed that underlying infla- recent years and that the existing limit also was tion pressures were relatively strong and that the approached more often during intermeeting interbalance of risks pointed to a need for greater vals when no temporary increase was requested. monetary restraint to curb such inflation. He A permanent increase to $8 billion would reduce emphasized the desirability of tightening mone- the number of occasions requiring special Comtary policy gradually to reduce monetary growth mittee action, while still calling needs for particto a pace closer to the midpoint of the Commit- ularly large changes to the Committee's attentee's range for the year. tion. The Committee concurred in the Manager's Ms. Seger's dissent reflected a preference for view that a $2 billion increase would be approsome easing of reserve conditions at this point. priate. In her view, even a limited decline in interest Accordingly, effective February 6, 1990, pararates would provide timely assistance to relagraph 1(a) of the authorization for domestic open tively weak, interest-sensitive sectors of the market operations was amended to read as foleconomy such as housing and motor vehicles and lows: would tend to sustain the expansion itself without adding to inflation risks in the economy. 1. The Federal Open Market Committee authorizes and directs the Federal Reserve Bank of New York, to 2. Review of Continuing Authorizations the extent necessary to carry out the most recent domestic policy directive adopted at a meeting of the Committee: The Committee followed its customary practice of reviewing all of its continuing authorizations (a) To buy or sell U.S. Government securities, and directives at this first regular meeting of the including securities of the Federal Financing Bank, Federal Open Market Committee following the and securities that are direct obligations of, or fully guaranteed as to principal and interest by, any agency election of new members from the Federal Reof the United States in the open market, from or to serve Banks to serve for the year beginning securities dealers and foreign and international ac- January 1, 1990. The Committee reaffirmed the counts maintained at the Federal Reserve Bank of authorization for foreign currency operations, New York, on a cash, regular, or deferred delivery the foreign currency directive, and the proce- basis, for the System Open Market Account at market prices, and, for such Account, to exchange maturing dural instructions with respect to foreign cur- U.S. Government and Federal agency securities with rency operations in the forms in which they were the Treasury or the individual agencies or to allow currently outstanding. them to mature without replacement; provided that the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
340 Federal Reserve Bulletin • May 1990 aggregate amount of U.S. Government and Federal ending with the close of business on the day of the next agency securities held in such Account (including such meeting; forward commitments) at the close of business on the day of a meeting of the Committee at which action is taken with respect to a domestic policy directive shall Votes for this action: Messrs. Greenspan, Cornot be increased or decreased by more than $8.0 rigan, Angell, Boehne, Boy kin, Hoskins, Johnson, billion during the period commencing with the opening Kelley, LaWare, Ms. Seger, and Mr. Stern. Votes of business on the day following such meeting and against this action: None. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
341 Legal Developments AMENDMENT TO REGULATION B an applicant's statement of the purpose for the credit requested. The Board of Governors is publishing revisions to the official staff commentary to 12 C.F.R. Part 202, its Regulation B (Equal Credit Opportunity). The com- 4. In section 202.3, comment 3(e)-l and the heading mentary applies and interprets the requirements of and comment 3(d)(3)-1 are removed; comment 3(d)-1 Regulation B and is a substitute for individual staff and the heading are revised to read as follows: interpretations of the regulation. The revisions include interpretations of the final rule amending Regulation B Section 202.3—Limited Exceptions for Certain to implement Equal Credit Opportunity Act amend- Classes of Transactions ments on business credit as well as interpretations about data collection. Effective April 1, 1990, 12 C.F.R. Part 202 is 3(d) Government credit. amended as follows: 1. Credit to governments. The exception relates to credit extended to (not by) governmental entities. 1. The authority citation for Part 202 continues to read For example, credit extended to a local government as follows: by a creditor in the private sector is covered by this exception, but credit extended to consumers by a Authority: 15 U.S.C. §§ 1691-1961f federal or state housing agency does not qualify for special treatment under this category. 2. In section 202.1, comment l(a)-3 is added to read as follows: 5. In section 202.5, comments 5(b)(2)-l and -2 and a Section 202.1—Authority, Scope, and Purpose heading are added to read as follows: Section 202.5—Rules Concerning Taking of Applications 1(a) Authority and Scope. 5(b) General rules concerning request for information. 3. Board. The term "Board," as used in this regulation, means the Board of Governors of the Federal Reserve System. Paragraph 5(b)(2) 1. Local laws. Information that a creditor is allowed 3. In section 202.2, comment 2(g)-1 and a heading are to collect pursuant to a "state" statute or regulation added to read as follows: includes information required by a local statute, regulation, or ordinance. Section 202.2—Definitions 2. Information required by Regulation C. Regulation C generally requires creditors covered by the Home Mortgage Disclosure Act ("HMDA") to col- 2(g)Business credit. lect and report information about the race or na- 1. Definition. The test for deciding whether a trans- tional origin and sex of applicants for home imaction qualifies as business credit is one of primary provement loans and home purchase loans, purpose. For example, an open-end credit account including some types of loans not covered by secused for both personal and business purposes is not tion 202.13. Certain creditors with assets under $30 business credit unless the primary purpose of the million, though covered by HMDA, are not required account is business-related. A creditor may rely on to collect and report these data; but they may do so Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
342 Federal Reserve Bulletin • May 1990 at their option under HMD A, without violating the EC OA or Regulation B. 7. In section 202.10, comment 10-1 is revised to read as follows: 6. In section 202.9, comments 9(a)(3)-1 through -5 and Section 202.10—Furnishing of Credit a heading are added to read as follows: Information Section 202.9—Notifications 1. Scope. The requirements of section 202.10 for designating and reporting credit information apply 9(a) Notification of action taken, ECOA notice, and only to consumer credit transactions. Moreover, they statement of specific reasons. apply only to creditors that opt to furnish credit information to credit bureaus or to other creditors; there is no requirement that a creditor furnish credit Paragraph 9(a)(3) information on its accounts. 1. Coverage. In determining the rules in this paragraph that apply to a given business credit application, a creditor may rely on the applicant's assertion 8. In section 202.13, comment 13(a)-7 is added to read about the revenue size of the business. (Applica- as follows: tions to start a business are governed by the rules in section 202.9(a)(3)(i).) If an applicant applies for Section 202.13—Information for Monitoring credit as a sole proprietor, the revenues of the sole Purposes proprietorship will determine which rules in the paragraph govern the application. However, if an applicant applies for business purpose credit as an 13(a) Information to be requested. individual, the rules in paragraph 9(a)(3)(i) apply unless the application is for trade or similar credit. 2. Trade credit. The term "trade credit" generally 7. Data collection under Regulation C. See comis limited to a financing arrangement that involves a ment 5(b)(2)-2. buyer and a seller — such as a supplier who finances the sale of equipment, supplies, or inventory; it does not apply to an extension of credit by a bank or other financial institution for the financing of such AMENDMENT TO REGULATION E items. 3. Factoring. Factoring refers to a purchase of The Board of Governors is publishing revisions to the accounts receivable, and thus is not subject to the official staff commentary to 12 C.F.R. Part 205, its act or regulation. If there is a credit extension Regulation E (Electronic Fund Transfers). The comincident to the factoring arrangements, the notifica- mentary applies and interprets the requirements of tion rules in section 202.9(a)(3)(ii) apply as do other Regulation E and is a substitute for individual staff relevant sections of the act and regulation. interpretations of the regulation. The revision ad- 4. Manner of compliance. In complying with the dresses questions that have arisen about the requirenotice provisions of the act and regulation, creditors ments of the regulation relating to the revocation of offering business credit may follow the rules govern- authority for preauthorized transfers. ing consumer credit. Similarly, creditors may elect Effective April 1, 1990, 12 C.F.R. Part 205 is to treat all business credit the same (irrespective of amended as follows: revenue size) by providing notice and keeping records in accordance with section 202.9(a)(3)(i). 1. The authority citation for Part 205 continues to read: 5. Timing of notification. A creditor subject to section 202.9(a)(3)(ii)(A) is required to notify a bus- Authority: Pub. L. 95-630, 92 Stat. 3730 (15 U.S.C. iness credit applicant, orally or in writing, of action § 1693b). taken on an application within a reasonable time of receiving a completed application. Notice provided 2. Comment Q10-19.5 is added to read as follows: in accordance with the timing requirements of sec- Q10-19.5: Preauthorized debits — revocation of aution 202.9(a)(1) is deemed reasonable in all in- thorization. A consumer authorizes a designated stances. payee to originate electronic fund transfers from the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 343 consumer's account. The consumer later revokes that (2) A foreign security that is a debt security authorization, and instructs the account-holding finan- convertible into a margin security, cial institution to block all subsequent debits initiated (j) Foreign security means a security issued in a by that payee-originator. Must the financial institution jurisdiction other than the United States. comply with the consumer's instructions, or may it wait for the originator to cease the initiation of automatic debits? (q) Margin security * * * A: Since the financial institution has been notified that (6) Any foreign margin stock. the consumer's authorization is no longer valid, the institution must block all future debits transmitted by that payee-originator. (t) OTC margin bond * * * The financial institution may confirm that the con- (5) A foreign security that is a nonconvertible sumer has informed the payee-originator of the revo- debt security that meets all of the following cation. The institution may also require a copy of the requirements: consumer's revocation. (i) At the time of original issue, a principal amount of at least $100,000,000 was outstanding; (ii) At the time of the extension of credit, the creditor has a reasonable basis for believing AMENDMENT TO REGULATION T that the issuer is not in default on interest or principal payments; and The Board of Governors is amending 12 C.F.R. Part (iii) At the time of the extension of credit, the 220, its Regulation T (Credit by Brokers and Dealers; issue is rated in one of the two highest rating Accommodation of Settlement and Clearance of For- categories by a nationally recognized statistieign Securities) to permit marginability of certain cal rating organization, except that an issue foreign securities and to accommodate settlement and that has not been rated as of the effective date clearance of transactions in foreign securities. of this provision shall be considered an Effective April 30, 1990, 12 C.F.R. Part 220 is "OTC margin bond" if a subsequent unseamended as follows: cured issue of at least $100,000,000 of the same issuer is rated in one of the two highest Part 220—Credit by Brokers and Dealers rating categories by a nationally recognized statistical rating organization. 1. The authority citation for Part 220 continues to read as follows: 3. In section 220.4, a new sentence is added to the end of paragraph (c)(1) to read as follows: Authority: 15 U.S.C. §§ 78c, 78g, 78h, 78q, and 78w. Section 220.4—Margin account 2. In section 220.2, paragraphs (i) through (y) are redesignated as paragraphs (k) through (aa); "or" is removed at the end of newly redesignated paragraph (q)(4); the period is removed at the end of newly (c)When additional margin is required — redesignated paragraphs (q)(5), (t)(3), and (t)(4)(iii) and (1) Computing deficiency. * * * To the extent "; or" is added; and new paragraphs (i), (j), (q)(6), and that debits in a margin account are denominated (t)(5) are added to read as follows: in foreign currency secured by specifically identified foreign margin securities as provided in Section 220.2—Definitions section 220.5(g), each foreign currency debit position shall be considered separately for purposes of computing a deficiency and no credit (i) Foreign margin stock means: shall be given to such specifically identified (1) A foreign security that is an equity security foreign margin securities for purposes of comand that appears on the Board's periodically puting equity in the margin account either in published List of Foreign Margin Stocks based United States dollars or in any other specific on information submitted by a self-regulatory foreign currency. organization under procedures approved by the Board; or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
344 Federal Reserve Bulletin • May 1990 4. In section 220.5, a new paragraph (g) is added to Section 220.13—Arranging for loans by others read as follows: Section 220.5—Margin account exceptions and (d) Credit extended by a foreign person to purspecial provisions chase foreign securities. 7. In section 220.17, the section heading and the (g) Credit denominated in foreign currency. A headings to paragraphs (a) and (b) are revised; the creditor may extend credit denominated in a for- reference to paragraph (d) in paragraphs (a) and (b) is eign currency secured by foreign margin securi- changed to read paragraph (f); paragraphs (c), (d), and ties denominated or traded in the same foreign (e) are redesignated as paragraphs (e), (f), and (g) and currency and specifically identified on the credi- revised; and new paragraphs (c) and (d) are added to tor's books and records as securing the foreign read as follows: currency debit. Section 220.17—Requirements for the list of 5. In section 220.8, paragraph (b)(1) introductory text marginable OTC stocks and the list of foreign is revised; paragraphs (b)(l)(i) through (iv) are redesmargin stocks ignated as shown below: (a) Requirements for inclusion on the list of mar- Old Paragraph Designation New Paragraph Designation ginable OTC stocks. (i) (A) (ii) (B) (Hi) (C) (b) Requirements for continued inclusion on the (iv) CD) list of marginable OTC stocks. (A) (1) (B) (2) (C) (3) (c) Requirements for inclusion on the list of forand new paragraphs (b)(l)(i) and (b)(l)(ii) are added to eign margin stocks. Except as provided in pararead as follows: graph (f) of this section, a foreign margin stock shall meet the following requirements: Section 220.8—Cash account (1) The security is listed for trading on or through the facilities of a foreign securities exchange or recognized foreign securities mar- (b) Time periods for payment; cancellation or ket and has been trading on such exchange or liquidation — market for at least six months; (1) Full cash payment. A creditor shall obtain (2) Daily quotations for both bid and asked or full cash payment for customer purchases — last sale prices for the security provided by the (i) Within seven business days of the date: foreign securities exchange or foreign securities market on which the security is traded are continuously available to creditors in the (ii) In the case of the purchase of a foreign United States pursuant to an electronic quotasecurity, within seven business days of the tion system; trade date or the date on which settlement is (3) The aggregate market value of shares, the required to occur by the rules of the foreign ownership of which is unrestricted, is not less securities market, provided this period does than $1 billion; not exceed the maximum time permitted by (4) The average weekly trading volume of such this part for delivery against payment trans- security during the preceding six months is actions. either at least 200,000 shares or $1 million; and (5) The issuer or a predecessor in interest has been in existence for at least five years. 6. In section 220.13, "or" is removed at the end of (d) Requirements for continued inclusion on the paragraphs (a) and (b); the period is removed at the list of foreign margin stocks. Except as provided end of paragraph (c) and "; or" is added; and new in paragraph (f) of this section, a foreign margin paragraph (d) is added to read as follows: stock shall meet the following requirements: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 345 (1) The security continues to meet the require- tary incorporates much of the guidance provided when ments specified in paragraphs (c)(1) and (2) of those regulatory changes were adopted and addresses this section; additional questions that have been raised about ap- (2) The aggregate market value of shares, the plication of the new requirements as well as several ownership of which is unrestricted, is not less issues concerning other parts of the regulation. than $500 million; and Effective April 1, 1990, but compliance optional (3) The average weekly trading volume of such until October 1, 1990, 12 C.F.R. Part 226 is amended security during the preceding six months is as follows: either at least 100,000 shares of $500,000. (e) Removal from the lists. The Board shall peri- 1. The authority citation for Part 226 continues to read: odically remove from the lists any stock that: (1) ceases to exist or of which the issuer ceases Authority: Truth in Lending Act, 15 U.S.C. § 1604 and to exist, or sec. 2 Pub. L. 100-583, 102 Stat. 2960; sec. 1204(c), (2) no longer substantially meets the provisions Competitive Equality Banking Act, Pub. L. 100-86, of paragraphs (b) or (d) of this section or section 101 Stat. 552. 220.2(u). (f) Discretionary authority of Board. Without re- Subpart A—General gard to other paragraphs of this section, the Board may add to, or omit or remove from the list of marginable OTC stocks and the list of foreign margin stocks any equity security, if in the judg- Section 226.2—Definitions and Rules of ment of the Board, such action is necessary or Construction appropriate in the public interest. (g) Unlawful representations. It shall be unlawful for any creditor to make, or cause to be made, any 2(a) Definitions representation to the effect that the inclusion of a security on the list of marginable OTC stocks or the list of foreign margin stocks is evidence that 2(a)(15) "Credit Card" the Board or the SEC has in any way passed upon the merits of, or given approval to, such security or any transactions therein. Any statement in an 1. Comment 2(a)(15)-3 is added to read as follows: advertisement or other similar communication 3. Charge card. Generally, charge cards are cards containing a reference to the Board in connection used in connection with an account on which outwith the lists or stocks on those lists shall be an standing balances cannot be carried from one billing unlawful representation. cycle to another and are payable when a periodic statement is received. Under the regulation, a refer- 8. In section 220.18, the phrase "or the percentage set ence to credit cards generally includes charge cards. by the regulatory authority where the trade occurs, The term "charge card" is, however, distinguished whichever is greater" is added before the period at the from "credit card" in sections 226.5a, 226.9(e), end of paragraphs (a) and (b). 226.9(f) and 226.28(d), and appendices G-10 through G-13. When the term "credit card" is used in those provisions, it refers to credit cards other than charge AMENDMENT TO REGULATION Z cards. The Board of Governors is publishing revisions to the official staff commentary to 12 C.F.R. Part 226, its 2(a)(20) "Open-End Credit" Regulation Z (Truth in Lending). The commentary applies and interprets the requirements of Regulation Z and is a substitute for individual staff interpre- 2. Comment 2(a)(20)-5 is amended by adding parentations. The majority of the revisions address the thetical material before the last sentence to read as amendments to Regulation Z issued in April 1989 to follows: implement the Fair Credit and Charge Card Disclosure 5. Reusable line. * * * Act of 1988 and the amendments to the regulation issued in June 1989 to implement the Home Equity Loan Consumer Protection Act of 1988. The commen- 2(a)(24) "Residential Mortgage Transaction" Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
346 Federal Reserve Bulletin • May 1990 with section 226.5a(e)(2) provides all the applicable 3. Comment 2(a)(24)-6 is added to read as follows: disclosures required under section 226.6, in a form that 6. Multiple purpose transactions. A transaction the consumer may keep and in accordance with the meets this definition of this section if any part of the other format and timing requirements for that section, loan proceeds will be used to finance the acquisition the issuer satisfies the initial disclosure requirements or initial construction of the consumer's principal under section 226.6 as well as the disclosure requiredwelling. For example, a transaction to finance the ments of section 226.5a(e)(2). Or if, in complying with initial construction of the consumer's principal dwell- section 226.5a(c) or 226.5a(d)(2), a card issuer proing is a residential mortgage transaction even if a vides an integrated document that the consumer may portion of the funds will be disbursed directly to the keep, and provides the section 226.5a disclosures (in a consumer or used to satisfy a loan for the purchase of tabular format) along with the additional disclosures the land on which the dwelling will be built. required under section 226.6 (presented outside of the table), the card issuer satisfies the requirements of both sections 226.5a and 226.6. Subpart B—Open-End Credit 5a(a) General Rules 5a(a)(2) Form of Disclosures Section 226.5—General Disclosure 1. Prominent location. Certain of the required disclo- Requirements sures provided on or with an application or solicitation must be prominently located— that is, readily noticeable to the consumer. There are, however, no require- 5(b) Time of Disclosures ments that the disclosures be in any particular location 5(b)(1) Initial Disclosures or in any particular type size or typeface. 2. Multiple accounts or varying terms. If a tabular 4. Comment 5(b)(1)-1 is amended by adding two sen- format is required to be used, card issuers offering tences after the second sentence to read as follows: several types of accounts may disclose the various 1. Disclosures before the first transaction. * * * The terms for the accounts in a single table or may provide prohibition on the payment of fees other than appli- a separate table for each account. Similarly, if rates or cation or refundable membership fees before initial other terms vary from state to state, card issuers may disclosures are provided does not apply to home list the states and the various disclosures in a single equity plans subject to sections 226.5b. See the table or in separate tables. commentary to section 226.5b(h) regarding the col- 3. Additional information. The table containing the lection of fees for home equity plans covered by disclosures required by section 226.5a should contain section 226.5b. * * * only the information required or permitted by this section. (See the commentary to section 226.5a(b) for guidance on information permitted in the table.) Other 5. Comments 5a-1 through 5a(g)-2 and headings are credit information may be presented on or with an added to read as follows: application or solicitation, provided such information appears outside the required table. Section 226.5a—Credit and Charge Card 4. Location of certain disclosures. A card issuer has Applications and Solicitations the option of disclosing any of the fees in section 226.5a(b)(8) through (10) in the required table or out- 1. General. Section 226.5a generally requires that side the table. credit disclosures be contained in application forms 5. Terminology. In general, section 226.5a(a)(2)(iv) and preapproved solicitations initiated by a card issuer requires that the terminology used for the disclosures to open a credit or charge card account. (See the specified in section 226.5a(b) be consistent with that commentary to sections 226.5a(a)(3) and 226.5a(e) for used in the disclosures under sections 226.6 and 226.7. exceptions; see also section 226.2(a)(15) and accom- This standard requires that the section 226.5a(b) dispanying commentary for the definition of charge card.) closures be close in meaning to those under sections 2. Combining disclosures. The initial disclosures re- 226.6 and 226.7; however, the terminology used need quired by section 226.6 do not substitute for the not be identical. In addition, section 226.5a(a)(2)(i) disclosures required by section 226.5a; however, a requires that the headings, content, and format of the card issuer may establish procedures so that a single tabular disclosures be substantially similar, but need disclosure statement meets the requirements of both not be identical, to the tables in appendix G. A special sections. For example, if a card issuer in complying rule applies to the grace period disclosure, however; Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 347 the term "grace period" must be used, either in the apply after the temporary rate expires, the card issuer heading or in the text of the disclosure. must disclose the annual percentage rate that would 6. Deletion of inapplicable disclosures. Generally, otherwise apply to the account. In a fixed-rate acdisclosures need only be given as applicable. Card count, the card issuer must disclose the rate that will issuers may, therefore, delete inapplicable headings apply after the introductory rate expires. In a variableand their corresponding boxes in the table. For exam- rate account, the card issuer must disclose a rate based ple, if no transaction fee is imposed for purchases, the on the index or formula applicable to the account in disclosure form may contain the heading "Transaction accordance with the rules in section 226.5a(b)(l)(ii) fee for purchases" and a box showing "none," or the and comment 5a(b)(l)-3. An initial discounted rate heading and box may be deleted from the table. There may be provided in the table along with the rate is an exception for the grace period disclosure, how- required to be disclosed if the card issuer also disever: even if no grace period exists, that fact must be closes the time period during which the introductory stated. rate will remain in effect. 6. Introductory rates—premium rates. If the initial rate 5a(a)(3) Exceptions is temporary and is higher than the permanently appli- 1. Coverage. Certain exceptions to the coverage of cable rate, the card issuer must disclose the initial rate. section 226.5a are stated in section 226.5a(a)(3); in The issuer may disclose in the table the rate that would addition, the requirements of section 226.5a do not otherwise apply if the issuer also discloses the time apply to the following: period during which the initial rate will remain in —Lines of credit accessed solely by account num- effect. bers; or 5a(b)(2) Fees for Issuance or Availability —Addition of a credit or charge card to an existing 1. Membership fees. Membership fees for opening an open-end plan account must be disclosed under this paragraph. A 2. Noncoverage of "consumer initiated" requests. membership fee to join an organization that provides a Applications provided to a consumer upon request are credit or charge card as a privilege of membership not covered by section 226.5a, even if the request is must be disclosed only if the card is issued automatimade in response to the card issuer's invitation to cally upon membership. Such a fee need not be apply for a card account. To illustrate, if a card issuer disclosed if membership results merely in eligibility to invites consumers to call a toll-free number or to apply for an account. return a response card to obtain an application, the 2. Enhancements. Fees for optional services in addiapplication sent in response to the consumer's request tion to basic membership privileges in a credit or need not contain the disclosures required under sec- charge card account (for example, travel insurance or tion 226.5a. Similarly, if the card issuer invites con- card registration services) need not be disclosed under sumers to call and make an oral application on the this paragraph if the basic account may be opened telephone, section 226.5a does not apply to the appli- without paying such fees. cation made by the consumer. If, however, the card 3. One-time fees. Disclosure of non-periodic fees is issuer calls a consumer or initiates a telephone discus- limited to fees related to opening the account, such as sion with a consumer about opening a card account one-time membership fees. The following are examand contemporaneously takes an oral application, ples of fees that should not be disclosed in the table: such applications are subject to section 226.5a, specif- —Fees for reissuing a lost or stolen card; ically section 226.5a(d). —Statement reproduction fees; and 3. General purpose applications. In accordance with —Application fees described in section 226.4(c)(1). section 226.5(c). 4. Waived or reduced fees. If fees required to be 4. Variable-rate accounts—other disclosures. In de- disclosed are waived or reduced for a limited time, the scribing how the applicable rate will be determined, introductory fees or the fact of fee waivers may be the card issuer must identify the index or formula and provided in the table in addition to the required fees if disclose any margin or spread added to the index or the card issuer also discloses how long the fees or formula in setting the rate. The card issuer may waivers will remain in effect. disclose the margin or spread as a range of the highest 5. Fees stated as annual amount. Fees imposed periand lowest margins that may be applicable to the odically must be stated as an annual total. For examaccount. A disclosure of any applicable limitations on ple, if a fee is imposed quarterly, the disclosures would rate increases or decreases may also be included in the state the total amount of the fees for one year. (See, table. however, the commentary to section 226.9(e) with 5. Introductory rates—discounted rates. If the initial regard to disclosure of such fees in renewal notices.) rate is temporary and is lower than the rate that will 5a(b)(4) Transaction Charges Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
348 Federal Reserve Bulletin • May 1990 1. Charges imposed by person other than card issuer. finance charges under section 226.4. For example, a Charges imposed by a third party, such as a seller of charge for a cash advance at an automated teller goods, would not be disclosed under this section; the machine (ATM) would be disclosed under section third party would be responsible for disclosing the 226.5a(b)(8) if no similar charge is imposed for ATM charge under section 226.9(d)(1). transactions not involving an extension of credit. (See 5a(b)(5) Grace Period comment 4(a)-5 for a description of such a fee.) 1. How disclosure is made. The card issuer may, but 5a(b)(9) Late Payment Fee need not, refer to the beginning or ending point of any 1. Applicability. The disclosure of the fee for a late grace period and briefly state any conditions on the payment includes only those fees that will be imposed applicability of the grace period. For example, the for actual, unanticipated late payments. (See the comgrace period disclosure might read "30 days" or "30 mentary to section 226.4(c)(2) for additional guidance days from the date of the periodic statement (provided on late payment fees.) you have paid your previous balance in full by the due 5a(b)(10) Over-the-Limit Fee date)." 1. Applicability. The disclosure of fees for exceeding a 5a(b)(6) Balance Computation Method credit limit does not include fees for other types of 1. Form of disclosure. In cases where the card issuer default or for services related to exceeding the limit. uses a balance calculation method that is identified by For example, no disclosure is required of fees for name in the regulation, the card issuer may only reinstating credit privileges or fees for the dishonor of disclose the name of the method in the table. In cases checks on an account that, if paid, would cause the where the card issuer uses a balance computation credit limit to be exceeded. method that is not identified by name in the regulation, 5a(c) Direct Mail Applications and Solicitations the disclosure in the table should clearly explain the 1. Accuracy. In general, disclosures in direct mail method in as much detail as set forth in the descrip- applications and solicitations must be accurate as of tions of balance methods in section 226.5a(g). The the time of mailing. (An accurate variable annual explanation need not be as detailed as that required for percentage rate is one in effect within 30 days before the disclosures under section 226.6(a)(3). (See the mailing.) commentary to section 226.5a(g) for guidance on par- 2. Mailed publications. Applications or solicitations ticular methods.) contained in generally available publications mailed to 2. Determining the method. In determining the appro- consumers (such as subscription magazines) are subpriate balance computation method for purchases for ject to the requirements applicable to "take-ones" in disclosure purposes, the card issuer must assume that section 226.5a(e), rather than the direct mail requirea purchase balance will exist at the end of any grace ments of section 226.5a(c). However, if a primary period. Thus, for example, if the average daily balance purpose of a card issuer's mailing is to offer credit or method will include new purchases or cover two charge card accounts—for example, where a card billing cycles only if purchase balances are not paid issuer "prescreens" a list of potential cardholders within the grace period, the card issuer would disclose using credit criteria, and then mails to the targeted the name of the average daily balance method that group its catalog containing an application or a soliciincludes new purchases or covers two billing cycles, tation for a card account—the direct mail rules apply. respectively. The card issuer should not assume the In addition, a card issuer may use a single application existence of a purchase balance, however, in making form as a "take-one" (in racks in public locations, for other disclosures under section 226.5a(b). example) and for direct mailings, if the card issuer 5a(b)(7) Statement on Charge Card Payments complies with the requirements of section 226.5a(c) 1. Applicability and content. The disclosure that even when the form is used as a "take-one"—that is, charges are payable upon receipt of the periodic by providing current information and presenting the statement is applicable only to charge card accounts. required disclosures in a tabular format—and elimi- In making this disclosure, the card issuer may make nates the information required under section such modifications as are necessary to more accu- 226.5a(e)(l)(ii) and (iii). rately reflect the circumstances of repayment under 5a(d) Telephone Applications and Solicitations the account. For example, the disclosure might read, 1. Coverage. This paragraph applies if: "Charges are due and payable upon receipt of the —A telephone conversation between a card issuer periodic statement and must be paid no later than 15 and consumer may result in the issuance of a card as days after receipt of such statement." a consequence of an issuer-initiated offer to open an 5a(b)(8) Cash Advance Fee account for which the issuer does not require any 1. Applicability. The card issuer must disclose only application (that is, a "preapproved" telephone those fees it imposes for a cash advance that are solicitation). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 349 —The card issuer initiates the contact and at the 5a(e)(2) Inclusion of Certain Initial Disclosures same time takes application information over the 1. Accuracy of disclosures. The disclosures required telephone. by section 226.5a(e)(2) generally must be current as of This paragraph does not apply to: the time they are made available to the public. Disclo- —Telephone applications initiated by the consumer. sures are considered to be made available at the time —Situations where no card will be issued—because, they are placed in public locations (in the case of for example, the consumer indicates that he or she "take-ones") or mailed to consumers (in the case of does not want the card, or the card issuer decides publications). either during the telephone conversation or later not 2. Accuracy—exception. If a card issuer discloses all to issue the card. the information required by section 226.5a(e)(l)(ii) on 5a(e) Applications and Solicitations Made Available the application or solicitation, the disclosures under to General Public section 226.5a(e)(2) need only be current as of the date 1. Coverage. Applications and solicitations made of printing. (A current variable annual percentage rate available to the general public include what are com- would be one in effect within 30 days before printing.) monly referred to as "take-one" applications typically 5a(e)(3) No Disclosure of Credit Information found at counters in banks and retail establishments, 1. When disclosure option available. A card issuer as well as applications contained in catalogs, maga- may use this option only if the issuer does not include zines and other generally available publications. In the on or with the application or solicitation any statement case of credit unions, this paragraph applies to appli- that refers to the credit disclosures required by section cations and solicitations to open card accounts made 226.5a(b). Statements such as "no annual fee," "low available to those in the general field of membership. interest rate," "favorable rates," and "low costs" are 2. Cross-selling. If a card issuer invites a consumer to deemed to refer to the required credit disclosures and, apply for a credit or charge card (for example, where therefore, may not be included on or with the solicithe issuer engages in cross-selling), an application tation or application, if the card issuer chooses to use provided to the consumer at the consumer's request is this option. not considered an application made available to the 5a(e)(4) Prompt Response to Requests for Information general public and therefore is not subject to section 1. Prompt disclosure. Information is promptly dis- 226.5a(e). For example, the following are not covered: closed if it is given within 30 days of a consumer's —A consumer applies in person for a car loan at a request for information but in no event later than financial institution and the loan officer invites the delivery of the credit or charge card. consumer to apply for a credit or charge card 2. Information disclosed. When a consumer requests account; the consumer accepts the invitation. credit information, card issuers need not provide all —An employee of a retail establishment, in the the required credit disclosures in all instances. For course of processing a sales transaction using a bank example, if disclosures have been provided in accordcredit card, asks a customer if he or she would like ance with section 226.5a(e)(l) or (2) and a consumer to apply for the retailer's credit or charge card; the calls or writes a card issuer to obtain information customer responds affirmatively. about changes in the disclosures, the issuer need only 3. Toll-free telephone number. If a card issuer, in provide the items of information that have changed complying with any of the disclosure options of from those previously disclosed on or with the applisection 226.5a(e), provides a telephone number for cation or solicitation. If a consumer requests informaconsumers to call to obtain credit information, the tion about particular items, the card issuer need only number must be toll-free for nonlocal calls made provide the requested information. If, however, the from an area code other than the one used in the card card issuer has made disclosures in accordance with issuer's dialing area. Alternatively, a card issuer may the option in section 226.5a(e)(3) and a consumer calls provide any telephone number that allows a con- or writes the card issuer requesting information about sumer to call for information and reverse the tele- costs, all the required disclosure information must be phone charges. given. 5a(e)(l) Disclosure of Required Credit Information 3. Manner of response. A card issuer's response to a 1. Date of printing. Disclosure of the month and year consumer's request for credit information may be fulfills the requirement to disclose the date an applica- provided orally or in writing, regardless of the manner tion was printed. in which the consumer's request is received by the 2. Form of disclosures. The disclosures specified in issuer. Furthermore, the card issuer may provide the sections 226.5a(e)(i), (ii), and (iii) may appear either in information listed in either section 226.5a(e)(l) or (2). or outside the table containing the required credit Information provided in writing need not be in a disclosures. tabular format. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
350 Federal Reserve Bulletin • May 1990 5a(f) Special Charge Card Rule—Card Issuer and Section 226.5b—Requirements for Home Person Extending Credit Not the Same Person Equity Plans 1. Duties of charge card issuer. Although the charge card issuer is not required to disclose information 1. Coverage. This section applies to all open-end about the underlying open-end credit plan if the card credit plans secured by the consumer's "dwelling," as issuer meets the conditions set forth in section defined in section 226.2(a)(19), and is not limited to 226.5a(f), the card issuer must disclose the information plans secured by the consumer's principal dwelling. relating to the charge card plan itself. (See the commentary to section 226.3(a), which dis- 2. Duties of creditor maintaining open-end plan. Sec- cusses whether transactions are consumer or businesstion 226.5a does not impose disclosure requirements purpose credit, for guidance on whether a home equity on the creditor that maintains the underlying open-end plan is subject to Regulation Z.) credit plan. This is the case even though the creditor 2. Transition rules and renewals of preexisting plans. offering the open-end credit plan may be considered an The requirements of this section do not apply to home agent of the charge card issuer. (See comment equity plans entered into before November 7, 1989. 2(a)(7)-1.) The requirements of this section also do not apply if 3. Form of disclosures. The disclosures required by the original consumer, on or after November 7, 1989, section 226.5a(f) may appear either in or outside the renews a plan entered into prior to that date (with or table containing the required credit disclosures in without changes to the terms). If, on or after Novemcircumstances where a tabular format is required. ber 7, 1989, a security interest in the consumer's 5a(g) Balance Computation Methods Defined dwelling is added to a line of credit entered into before 1. Daily balance method. Card issuers using the daily that date, the substantive restrictions of this section balance method may disclose it using the name "av- apply for the remainder of the plan, but no new erage daily balance (including new purchases)" or disclosures are required under this section. "average daily balance (excluding new purchases)," 3. Disclosure of repayment phase—applicability of as appropriate. Alternatively, such card issuers may requirements. Some plans provide in the initial agreeexplain the method. (See comment 7(e)-5 for a discus- ment for a period during which no further draws may sion of the daily balance method.) be taken and repayment of the amount borrowed is 2. Two-cycle average daily balance methods. The made. All of the applicable disclosures in this section "two-cycle average daily balance" methods described must be given for the repayment phase. Thus, for in sections 226.5a(g)(2)(i) and (ii) include those meth- example, a creditor must provide payment information ods in which the average daily balances for two billing about the repayment phase as well as about the draw cycles may be added together to compute the finance period, as required by section 226.5b(d)(5). If the rate charge. Such methods also include those in which a that will apply during the repayment phase is fixed at a periodic rate is applied separately to the balance in known amount, the creditor must provide an annual each cycle, and the resulting finance charges are added percentage rate under section 226.5b(d)(6) for that together. The method is a "two-cycle average daily phase. If, however, a creditor uses an index to deterbalance" even if the finance charge is based on both mine the rate that will apply at the time of conversion the current and prior cycle balances only under certain to the repayment phase—even if the rate will thereafcircumstances, such as when purchases during a prior ter be fixed—the creditor must provide the information cycle were carried over into the current cycle and no in section 226.5b(d)(12), as applicable. finance charge was assessed during the prior cycle. 4. Payment terms—applicability of closed-end provi- Furthermore, the method is a "two-cycle average sions and substantive rules. All payment terms that daily balance method" if the balances for both the are provided for in the initial agreement are subject to current and prior cycles are average daily balances, the requirements of Subpart B and not Subpart C of even if those balances are figured differently. For the regulation. Payment terms that are subsequently example, the name "two-cycle average daily balance added to the agreement may be subject to Subpart B or (excluding new purchases)" should be used to de- to Subpart C, depending on the circumstances. The scribe a method in which the finance charge for the following examples apply these general rules to difcurrent cycle, figured on an average daily balance ferent situations: excluding new purchases, will be added to the finance —If the initial agreement provides for a repayment charge for the prior cycle, figured on an average daily phase or for other payment terms such as options balance of only new purchases during that prior cycle. permitting conversion of part or all of the balance to a fixed rate during the draw period, these terms must 6. Comments 5b-1 through 5b(h)-3 and headings are be disclosed pursuant to sections 226.5b and 226.6, added to read as follows: and not under Subpart C. Furthermore, the creditor Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 351 must continue to provide periodic statements under —Any prepayment penalty; section 226.7 and comply with other provisions of —How a substitute index may be chosen; Subpart B (such as the substantive requirements of —Actions the creditor may take short of terminating section 226.5b(f)) throughout the plan, including the and accelerating an outstanding balance; repayment phase. —Renewal terms; or —If the consumer and the creditor enter into an —Rebate of fees. agreement during the draw period to repay all or part of the principal balance on different terms (for An example of information that does not explain or example, with a fixed rate of interest) and the expand on the required disclosures and thus cannot be amount of available credit will be replenished as the included is the creditor's underwriting criteria, alprincipal balance is repaid, the creditor must con- though the creditor could provide such information tinue to comply with Subpart B. For example, the separately from the required disclosures. creditor must continue to provide periodic state- 4. Method of providing disclosures. A creditor may ments and comply with the substantive require- provide a single disclosure form for all of its home ments of section 226.5b(f) throughout the plan. equity plans, as long as the disclosure describes all —If the consumer and creditor enter into an agree- aspects of the plans. For example, if the creditor offers ment during the draw period to repay all or part of several payment options, all such options must be the principal balance and the amount of available disclosed. (See, however, the commentary to sections credit will not be replenished as the principal bal- 226.5b(d)(5)(iii) and 226.5b(d)(12)(x) and (xi) for disance is repaid, the creditor must give closed-end closure requirements relating to these provisions.) If credit disclosures pursuant to Subpart C for that any aspects of a plan are linked together, the creditor new agreement. In such cases, Subpart B, including must disclose clearly the relationship of the terms to the substantive rules, does not apply to the closed- each other. For example, if the consumer can only end credit transaction, although it will continue to obtain a particular payment option in conjunction with apply to any remaining open-end credit available a certain variable-rate feature, this fact must be disunder the plan. closed. A creditor has the option of providing separate 5. Spreader clause. When a creditor holds a mortgage disclosure forms for multiple options or variations in or deed of trust on the consumer's dwelling and that features. For example, a creditor that offers different mortgage or deed of trust contains a "spreader payment options for the draw period may prepare clause" (also known as a "dragnet" or cross-collater- separate disclosure forms for the two payment opalization clause), subsequent occurrences such as the tions. A creditor using this alternative, however, must opening of an open-end plan are subject to the rules include a statement on each disclosure form that the applicable to home equity plans to the same degree as consumer should ask about the creditor's other home if a security interest were taken directly to secure the equity programs. (This disclosure is required only for plan, unless the creditor effectively waives its security those programs available generally to the public. Thus, interest under the spreader clause with respect to the if the only other programs available are employee subsequent open-end credit extensions. preferred-rate plans, for example, the creditor would 5b(a) Form of Disclosures not have to provide this statement.) A creditor that 5b(a)(l) General receives a request for information about other avail- 1. Written disclosures. The disclosures required under able programs must provide the additional disclosures this section must be clear and conspicuous and in as soon as reasonably possible. writing, but need not be in a form the consumer can 5b(a)(2) Precedence of Certain Disclosures keep. (See the commentary to section 226.6(e) for 1. Precedence rule. The list of conditions provided at special rules when disclosures required under section the creditor's option under section 226.5b(d)(4)(iii) 226.5b(d) are given in a retainable form.) need not precede the other disclosures. 2. Disclosure of annual percentage rate — more 5b(b) Time of Disclosures conspicuous requirement. As provided in section 1. Mail and telephone applications. If the creditor 226.5(a)(2), when the term "annual percentage rate" is sends applications through the mail, the disclosures required to be disclosed with a number, it must be and a brochure must accompany the application. If an more conspicuous than other required disclosures. application is taken over the telephone, the disclosures 3. Segregation of disclosures. While most of the and brochure may be delivered or mailed within three disclosures must be grouped together and segregated business days of taking the application. If an applicafrom all unrelated information, the creditor is permit- tion is mailed to the consumer following a telephone ted to include information that explains or expands on request, however, the creditor also must send the the required disclosures, including, for example: disclosures and a brochure along with the application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
352 Federal Reserve Bulletin • May 1990 2. General purpose applications. The disclosures and application form, the third party must give the discloa brochure need not be provided when a general sures to the consumer with the application form. The purpose application is given to a consumer unless (1) duties under this section are those of the third party ; the application or materials accompanying it indicate the creditor is not responsible for ensuring that a third that it can be used to apply for a home equity plan or party complies with those obligations. If an interme- (2) the application is provided in response to a con- diary agent or broker takes an application over the sumer's specific inquiry about a home equity plan. On telephone or receives an application contained in a the other hand, if a general purpose application is magazine or other publication, footnote 10a permits provided in response to a consumer's specific inquiry that person to mail the disclosures and brochure within only about credit other than a home equity plan, the three business days of receipt of the application. (See disclosures and brochure need not be provided even if the commentary to section 226.5b(h) about imposition the application indicates it can be used for a home of nonrefundable fees.) equity plan, unless it is accompanied by promotional 5b(d) Content of Disclosures information about home equity plans. 1. Disclosures given as applicable. The disclosures 3. Publicly-available applications. Some creditors required under this section need be made only as make applications for home equity plans, such as applicable. Thus, for example, if negative amortization "take-ones," available without the need for a con- cannot occur in a home equity plan, a reference to it sumer to request them. These applications must be need not be made. accompanied by the disclosures and a brochure, such 2. Duty to respond to requests for information. If the as by attaching the disclosures and brochure to the consumer, prior to the opening of a plan, requests application form. information as suggested in the disclosures (such as 4. Response cards. A creditor may solicit consumers the current index value or margin), the creditor must for its home equity plan by mailing a "response card" provide this information as soon as reasonably possiwhich the consumer returns to the creditor to indicate ble after the request. interest in the plan. If the only action taken by the 5b(d)(l) Retention of Information creditor upon receipt of the response card is to send 1. When disclosure not required. The creditor need not the consumer an application form or to telephone the disclose that the consumer should make or otherwise consumer to discuss the plan, the creditor need not retain a copy of the disclosures if they are retainable — send the disclosures and brochure with the response for example, if the disclosures are not part of an card. application that must be returned to the creditor to 5. Denial or withdrawal of application. In situations apply for the plan. where footnote 10a permits the creditor a three-day 5b(d)(2) Conditions for Disclosed Terms delay in providing disclosures and the brochure, if the Paragraph 5b(d)(2)(i) creditor determines within that period that an applica- 1. Guaranteed terms. The requirement that the credition will not be approved, the creditor need not tor disclose the time by which an application must be provide the consumer with the disclosures or bro- submitted to obtain the disclosed terms does not chure. Similarly, if the consumer withdraws the appli- require the creditor to guarantee any terms. If a cation within this three-day period, the creditor need creditor chooses not to guarantee any terms, it must not provide the disclosures or brochure. disclose that all of the terms are subject to change 6. Intermediary agent or broker. In determining prior to opening the plan. The creditor also is permitwhether or not an application involves an "intermedi- ted to guarantee some terms and not others, but must ary agent or broker" as discussed in footnote 10a, indicate which terms are subject to change. creditors should consult the provisions in comment 2. Date for obtaining disclosed terms. The creditor 19(b)-3. may disclose either a specific date or a time period for 5b(c) Duties of Third Parties obtaining the disclosed terms. If the creditor discloses 1. Disclosure requirements. Although third parties a time period, the consumer must be able to determine who give applications to consumers for home equity from the disclosure the specific date by which an plans must provide the brochure required under sec- application must be submitted to obtain any guarantion 226.5b(e) in all cases, such persons need provide teed terms. For example, the disclosure might read, the disclosures required under section 226.5b(d) only "To obtain the following terms, you must submit your in certain instances. A third party has no duty to application within 60 days after the date appearing on obtain disclosures about a creditor's home equity plan this disclosure," provided the disclosure form also or to create a set of disclosures based on what it knows shows the date. about a creditor's plan. If, however, a creditor pro- Paragraph 5b(d)(2)(ii) vides the third party with disclosures along with its 1. Relation to other provisions. Creditors should con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 353 suit the rules in section 226.5b(g) regarding refund of determined by the size of the balance. If the length of fees. the plan is indefinite (for example, because there is no 5b(d)(4) Possible Actions by Creditor time limit on the period during which the consumer Paragraph 5b(d)(4)(i) can take advances), the creditor must state that fact. 1. Fees imposed upon termination. This disclosure 2. Renewal provisions. If, under the credit agreement, applies only to fees (such as penalty or prepayment a creditor retains the right to review a line at the end of fees) that the creditor imposes if it terminates the plan the specified draw period and determine whether to prior to normal expiration. The disclosure does not renew or extend the draw period of the plan, the apply to fees that are imposed either when the plan possibility of renewal or extension — regardless of its expires in accordance with the agreement or if the likelihood — should be ignored for purposes of the consumer terminates the plan prior to its scheduled disclosures. For example, if an agreement provides maturity. In addition, the disclosure does not apply to that the draw period is five years and that the creditor fees associated with collection of the debt, such as may renew the draw period for an additional five attorneys fees and court costs, or to increases in the years, the possibility of renewal should be ignored and annual percentage rate linked to the consumer's failure the draw period should be considered five years. (See to make payments. The actual amount of the fee need the commentary accompanying section 226.9(c)(1) not be disclosed. dealing with change in terms requirements.) 2. Changes specified in the initial agreement. If Paragraph 5b(d)(5)(ii) changes may occur pursuant to section 226.5b(f)(3)(i), 1. Determination of the minimum periodic payment. a creditor must state that certain changes will be This disclosure must reflect how the minimum periodic implemented as specified in the initial agreement. payment is determined, but need only describe the Paragraph 5b(d)(4)(iii) principal and interest components of the payment. 1. Disclosure of conditions. In making this disclosure, Other charges that may be part of the payment (as well the creditor may provide a highlighted copy of the as the balance computation method) may, but need document that contains such information, such as the not, be described under this provision. contract or security agreement. The relevant items 2. Fixed rate and term payment options during draw must be distinguished from the other information period. If the home equity plan permits the consumer contained in the document. For example, the creditor to repay all or part of the balance during the draw may provide a cover sheet that specifically points out period at a fixed rate (rather than a variable rate) and which contract provisions contain the information, or over a specified time period, this feature must be may mark the relevant items on the document itself. disclosed. To illustrate, a variable-rate plan may per- As an alternative to disclosing the conditions in this mit a consumer to elect during a ten-year draw period manner, the creditor may simply describe the condi- to repay all or a portion of the balance over a threetions using the language in sections 226.5b(f)(2) and year period at a fixed rate. The creditor must disclose 226.5b(f)(3)(vi) or language that is substantially simi- the rules relating to this feature including the period lar. In describing specified changes that may be imple- during which the option can be selected, the length of mented during the plan, the creditor may provide a time over which repayment can occur, any fees imdisclosure such as: "Our agreement permits us to posed for such a feature, and the specific rate or a make certain changes to the terms of the line at description of the index and margin that will apply specified times or upon the occurrence of specified upon exercise of this choice. For example, the index events." and margin disclosure might state, "If you choose to 2. Form of disclosure. The list of conditions under convert any portion of your balance to a fixed rate, the section 226.5b(d)(4)(iii) may appear with the segre- rate will be the highest prime rate published in the Wall gated disclosures or apart from them. If the creditor Street Journal that is in effect at the date of conversion elects to provide the list of conditions with the segre- plus a margin." If the fixed rate is to be determined gated disclosures, the list need not comply with the according to an index, it must be one that is outside the precedence rule in section 226.5b(a)(2). creditor's control and is publicly available in accord- 5b(d)(5) Payment Terms ance with section 226.5b(f)(l). The effect of exercising Paragraph 5b(d)(5)(i) the option should not be reflected elsewhere in the 1. Length of the plan. The combined length of the disclosures, such as in the historical example required draw period and any repayment period need not be in section 226.5b(d)(12)(xi). stated. If the length of the repayment phase cannot be 3. Balloon payments. In programs where the occurdetermined because, for example, it depends on the rence of a balloon payment is possible, the creditor balance outstanding at the beginning of the repayment must disclose the possibility of a balloon payment period, the creditor must state that the length is even if such a payment is uncertain or unlikely. In Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
354 Federal Reserve Bulletin • May 1990 such cases, the disclosure might read, "Your mini- elect to provide representative payment examples mum payments may not be sufficient to fully repay the based on three categories of payment options. The first principal that is outstanding on your line. If they are category consists of plans that permit minimum paynot, you will be required to pay the entire outstanding ment of only accrued finance charges ("interest only" balance in a single payment." In programs where a plans). The second category includes plans in which a balloon payment will occur, such as programs with fixed percentage or a fixed fraction of the outstanding interest-only payments during the draw period and no balance or credit limit (for example, 2% of the balance repayment period, the disclosures must state that fact. or 1/180th of the balance) is used to determine the For example, the disclosure might read, "Your mini- minimum payment. The third category includes all mum payments will not repay the principal that is other types of minimum payment options, such as a outstanding on your line. You will be required to pay specified dollar amount plus any accrued finance the entire outstanding balance in a single payment." In charges. Creditors may classify their minimum paymaking this disclosure, the creditor is not required to ment arrangements within one of these three categouse the term "balloon payment." The creditor also is ries even if other features exist, such as varying not required to disclose the amount of the balloon lengths of a draw or repayment period, required paypayment. (See, however, the requirement under sec- ment of past due amounts, late charges, and minimum tion 226. 5b(d)(5)(iii).) The balloon payment disclosure dollar amounts. The creditor may use a single example does not apply in cases where repayment of the entire within each category to represent the payment options outstanding balance would occur only as a result of in that category. For example, if a creditor permits termination and acceleration. The creditor also need minimum payments of 1%, 2%, 3% or 4% of the not make a disclosure about balloon payments if the outstanding balance, it may pick one of these four final payment could not be more than twice the amount options and provide the example required under secof other minimum payments under the plan. tions 226.5b(d)(5)(iii) for that option alone. The exam- Paragraph 5b(d)(5)(iii) ple used to represent a category must be an option 1. Minimum periodic payment example. In disclosing commonly chosen by consumers, or a typical or the payment example, the creditor may assume that representative example. (See the commentary to secthe credit limit as well as the outstanding balance is tion 226.5b(d)(12)(x) and (xi) for a discussion of the use $10,000 if such an assumption is relevant to calculating of representative examples for making those disclopayments. (If the creditor only offers lines of credit for sures. Creditors using a representative example within less than $10,000, the creditor may assume an out- each category must use the same example for purposes standing balance of $5,000 instead of $10,000 in mak- of the disclosures under sections 226.5b(d)(5)(iii) and ing this disclosure.) The example should reflect the 226.5b(d)(12)(x) and (xi).) Creditors may use reprepayment comprised only of principal and interest. sentative examples under section 226.5b(d)(5) only Creditors may provide an additional example reflect- with respect to the payment example required under ing other charges that may be included in the payment, paragraph (d)(5)(iii). Creditors must provide a full such as credit insurance premiums. Creditors may narrative description of all payment options under assume that all months have an equal number of section 226.5b(d)(5)(i) and (ii). days, that payments are collected in whole cents, and 3. Examples for draw and repayment periods. Sepathat payments will fall on a business day even though rate examples must be given for the draw and repaythey may be due on a non-business day. For variable- ment periods unless the payments are determined the rate plans, the example must be based on the last same way during both periods. In setting forth payrate in the historical example required in section ment examples for any repayment period under this 226.5b(d)(12)(xi), or a more recent rate. In cases section (and the historical example under section where the last rate shown in the historical example is 226.5b(d)(12)(xi)), creditors should assume a $10,000 different from the index value and margin (for exam- advance is taken at the beginning of the draw period ple, due to a rate cap), creditors should calculate the and is reduced according to the terms of the plan. rate by using the index value and margin. A dis- Creditors should not assume an additional advance is counted rate may not be considered a more recent taken at any time, including at the beginning of any rate in calculating this payment example for either repayment period. variable- or fixed-rate plans. 4. Reverse mortgages. Reverse mortgages, also 2. Representative examples. In plans with multiple known as reverse annuity or home equity conversion payment options within the draw period or within any mortgages, in addition to permitting the consumer to repayment period, the creditor may provide repre- obtain advances, may involve the disbursement of sentative examples as an alternative to providing ex- monthly advances to the consumer for a fixed period amples for each payment option. The creditor may or until the occurrence of an event such as the con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 355 sumer's death. Repayment of the reverse mortgage as "The disclosures assume full repayment of the (generally a single payment of principal and accrued amount advanced plus accrued interest, although interest) may be required to be made at the end of the the amount you may be required to pay is limited by disbursements or, for example, upon the death of the your agreement." consumer. In disclosing these plans, creditors must —Some reverse mortgages provide that some or all apply the following rules, as applicable: of the appreciation in the value of the property will —If the reverse mortgage has a specified period for be shared between the consumer and the creditor. advances and disbursements but repayment is due The appreciation feature must be disclosed in aconly upon occurrence of a future event such as the cordance with section 226.5b(d)(12). death of the consumer, the creditor must assume 5b(d)(6) Annual Percentage Rate that disbursements will be made until they are 1. Preferred-rate plans. If a creditor offers a preferenscheduled to end. The creditor must assume repay- tial fixed-rate plan in which the rate will increase a ment will occur when disbursements end (or within specified amount upon the occurrence of a specified a period following the final disbursement which is event, the creditor must disclose the specific amount not longer than the regular interval between dis- the rate will increase. bursements). This assumption should be used even 5b(d)(7) Fees Imposed by Creditor though repayment may occur before or after the 1. Applicability. The fees referred to in section disbursements are scheduled to end. In such cases, 226.5b(d)(7) include items such as application fees, the creditor may include a statement such as "The points, annual fees, transaction fees, fees to obtain disclosures assume that you will repay the line at the checks to access the plan, and fees imposed for contime the draw period and our payments to you end. verting to a repayment phase that is provided for in the As provided in your agreement, your repayment original agreement. This disclosure includes any fees may be required at a different time." The single that are imposed by the creditor to use or maintain the payment should be considered the "minimum peri- plan, whether the fees are kept by the creditor or a third odic payment" and consequently would not be party. For example, if a creditor requires an annual treated as a balloon payment. The example of the credit report on the consumer and requires the conminimum payment under section 226.5b(d)(5)(iii) sumer to pay this fee to the creditor or directly to the should assume a single $10,000 draw. third party, the fee must be specifically stated. Third —If the reverse mortgage has neither a specified party fees to open the plan that are initially paid by the period for advances or disbursements nor a specified consumer to the creditor may be included in this repayment date and these terms will be determined disclosure or in the disclosure under section solely by reference to future events, including the 226.5b(d)(8). consumer's death, the creditor may assume that the 2. Manner of describing fees. Charges may be stated draws and disbursements will end upon the consum- as an estimated dollar amount for each fee, or as a er's death (estimated by using actuarial tables, for percentage of a typical or representative amount of example) and that repayment will be required at the credit. The creditor may provide a stepped fee schedsame time (or within a period following the date of ule in which a fee will increase a specified amount at a the final disbursement which is not longer than the specified date. (See the discussion contained in the regular interval for disbursements). Alternatively, commentary to section 226.5b(f)(3)(i).) the creditdr may base the disclosures upon another 3. Fees not required to be disclosed. Fees that are not future event it estimates will be most likely to occur imposed to open, use, or maintain a plan, such as fees first. (If terms will be determined by reference to for researching an account, photocopying, paying late, future events which do not include the consumer's stopping payment, having a check returned, exceeding death, the creditor must base the disclosures upon the credit limit, or closing out an account do not have the occurrence of the event estimated to be most to be disclosed under this section. Credit report and likely to occur first.) appraisal fees imposed to investigate whether a condi- —In making the disclosures, the creditor must as- tion permitting a freeze continues to exist—as dissume that all draws and disbursements and accrued cussed in the commentary to section 226.5b(f)(3)(vi)— interest will be paid by the consumer. For example, are not required to be disclosed under this section or if the note has a non-recourse provision providing section 226.5b(d)(8). that the consumer is not obligated for an amount 4. Rebates of closing costs. If closing costs are imposed greater than the value of the house, the creditor they must be disclosed, regardless of whether such must nonetheless assume that the full amount to be costs may be rebated later (for example, rebated to the drawn or disbursed will be repaid. In this case, extent of any interest paid during the first year of the however, the creditor may include a statement such plan). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
356 Federal Reserve Bulletin • May 1990 5. Terms used in disclosure. Creditors need not use the G-14 provide illustrative guidance on the variable-rate terms "finance charge" or "other charge" in describ- rules. ing the fees imposed by the creditor under this section Paragraph 5b(d)(12)(iv) or those imposed by third parties under section 1. Determination of annual percentage rate. If the 226.5b(d)(8). creditor adjusts its index through the addition of a 5b(d)(8) Fees Imposed by Third Parties to Open a Plan margin, the disclosure might read, "Your annual per- 1. Applicability. Section 226.5b(d)(8) applies only to centage rate is based on the index plus a margin." The fees imposed by third parties to open the plan. Thus, creditor is not required to disclose a specific value for for example, this section does not require disclosure of the margin. a fee imposed by a government agency at the end of a Paragraph 5b(d)(12)(viii) plan to release a security interest. Fees to be disclosed 1. Preferred-rate provisions. This paragraph requires include appraisal, credit report, government agency, disclosure of preferred-rate provisions, where the rate and attorneys fees. In cases where property insurance will increase upon the occurrence of some event, such is required by the creditor, the creditor either may as the borrower-employee leaving the creditor's emdisclose the amount of the premium or may state that ploy or the consumer closing an existing deposit property insurance is required. For example, the dis- account with the creditor. closure might state, "You must carry insurance on the 2. Provisions on conversion to fixed rates. The comproperty that secures this plan." mentary to section 226.5b(d)(5)(ii) discusses the dis- 2. Itemization of third party fees. In all cases creditors closure requirements for options permitting the conmust state the total of third party fees as a single dollar sumer to convert from a variable rate to a fixed rate. amount or a range. A creditor has two options with Paragraph 5b(d)(12)(ix) regard to providing the more detailed information 1. Periodic limitations on increases in rates. The about third party fees. Creditors may provide a state- creditor must disclose any annual limitations on inment that the consumer may request more specific creases in the annual percentage rate. If the creditor cost information about third party fees from the cred- bases its rate limitation on 12 monthly billing cycles, itor. As an alternative to including this statement, such a limitation should be treated as an annual cap. creditors may provide an itemization of such fees (by Rate limitations imposed on less than an annual basis type and amount) with the early disclosures. must be stated in terms of a specific amount of time. 3. Manner of describing fees. A good faith estimate of For example, if the creditor imposes rate limitations the amount of fees must be provided. Creditors may on only a semiannual basis, this must be expressed as provide, based on a typical or representative amount a rate limitation for a six-month time period. If the of credit, a range for such fees or state the dollar creditor does not impose periodic limitations (annual amount of such fees. Fees may be expressed on a unit or shorter) on rate increases, the fact that there are no cost basis, for example, $5 per $1,000 of credit. annual rate limitations must be stated. 4. Rebates of third party fees. Even if fees imposed by 2. Maximum limitations on increases in rates. The third parties may be rebated, they must be disclosed. maximum annual percentage rate that may be imposed (See the commentary to section 226.5b(d)(7).) under each payment option over the term of the plan 5b(d)(9) Negative Amortization (including the draw period and any repayment period 1. Disclosure required. In transactions where the provided for in the initial agreement) must be prominimum payment will not or may not be sufficient to vided. The creditor may disclose this rate as a specific cover the interest that accrues on the outstanding number (for example, 18%) or as a specific amount balance, the creditor must disclose that negative am- above the initial rate. For example, this disclosure ortization will or may occur. This disclosure is re- might read, "The maximum annual percentage rate quired whether or not the unpaid interest is added to that can apply to your line will be 5 percentage points the outstanding balance upon which interest is com- above your initial rate." If the creditor states the puted. A disclosure is not required merely because a maximum rate as a specific amount above the initial loan calls for non-amortizing or partially amortizing rate, the creditor must include a statement that the payments. consumer should inquire about the rate limitations that 5b(d)(10) Transaction Requirements are currently available. If an initial discount is not 1. Applicability. A limitation on automated teller ma- taken into account in applying maximum rate limitachine usage need not be disclosed under this paragraph tions, that fact must be disclosed. If separate overall unless that is the only means by which the consumer limitations apply to rate increases resulting from can obtain funds. events such as the exercise of a fixed-rate conversion 5b(d)(12) Disclosures for Variable-Rate Plans option or leaving the creditor's employ, those limita- 1. Variable-rate provisions. Sample forms in appendix tions also must be stated. Limitations do not include Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 357 legal limits in the nature of usury or rate ceilings under must reflect the method of choosing index values for state or federal statutes or regulations. the plan. For example, if an average of index values is 3. Form of disclosures. The creditor need not disclose used in the plan, averages must be used in the exameach periodic or maximum rate limitation that is cur- ple, but if an index value as of a particular date is used, rently available. Instead, the creditor may disclose the a single index value must be shown. The creditor is range of the lowest and highest periodic and maximum required to assume one date (or one period, if an rate limitations that may be applicable to the creditor's average is used) within a year on which to base the home equity plans. Creditors using this alternative must history of index values. The creditor may choose to include a statement that the consumer should inquire use index values as of any date or period as long as the about the rate limitations that are currently available. index value as of this date or period is used for each Paragraph 5b(d)(12)(x) year in the example. Only one index value per year 1. Maximum rate payment example. In calculating the need be shown, even if the plan provides for adjustpayment, creditors should assume the maximum rate is ments to the annual percentage rate or payment more in effect. Any discounted or premium initial rates or than once in a year. In such cases, the creditor can periodic rate limitations should be ignored for purposes assume that the index rate remained constant for the of this disclosure. If a range is used to disclose the full year for the purpose of calculating the annual maximum cap under section 226.5b(d)(12)(ix), the high- percentage rate and payment. est rate in the range must be used for the disclosure 3. Selection of margin. A value for the margin must be under this paragraph. As an alternative to making assumed in order to prepare the example. A creditor disclosures based on each payment option, the creditor may select a representative margin that it has used with may choose a representative example within the three the index during the six months preceding preparation categories of payment options upon which to base this of the disclosures and state that the margin is one that it disclosure. (See the commentary to section has used recently. The margin selected may be used 226.5b(d)(5).) However, separate examples must be until the creditor annually updates the disclosure form provided for the draw period and for any repayment to reflect the most recent 15 years of index values. period unless the payment is determined the same way 4. Amount of discount or premium. In reflecting any in both periods. Creditors should calculate the example discounted or premium initial rate, the creditor may for the repayment period based on an assumed $10,000 select a discount or premium that it has used during the balance. (See the commentary to section 226.5b(d)(5) six months preceding preparation of the disclosures, for a discussion of the circumstances in which a creditor and should disclose that the discount or premium is one may use a lower outstanding balance.) that the creditor has used recently. The discount or 2. Time the maximum rate could be reached. In stating premium should be reflected in the example for as long the date or time when the maximum rate could be as it is in effect. The creditor may assume that a reached, creditors should assume the rate increases as discount or premium that would have been in effect for rapidly as possible under the plan. In calculating the any part of a year was in effect for the full year for date or time, creditors should factor in any discounted purposes of reflecting it in the historical example. or premium initial rates and periodic rate limitations. 5. Rate limitations. Limitations on both periodic and This disclosure must be provided for the draw phase maximum rates must be reflected in the historical and any repayment phase. Creditors should assume example. If ranges of rate limitations are provided the index and margin shown in the last year of the under section 226.5b(d)(12)(ix), the highest rates prohistorical example (or a more recent rate) is in effect at vided in those ranges must be used in the example. the beginning of each phase. Rate limitations that may apply more often than annu- Paragraph 5b(d)(12)(xi) ally should be treated as if they were annual limita- 1. Index movement. Index values and annual percent- tions. For example, if a creditor imposes a 1% cap age rates must be shown for the entire 15 years of the every six months, this should be reflected in the historical example and must be based on the most example as if it were a 2% annual cap. recent 15 years. The example must be updated annu- 6. Assumed advances. The creditor should assume ally to reflect the most recent 15 years of index values that the $10,000 balance is an advance taken at the as soon as reasonably possible after the new index beginning of the first billing cycle and is reduced value becomes available. If the values for an index according to the terms of the plan, and that the have not been available for 15 years, a creditor need consumer takes no subsequent draws. As discussed in only go back as far as the values have been available the commentary to section 226.5b(d)(5), creditors and may start the historical example at the year for should not assume an additional advance is taken at which values are first available. the beginning of any repayment period. If applicable, 2. Selection of index values. The historical example the creditor may assume the $10,000 is both the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
358 Federal Reserve Bulletin • May 1990 advance and the credit limit. (See the commentary to used during the draw and repayment periods, the section 226.5b(d)(5) for a discussion of the circum- index values for that portion of the 15 years that reflect stances in which a creditor may use a lower outstand- the repayment period must be the values for the ing balance.) appropriate index. 7. Representative payment options. The creditor need 10. Reverse mortgages. The historical example for not provide an historical example for all of its various reverse mortgages should reflect 15 years of index payment options, but may select a representative values and annual percentage rates, but the payment payment option within each of the three categories of column should be blank until the year that the single payments upon which to base its disclosure. (See the payment will be made, assuming that payment is esticommentary to section 226.5b(d)(5).) mated to occur within 15 years. (See the commentary to 8. Payment information. The payment figures in the section 226.5b(d)(5) for a discussion of reverse morthistorical example must reflect all significant program gages.) terms. For example, features such as rate and payment 5b(e) Brochure caps, a discounted initial rate, negative amortization, 1. Substitutes. A brochure is a suitable substitute for and rate carryover must be taken into account in the Board's home equity brochure if it is, at a minicalculating the payment figures if these would have mum, comparable to the Board's brochure in subapplied to the plan. The historical example should stance and comprehensiveness. Creditors are permitinclude payments for as much of the length of the plan ted to provide more detailed information than is as would occur during a 15-year period. For example: contained in the Board's brochure. —If the draw period is 10 years and the repayment 2. Effect of third party delivery of brochure. If a period is 15 years, the example should illustrate the creditor determines that a third party has provided a entire 10-year draw period and the first 5 years of the consumer with the required brochure pursuant to repayment period. section 226.5b(c), the creditor need not give the con- —If the length of the draw period is 15 years and sumer a second brochure. there is a 15-year repayment phase, the historical 5b(f) Limitations on Home Equity Plans example must reflect the payments for the 15-year 1. Coverage. Section 226.5b(f) limits both actions that draw period and would not show any of the repay- may be taken and language that may be included in ment period. No additional historical example contracts, and applies to any assignee or holder as well would be required to reflect payments for the repay- as to the original creditor. The limitations apply to the ment period. draw period and any repayment period, and to any —If the length of the plan is less than 15 years, renewal or modification of the original agreement. payments in the historical example need only be Paragraph 5b(f)(l) shown for the number of years in the term. In such 1. External index. A creditor may change the annual cases, however, the creditor must show the index percentage rate for a plan only if the change is based values, margin and annual percentage rates and on an index outside the creditor's control. Thus, a continue to reflect all significant plan terms such as creditor may not make rate changes based on its own rate limitations for the entire 15 years. prime rate or cost of funds and may not reserve a contractual right to change rates at its discretion. A A creditor need show only a single payment per year in creditor is permitted, however, to use a published the example, even though payments may vary during a prime rate, such as that in the Wall Street Journal, year. The calculations should be based on the actual even if the bank's own prime rate is one of several payment computation formula, although the creditor rates used to establish the published rate. may assume that all months have an equal number of 2. Publicly available. The index must be available to days. The creditor may assume that payments are the public. A publicly available index need not be made on the last day of the billing cycle, the billing published in a newspaper, but it must be one the date or the payment due date, but must be consistent consumer can independently obtain (by telephone, for in the manner in which the period used to illustrate example) and use to verify rates imposed under the payment information is selected. Information about plan. balloon payments and remaining balance may, but 3. Provisions not prohibited. This paragraph does not need not, be reflected in the example. prohibit rate changes that are specifically set forth in the 9. Disclosures for repayment period. The historical agreement. For example, stepped-rate plans, in which example must reflect all features of the repayment specified rates are imposed for specified periods, are period, including the appropriate index values, mar- permissible. In addition, preferred-rate provisions, in gin, rate limitations, length of the repayment period, which the rate increases by a specified amount upon the and payments. For example, if different indices are occurrence of a specified event, also are permissible. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 359 Paragraph 5b(f)(2) not override any state or other law that requires a right 1. Limitations on termination and acceleration. In to cure notice, or otherwise places a duty on the general, creditors are prohibited from terminating and creditor before it can terminate a plan and accelerate accelerating payment of the outstanding balance be- the balance. fore the scheduled expiration of a plan. However, Paragraph 5b(f)(2)(iii) creditors may take these actions in the three circum- 1. Impairment of security. A creditor may terminate a stances specified in section 226.5b(f)(2). Creditors are plan and accelerate the balance if the consumer's action not permitted to specify in their contracts any other or inaction adversely affects the creditor's security for events that allow termination and acceleration beyond the plan, or any right of the creditor in that security. those permitted by the regulation. Thus, for example, Action or inaction by third parties does not, in itself, an agreement may not provide that the balance is permit the creditor to terminate and accelerate. payable on demand nor may it provide that the ac- 2. Examples. A creditor may terminate and accelerate, count will be terminated and the balance accelerated if for example, if: the rate cap is reached. —the consumer transfers title to the property or 2. Other actions permitted. If an event permitting sells the property without the permission of the termination and acceleration occurs, a creditor may creditor; instead take actions short of terminating and acceler- —the consumer fails to maintain required insurance ating. For example, a creditor could temporarily or on the dwelling; permanently suspend further advances, reduce the —the consumer fails to pay taxes on the property; credit limit, change the payment terms, or require the —the consumer permits the filing of a lien senior to consumer to pay a fee. A creditor also may provide in that held by the creditor; its agreement that a higher rate or higher fees will —the sole consumer obligated on the plan dies; apply in circumstances under which it would other- —the property is taken through eminent domain; or wise be permitted to terminate the plan and accelerate —a prior lienholder forecloses. the balance. A creditor that does not immediately terminate an account and accelerate payment or take By contrast, the filing of a judgment against the another permitted action may take such action at a consumer would permit termination and acceleration later time, provided one of the conditions permitting only if the amount of the judgment and collateral termination and acceleration exists at that time. subject to the judgment is such that the creditor's Paragraph 5b(J)(2)(i) security is adversely affected. If the consumer com- 1. Fraud or material misrepresentation. A creditor mits waste or otherwise destructively uses or fails to may terminate a plan and accelerate the balance if maintain the property such that the action adversely there has been fraud or material misrepresentation by affects the security, the plan may be terminated and the consumer in connection with the plan. This excep- the balance accelerated. Illegal use of the property by tion includes fraud or misrepresentation at any time, the consumer would permit termination and acceleraeither during the application process or during the tion if it subjects the property to seizure. If one of two draw period and any repayment period. What consti- consumers obligated on a plan dies, the creditor may tutes fraud or misrepresentation is determined by terminate the plan and accelerate the balance if the applicable state law and may include acts of omission security is adversely affected. If the consumer moves as well as overt acts, as long as any necessary intent out of the dwelling that secures the plan and that on the part of the consumer exists. action adversely affects the security, the creditor may Paragraph 5b(f)(2)(ii) terminate a plan and accelerate the balance. 1. Failure to meet repayment terms. A creditor may Paragraph 5b(f)(3) terminate a plan and accelerate the balance when the 1. Scope of provision. In general, a creditor may not consumer fails to meet the repayment terms provided change the terms of a plan after it is opened. For for in the agreement. However, a creditor may termi- example, a creditor may not increase any fee or nate and accelerate under this provision only if the impose a new fee once the plan has been opened, even consumer actually fails to make payments. For exam- if the fee is charged by a third party, such as a credit ple, a creditor may not terminate and accelerate if the reporting agency, for a service. The change of terms consumer, in error, sends a payment to the wrong prohibition applies to all features of a plan, not only location, such as a branch rather than the main office those required to be disclosed under this section. For of the creditor. If a consumer files for or is placed in example, this provision applies to charges imposed for bankruptcy, the creditor may terminate and accelerate late payment, although this fee is not required to be under this provision if the consumer fails to meet the disclosed under section 226.5b(d)(7). repayment terms of the agreement. This section does 2. Charges not covered. There are three charges not Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
360 Federal Reserve Bulletin • May 1990 covered by this provision. A creditor may pass on index becomes unavailable, as long as historical flucincreases in taxes since such charges are imposed by a tuations in the original and replacement indices were governmental body and are beyond the control of the substantially similar, and as long as the replacement creditor. In addition, a creditor may pass on increases index and margin will produce a rate similar to the rate in premiums for property insurance that are excluded that was in effect at the time the original index became from the finance charge under section 226.4(d)(2), unavailable. If the replacement index is newly estabsince such insurance provides a benefit to the con- lished and therefore does not have any rate history, it sumer independent of the use of the line and is often may be used if it produces a rate substantially similar maintained notwithstanding the line. A creditor also to the rate in effect when the original index became may pass on increases in premiums for credit insur- unavailable. ance that are excluded from the finance charge under Paragraph 5b(f)(3)(iii) section 226.4(d)(1), since the insurance is voluntary 1. Changes by written agreement. A creditor may and provides a benefit to the consumer. change the terms of a plan if the consumer expressly Paragraph 5b(f)(3)(i) agrees in writing to the change at the time it is made. 1. Changes provided for in agreement. A creditor may For example, a consumer and a creditor could agree in provide in the initial agreement for specific changes to writing to change the repayment terms from interesttake place upon the occurrence of specific events. only payments to payments that reduce the principal Both the triggering event and the resulting modifica- balance. The provisions of any such agreement are tion must be stated with specificity. For example, in governed by the limitations in section 226.5b(f). For home equity plans for employees, the agreement could example, a mutual agreement could not provide for provide that a specified higher rate or margin will future annual percentage rate changes based on the apply if the borrower's employment with the creditor movement of an index controlled by the creditor or for ends. A contract could contain a stepped-rate or termination and acceleration under circumstances stepped-fee schedule providing for specified changes other than those specified in the regulation. By conin the rate or the fees on certain dates or after a trast, a consumer could agree to a new credit limit for specified period of time. A creditor also may provide the plan, although the agreement could not permit the in the initial agreement that it will be entitled to a share creditor to later change the credit limit except by a of the appreciation in the value of the property as long subsequent written agreement or in the circumstances as the specific appreciation share and the specific described in section 226.5b(f)(3)(vi). circumstances which require the payment of it are set 2. Written agreement. The change must be agreed to in forth. A contract may permit a consumer to switch writing by the consumer. Creditors are not permitted among minimum payment options during the plan. to assume consent because the consumer uses an 2. Prohibited provisions. A creditor may not include a account, even if use of an account would otherwise general provision in its agreement permitting changes constitute acceptance of a proposed change under to any or all of the terms of the plan. For example, state law. creditors may not include "boilerplate" language in Paragraph 5b(f)(3)(iv) the agreement stating that they reserve the right to 1. Beneficial changes. After a plan is opened, a credchange the fees imposed under the plan. In addition, a itor may make changes that unequivocally benefit the creditor may not include any "triggering events" or consumer. Under this provision, a creditor may offer responses that the regulation expressly addresses in a more options to consumers, as long as existing options manner different from that provided in the regulation. remain. For example, a creditor may offer the con- For example, an agreement may not provide that the sumer the option of making lower monthly payments margin in a variable-rate plan will increase if there is a or could increase the credit limit. Similarly, a creditor material change in the consumer's financial circum- wishing to extend the length of the plan on the same stances, because the regulation specifies that tempo- terms may do so. Creditors are permitted to temporarily freezing the line or lowering the credit limit is the rarily reduce the rate or fees charged during the plan permissible response to a material change in the con- (though a change in terms notice may be required sumer's financial circumstances. Similarly a contract under section 226.9(c) when the rate or fees are cannot contain a provision allowing the creditor to returned to their original level). Creditors also may freeze a line due to an insignificant decline in property offer an additional means of access to the line, even if value since the regulation allows that response only for fees are associated with using the device, provided the a significant decline. consumer retains the ability to use prior access de- Paragraph 5b(f)(3)(ii) vices on the original terms. 1. Substitution of index. A creditor may change the Paragraph 5b(f)(3)(v) index and margin used under the plan if the original 1. Insignificant changes. A creditor is permitted to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 361 make insignificant changes after a plan is opened. This condition that permitted the creditor's action ceases to rule accommodates operational and similar problems, exist. One way a creditor can meet this responsibility such as changing the address of the creditor for is to monitor the line on an ongoing basis to determine purposes of sending payments. It does not permit a when the condition ceases to exist. The creditor must creditor to change a term such as a fee charged for late investigate the condition frequently enough to assure payments. itself that the condition permitting the freeze continues 2. Examples of insignificant changes. Creditors may to exist. The frequency with which the creditor must make minor changes to features such as the billing investigate to determine whether a condition continues cycle date, the payment due date (as long as the to exist depends upon the specific condition permitting consumer does not have a diminished grace period if the freeze. As an alternative to such monitoring, the one is provided), and the day of the month on which creditor may shift the duty to the consumer to request index values are measured to determine changes to the reinstatement of credit privileges by providing a notice rate for variable-rate plans. A creditor also may in accordance with section 226.9(c)(3). A creditor may change its rounding practice in accordance with the require a reinstatement request to be in writing if it tolerance rules set forth in section 226.14 (for example, notifies the consumer of this requirement on the notice stating an exact APR of 14.3333 percent as 14.3 provided under section 226.9(c)(3). Once the conpercent, even if it had previously been stated as 14.33 sumer requests reinstatement, the creditor must percent). A creditor may change the balance compu- promptly investigate to determine whether the conditation method it uses only if the change produces an tion allowing the freeze continues to exist. Under this insignificant difference in the finance charge paid by alternative, the creditor has a duty to investigate only the consumer. For example, a creditor may switch upon the consumer's request. from using the average daily balance method (includ- 5. Suspension of credit privileges following request by ing new transactions) to the daily balance method consumer. A creditor may honor a specific request by (including new transactions). a consumer to suspend credit privileges. If the con- Paragraph 5b(f)(3)(vi) sumer later requests that the creditor reinstate credit 1. Suspension of credit or reduction of credit limit. A privileges, the creditor must do so provided no other creditor may prohibit additional extensions of credit or circumstance justifying a suspension exists at that reduce the credit limit in the circumstances specified in time. If two or more consumers are obligated under a the regulation. A creditor may not take these actions plan and each has the ability to take advances, the under other circumstances, unless the creditor would agreement may permit any of the consumers to direct be permitted to terminate the line and accelerate the the creditor not to make further advances. A creditor balance as described in section 226.5b(f)(2). The cred- may require that all persons obligated under a plan itor's right to reduce the credit limit does not permit request reinstatement. reducing the limit below the amount of the outstanding 6. Significant decline defined. What constitutes a balance if this would require the consumer to make a significant decline for purposes of section higher payment. 226.5b(f)(3)(vi)(A) will vary according to individual 2. Temporary nature of suspension or reduction. Cred- circumstances. In any event, if the value of the dwellitors are permitted to prohibit additional extensions of ing declines such that the initial difference between the credit or reduce the credit limit only while one of the credit limit and the available equity (based on the designated circumstances exists. When the circum- property's appraised value for purposes of the plan) is stance justifying the creditor's action ceases to exist, reduced by fifty percent, this constitutes a significant credit privileges must be reinstated, assuming that no decline in the value of the dwelling for purposes of other circumstance permitting such action exists at section 226.5b(f)(3)(vi)(A). For example, assume that a that time. house with a first mortgage of $50,000 is appraised at 3. Imposition of fees. If not prohibited by state law, a $100,000 and the credit limit is $30,000. The difference creditor may collect only bona fide and reasonable between the credit limit and the available equity is appraisal and credit report fees if such fees are actually $20,000, half of which is $10,000. The creditor could incurred in investigating whether the condition permit- prohibit further advances or reduce the credit limit if ting the freeze continues to exist. A creditor may not, in the value of the property declines from $100,000 to any circumstances, impose a fee to reinstate a credit $90,000. This provision does not require a creditor to line once the condition has been determined not to obtain an appraisal before suspending credit privileges exist. although a significant decline must occur before sus- 4. Reinstatement of credit privileges. Creditors are pension can occur. responsible for ensuring that credit privileges are 7. Material change in financial circumstances. Two restored as soon as reasonably possible after the conditions must be met for section 226.5b(f)(3)(vi)(B) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
362 Federal Reserve Bulletin • May 1990 to apply. First, there must be a "material change" in percentage points over the initial rate), the change the consumer's financial circumstances, such as a would permit the consumer to obtain a refund of fees. significant decrease in the consumer's income. Sec- If a fee imposed by the creditor is stated in the early ond, as a result of this change, the creditor must have disclosures as an estimate and the fee changes, the a reasonable belief that the consumer will be unable to consumer could elect to not enter into the agreement fulfill the payment obligations of the plan. A creditor and would be entitled to a refund of fees. On the other may, but does not have to, rely on specific evidence hand, if fees imposed by third parties are disclosed as (such as the failure to pay other debts) in concluding estimates and those fees change, the consumer is not that the second part of the test has been met. A entitled to a refund of fees paid in connection with the creditor may prohibit further advances or reduce the application. Creditors must, however, use the best credit limit under this section if a consumer files for or information reasonably available in providing disclois placed in bankruptcy. sures about such fees. 8. Default of a material obligation. Creditors may 4. Timing of refunds and relation to other provisions. specify events that would qualify as a default of a The refund of fees must be made as soon as reasonably material obligation under section 226.5b(f)(3)(vi)(C). possible after the creditor is notified that the consumer For example, a creditor may provide that default of a is not entering into the plan because of the changed material obligation will exist if the consumer moves term, or that the consumer wants a refund of fees. The out of the dwelling or permits an intervening lien to be fact that an application fee may be refunded to some filed that would take priority over future advances applicants under this provision does not render such made by the creditor. fees finance charges under section 226.4(c)(1) of the 9. Government limits on the annual percentage rate. regulation. Under section 226.5b(f)(3)(vi)(D), a creditor may pro- 5b(h) Imposition of Nonrefundable Fees hibit further advances or reduce the credit limit if, for 1. Collection of fees after consumer receives discloexample, a state usury law is enacted which prohibits sures. A fee may be collected after the consumer a creditor from imposing the agreed-upon annual per- receives the disclosures and brochure and before the centage rate. expiration of three days, although the fee must be 5b(g) Refund of Fees refunded if, within three days of receiving the required 1. Refund of fees required. If any disclosed term, information, the consumer decides to not enter into including any term provided upon request pursuant to the agreement. In such a case, the consumer must be section 226.5b(d), changes between the time the early notified that the fee is refundable for three days. The disclosures are provided to the consumer and the time notice must be clear and conspicuous and in writing, the plan is opened, and the consumer as a result and may be included with the disclosures required decides to not enter into the plan, a creditor must under section 226.5b(d) or as an attachment to them. If refund all fees paid by the consumer in connection disclosures and brochure are mailed to the consumer, with the application. All fees, including credit report footnote lOd of the regulation provides that a nonrefees and appraisal fees, must be refunded whether fundable fee may not be imposed until six business such fees are paid to the creditor or directly to third days after the mailing. parties. A consumer is entitled to a refund of fees 2. Collection of fees before consumer receives disunder these circumstances whether or not terms are closures. An application fee may be collected before guaranteed by the creditor under section the consumer receives the disclosures and brochure 226.5b(d)(2)(i). (for example, when an application contained in a 2. Variable-rate plans. The right to a refund of fees magazine is mailed in with an application fee) prodoes not apply to changes in the annual percentage vided that it remains refundable until three business rate resulting from fluctuations in the index value in a days after the consumer receives the section 226.5b variable-rate plan. Also, if the maximum annual per- disclosures. No other fees except a refundable memcentage rate is expressed as an amount over the initial bership fee may be collected until after the consumer rate, the right to refund of fees would not apply to receives the disclosures required under section changes in the cap resulting from fluctuations in the 226.5b. index value. 3. Relation to other provisions. A fee collected before 3. Changes in terms. If a term, such as the maximum disclosures are provided may become nonrefundable rate, is stated as a range in the early disclosures, and except that, under section 226.5b(g), it must be rethe term ultimately applicable to the plan falls within funded if the consumer elects to not enter into the plan that range, a change does not occur for purposes of because of a change in terms. (Of course, all fees must this section. If, however, no range is used and the term be refunded if the consumer later rescinds under is changed (for example, a rate cap of 6 rather than 5 section 226.15.) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 363 Section 226.6—Initial Disclosure Statement disclosures again when the account is opened. If the creditor showed only one of the three options in the early disclosures (which would be the case with a 6(a) Finance Charge separate disclosure form rather than a combined form, as discussed under section 226.5b(a)), the disclosures under sections 226.5b(d)(5)(iii) and 226.5b(d)(12)(viii), Paragraph 6(a)(2) (x), (xi) and (xii) must be given to any consumer who chooses one of the other two options. If the sections 226.5b(d)(5)(iii) and 226.5b(d)(12) disclosures are pro- 7. Comment 6(a)(2)-2 is amended by adding a sentence vided with the second set of disclosures, they need not after the first sentence following the third bullet to read be transaction-specific, but may be based on a repreas follows: sentative example of the category of payment option 2. Variable-rate disclosures — coverage. * * * (See chosen. the rule in section 226.5b(f)(l) applicable to home 4. Disclosures for the repayment period. The creditor equity plans, however, which prohibits "rate reser- must provide disclosures about both the draw and vation" clauses.) * * * repayment phases when giving the disclosures under section 226.6. Specifically, the creditor must make the disclosures in section 226.6(e), state the corresponding 8. Comments 6(e)-1 through -4 and a heading are added annual percentage rate (as required in section to read as follows: 226.6(a)(2)) and provide the variable-rate information 6(e) Home Equity Plan Information required in footnote 12 for the repayment phase. To, 1. Additional disclosures required. For home equity the extent the corresponding annual percentage rate, plans, creditors must provide several of the disclo- the information in footnote 12 and any other required sures set forth in section 226.5b(d) along with the disclosures are the same for the draw and repayment disclosures required under section 226.6. Creditors phase, the creditor need not repeat such information, also must disclose a list of the conditions that permit as long as the disclosure clearly states that the inforthe creditor to terminate the plan, freeze or reduce the mation applies to both phases. credit limit, and implement specified modifications to the original terms. 2. Form of disclosures. The home equity disclosures provided under this section must be in a form the Section 226.9—Subsequent Disclosure consumer can keep, and are governed by section Requirements 226.5(a)(1). The segregation standard set forth in section 226.5b(a) does not apply to home equity disclosures provided under section 226.6. 3. Disclosure of payment and variable-rate examples. 9(c) Change in Terms The payment example disclosure in section 9. Comment 9(c)-1 is revised by adding a sentence at 226.5b(d)(5)(iii) and the variable-rate information in the end to read as follows: sections 226.5b(d)(12)(viii), (x), (xi), and (xii) need not 1. "Changes" initially disclosed. * * * The rules in be provided with the disclosures under section 226.6 if: section 226.5b(f) relating to home equity plans, —The disclosures under section 226.5b(d) were pro- however, limit the ability of a creditor to change the vided in a form the consumer could keep; and terms of such plans. —The disclosures of the payment example under section 226.5b(d)(5)(iii), the maximum payment example under section 226.5b(d)(12)(x) and the histor- 9(c)(1) Written Notice Required ical table under section 226.5b(d)(12)(xi) included a representative payment example for the category of payment options the consumer has chosen. 10. Comment 9(c)(l)-6 is added to read as follows: 6. Home equity plans. If a creditor renews the draw For example, if a creditor offers three payment options period for a home equity plan on terms different (one for each of the categories described in the com- from those of the original plan, the requirements of mentary to section 226.5b(d)(5)), describes all three section 226.9(c) apply to such a change. When the options in its early disclosures, and provides all of the terms are changed pursuant to a written agreement disclosures in a retainable form, that creditor need not as described in section 225.5b(f)(3)(iii), the advance provide the section 226.5b(d)(5)(iii) or 226.5b(d)(12) notice requirement does not apply. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
364 Federal Reserve Bulletin • May 1990 annualized amount. Alternatively, the card issuer may provide the notice no less than once every twelve 11. Comments 9(c)(3)-1 and -2 and a heading are added months if the notice explains the amount and freto read as follows: quency of the fee that will be billed during the time 9(c)(3) Notice for Home Equity Plans period covered by the disclosure, and also discloses 1. Written request for reinstatement. If a creditor the fee as an annualized amount. The notice under this requires the request for reinstatement of credit privialternative also must state the consequences of a leges to be in writing, the notice under section cardholder's decision to terminate the account after 226.9(c)(3) must state that fact. the renewal notice period has expired. For example, if 2. Notice not required. A creditor need not provide a a $2 fee is billed monthly but the notice is given notice under this paragraph if, pursuant to the comannually, the notice must inform the cardholder that mentary to section 226.5b(f)(2), a creditor freezes a the monthly charge is $2, the annualized fee is $24, and line or reduces a credit line rather than terminating a $2 will be billed to the account each month for the plan and accelerating the balance. coming year unless the cardholder notifies the card issuer. If the cardholder is obligated to pay an amount equal to the remaining unpaid monthly charges if the 12. Comments 9(e)-l through 9(e)(3)-2 and headings cardholder terminates the account during the coming are added to read as follows: year but after the first month, the notice must disclose 9(e) Disclosures Upon Renewal of Credit or Charge that fact. Card 6. Terminating credit availability. Card issuers have 1. Coverage. This paragraph applies to credit and some flexibility in determining the procedures for how charge card accounts of the type subject to 226.5a. and when an account may be terminated. However, (See section 226.5a(a)(3) and the accompanying com- the card issuer must clearly disclose the time by which mentary for discussion of the types of accounts subject the cardholder must act to terminate the account to to section 226.5a.) The disclosure requirements are avoid paying a renewal fee. State and other applicable triggered when a card issuer imposes any annual or law govern whether the card issuer may impose reother periodic fee on such an account, whether or not quirements such as specifying that the cardholder's the card issuer originally was required to provide the response be in writing or that the outstanding balance application and solicitation disclosures described in be repaid in full upon termination. section 226.5a. 7. Timing of termination by cardholder. When a card 2. Form. The disclosures under this paragraph must be issuer provides notice under section 226.9(e)(1), a clear and conspicuous, but need not appear in a cardholder must be given at least 30 days or one billing tabular format or in a prominent location. The disclo- cycle, whichever is less, from the date the notice is sures need not be in a form the cardholder can retain. mailed or delivered to make a decision whether to 3. Terms at renewal. Renewal notices must reflect the terminate an account. When notice is given under terms actually in effect at the time of renewal. For section 226.9(e)(2), a cardholder has 30 days from example, a card issuer that offers a preferential annual mailing or delivery to decide to terminate an account. percentage rate to employees during their employment 8. Timing of notices. A renewal notice is deemed to be must send a renewal notice to employees disclosing provided when mailed or delivered. Similarly, notice the lower rate actually charged to employees (although of termination is deemed to be given when mailed or the card issuer also may show the rate charged to the delivered. general public). 9. Prompt reversal of renewal fee upon termination. In 4. Variable rate. If the card issuer cannot determine a situation where a cardholder has provided timely the rate that will be in effect if the cardholder chooses notice of termination and a renewal fee has been billed to renew a variable-rate account, the card issuer may to a cardholder's account, the card issuer must reverse disclose the rate in effect at the time of mailing or or otherwise withdraw the fee promptly. Once a delivery of the renewal notice. Alternatively, the card cardholder has terminated an account, no additional issuer may use the rate as of a specified date (and then action by the cardholder may be required. update the rate from time to time, for example, each 9(e)(3) Notification on Periodic Statements calendar month) or use an estimated rate under section 1. Combined disclosures. If a single disclosure is used 226.5(c). to comply with both sections 226.9(e) and 226.7, the 5. Renewals more frequent than annual. If a renewal periodic statement must comply with the rules in fee is billed more often than annually, the renewal sections 226.5a and 226.7. For example, the words notice should be provided each time the fee is billed. "grace period" must be used and the name of the In this instance, the fee need not be disclosed as an balance calculation method must be identified (if listed Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 365 in section 226.5a(g)) to comply with the requirements issuer may explain the effect the cancellation would of section 226.5a, even though the use of those terms have on the consumer's credit card plan. would not otherwise be required for periodic state- 5. Mailing by third party. Although the card issuer is ments under section 226.7. A card issuer may include responsible for the disclosures, the insurance provider some of the renewal disclosures on a periodic state- or another third party may furnish the disclosures on ment and others on a separate document so long as the card issuer's behalf. there is some reference indicating that they relate to 9(f)(3) Substantial Decrease in Coverage one another. All renewal disclosures must be provided 1. Determination. Whether a substantial decrease in to a cardholder at the same time. coverage will result from the change in providers is 2. Preprinted notices on periodic statements. A card determined by the two-part test in section 226.9(f)(3): issuer may preprint the required information on its first, whether the decrease is in a significant term of periodic statements. A card issuer that does so, how- coverage; and second, whether the decrease might ever, using the advance notice option under section reasonably be expected to affect a cardholder's deci- 226.9(e)(1), must make clear on the periodic statement sion to continue the insurance. If both conditions are when the preprinted renewal disclosures are applica- met, the decrease must be disclosed in the notice. ble. For example, the card issuer could include a special notice (not preprinted) at the appropriate time that the renewal fee will be billed in the following billing cycle, or could show the renewal date as a Section 226.12—Special Credit Card Provisions regular (preprinted) entry on all periodic statements. 13. Comments 9(f)-1 through 9(f)-4 and 9(f)(3)-1 and headings are added to read as follows: 12(a) Issuance of Credit Cards 9(f) Change in Credit Card Account Insurance Provider 1. Coverage. This paragraph applies to credit card Paragraph 12(a)(2) accounts of the type subject to section 226.5a if credit insurance (typically life, disability, and unemployment insurance) is offered on the outstanding balance of 14. Comment 12(a)(2)-9 is added to read as follows: such an account. (Credit card accounts subject to 9. Multiple entities. Where multiple entities share section 226.9(f) are the same as those subject to responsibilities with respect to a credit card issued section 226.9(e); see comment 9(e)-l.) Charge card by one of them, the entity that issued the card may accounts are not covered by this paragraph. In addi- replace it on an unsolicited basis, if that entity terminates the original card by voiding it in some tion, the disclosure requirements of this paragraph way, as described in comment 12(a)(2)-7. The other apply only where the card issuer initiates the change in entity or entities may not issue a card on an unsoinsurance providers. For example, if the card issuer's licited basis in these circumstances. current insurance provider is merged into or acquired by another company, these disclosures would not be required. Disclosures also need not be given in cases where card issuers pay for credit insurance themselves and do not separately charge the cardholder. Section 226.14—Determination of Annual 2. No increase in rate or decrease in coverage. The Percentage Rate requirement to provide the disclosure arises when the card issuer changes the provider of insurance, even if there will be no increase in the premium rate charged 15. The heading to comments under section 226.14(b) the consumer and no decrease in coverage under the is revised to read as follows: insurance policy. 14(b) Annual Percentage Rate for Section 226.5a and 3. Form of notice. If a substantial decrease in coverage 226.5b Disclosures, for Initial Disclosures and for will result from the change in providers, the card Advertising Purposes issuer either must explain the decrease or refer to an accompanying copy of the policy or group certificate 16. Comment 14(b)-1 is amended by revising the first for details of the new terms of coverage. (See the sentence to read as follows: commentary to appendix G-13.) 1. Corresponding annual percentage rate computa- 4. Discontinuation of insurance. In addition to stating tion. For purposes of sections 226.5a, 226.5b, 226.6 that the cardholder may cancel the insurance, the card and 226.16, the annual percentage rate is determined Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
366 Federal Reserve Bulletin • May 1990 by multiplying the periodic rate by the number of periods in the year. * * * 19. Comment 16(b)-7 is revised to read as follows: 7. Triggering terms. The following are examples of terms that trigger additional disclosures: —"Small monthly service charge on the remaining Section 226.15—Right of Rescission balance," which describes how the amount of a finance charge will be determined. —"12 percent Annual Percentage Rate" or "A $15 15(a) Consumer's Right to Rescind annual membership fee buys you $2,000 in credit," which describe required disclosures using positive numbers. Paragraph 15(a)(3) 20. Comment 16(b)-8 is added to read as follows: 8. Deferred billing and deferred payment programs. 17. Comments to 15(a)(3) are amended by revising the Statements such as "Charge it — you won't be fourth sentence and by adding two sentences at the billed until May" or "You may skip your January end of comment 15(a)(3)-2; and by adding a sentence at payment" are not in themselves triggering terms, the end of comment 15(a)(3)-3 to read as follows: since the timing for initial billing or for monthly 2. Material disclosures. * * * Failure to give the payments are not terms required to be disclosed other required initial disclosures (such as the billing under section 226.6. However, a statement such as rights statement) or the information required under "No finance charge until May" or any other statesection 226.5b does not prevent the running of the ment regarding when finance charges begin to acrescission period, although that failure may result in crue is a triggering term, whether appearing alone or civil liability or administrative sanctions. The payin conjunction with a description of a deferred ment terms set forth in footnote 36 apply to any billing or deferred payment program such as the repayment phase set forth in the agreement. Thus, the payment terms described in section 226.6(e)(2) examples above. for any repayment phase as well as for the draw period are "material disclosures." 21. Comments 16(d)-1 through -6 and a heading are 3. Material disclosures — variable-rate program. * * added to read as follows: * The disclosures listed in footnote 12 to section 16(d) Additional Requirements for Home Equity Plans 226.6(a)(2) for any repayment phase also are mate- 1. Trigger terms. Negative as well as affirmative refrial disclosures for variable-rate programs. erences trigger the requirement for additional information. For example, if a creditor states "no annual fee," "no points," or "we waive closing costs" in an advertisement, additional information must be pro- Section 226.16—Advertising vided. (See comment 16(d)-4 regarding the use of a phrase such as "no closing costs.") Inclusion of a * * * ** statement such as "low fees," however, would not 16(b) Advertisement of Terms That Require Additional trigger the need to state additional information. Refer- Disclosures ences to payment terms include references to the draw period or any repayment period, to the length of the 18. Comments to 16(b) are revised by adding paren- plan, to how the minimum payments are determined thetical material at the end of comment 16(b)-2 and by and to the timing of such payments. revising the last sentence in comment 16(b)-6 to read 2. Fees to open the plan. Section 226.16(d)(l)(i) reas follows: quires a disclosure of any fees imposed by the creditor 2. Use of positive terms. * * * (See, however, the or a third party to open the plan. In providing the fee rules in section 226.16(d) relating to advertisements information required under this paragraph, the correfor home equity plans.) sponding rules for disclosure of this information apply. For example, fees to open the plan may be stated as a range. Similarly, if property insurance is required to 6. Discounted variable-rate plans — disclosure of open the plan, a creditor either may estimate the cost the annual percentage rates. * * * The options listed of the insurance or provide a statement that such in comment 16(b)-5 may be used in disclosing the insurance is required. (See the commentary to sections current indexed rate. 226.5b(d)(7) and (8).) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 367 3. Statements of tax deductibility. An advertisement 23. Comments to 17(c)(1) are revised by adding four referring to deductibility for tax purposes is not mis- sentences and parenthetical material at the end of leading if it includes a statement such as "consult a tax comment 17(c)(l)-4; by adding a fourth bullet before advisor regarding the deductibility of interest." the last sentence of comment 17(c)(l)-ll; and by 4. Misleading terms prohibited. Under section adding a new comment 17(c)(1)-17, to read as follows: 226.16(d)(5), advertisements may not refer to home equity plans as "free money" or use other misleading terms. For example, an advertisement could not state 4. Consumer buy downs. * * * The rules regarding "no closing costs" or "we waive closing costs" if consumer buydowns do not apply to transactions consumers may be required to pay any closing costs, known as "lender buydowns." In lender buydowns, such as recordation fees. a creditor pays an amount (either into an account or 5. Relation to other sections. Advertisements for to the party to whom the obligation is sold) to reduce home equity plans must comply with all provisions in the consumer's payments or interest rate for all or a section 226.16, not solely the rules in section portion of the credit term. Typically, these transac- 226.16(d). If an advertisement contains information tions are structured as a buy down of the interest rate (such as the payment terms) that triggers the duty during an initial period of the transaction with a under section 226.16(d) to state the annual percentage higher than usual rate for the remainder of the term. rate, the additional disclosures in section 226.16(b) The disclosures for lender buydowns should be must be provided in the advertisement. While section based on the terms of the legal obligation between 226.16(d) does not require a statement of fees to use or the consumer and the creditor. (See comment maintain the plan (such as membership fees and trans- 17(c)(l)-3 for the analogous rules concerning thirdaction charges), such fees must be disclosed under party buydowns.) section 226.16(b)(1) and (3). 6. Inapplicability of closed-end rules. Advertisements for home equity plans are governed solely by the 11. Other variable-rate transactions. * * * requirements in section 226.16, and not by the closed- — "Price level adjusted mortgages" or other inend advertising rules in section 226.24. Thus, if a dexed mortgages that have a fixed rate of interest creditor states payment information about the repay- but provide for periodic adjustments to payments ment phase, this will trigger the duty to provide and the loan balance to reflect changes in an index additional information under section 226.16, but not measuring prices or inflation. Disclosures are to be under section 226.24. based on the fixed interest rate. * * * Subpart C—Closed-End Credit 17. Special rules for tax refund anticipation loans. Tax Section 226.17—General Disclosure refund loans, also known as refund anticipation loans Requirements (RALs), are transactions in which a creditor will lend up to the amount of a consumer's expected tax refund. RAL agreements typically require repayment upon 17(b) Time of Disclosures demand, but also may provide that repayment is required when the refund is made. The agreements also typically provide that if the amount of the refund 22. Comment 17(b)-2 is amended by revising the first is less than the payment due, the consumer must pay sentence to read as follows: the difference. Repayment often is made by a preau- 2. Converting open-end to closed-end credit. Except thorized offset to a consumer's account held with the for home equity plans subject to section 226.5b in creditor when the refund has been deposited by elecwhich the agreement provides for a repayment tronic transfer. Creditors may charge fees for RALs in phase, if an open-end credit account is converted to addition to fees for filing the consumer's tax return a closed-end transaction under a written agreement electronically. In RAL transactions subject to the with the consumer, the creditor must provide a set regulation, the following special rules apply: of closed-end credit disclosures before consumma- —If, under the terms of the legal obligation, repaytion of the closed-end transaction. * * * ment of the loan is required when the refund is received by the consumer (such as by deposit into the consumer's account), the disclosures should be 17(c) Basis of Disclosures and Use of Estimates based on the creditor's estimate of the time the Paragraph 17(c)(1) refund will be delivered even if the loan also con- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
368 Federal Reserve Bulletin • May 1990 tains a demand clause. The practice of a creditor to whether or not a transaction involves an "intermedidemand repayment upon delivery of refunds does ary agent or broker" the following factors should be not determine whether the legal obligation requires considered: that repayment be made at that time; this determi- —The number of applications submitted by the nation must be made according to applicable state or broker to the creditor as compared to the total other law. (See comment 17(c)(5)-1 for the rules number of applications received by the creditor. The regarding disclosures if the loan is payable solely on greater the percentage of total loan applications demand or is payable either on demand or on an submitted by the broker in any given period of time, alternate maturity date.) the less likely it is that the broker would be consid- —If the consumer is required to repay more than the ered an "intermediary agent or broker" of the amount borrowed, the difference is a finance charge creditor during the next period. unless excluded under section 226.4. In addition, to —The number of applications submitted by the the extent that any fees charged in connection with broker to the creditor as compared to the total the loan (such as for filing the tax return electroni- number of applications received by the broker. (This cally) exceed those fees for a comparable cash factor is applicable only if the creditor has such transaction (that is, filing the tax return electroni- information.) The greater the percentage of total cally without a loan), the difference must be in- loan applications received by the broker that is cluded in the finance charge. submitted to a creditor in any given period of time, the less likely it is that the broker would be considered an "intermediary agent or broker" of the creditor during the next period. Section 226.19—Certain Residential Mortgage —The amount of work (such as document prepara- Transactions tion) the creditor expects to be done by the broker on an application based on the creditor's prior 19(a)(1) Time of Disclosure dealings with the broker and on the creditor's requirements for accepting applications. The more preparation that the creditor expects the broker to 24. Comment 19(a)(l)-3 is revised by adding parenthet- do on an application, the less likely it is that the ical materials after the third sentence to read as broker would be considered an "intermediary agent follows: or broker" of the creditor. 3. Written application. * * * (See comment 19(b)-3 for guidance in determining whether or not the transac- An example of an "intermediary agent or broker" is a tion involves an intermediary agent or broker.) broker who, customarily within a brief time after receiving an application, inquires about the credit terms of several creditors with whom the broker does 19(b) Certain Variable-Rate Transactions business and submits the application to one of them. 25. Comments to 19(b) are amended by adding paren- The broker is responsible for only a small percentage thetical information after the second sentence in com- of the applications received by that creditor. During ment 19(b)-2; by redesignating comments 19(b)-3 the time the broker has the application, it might and -4 to be comments 19(b)-4 and -5, respectively; by request a credit report and an appraisal. adding new comment 19(b)-3; and by adding a third bullet before the last sentence of comment 19(b)-5 to read as follows: 5. Examples of variable-rate transactions. * * * —"Price level adjusted mortgages" or other indexed mortgages that have a fixed rate of interest 2. Timing. * * * (See comment 19(b)-3 for guidance in but provide for periodic adjustments to payments determining whether or not the transaction involves an and the loan balance to reflect changes in an index intermediary agent or broker.) * * * measuring prices or inflation. The disclosures under 3. Intermediary agent or broker. In certain transac- section 226.19(b)(1) are not applicable to such loans, tions involving an "intermediary agent or broker," a nor are the following provisions to the extent they creditor may delay providing disclosures. A creditor relate to the determination of the interest rate by the may not delay providing disclosures in transactions addition of a margin, changes in the interest rate, or involving either a legal agent (as determined by appli- interest rate discounts: Sections 226.19(b)(2)(i), (iii), cable law) or any other third party that is not an (iv), (v), (vi), (vii), (viii), (ix), and (x). (See com- "intermediary agent or broker." In determining ments 20(c)-2 and 30-1 regarding the inapplicability Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 369 of variable-rate adjustment notices and interest rate either an account for consumer purposes or an account limitations to price level adjusted or similar mort- for business purposes is deemed to be a "consumer gages.) credit or charge card application or solicitation.") For example, a state law requiring disclosure of credit terms in direct mail solicitations for consumer credit card accounts is preempted. A state law requiring Section 226.20—Subsequent Disclosure disclosures in telephone applications for consumer Requirements credit card accounts also is preempted, even if it applies to applications initiated by the consumer rather than the issuer, because the state law relates to the 20(c) Variable-Rate Adjustments disclosure of credit information in applications or solicitations within the general field of preemption, that is, consumer credit and charge cards. 26. Comment 20(c)-2 is amended by revising it to read 2. Limitations on field of preemption. Preemption as follows: under the Fair Credit and Charge Card Disclosure 2. Exceptions. Section 226.20(c) does not apply to Act does not extend to state laws applying to types of "shared-equity," "shared-appreciation," or "price credit other than open-end consumer credit and level adjusted" or similar mortgages. charge card accounts. Thus, for example, a state law is not preempted as it applies to disclosures in credit and charge card applications and solicitations solely for business-purpose accounts. On the other hand, Subpart D—Miscellaneous state credit disclosure laws will not apply to a single Section 226.25—Record Retention application or solicitation to open either an account for consumer purposes or an account for business purposes. Such "dual purpose" applications and 25(a) General Rule solicitations are treated as "consumer credit or charge card applications or solicitations" under this section and state credit disclosure laws applicable to 27. Comment 25(a)-4 is added to read as follows: them are preempted. Preemption under this statute 4. Home equity plans. In home equity plans that are does not extend to state laws applicable to home subject to the requirements of section 226.5b, writequity plans; preemption determinations in this area ten procedures for compliance with those requireare based on the Home Equity Loan Consumer ments as well as a sample disclosure form and Protection Act, as implemented in section 226.5b of contract for each home equity program represent adequate evidence of compliance. (See comment the regulation. 25(a)-2 pertaining to permissible methods of retain- 3. Laws not preempted. State laws relating to discloing the required disclosures.) sures concerning credit and charge cards other than in applications, solicitations, or renewal notices are not preempted under section 226.28(d). In addition, state laws regulating the terms of credit and charge card Section 226.28—Effect on State Laws accounts are not preempted, nor are laws preempted that regulate the form or content of information unrelated to the information required to be disclosed under 28. Comments 28(d)-1 through 28(d)-3 and a heading sections 226.5a and 226.9(e). Finally, state laws conare added to read as follows: cerning the enforcement of the requirements of sec- 28(d) Special Rule for Credit and Charge Cards tions 226.5a and 226.9(e) and state laws prohibiting 1. General. The standard that applies to preemption of unfair or deceptive acts or practices concerning credit state laws as they affect transactions of the type and charge card applications, solicitations and renewsubject to sections 226.5a and 226.9(e) differs from the als are not preempted. Examples of laws that are not preemption standards generally applicable under the preempted include: Truth in Lending Act. The Fair Credit and Charge —A state law that requires card issuers to offer a Card Disclosure Act fully preempts state laws relating grace period or that prohibits certain fees in credit to the disclosure of credit information in consumer and charge card transactions. credit or charge card applications or solicitations. (For —A state retail installment sales law or a state plain purposes of this section, a single credit or charge card language law, except to the extent that it regulates application or solicitation that may be used to open the disclosure of credit information in applications, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
370 Federal Reserve Bulletin • May 1990 solicitations and renewals of accounts of the type APPENDIX G—OPEN-END MODEL FORMS AND subject to sections 226.5a and 226.9(e). CLAUSES —A state law requiring notice of a consumer's rights under antidiscrimination or similar laws or a state law requiring notice about credit information avail- 31. Comments app. G-5 through app. G-7 are added to able from state authorities. read as follows: 5. Models G-10(A) through G-10(C). Models G-10(A) and G-10(B) illustrate the tabular format for providing the disclosures required under section 226.5a for Section 226.30—Limitations on Rates applications and solicitations for credit cards other than charge cards. Model G-10(A) illustrates the 29. Comment 30-1 is amended by revising the first permissible inclusion in the tabular format of all of sentence in the second bullet; by revising the first the disclosures. Model G-10(B) contains only the sentence in the fourth bullet; and by adding a sixth disclosures required to be included in the table, while bullet before the last two sentences to read as follows: the three additional disclosures are shown outside of I. Scope of coverage. * * * Examples of credit the table. The two forms also illustrate two different obligations subject to this section include: * * * levels of detail in disclosing the grace period, and —Dwelling-secured open-end credit plans entered different arrangements of the disclosures. Model into before November 7, 1989 (the effective date of G-10(C) illustrates the tabular format disclosure for the home equity rules) that are not considered charge card applications and solicitations and reflects variable-rate obligations for purposes of disclosure all of the disclosures in the table. Disclosures may be under the regulation but where the creditor reserves arranged in an order different from that in model the contractual right to increase the interest rate— forms G- 10(A), (B), and (C); may be arranged vertiperiodic rate and corresponding annual percentage cally or horizontally; need not be highlighted aside rate—during the term of the plan. from being included in the table; and are not required to be in any particular type size. Various features In contrast, credit obligations in which there is no from different model forms may be combined; for contractual right to increase the interest rate during example, the shorter grace period disclosure in the term of the obligation are not subject to this model form G-10(B) may be used in any disclosure. section. Examples include: * * * While proper use of the model forms will be deemed —Dwelling-secured fixed-rate closed-end balloon- in compliance with the regulation, card issuers are payment mortgage loans and dwelling-secured permitted to use headings and disclosures other than fixed-rate open-end plans with a stated term that the those in the forms (with an exception relating to the creditor may renew at maturity. * * * use of "grace period") if they are clear and concise —"Price level adjusted mortgages" or other in- and are substantially similar to the headings and dexed mortgages that have a fixed rate of interest disclosures contained in model forms. For further but provide for periodic adjustments to payments discussion of requirements relating to form, see the and the loan balance to reflect changes in an index commentary to section 226.5a(a)(2). measuring prices or inflation. * * * 6. Models G-ll and G-12. Model G-ll contains clauses that illustrate the general disclosures required under section 226.5a(e) in applications and 30. Comment 30-11 is amended by revising the fourth solicitations made available to the general public. sentence; by deleting the fifth sentence; and by adding a Model G-12 is a model clause for the disclosure sentence after the fourth sentence, to read as follows: required under section 226.5a(f) when a charge card accesses an open-end plan offered by another credi- II. Increasing the maximum interest rate — general tor. rule. * * * Furthermore, where an open-end plan has a fixed maturity and a creditor renews the plan at 7. Models G-13(A) and G-13(B). These model forms maturity, or enters into a closed-end credit transac- illustrate the disclosures required under section tion, a new maximum interest rate may be set at that 226.9(f) when the card issuer changes the entity time. If the open-end plan provides for a repayment providing insurance on a credit card account. Model phase, the maximum interest rate cannot be increased G-13(A) contains the items set forth in section when the repayment phase begins unless the agree- 226.9(f)(3) as examples of significant terms of coverment provided for such an increase. * * * age that may be affected by the change in insurance provider. The card issuer may either list all of these potential changes in coverage and place a check Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 371 mark by the applicable changes, or list only the APPENDIX F—OFFICIAL BOARD actual changes in coverage. Under either approach, INTERPRETATIONS; PREEMPTION the card issuer must either explain the changes or refer DETERMINA TIONS to an accompanying copy of the policy or group certificate for details of the new terms of coverage. Model G-13(A) also illustrates the permissible combination of California the two notices required by section 226.9(f)—the notice required for a planned change in provider and the notice required once a change has occurred. This form may be * * * The regulations applicable to commercial banks modified for use in providing only the disclosures and branches of foreign banks located in California required before the change if the card issuer chooses to (Cal. Admin. Code tit. 10, §§ 10.190401-10.190402) send two separate notices. Thus, for example, the were promulgated by the Superintendent of Banks. references to the attached policy or certificate would The regulations applicable to savings banks and savnot be required in a separate notice prior to a change in ings and loan associations (Cal. Admin. Code tit. 10, the insurance provider since the policy or certificate §§ 106.200-106.202) were adopted by the Savings and need not be provided at that time. Model G-13(B) Loan Commissioner. * * * illustrates the disclosures required under section 226.9(f)(2) when the insurance provider is changed. Commercial Banks and Branches of Foreign Banks Coverage. The California State Banking Department regulations, which apply to California state commer- AMENDMENT TO REGULATION CC cial banks, California national banks, and California branch offices of foreign banks, provide that a depos- The Board of Governors is amending 12 C.F.R. Part itary bank shall make funds deposited into a deposit 229, its Regulation CC (Availability of Funds and account available for withdrawal as provided in Reg- Collection of Checks), concerning the laws of Cali- ulation CC with certain exceptions. The funds availfornia relating to commercial banks, branches of ability schedules in Regulation CC apply only to foreign banks, savings and loan associations, and "accounts" as defined in Regulation CC, which gensavings banks. The Expedited Funds Availability erally consist of transaction accounts. The California Act provides standards for determining whether state funds availability law and regulations apply to aclaws governing funds availability supersede or are counts as defined by Regulation CC as well as savings preempted by federal law. Under Regulation CC, the accounts (other than time accounts), as defined in the Board may issue preemption determinations with Board's Regulation D (12 C.F.R. 204.2(d)). (Note, respect to state law upon request. however, that under section 229.19(e) of Regula- Effective March 22, 1990, 12 C.F.R. Part 229 is tion CC, Holds on other funds, the federal availability amended as follows: schedules may apply to savings, time, and other accounts not defined as "accounts" under Regulation CC in certain circumstances.) Part 229—{Amended] Availability Schedules 1. The authority citation for Part 229 continues to read Temporary schedule—Regulation CC provides that, as follows: until September 1, 1990, nonlocal checks must be made available for withdrawal by the seventh business Authority: Title VI of Pub. L. 100-86, 101 Stat. 552, day after the banking day of deposit, except for certain 635, 12 U.S.C. § 4001 et seq. nonlocal checks listed in Appendix B-l, which must be made available within a shorter time (by the fifth 2. In Appendix F, the California preemption deter- business day following deposit for those California mination is amended by revising the second and third checks listed). Under the temporary schedule in the sentences of the second paragraph, and by adding, California regulations, a depositary bank with a fourwithin the reserved sections, preemption determina- digit routing symbol of 1210 ("1210 bank") or of 1220 tions for Commercial Banks and Branches of Foreign ("1220 bank") that receives for deposit a check drawn Banks and for Savings Institutions. on a nonlocal, in-state commercial bank or foreign Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
372 Federal Reserve Bulletin • May 1990 bank branch1 must make the funds available for with- must make the funds available for withdrawal by the drawal by the fourth business day after the day of fourth business day after the day of deposit. These deposit. The California regulations provide that 1210 state schedules provide for shorter hold periods than and 1220 banks must make deposited checks drawn on and thus supersede the federal schedules. nonlocal in-state thrifts (defined as savings and loan Second-day availability—Section 867 of the Caliassociations, savings banks, and credit unions) avail- fornia Financial Code requires depository instituable by the fifth business day after deposit. In addition, tions to make funds deposited by cashier's check, California law provides that all other depositary banks teller's check, certified check, or depository check must make deposited checks drawn on a nonlocal available for withdrawal on the second business day in-state commercial bank or foreign bank branch avail- following deposit, if certain conditions are met. The able by the fifth business day after deposit and checks Regulation CC next-day availability requirement for drawn on nonlocal in-state thrifts available by the sixth cashier's checks and teller's checks applies only to business day after deposit. To the extent that these those checks issued to a customer of the bank or schedules provide for shorter holds than Regula- acquired from the bank for remittance purposes. To tion CC and its Appendix B-l, the state schedules the extent that the state second-day availability resupersede the federal schedules.2 For example, the quirement applies to cashier's and teller's checks California four-day schedule that applies to checks issued to a non-customer of the bank for other than drawn on in-state nonlocal commercial banks or for- remittance purposes, the state two-day requirements eign bank branches and deposited in a 1210 or 1220 supersedes the federal local and nonlocal schedules. bank would be shorter than and would supersede the Availability at start of day—The California regulafederal schedules. tions do not specify when during the day funds must be The California regulations do not specify whether made available for withdrawal. Section 229.19(b) of the state schedules apply to deposits of checks at Regulation CC provides that funds must be made nonproprietary ATMs. Under the temporary sched- available at the start of the business day. In those ules in Regulation CC, deposits at nonproprietary cases where federal and state law provide for holds for ATMs must be made available for withdrawal by the the same number of days, to the extent that the seventh business day following deposit. To the extent California regulations allow funds to be made available that the California schedules provide for shorter avail- later in the day than does Regulation CC, the federal ability for deposits at nonproprietary ATMs, they law would preempt state law. would supersede the temporary schedule in Regulation Exceptions to the availability schedules—Under the CC for deposits at nonproprietary ATMs specified in state preemption standards of Regulation CC (see secsection 229.11(d). tion 229.20(c) and accompanying Commentary), for Permanent schedule—Regulation CC provides that, deposits subject to the state availability schedules, a as of September 1, 1990, nonlocal checks must be state exception may be used to extend the state availmade available for withdrawal by the fifth business day ability schedule up to the federal availability schedule. after the banking day of deposit. Under the permanent Once the deposit is held up to the federal availability schedule in the California regulations, a depositary schedule limit under a state exception, the depositary bank with a four-digit routing symbol of 1210 or of bank may further extend the hold under any federal 1220 that receives for deposit a check drawn a nonlo- exception that can be applied to the deposit. If no state cal, in-state commercial bank or foreign bank branch exceptions exist, then no exception holds may be placed on deposits covered by state schedules. Thus, to the extent that California law provides for exceptions to 1. The California regulation uses the term "paying bank" when the California schedules that supersede Regulation CC, describing the institution on which these checks are drawn, but does not define "paying bank" or "bank." Regulation CC's definitions of those exceptions may be applied in order to extend the "paying bank" and "bank" include savings institutions and credit state availability schedules up to the federal availability unions as well as commercial banks and branches of foreign banks. schedules or such later time as is permitted by a federal However, because the California regulation makes separate provisions for checks drawn on savings institutions and credit unions, the exception. Board concludes that the term "paying bank," as used in the Disclosures. California law (Cal. Fin. Code § 866.2) California regulation, includes only commercial banks and foreign requires depository institutions to provide written disbank branches. 2. Appendix B-l of Regulation CC provides that the federal sched- closures of their general availability policies to potential ules will be the same as the California schedules (5 days) in the customers prior to opening any deposit accounts. The following cases: a depositary bank bearing a 1210 routing number receiving for deposit checks bearing a 3220 or a 3223 routing number, law also requires that preprinted deposit slips and ATM and a depositary bank bearing a 1220 routing number receiving for deposit envelopes contain a conspicuous summary of deposit checks bearing a 3210 routing number. In the cases where the general policy. Finally, the law requires depository federal and state law are the same, the state law is not preempted by, nor does it supersede, the federal law. institutions to provide specific notice of the time the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 373 customer may withdraw funds deposited by check or fornia law incorporates the Regulation CC availabilsimilar instrument into a deposit account if the funds ity requirements with respect to deposits to accounts are not available for immediate withdrawal. covered by Regulation CC. Because the state re- Section 229.20(c)(92) of Regulation CC provides quirements are consistent with the federal requirethat inconsistency may exist when a state law pro- ments, the California regulation is not preempted by, vides for disclosures or notices concerning funds nor does it supersede, the federal law. availability relating to accounts. California Financial Disclosures. California law (Cal. Fin. Code § Code § 866.2 requires disclosures that differ from 866.2) requires depository institutions to provide those required by Regulation CC and, therefore, is written disclosures of their general availability polipreempted to the extent that it applies to "ac- cies to potential customers prior to opening any counts" as defined in Regulation CC. The state law deposit account. The law also requires that precontinues to apply to savings accounts and other printed deposit slips and ATM deposit envelopes accounts not governed by Regulation CC disclosure contain a conspicuous summary of the general polrequirements. icy. Finally, the law requires depository institutions to provide specific notice of the time the customer Savings Institutions may withdraw funds deposited by check or similar instrument into a deposit account if the funds are not Coverage. The California Department of Savings and available for immediate withdrawal. Section Loan regulations, which apply to California savings 229.20(c)(2) of Regulation CC provides that inconsisand loan associations and California savings banks, tency may exist when a state law provides for provide that a depositary bank shall make funds disclosures or notices concerning funds availability deposited into a transaction or non-transaction ac- relating to accounts. To the extent that California count available for withdrawal as provided in Regu- Financial Code § 866.2 requires disclosures that lation CC. The funds availability schedules in Regu- differ from those required by Regulation CC and lation CC apply only to "accounts" as defined in apply to "accounts" as defined in Regulation CC Regulation CC, which generally consist of transac- (generally, transaction accounts), the California law tion accounts. The California funds availability law is preempted by Regulation CC. and regulations apply to accounts as defined by The Department of Savings and Loan regulations Regulation CC as well as savings accounts as defined provide that for those non-transaction accounts covin the Board's Regulation D (12 C.F.R. 204.2(d)). ered by state law but not by federal law, disclosures (Note, however, that under section 229.19(e) of in accordance with Regulation CC will be deemed to Regulation CC, Holds on other funds, the federal comply with the state law disclosure requirements. availability schedules may apply to savings, time, To the extent that the Department of Savings and and other accounts not defined as "accounts" under Loan regulations permit reliance on Regulation CC Regulation CC in certain circumstances.) disclosures for transaction accounts and to the extent the state regulations survive the preemption of Cali- Availability Schedules fornia Financial Code § 866.2, they are not preempted by, nor do they supersede, the federal law. Second-day availability—Section 867 of the Califor- The state law continues to apply to savings accounts nia Financial Code requires depository institutions to and other non-transaction accounts not governed by make funds deposited by cashier's check, teller's Regulation CC disclosure requirements. check, certified check, or depository check available for withdrawal on the second business day following deposit, if certain conditions are met. The Regula- AMENDMENT TO REGULATIONS REGARDING tion CC next-day availability requirement for cash- FOREIGN GIFTS AND DECORATIONS ier's checks and teller's checks applies only to those checks issued to a customer of the bank or acquired The Board of Governors is amending 12 C.F.R. Part from the bank for remittance purposes. To the extent 264b, its Regulations Regarding Foreign Gifts and that the state second-day availability requirement Decorations. The Congress has permitted federal govapplies to cashier's and teller's checks issued to a ernment employees to accept gifts from foreign govnon-customer of the bank for other than remittance ernments in amounts up to a "minimal value" that is purposes, the state two-day requirement supersedes to be established by the General Services Administrathe federal local and nonlocal schedules. tion ("GSA") in consultation with the Secretary of Temporary and Permanent Schedules—Other than State. While the Board's Rules Regarding Foreign the provisions of Section 867 discussed above, Cali- Gifts and Regulations set "minimal value" at $180 or Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
374 Federal Reserve Bulletin • May 1990 such higher amount as might be established by the the applications and all comments received in light of GSA, the GSA has since redefined minimal value, the factors set forth in section 3 of the BHC Act and in effective January 1, 1990, to be $200. Accordingly, this the Bank Merger Act (12 U.S.C. § 1828(c)(5)). technical amendment will change the Board's defini- First Citizens is the 43rd largest commercial banking tion of "minimal value" to be $200 or such higher organization in Ohio, controlling deposits of approxiamount as might be established by the GSA. mately $151.9 million, representing less than one per- Effective January 1, 1990, 12 C.F.R. Part 264b is cent of the total deposits in commercial banking orgaamended as follows: nizations in the state.1 Bank is one of the smaller commercial banking organizations in Ohio, controlling Part 264b—Rules Regarding Foreign Gifts and deposits of approximately $37.3 million, representing Decorations less than one percent of the total deposits in commercial banking organizations in the state. Upon consum- 1. The authority citation for Part 264b continues to mation of the proposal, First Citizens would become read as follows: the 32nd largest commercial banking organization in Ohio, controlling deposits of $189.2 million, represent- Authority: 5 U.S.C. § 7342, as amended; and sec. ll(i) ing less than one percent of the total deposits in of the Federal Reserve Act (12 U.S.C. § 248(i)); commercial banking organizations in the state. Con- 5 U.S.C. § 552. summation of the proposal would not have a significantly adverse effect on the concentration of commer- 2. Section 264b.3(a) is amended by changing "$180" to cial banking resources in Ohio. read "$200". First Citizens and Bank compete directly in the Sandusky, Ohio, banking market.2 First Citizens is the largest commercial banking organization in the market, controlling deposits of approximately $151.9 million, representing approximately 29.7 percent of the ORDERS ISSUED UNDER BANK HOLDING total deposits in commercial banking organizations in COMPANY ACT the market ("market deposits"). Bank is the fourth largest commercial banking organization in the mar- Orders Issued Under Section 3 of the Bank ket, controlling deposits of approximately $37.3 mil- Holding Company Act lion, representing approximately 7.3 percent of market deposits. Upon consummation of this proposal, First First Citizens Banc Corp. Citizens would control deposits of approximately Sandusky, Ohio $189.2 million, representing approximately 37.0 percent of market deposits. The Sandusky banking Order Approving Acquisition of a Bank and market is considered highly concentrated. The Her- Establishment of a Branch findahl-Hirschman Index ("HHI") for the market is 2203, and, upon consummation of this proposal, the First Citizens Banc Corp., Sandusky, Ohio ("First HHI would increase by 434 points to 2637.3 Citizens"), a bank holding company within the mean- Although consummation of this proposal would ing of the Bank Holding Company Act ("BHC Act"), eliminate some existing competition in the Sandusky has applied for the Board's approval under section 3 of banking market, several factors mitigate the potential the BHC Act (12 U.S.C. § 1842) to acquire all of the voting shares of The Castalia Banking Company, Castalia, Ohio ("Bank"). First Citizens proposes to 1. Banking data are as of June 30, 1988. merge a new bank subsidiary, Citizens Interim Bank, 2. The Sandusky banking market is approximated by Erie County, with and into Bank. In connection with this proposal, Ohio, excluding the City of Vermilion, Ohio. 3. Under the revised Department of Justice Merger Guidelines, 49 Citizens Interim Bank has applied for the Board's Federal Register 26,823 (1984), a market in which the post-merger approval under the Bank Merger Act (12 U.S.C. HHI is above 1800 is considered to be highly concentrated. In such markets, the Justice Department is likely to challenge a merger that § 1828(c)) to merge with Bank and thereby to establish increases the HHI by more than 50 points. The Justice Department a branch pursuant to section 9 of the Federal Reserve has informed the Board that a bank merger or acquisition generally Act (12 U.S.C. § 321). will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 Notice of the applications, affording interested per- and the merger increases the HHI by more than 200 points. The sons an opportunity to comment, has been published Justice Department has stated that the higher than normal HHI thresholds for screening bank mergers for anticompetitive effects (54 Federal Register 51,078 (1989)). The time for filing implicitly recognize the competitive effect of limited-purpose lenders comments has expired, and the Board has considered and other non-depository financial entities. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 375 anticompetitive effects of this proposal. Seven banks, evaluating applications for the establishment of including some of the largest commercial banking branches pursuant to section 9 of the Federal Reserve organizations in Ohio, would remain as competitors Act and finds those factors to be consistent with upon consummation of this proposal. In addition, the approval. Board has considered the presence of thrift institutions Based on the foregoing and other facts of record, the in this market in its analysis of the proposal. The Board has determined that the applications should be, Board previously has indicated that thrift institutions and hereby are, approved. The transactions shall not have become, or have the potential to become, major be consummated before the thirtieth calendar day competitors of commercial banks.4 Four thrift institu- following the effective date of this Order, or later than tions actively compete in the Sandusky market. Based three months after the effective date of this Order, upon the size and market share of the thrift institutions unless such period is extended for good cause by the in the Sandusky banking market, the Board has con- Board or by the Federal Reserve Bank of Cleveland, cluded that thrift institutions exert a competitive influ- acting pursuant to delegated authority. ence that mitigates the anticompetitive effects of this By order of the Board of Governors, effective proposal.5 March 19, 1990. In addition, several characteristics of the Sandusky market indicate that it is attractive for entry. The Voting for this action: Vice Chairman Johnson and Gover- Sandusky market encompasses a significant urban nors Angell, Kelley, and LaWare. Absent and not voting: Chairman Greenspan and Governor Seger. area and the market's growth in total and per capita personal income, labor force, and retail sales exceeds JENNIFER J. JOHNSON the comparable averages of similar Ohio banking mar- Associate Secretary of the Board kets and of the state as a whole. Furthermore, recent evidence regarding entry into the Sandusky market First Interstate Corporation of Wisconsin demonstrates that the Sandusky market is attractive Kohler, Wisconsin for entry. Since 1987, a commercial bank and a thrift have entered the market on a de novo basis. Finally, Order Approving the Acquisition of a Bank Holding because Ohio banking law permits statewide branch- Company ing and nationwide de novo entry on a reciprocal basis, there are many potential entrants into the Sandusky First Interstate Corporation of Wisconsin, Kohler, banking market. Wisconsin ("First Interstate"), a bank holding com- In light of the facts of record, including the presence pany within the meaning of the Bank Holding Comof thrifts in the market, the market's attractiveness for pany Act ("BHC Act"), has applied for the Board's entry, and the substantial number of competitors that approval under section 3(a)(3) of the BHC Act would remain in the market, the Board has concluded (12 U.S.C. § 1842(a)(3)) to acquire First Illini Banthat consummation of the proposal is not likely to have corp, Inc., Galesburg, Illinois ("First Illini"). In cona significantly adverse effect on competition in the nection with this application, FIB Acquisition, Inc., Sandusky banking market. Kohler, Wisconsin ("FIB"), a wholly owned subsid- The financial and managerial resources of First iary of First Interstate, has applied for the Board's Citizens and Bank and their future prospects are approval under section 3(a)(1) of the BHC Act to consistent with approval. Considerations relating to become a bank holding company by merging with First the convenience and needs of the community to be Illini.1 served also are consistent with approval. Notice of the applications, affording interested per- Citizens Interim Bank has applied under section 9 of sons an opportunity to submit comments, has been the Federal Reserve Act (12 U.S.C. § 321) to estabduly published (54 Federal Register 42,360 and 46,986 lish a branch at the site of Bank. The Board has (1989)). The time for filing comments has expired, and considered the factors it is required to consider when the Board has considered the applications and all comments received in light of the factors set forth in section 3(c) of the BHC Act. 4. Midwest Financial Group, 75 Federal Reserve Bulletin 386 (1989); CB&T Bancshares, Inc., 75 Federal Reserve Bulletin 381 (1989); National City Corporation, 70 Federal Reserve Bulletin 743 (1984). 5. If 50 percent of the deposits held by thrift institutions were 1. First Interstate and FIB will acquire the following banks: First included in the calculation of market concentration, First Citizens Galesburg National Bank and Trust Company, Galesburg, Illinois; would control approximately 27.6 percent of market deposits and Abingdon Bank and Trust Company, Abingdon, Illinois; Madison Bank would control approximately 6.8 percent of market deposits. Park Bank, Peoria, Illinois; and Community Bank and Trust Company The HHI would increase by 375 points from 1929 to 2304. of Canton, Canton, Illinois. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
376 Federal Reserve Bulletin • May 1990 Section 3(d) of the BHC Act, the Douglas Amend- tion of this proposal would not have a significantly ment, prohibits the Board from approving an applica- adverse effect on the concentration of banking retion by a bank holding company to acquire control of sources in Illinois, or have a significantly adverse any bank located outside of the bank holding com- effect upon existing competition in any relevant bankpany's home state, unless such acquisition is "specif- ing market. In light of the existence of numerous ically authorized by the statute laws of the State in potential entrants into the relevant banking markets, which bank is located, by language to that effect and the Board has concluded that consummation of this not merely by implication."2 First Interstate's home proposal would not have any significantly adverse state is Wisconsin,3 while First Illini's home state is effect on probable future competition in any relevant Illinois. market. The statute laws of Illinois expressly authorize the The Board has carefully reviewed the financial facacquisition of a banking institution located in Illinois tors in this case. The Board notes that following the by a bank holding company located in a number of conclusion of First Interstate's negotiations to acquire states, including Wisconsin, if that other state autho- First Illini, Norwest Corporation, Minneapolis, Minrizes the acquisition of a financial institution in that nesota, proposed to acquire First Interstate.6 In light state on a reciprocal basis by an Illinois bank holding of this and other facts of record, the Board finds that company.4 Wisconsin law expressly authorizes the the financial and managerial factors and future prosacquisition of a banking organization in Wisconsin by pects of First Interstate, First Illini and their bank an Illinois bank holding company on a reciprocal subsidiaries are consistent with approval. basis.5 The Board concludes that approval of First In addition, considerations relating to the conve- Interstate's proposal to acquire First Illini is not nience and needs of the communities to be served by barred by the Douglas Amendment. First Interstate and First Illini are consistent with First Interstate operates seven banking subsidiaries approval. located in Wisconsin and one banking subsidiary lo- Based on the foregoing and other facts of record, the cated in Indiana. First Interstate is the fifth largest Board has determined that the applications should be, banking organization in Wisconsin, controlling ap- and hereby are, approved. The transaction shall not be proximately $1.2 billion in deposits, representing ap- consummated before the thirtieth calendar day followproximately 3.4 percent of the total deposits in com- ing the effective date of this Order, or later than three mercial banking organizations in the state. First months after the effective date of this Order, unless Interstate is the 34th largest banking organization in such period is extended for good cause by the Board or Indiana, controlling approximately $224.4 million in by the Federal Reserve Bank of Chicago, acting purdeposits, representing less than one percent of the suant to delegated authority. total deposits in commercial banking organizations in By order of the Board of Governors, effective the state. First Illini operates four subsidiary banks March 26, 1990. located in Illinois. First Illini is the 68th largest banking organization in Illinois, controlling approximately Voting for this action: Chairman Greenspan and Governors $254.0 million in deposits, representing less than one Johnson, Seger, Angell, Kelley, and LaWare. percent of the total deposits in commercial banking organizations in the state. JENNIFER J. JOHNSON Associate Secretary of the Board First Interstate does not compete directly with First Illini in any banking market. Accordingly, consumma- First State Corporation Waynesboro, Mississippi 2. 12 U.S.C. § 1842(d). Order Approving Acquisition of Shares of a Bank 3. A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the First State Corporation, Waynesboro, Mississippi company became a bank holding company, whichever is later. 4. 111. Rev. Stat. ch. 17, paras. 2502 and 2510.01 (Smith-Hurd Supp. ("First State"), a bank holding company within the 1989). meaning of the Bank Holding Company Act (the 5. Wis. Stat. Ann. § 221.58 (West Supp. 1989). Illinois law also has "BHC Act"), has applied for the Board's approval a longevity requirement for all Illinois banks chartered after January 1, 1982 (111. Rev. Stat. ch. 17, para. 2508 (Smith-Hurd Supp. 1989)), under section 3(a)(3) of the BHC Act (12 U.S.C. which does not affect the proposed acquisition since all of First Illini's § 1842(a)(3)) to acquire up to 24.9 percent of the subsidiary banks were chartered prior to this date. Finally, Illinois law requires the Illinois Commissioner of Banks and Trust Companies to impose all restrictions or conditions that the acquiring state imposes on interstate acquisitions but not intrastate acquisitions. (111. Rev. 6. By order dated March 26, 1990, the Board approved Norwest Stat. ch. 17, paras. 2510.01 (Smith-Hurd Supp. 1989)). Corporation's application to acquire First Interstate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 377 outstanding voting shares of First National Bank of pose, or power of such corporation be, directly or Lucedale, Lucedale, Mississippi ("Lucedale Bank"). indirectly, the organization, ownership or operation of Notice of the application, affording interested per- banks in groups or chains, or in systems commonly sons an opportunity to submit comments, has been referred to as group banking systems or chain banking published (53 Federal Register 9143 (1988)). The time systems."4 According to the Attorney General of the for filing comments has expired, and the Board has State of Mississippi, "group banking" means the considered the application and all comments received control of a bank by a holding company that also in light of the factors set forth in section 3(c) of the controls another independent bank.5 BHC Act. The Board received comments in opposi- The Mississippi Department of Banking and Contion to the application from Lucedale Bank and some sumer Finance regulation defining "control" of a bank of the customers of that bank ("Protestants"). for purposes of the statute is similar to the definition of The Board has previously indicated that the acqui- control in the BHC Act (12 U.S.C. § 1841(a)(2)) and sition of less than a controlling interest in a bank is not provides that a company controls a bank if: a normal acquisition for a bank holding company.1 (1) the company directly or indirectly owns, con- However, the requirement in section 3(a)(3) of the trols, or has power to vote 25 percent or more of any BHC Act that the Board's approval be obtained before class of voting securities of the bank, a bank holding company acquires more than 5 percent (2) the company controls in any manner the election of the voting shares of a bank suggests that Congress of a majority of the directors or trustees of the bank, contemplated the acquisition by bank holding compa- or nies of between 5 percent and 25 percent of the voting (3) the Mississippi Commissioner of the Department shares of banks. Moreover, nothing in section 3(c) of of Banking and Consumer Finance ("Mississippi the BHC Act requires denial of an application solely Commissioner") determines that the company dibecause a bank holding company proposes to acquire rectly or indirectly exercises a controlling influence less than a controlling interest in a bank or a bank over the management or policies of the bank. holding company. On this basis, the Board has previously approved the acquisition by a bank holding Protestants argue that, as the largest shareholder of company of less than a controlling interest in a bank.2 Lucedale Bank, First State will be able to exercise a For these reasons, the Board concludes that the pur- controlling influence over Lucedale Bank, and would, chase by First State of less than a controlling interest therefore, control Lucedale Bank in violation of Misin Lucedale Bank is not a factor that, by itself, sissippi law. First State contends that it has no intenwarrants denial of this application. tion to exercise a controlling influence over Lucedale Bank and will not have the means, in any event, to Mississippi Chain Banking Statute control Lucedale Bank for purposes of Mississippi law. First State has offered a number of commitments In acting on an application under the BHC Act, the to the Mississippi Commissioner and to the Board that Board is required to consider, in addition to the the Board has previously found helpful in determining competitive, financial, managerial, and convenience that an investing bank holding company will not be and needs factors set out in the BHC Act, whether the able to exercise a controlling influence over another proposal would comply with the provisions of relevant bank for purposes of the BHC Act.6 In particular, First state law. The Board may not approve an application State has committed not to: that would result in a violation of state law.3 (1) take any action causing Lucedale Bank to be- Under current Mississippi law, First State is prohib- come a subsidiary of First State; ited from becoming a multibank holding company. The (2) acquire or retain shares that would cause the Mississippi banking statutes provide that no corpora- combined interests of First State and its officers, tion shall operate in Mississippi if "any object, pur- directors and affiliates to equal or exceed 25 percent of the outstanding voting shares of Lucedale Bank; (3) exercise or attempt to exercise a controlling 1. State Street Boston Corporation, 67 Federal Reserve Bulletin influence over the management or policies of 862, 863 (1981). Lucedale Bank; 2. See, e.g., Marine Midland Banks, Inc., 75 Federal Reserve Bulletin 455 (1989) (retention of warrants to acquire up to 24.99 percent of the voting shares of a bank holding company); Midlantic Banks, Inc., 70 Federal Reserve Bulletin 776 (1984) (acquisition of 4. Miss. Code Ann. § 81-7-19 (1972). 24.9 percent of the voting shares of a bank holding company); 5. Bancorp of Mississippi, Inc., 72 Federal Reserve Bulletin 257, 259 Comerica Incorporated, 69 Federal Reserve Bulletin 911 (1983) (ac- (1986). quisition of 21.6 percent of the voting shares of a bank). 6. See, e.g., United Counties Bancorporation, 75 Federal Reserve 3. Whitney National Bank in Jefferson Parish v. Bank of New Bulletin 714 (1989); The Summit Bancorporation, 75 Federal Reserve Orleans & Trust Co., 379 U.S. 441 (1965). Bulletin 712 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
378 Federal Reserve Bulletin • May 1990 (4) seek or accept representation on the board of chain banking statute.7 Based upon the facts of directors of Lucedale Bank; record, including commitments by First State dis- (5) have or seek to have any employees or represen- cussed above, the Board also does not believe that tatives serve as an officer, agent or employee of First State would acquire control of Lucedale Bank Lucedale Bank; for purposes of the BHC Act through this transac- (6) propose a director or slate of directors in oppo- tion. sition to a nominee or slate of nominees proposed by Section 3(c) of the BHC Act requires the Board in the management or board of directors of Lucedale every case under section 3 of the BHC Act to analyze Bank; competitive, financial, managerial, future prospects, (7) solicit or participate in soliciting proxies with and convenience and needs considerations. In accordrespect to any matter presented to the shareholders ance with the terms of this section of the BHC Act, the of Lucedale Bank; Board has considered these factors in its analysis of this (8) attempt to influence the dividend policies or application, even though First State's proposal involves practices of Lucedale Bank; less than a controlling interest in Lucedale Bank.8 (9) attempt to influence the loan and credit decisions or policies of Lucedale Bank, the pricing of Competitive Factors services, any personnel decision, the location of any offices, branching, the hours of operation, or First State is the twenty-sixth largest commercial similar activities of Lucedale Bank; or banking organization in Mississippi, controlling one (10) enter into any other banking or nonbanking subsidiary bank with total deposits of $110.5 million, transactions with Lucedale Bank, except in the representing less than one percent of the total deposits ordinary course of business and on substantially in commercial banks in the state.9 Lucedale Bank is the same terms as comparable transactions entered the eighty-eighth largest commercial banking organiinto with other unaffiliated banks. zation in Mississippi, controlling deposits of $30.6 million, also representing less than one percent of the The Mississippi Commissioner has indicated that, total deposits in commercial banks in the state. First in light of the commitments made by First State, "it State and Lucedale Bank, if considered as a combined appears [First State] is willing to not violate the banking organization, would become the twenty- [Mississippi] regulation regarding control." Based on fourth largest banking organization in Mississippi, and this, the Commissioner has informed the Board would control total deposits of $141.1 million, reprethat he has "no current intention to initiate a con- senting less than one percent of the total deposits in commercial banks in the state. Based on all of the facts trol proceeding to determine whether [First State] of record, the Board believes that consummation of is in violation of the Mississippi chain banking the proposed acquisition would not have a significantly statute." adverse effect on the concentration of commercial As noted above, in a number of previous cases, the banking resources in Mississippi. Board has relied on similar commitments in finding that a proposed investment by a bank holding com- First State and Lucedale Bank compete directly in pany in up to 24.9 percent of the stock of another the Pascagoula and Perry-Greene banking markets in bank or bank holding company would not permit Mississippi. In the Pascagoula banking market,10 First the investing bank holding company to exercise a State is the smallest of eight commercial banking controlling influence over the subject of the acquisition. The Mississippi Commissioner's reliance on 7. On February 20, 1990, Mississippi enacted legislation that would these commitments as a basis for not initiating a permit multi-bank holding companies in Mississippi, with certain control proceeding at this time under Mississippi restrictions. Act to Amend Section 81-7-19, Mississippi Code of 1972, law would appear reasonable and is in accord with H.B. No. 1079, Laws of Mississippi, 1990 Regular Session (enacted February 20, 1990) (to be codified at Miss. Code Ann. § 81-7-19). This these previous Board decisions interpreting control authorization becomes effective on July 1, 1990. First State's proposal provisions in the BHC Act identical to the Missis- is specifically contemplated in that legislation and appears to be sippi law. permissible under that act. 8. State Street Boston Corporation, supra. In the event that First In light of the Mississippi Commissioner's views State proposes to acquire control of Lucedale Bank in the future, First and the other facts of record, including the commit- State would be required to submit an application for such an acquisiments made by First State, the Board concludes that, tion, and the Board would reexamine the competitive effects of such an acquisition as well as all of the other factors in section 3(c) of the as currently structured, First State's proposal is BHC Act in view of the new set of facts and circumstances. consistent with Mississippi law. The Board's ap- 9. State banking data are as of June 30, 1989. 10. The Pascagoula banking market is approximated by George and proval of this application is conditioned on First Jackson Counties in Mississippi minus the city of Ocean Springs in State not taking any action to violate the Mississippi Jackson County. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 379 organizations, controlling $8.8 million in deposits, smallest commercial banking organization in the marwhich represents approximately 2.0 percent of the ket, controlling $6.2 million in deposits, which repretotal deposits in banks in that market.11 Lucedale sents 8.9 percent of the total commercial bank deposits Bank is the sixth largest commercial banking organi- in the market. If considered as a combined banking zation, controlling $24.4 million in deposits, which organization, upon consummation of this proposal represents approximately 5.5 percent of total deposits First State and Lucedale Bank would control 30.7 in commercial banks in the market. If considered as a percent of the deposits in commercial banks in the combined banking organization, upon consummation market. The HHI would increase by 386 points to of this proposal First State and Lucedale Bank would 3553. become the fifth largest commercial banking organiza- The Board believes that the proposal would raise tion in the market, controlling approximately 7.5 per- serious competitive concerns in the Perry-Greene cent of the deposits in commercial banks in the mar- banking market if the proposal involved the acquisiket. The Herfindahl-Hirschman Index ("HHI") would tion of control of Lucedale Bank by First State. Based increase by 21 points to 2066.12 The Board also notes on the facts of record, including First State's committhat 13 bank and thrift competitors would remain in the ments discussed above, the Board has concluded that market. Based on these and the other facts of record, First State would not acquire control or the ability to the Board believes that consummation of this proposal exercise a controlling influence over Lucedale Bank would not have a significantly adverse effect on com- upon consummation of this proposal. The Board's petition in the Pascagoula banking market. inquiry does not end, however, with its finding that In the Perry-Greene banking market,13 First State is First State will not control Lucedale Bank. The Board the third largest of four commercial banking organiza- views these acquisitions with concern and continues to tions, controlling $15.3 million in deposits which rep- believe that noncontrolling interests in directly comresents 21.8 percent of the total deposits in commer- peting banks or bank holding companies may raise cial banks in the market.14 Lucedale Bank is the serious questions under the BHC Act. The Board has previously noted that one company need not acquire control of another in order to substantially lessen 11. Market data are as of June 30, 1989. competition between them, and that the specific facts 12. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (June 29, 1984), a market in which the of each case will determine whether the minority post-merger HHI is above 1800 is considered highly concentrated. In such markets, the Justice Department is likely to challenge a merger that increases the HHI by more than 50 points. The Justice Department has informed the Board that a bank merger or acquisition generally will not be challenged (in the absence of other factors In the Board's view, based on the facts of record, George County is indicating anticompetitive effects) unless the post-merger HHI is at more closely linked with Jackson County than with Greene County. least 1800 and the merger increases the HHI by at least 200 points. The Jackson County contains the city of Pascagoula, a major state Justice Department has stated that the higher than normal HHI population and commercial center. According to the Census Bureau's thresholds for screening bank mergers for anticompetitive effects Place of Work Data, and Reserve Bank surveys, nearly 20 percent of implicitly recognizes the competitive effect of limited-purpose lenders the workers living in George County commute into Jackson County. and other nondepository financial entities. Advertising from the Pascagoula area reaches George County resi- 13. The Perry-Greene banking market is approximated by Greene dents, and George County residents can travel easily into Pascagoula, County, Mississippi, minus the town of Stateline plus the towns of which offers numerous commercial and major shopping opportunities New Augusta, Beaumont and Richton in Perry County, Mississippi. not offered by Greene County. Protestants have requested a public hearing to consider the appropri- Similarly, the Board believes that Greene County is more closely ate definitions of the relevant banking markets, the effect of the linked with Perry County. Mississippi State Highway Department proposal on competition, and the convenience and needs of the records indicate a significant amount of traffic between Perry and communities served by First State and Lucedale Bank. While the Greene Counties, and price data and deposit rates suggest that banks provisions of the BHC Act require that a hearing be held in certain in Greene County and the relevant towns in Perry County are part of cases, a hearing is not required by the BHC Act in this case. The a single banking market. Moreover, the Rand McNally Commercial parties in this case have had ample opportunity to present their Atlas lists George and Greene Counties as being in separate trading arguments in writing concerning the issues raised by this application, areas, with Perry and Greene Counties being placed in the Hattiesburg including the market definitions. Moreover, in 1987 and 1989 the Trading area, and George County being placed in the Biloxi (Pasca- Federal Reserve Bank of Atlanta conducted an extensive analysis of goula) Trading area. the appropriate banking markets using an economics-based approach Based on these and the other facts of record, including the market consistent with Board precedent. For these reasons, and based on a surveys conducted by the Reserve Bank, the Board believes that the review of the record in this case, the Board does not believe that a market definitions adopted in this case are appropriate, and, for all of hearing is necessary or appropriate in this case and denies the hearing the reasons stated in this Order, this proposal would not violate request. federal antitrust law. 14. Protestants allege that consummation of First State's proposal Furthermore, the Board has found no case law, interpretations or would result in a monopoly in violation of the Clayton Act (15 U.S.C. other legal precedents to support Protestants' contention that Missis- § 18). Protestants base their claim on their argument that the appro- sippi's antitrust statute (Miss. Code Ann. § 75-21-13) should be priate banking market in this case should be George and Greene interpreted more restrictively than the Clayton Act to bar approval of Counties, either as a single market or as two separate markets, rather the application as Protestants have urged. For the reasons discussed in than the markets as noted above, linking George County with Jackson this Order, and based on all the facts of record, the Board believes that County as one market, and Greene County with Perry County as consummation of the proposed transaction would not violate Missisanother market. sippi's antitrust statute. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
380 Federal Reserve Bulletin • May 1990 investment in a company will be anticompetitive.15 In tants, the Board believes that the financial and manathis case, it is the Board's judgment, based upon gerial resources of First State, its subsidiary bank, and careful analysis of the record, that no significant Lucedale Bank and the future prospects of these reduction in competition is likely to result from the organizations are consistent with approval.18 In evalproposed acquisition. The record shows that there will uating the managerial factors in this case, the Board be no officer or director interlocks between First State has considered the allegation of Protestants that First and Lucedale Bank, that First State intends the acqui- State and its agents, acting in concert, have already sition to be a strictly passive investment, and that First acquired control of more than five percent of the State is prohibited by the BHC Act and its commit- shares of Lucedale Bank in violation of the BHC Act ments from acting in concert with any other entity to and the Change in Bank Control Act ("CBC Act").19 control Lucedale Bank without prior approval from the Board. In addition, management of Lucedale Bank has vigorously opposed this proposed acquisition, and strongly indicated its intention to remain independent. 18. Protestants' allege that First State made misrepresentations or omitted to state material facts in a tender offer for shares of Lucedale Moreover, existing officers and directors of Lucedale Bank and thus violated federal securities laws. Protestants argue that Bank currently control in excess of 30 percent of the such a violation reflects so adversely on First State's management as to require denial of this application. Protestants have raised these voting shares of Lucedale Bank. securities claims in litigation with First State. The Board has also considered the presence and The Board has previously stated that it does not believe that the competition provided by other commercial banking standards of section 3(c) of the BHC Act for review of bank holding company expansion proposals require the Board to adjudicate the organizations and thrift institutions in the market.16 type of securities law issues raised by Protestants, See Suburban There are two thrift institutions located in the Perry- Bancorp, Inc., 71 Federal Reserve Bulletin 581 (1985), particularly in cases, such as this one, where the issues have previously been Greene banking market that provide additional litigated and the courts were fully able to offer Lucedale Bank any sources of banking services to that market.17 relief to which it may have been entitled. The parties have settled the In addition, the Board has considered the market securities law aspect of the litigation. First National Bank of Lucedale v. First State Corporation, No. 587-0499 (S.D. Miss, settled Decemconditions in the Perry-Greene banking market. The ber 17, 1987). Board notes that the market is sparsely populated and The Board previously has, however, considered allegations such as has experienced only minimal growth in population in those made by Protestants in the context of its evaluation of managerial factors. See Benson Bancshares, Inc., 63 Federal Reserve Bulletin recent years. The market also has a relatively low per 1009 (1977). After careful review of these and the other facts in this capita income level and is serviced by an above case, the Board does not believe that the record of this application is sufficient to indicate that the alleged conduct of the management of average number of depository institution offices per First State that is the subject of the securities laws allegations would resident. Based upon these considerations, and the support an adverse finding with respect to managerial resources. other facts of record, the Board concludes that con- As discussed below, the solicitation of short-term options by a bank holding company is permissible under the Board's regulations under summation of this proposal would not have such a certain circumstances, and the Board understands that there are no significantly adverse effect on competition in the SEC investigations or enforcement proceedings regarding this matter Perry-Greene market as to warrant denial of this pending at this time. 19. First State acquired 4.1 percent of the shares of Lucedale Bank. application. Subsequently, an ESOP established by First State acquired an additional 4.9 percent of Lucedale Bank's shares. The ESOP acquired these shares without filing a CBC Act notice or a Bank Holding Financial and Managerial Factors Company application, based on written advice from staff of the Federal Reserve Bank of Atlanta that appeared to state that no such On the basis of all of the facts of record, and after application or notice was necessary. Because the ESOP was established by First State for its employees, an issue arises as to whether careful review of the comments submitted by Protes- First State should be presumed to control the shares in the ESOP under the Board's Regulation Y. As a general matter, the Board now believes the shares held by the ESOP should be deemed to be controlled by First State. The facts of record indicate that the shares 15. The Summit Bancorporation, 75 Federal Reserve Bulletin 712, held by the ESOP are voted by trustees for the benefit of employees 713 (1989). See also Sun Banks, Inc., 71 Federal Reserve Bulletin 243 of First State. Under section 2(g)(2) of the BHC Act, those shares (1985). would be deemed to be indirectly controlled by First State. Adding the 16. The Board previously has indicated that thrift institutions have shares to those already controlled by First State directly would cause become, or have the potential to become, major competitors of First State to exceed a 5 percent stake in the voting securities of commercial banks. National City Corporation, 70 Federal Reserve Lucedale Bank, requiring an application under section 3(a)(3) of the Bulletin 743 (1984); The Chase Manhattan Corporation, 70 Federal BHC Act. Reserve Bulletin 529 (1984); NCNB Bancorporation, 70 Federal In this case, however, because First State's ESOP acquired the Reserve Bulletin 225 (1984); General Bancshares Corporation, 69 shares after consulting with the Federal Reserve Bank of Atlanta, and Federal Reserve Bulletin 802 (1983); First Tennessee Corporation, 69 is now applying to retain the ESOP's shares, the Board concludes that Federal Reserve Bulletin 298 (1983). First State's failure to apply for prior approval to acquire shares 17. If 50 percent of deposits held by thrift institutions in the through its ESOP does not reflect so adversely upon First State's Perry-Greene banking market were included in the calculation of management as to warrant denial of the application. In the Board's market concentration, upon consummation of this proposal First State opinion, the record does not establish that First State has otherwise and Lucedale Bank would together control 29.3 percent of the acquired any shares of Lucedale Bank in violation of either the BHC market's deposits. The HHI would increase by 352 points to 3254. Act or the CBC Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 381 Protestants allege that shares of Lucedale Bank options on these shares violated the BHC Act or the held by two individuals, amounting to 11.5 percent CBC Act.22 and 7.7 percent of outstanding stock, respectively, Considerations relating to the convenience and should be attributed to First State. Protestants con- needs of the communities to be served are also contend that these individuals were acting on behalf of sistent with approval. and in concert with First State in acquiring shares of Based on the foregoing and other facts of record, Lucedale Bank. the Board has determined that the application should In the Board's view, the shares held by these be, and hereby is, approved. The Board's approval is individuals should not be regarded as being con- subject to the condition that First State not take any trolled by First State. The record indicates that, action to cause First State to violate the Mississippi upon acquiring shares of Lucedale Bank, one indi- chain banking statute. The acquisition shall not be vidual granted First State a three-month option to consummated before the thirtieth calendar day folacquire the shares. The second individual granted lowing the effective date of this Order, unless such First State a nine-month option to purchase her period is extended for good cause by the Board or by shares of Lucedale Bank. Both of these options have the Federal Reserve Bank of Atlanta, acting pursuant expired, and the individuals have stated that no to delegated authority. agreement currently exists to sell shares of Lucedale By order of the Board of Governors, effective Bank to First State. During the limited duration of March 5, 1990. the options and thereafter, the individuals retained all of the voting, dividend and other ownership rights Voting for this action: Vice Chairman Johnson and Goverof the shares.20 In addition, both options appear to nors Seger, Angell, and LaWare. Absent and not voting: Chairman Greenspan and Governor Kelley. have been consistent with the Board's regulations regarding these types of options.21 For these reasons JENNIFER J. JOHNSON and based on all the facts of record, it does not Associate Secretary of the Board appear that the acquisition by First State of the Orders Issued Under Section 4 of the Bank Holding Company Act The Mitsui Bank, Limited In addition, the Department of Labor has investigated allegations that First State violated the Employee Retirement Income Security Tokyo,Japan Act of 1974 ("ERISA") in purchasing shares of Lucedale Bank through the ESOP. The Department of Labor has concluded its investigation and reached a consent agreement with First State in The Taiyo Kobe Bank, Limited which First State has neither admitted nor denied that the ESOP's Kobe, Japan purchase violated ERISA. 20. The daughter of one of these individuals is a vice president of First State's subsidiary bank, First State Bank. Under the Board's Order Approving Acquisition of Nonbank Company regulations, shares controlled by the management of a bank holding company (including members of the immediate families of such individuals) are, under certain circumstances, presumed to be con- The Mitsui Bank, Limited, Tokyo, Japan ("Mitsui"), trolled by the bank holding company and aggregated with shares and The Taiyo Kobe Bank, Limited, Kobe, Japan owned directly by the bank holding company for purposes of deter- ("Taiyo Kobe"), both bank holding companies within mining whether the bank holding company has acquired in excess of 25 percent of the shares of another company. 12 C.F.R. the meaning of the Bank Holding Company Act 225.31(d)(2)(ii). The Board believes that this regulatory presumption ("BHC Act"), have applied for the Board's approval by its terms does not govern this case, however, because, even if the under section 4(c)(8) of the BHC Act (12 U.S.C. individual's shares are attributed to First State, the combined interest of First State would be below 25 percent of Lucedale Bank. The record also indicates that the individual, who is an established businessman, acquired these shares in his own right and with his own 22. In the Board's opinion, the record does not establish that resources, and was not part of an effort by First State to acquire additional shares of Lucedale Bank beyond those currently held by control of Lucedale Bank. First State or its ESOP should be attributed to First State for 21. The Board's regulations presume a company that enters into purposes of the BHC Act or the CBC Act. The Board notes that an agreement or understanding under which the rights of a holder of because any acquisitions of Lucedale Bank shares by First State voting securities of a bank are restricted in any manner to control would be subject to section 3 of the BHC Act, the CBC Act, by its those securities unless the agreement relates to restrictions on terms would not apply to such acquisitions by First State. 12 transferability and continues only for the time necessary to obtain U.S.C. § 1817(j)(17)(A). In particular, Protestants contend that approval from the appropriate federal supervisory authority to stock of Lucedale Bank held by a former director of Lucedale Bank acquire the securities subject to the agreement. See 12 C.F.R. should be attributed to First State for purposes of the BHC Act and 225.31(d)(l)(ii). See also Letter, dated June 17, 1987, from Michael the CBC Act. Protestants base this contention on the allegation that Bradfield, General Counsel of the Board, to H. Rodgin Cohen, Esq. First State has had discussions with this director regarding the Bank holding companies are permitted, under the Board's regula- possible purchase of shares held by this director. Based on the tions and federal statutes to enter into option agreements to pur- record, the Board does not believe that this allegation would support chase shares of banks. denial of this application. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
382 Federal Reserve Bulletin • May 1990 § 1843(c)(8)) to acquire Taiyo Kobe Bank and Trust ceived in light of the factors set forth in section 4 of the Company, New York, New York ("TKBTC"), a BHC Act. nonbank trust company. Mitsui, with consolidated total assets equivalent to Mitsui and Taiyo Kobe, both large Japanese city approximately $226 billion, is the 13th largest banking banks, have entered into an agreement to merge and to organization in the world.2 In the United States, continue operation under Mitsui's charter and the Mitsui owns a state nonmember bank, Mitsui Manuname The Mitsui Taiyo Kobe Bank, Ltd. The merger facturers Bank, Los Angeles, California, ("MMB") has been approved by the Japanese Ministry of Fi- which has 12 branch offices in California and total nance and is scheduled to be consummated on April 1, assets of $1.3 billion. In addition, Mitsui operates a 1990. No application is required under the BHC Act grandfathered branch in New York, a limited branch in for this merger of foreign banks, neither of which is a Illinois, an agency in California, and representative federally insured depository institution. This applica- offices in Georgia, Michigan, Texas, California, Washtion is required under the BHC Act for the limited ington, and Kentucky.3 purpose of permitting the merged entity, Mitsui Taiyo Taiyo Kobe, with total consolidated assets equiva- Kobe, to retain an interest in TKBTC after TKBTC lent to approximately $187.6 billion, is the 20th largest converts to a nonbank trust company. The conversion bank in the world. In the United States, Taiyo Kobe of TKBTC has been proposed to comply with the owns TKBTC, with total assets of approximately interstate banking restrictions of the Douglas Amend- $48.8 million. In addition, Taiyo Kobe operates a ment to the BHC Act. branch in New York, a grandfathered branch in Wash- The Douglas Amendment prohibits the Board from ington State, a limited branch in Illinois, an agency in approving an application by a bank holding company California, and representative offices in Georgia and to acquire a bank located outside of the holding Texas.4 company's home state, unless the state where the As a result of the proposed merger, Mitsui's New bank to be acquired is located has authorized the York and Illinois branches and California agency will acquisition by statute. The law of the home state of be combined with the duplicative Taiyo Kobe Mitsui and Mitsui Taiyo Kobe after the merger (Cali- branches and agency in these respective states.5 Mitfornia) will not provide for the requisite reciprocity sui will conform the deposit-taking activities of Taiyo imposed by the interstate banking law of New York Kobe's grandfathered branch in Washington to those (where TKBTC is located) until January 1, 1991. The of an Edge corporation under section 25(a) of the Douglas Amendment does not, however, prohibit the Federal Reserve Act (12 U.S.C. § 611 et seq.).6 interstate acquisition of nonbank companies, such as In acting on this application, the Board must connon-depository trust companies. Accordingly, in order sider whether the standards in section 4(c)(8) of the to avoid the closure of TKBTC, Mitsui Taiyo Kobe BHC Act are satisfied. The Board has previously has proposed to convert TKBTC into a limited-pur- determined that trust activities are closely related to pose trust company and has applied to acquire the trust company under the nonbanking provisions of section 4 of the BHC Act. Upon consummation of this 2. Data are as of September 30, 1989. 3. Mitsui's nonbanking activities in the United States include a trust proposal, TKBTC will restrict its activities exclusively company business (Mitsui Finance Trust Company of New York, to those permissible for a limited-purpose trust com- New York, New York) and a securities brokerage subsidiary (Mitsui pany under the BHC Act.1 Securities Company (USA), Inc., New York, New York). 4. Taiyo Kobe owns no nonbanking subsidiaries in the United Notice of the application, affording interested per- States. sons an opportunity to submit comments, has been 5. The New York branches of Mitsui and Taiyo Kobe will be merged and Mitsui Taiyo Kobe, as successor to Mitsui's charter, will continue published (54 Federal Register 49,357 (1989)). The to operate a branch in New York under the International Banking Act time for filing comments has expired, and the Board ("IBA"). Applicants have committed to complete all mergers within has considered the application and all comments re- one year of consummation of the merger. Mitsui Taiyo Kobe may retain these branches pursuant to section 5 of the IBA (12 U.S.C. § 3103(a)). 6. Section 5 of the IBA generally provides that no foreign bank may 1. Trust companies are exempt from the definition of "bank" under establish a state branch outside of its home state unless the establishthe BHC Act provided that the activities of the trust company conform ment of such branch is specifically authorized by state law and the with certain requirements specified in the BHC Act. 12 U.S.C. foreign bank agrees to limit the deposit-taking activities of such § 1841(c)(2)(D). Applicants have committed to operate TKBTC in branch to those permissible for an Edge corporation. Foreign banks conformance with these requirements immediately upon consumma- may also retain branches established before July 27, 1978. Taiyo Kobe tion of the proposal and have committed to divest TKBTC's existing obtained its Washington State branch under this grandfather authorloans and deposits no later than within one year of consummation. ity. However, Taiyo Kobe's grandfather rights to operate this branch Until this divestiture has been effected, the Board will not act upon will be extinguished by the proposed merger and Applicants have Mitsui Taiyo Kobe's application under section 3 of the BHC Act to committed to conform the deposit-taking activities of the Washington convert TKBTC to a bank when authorized by California and New branch as required by section 5 of the IBA within six months of York interstate banking provisions. consummating the merger. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 383 banking within the meaning of section 4(c)(8) of the tion, conflicts of interest, or unsound banking prac- BHC Act and Applicants have proposed to conduct tices. activities within the limitations specified in the Board's The Board has considered the public comments filed regulations. 12 C.F.R. 225.25(b)(3). The Board must regarding this proposal. The Board has received adalso consider whether an applicant's performance of verse comments from 16 community-based organizathe proposed activities "can reasonably be expected tions on the basis of the performance under the to produce benefits to the public, such as greater Community Reinvestment Act (12 U.S.C. § 2901 convenience, increased competition, or gains in effi- et seq.) ("CRA") of Applicants and MMB, Mitsui's ciency, that outweigh possible adverse effects, such as state nonmember bank subsidiary in California.8 The undue concentration of resources, decreased or unfair Board also received comments urging that the Board competition, conflicts of interests, or unsound banking convene a public meeting or hearing before acting on practices." this application. In every case involving a nonbanking acquisition by The CRA requires the federal bank supervisory a bank holding company under section 4 of the BHC agencies to encourage financial institutions—a term Act, the Board considers the financial condition and the CRA defines as federally insured depository instiresources of the applicant and the effect of the trans- tutions—to help meet the credit needs of the local action on these resources.7 In this case, the primary communities in which they operate, including low- and capital ratios of Mitsui and Taiyo Kobe, as publicly moderate-income neighborhoods, consistent with the reported, are below the minimum level specified in the safe and sound operation of the institutions. To ac- Board's Capital Adequacy Guidelines. After making complish this end, the CRA requires the appropriate adjustments to reflect Japanese banking and account- agency to assess by examination the record of an ing practices, however, including consideration of a insured depository institution in meeting the credit portion of the unrealized appreciation in Mitsui's and needs of its entire community, including low- and Taiyo Kobe's portfolios of equity securities consistent moderate-income neighborhoods, consistent with the with the principles of the Basle capital framework, safe and sound operation of the institution and to take capital ratios for these institutions meet United States that record into account in evaluating "an application standards. for a deposit facility by such institution." 12 U.S.C. The Board also has considered additional factors § 2903. The CRA expressly recognizes that the oblithat mitigate its concern in this case. The Board notes gation to help meet the credit needs of the local that Mitsui and Taiyo Kobe are in compliance with the community rests with insured depository institutions capital and other financial requirements for banking and their deposit facilities. Nonbank companies that organizations in Japan. In addition, the Board notes are affiliated with or that own depository institutions that the capital of Mitsui and Taiyo Kobe on a pro were not included by Congress within the provisions forma basis currently accords with the minimum re- of the CRA. These companies are not local insured quirements established by the Basle Committee capital deposit-taking facilities that have either the advanframework for year-end 1990. Based on these and tages or obligations of federally insured depository other facts of record, the Board concludes that the institutions that Congress covered under the CRA. financial and managerial considerations are consistent In instructing the federal agencies to encourage with approval of the application. insured depository institutions to help meet the credit Mitsui and Taiyo Kobe compete directly for trust needs of the community, the CRA expressly lists the services in New York. This market is highly competitive, however, with a number of sizable existing 8. Protestants principally allege the following deficiencies in MMB's competitors as well as potential competitors, and the record of CRA performance: effect of the proposal on competition in this market (i) lack of residential real estate lending or sufficient participation in would be de minimis. The Board has therefore deter- programs to assist in financing housing in low- and moderateincome neighborhoods; mined that consummation of this proposal would not (ii) insufficient programs for outreach to minorities, including an have significantly adverse effects on either existing or inadequate number of branches in minority communities; potential competition in any relevant market. In addi- (iii) lack of basic banking services to senior citizens, minorities, and residents in low- and moderate-income neighborhoods; tion, there is no evidence in the record to indicate that (iv) insufficient provision of small business financing; approval of this proposal would result in undue con- (v) lack of consumer credit products for residents of low-income neighborhoods; and centration of resources, decreased or unfair competi- (vi) overall lack of financial commitment to low-income, minority, and inner-city economic development and residential lending for both home improvement and affordable housing. Moreover, Prot- 7. 12 C.F.R. 225.24; The Fuji Bank Limited, 75 Federal Reserve estants have raised issues regarding the amount of MMB's financial Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve commitment to CRA activities in light of its parent holding com- Bulletin 155, 156 (1987). pany's assets and record of real estate lending outside California. 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384 Federal Reserve Bulletin • May 1990 type of expansion proposals by depository institutions of an existing operation in the United States in conin which the agency must review the institution's nection with the merger of two foreign organizations, record of serving the needs of its community. Section and does not represent an expansion in the United 803 of the CRA expressly defines applications by States of the offices or activities of the foreign organidepository institutions for a deposit facility to include zation. This proposal represents a decision by the applications to establish new branches and to relocate combined organization to continue to provide existing existing depository facilities, and applications to char- trust services to the community through TKBTC as an ter new insured depository institutions. As it relates to alternative to closing or otherwise disposing of this bank holding companies, section 803(3)(F) of the CRA operation. The Board believes that the continued defines the scope of "application for a deposit facility" provision of these trust services weighs in favor of as the "acquisition of shares in, or the assets of, a approval of this application. The record does not regulated financial institution requiring approval under indicate that the proposal is likely to result in undue section 1842 of [Title 12] [section 3 of the BHC Act]."9 concentration of resources, decreased or unfair com- The fact that the applications enumerated in section petition, conflicts of interest, or unsound banking 803 involve exclusively applications to establish or practices. expand deposit-taking facilities is consistent with the As stated above, the Board has received a number Congressional finding in the CRA that federally in- of comments regarding the record of Mitsui and MMB sured deposit-taking institutions have an obligation to under the CRA as well as requests that the Board hold help meet the credit needs of the local community in a public meeting or hearing on these matters. In this which they are chartered to do business. Thus, while regard, the Board notes that Mitsui Taiyo Kobe has the CRA is expressly applicable to applications by applied for Board approval under section 3 of the BHC bank holding companies to acquire banks under sec- Act to acquire TKBTC as a bank upon the effective tion 3 of the BHC Act, the CRA by its terms does not date of the California interstate banking statute (Januapply to applications by bank holding companies to ary 1, 1991). Such an application is required before acquire nonbanking companies under section 4(c)(8) of TKBTC may engage in deposit-taking activities. The the BHC Act. The Board has interpreted the CRA in comments submitted by the Protestants, and the perthis manner since 1979.10 formance of MMB under the CRA, are directly and In this case, the acquisition and retention of TKBTC materially relevant to Mitsui Taiyo Kobe's proposal by Mitsui Taiyo Kobe is subject to approval under the under section 3 of the BHC Act to operate a bank in nonbanking provisions of section 4 of the BHC Act and, New York State after January 1, 1991. thus, the analysis required under the CRA for section 3 In this regard, the Board notes that although MMB applications to acquire banks is not applicable. received a satisfactory CRA performance rating from The Board notes that section 4(c)(8) of the BHC Act the Federal Deposit Insurance Corporation in its latest requires the Board to weigh the public benefits of each CRA examination, that examination is two years old proposal reviewed under that section. Section 4(c)(8) and does not resolve the issues raised by the Protesfocuses that analysis on whether permitting the affili- tants. This examination also predates the Joint Agency ation of the applying bank holding company and the Policy Statement regarding the CRA,11 and MMB has particular nonbank company to be acquired can rea- not implemented in all respects the type of CRA sonably be expected to produce public benefits that program outlined in that Statement. Applicants have outweigh possible adverse effects that may result from submitted information regarding the CRA perforthe affiliation. The Board has previously stated that mance of MMB and have made several commitments this analysis does not incorporate the provisions of the to improve their CRA performance along the guide- CRA or require an extensive analysis of the CRA lines outlined in the inter-agency CRA policy stateperformance of bank affiliates. ment and to address concerns raised by Protestants.12 In this case, the Board has considered the public benefits associated with Mitsui Taiyo Kobe's proposal to retain TKBTC and to continue to offer trust services 11. 54 Federal Register 13,742 (1989). in the United States through TKBTC. The continued 12. MMB has undertaken a review of its programs to meet the current needs of its community and has submitted a draft CRA plan for operation of this company will help serve the needs of MMB. In that plan, MMB has stated it will: trust customers in the United States. In this regard, (i) place increased emphasis on direct and systematic contact with the Board notes that this proposal involves retention community groups with special knowledge regarding the credit needs of low- and moderate-income areas within MMB's communities; (ii) continue small- and medium-size business lending, including an 9. 12 U.S.C. § 2902(3)(F). increase in SBA loan activity and work with nonprofit community- 10. Citicorp, 65 Federal Reserve Bulletin 507, 512 (1979); Mellon based development corporations that originate loans to help meet Bank Corporation, 74 Federal Reserve Bulletin 773 (1988). the needs of low- and moderate-income groups; and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 385 Mitsui and MMB have also conducted a series of billion in assets), in order to permit the merger of the private meetings with Protestants in an effort to clarify two foreign banks to go forward—a merger that, as the issues regarding MMB's CRA performance. The noted, is not subject to the Board's review under the Board notes that the FDIC has scheduled a new CRA BHC Act. examination of MMB for the near future that will Given all of the above considerations bearing on the include an evaluation of many of these matters, includ- public interest, and based on all the facts of record, the ing a review of many of the issues raised by the Board has determined that the balance of the public Protestants. interest factors that the Board is required to consider Because interstate banking between California and under section 4(c)(8) of the BHC Act is favorable. New York will not be effective for nine months, the Based on the foregoing and all of the facts of record, Board has not yet accepted for processing Mitsui including the Applicants' representations and commit- Taiyo Kobe's section 3 application and does not ments, the Board has determined that this application expect to consider formally the merits of that applica- under section 4 of the BHC Act should be, and hereby tion until later this year. In view of the issues raised is, approved. This determination is subject to all of the regarding MMB's CRA performance, the Board would conditions set forth in the Board's Regulation Y, includintend to hold a public meeting before it acts on the ing those in sections 225.4(d) and 225.23(b), and to the section 3 application, unless the record developed on Board's authority to require such modifications or the application over the next several months, in the termination of activities of the bank holding company Board's view, resolves the CRA issues. A public or any of its subsidiaries as the Board finds necessary to meeting would be convened at an appropriate location assure compliance with, or prevent evasions of, the in California and would permit Applicant, MMB and provisions and purposes of the BHC Act and the members of the local community an opportunity to Board's regulations and orders issued thereunder. present testimony on these issues. The transaction shall not be consummated later than The Protestants and others have requested that the three months after the effective date of this Order, Board delay action on this section 4 application in unless such period is extended for good cause by the order to permit a public meeting or hearing on the Board or by the Federal Reserve Bank of San Fran- CRA issues. Given that this application under section cisco, acting pursuant to delegated authority. 4 of the BHC Act is not covered by CRA, the pending By order of the Board of Governors, effective section 3 application by Mitsui Taiyo Kobe, which is March 28, 1990. subject to the CRA, and the Board's intent to convene a public meeting on any unresolved CRA issues before Voting for this action: Chairman Greenspan and Governors consideration of the pending section 3 application, the Johnson, Angell, Kelley, and LaWare. Voting against this Board has decided not to hold a public meeting or action: Governor Seger. hearing or to delay action on the instant application under section 4(c)(8).13 The Board also notes that JENNIFER J. JOHNSON Associate Secretary of the Boarddelay in acting on the section 4 application might necessitate the closure of TKBTC, which is a small part (less that $50 million in assets) of the combined Dissenting Statement of Governor Seger Mitsui Taiyo Kobe organization (approximately $410 I dissent from the Board's action in this case. I believe that foreign banking organizations whose primary cap- (iii) increase the amount of residential real estate lending through ital, based on U.S. accounting principles, is below the appropriate secondary market arrangements and financial interme- Board's minimum capital guidelines for U.S. banking diaries such as the California Community Reinvestment Corporation. Mitsui Taiyo Kobe should report quarterly to the Federal organizations have an unfair competitive advantage in Reserve Bank of San Francisco on its progress in fulfilling its the United States over domestic banking organizacommitments. tions. In my view, such foreign organizations should 13. The Board does not believe that the record in this application under section 4(c)(8) contains any relevant and material issue of fact be judged against the same financial and managerial that remains unresolved regarding the standards the Board must apply standards, including the Board's capital adequacy under section 4 of the BHC Act. Moreover, Protestants have not guidelines, as are applied to domestic banking organiindicated why written submissions would not suffice in lieu of a formal administrative hearing, as required in the Board's Rules of Procedure. zations. The majority concludes that Applicants' pri- 12 C.F.R. 262.3(e). For these reasons and in view of the Board's mary capital meets United States standards. To do so, conclusion that a CRA analysis is not required in this case on the section 4 application, the Board believes that a formal hearing before however, the majority makes adjustments that are not an administrative law judge under the Administrative Procedure Act available for U.S. banks under guidelines that have not on the section 4 application is not required or appropriate in this case. yet become effective for U.S. or foreign banking Accordingly, the Board has determined not to grant the request for a formal administrative hearing on this application. organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
386 Federal Reserve Bulletin • May 1990 In addition, I am concerned that while some prog- Norwest also has applied for the Board's approval ress is being made in opening Japanese markets to under section 4(c)(8) of the BHC Act to acquire the U.S. banking organizations, U.S. banking organiza- nonbanking subsidiaries of First Interstate.2 tions and other financial institutions, in my opinion, Notice of the applications, affording interested perare still far from being afforded the full opportunity to sons an opportunity to submit comments, has been compete in Japan. duly published (54 Federal Register 46,301 and 50,279 I am also unable to concur in the approval of the (1989)). The time for filing comments has expired, and acquisition of Taiyo Kobe Bank and Trust Company the Board has considered the applications and all as a New York trust company in light of the Appli- comments received in light of the factors set forth in cants' section 3 application to reacquire this institution sections 3(c) and 4(c)(8) of the BHC Act. as a commercial bank when permitted by California Section 3(d) of the BHC Act, the Douglas Amendand New York interstate banking laws on January 1, ment, prohibits the Board from approving an appli- 1991. In my view, this proposal represents a transpar- cation by a bank holding company to acquire control ent attempt to evade interstate banking laws and to of any bank located outside of the bank holding permit in two steps a banking acquisition that cur- company's home state, unless such acquisition is rently is not authorized under New York law. "specifically authorized by the statute laws of the While I would not approve this application, I fully State in which [the] bank is located, by language to concur with the Board's decision and analysis that the that effect and not merely by implication."3 Nor- Community Reinvestment Act ("CRA"), by its terms, west's home state is Minnesota.4 First Interstate does not apply to applications by bank holding com- owns banks located in Wisconsin and Indiana and panies to acquire nonbanking companies under section has received Board approval to acquire First Illini 4 of the Bank Holding Company Act. In view of the and its bank subsidiaries located in Illinois. The issues raised regarding the CRA performance of statute laws of Wisconsin permit bank holding com- MMB, I also concur in the Board's intent to hold a panies located in a certain region, which includes public meeting on the related section 3 application, to Minnesota, to acquire financial institutions located in which the CRA applies, unless the record developed Wisconsin on a reciprocal basis. Minnesota has on that application over the next several months enacted a similar interstate banking statute that inresolves these issues. cludes Wisconsin.5 The laws of Illinois allow acquisitions of Illinois March 28, 1990 banks and bank holding companies by bank holding companies located within a region that includes Orders Issued Under Sections 3 and 4 of the Bank Holding Company Act Eau Claire, Wisconsin; First Interstate Bank of Wisconsin-Southeast, New Berlin, Wisconsin; First Interstate Bank of Wisconsin, Apple- Norwest Corporation ton, Wisconsin; First Interstate Bank of Wisconsin, Waupun, Wis- Minneapolis, Minnesota consin; First Interstate Bank Northern Indiana, N.A., South Bend, Indiana; First Galesburg National Bank and Trust Company, Galesburg, Illinois; Abingdon Bank and Trust Company, Abingdon, Illinois; Order Approving the Merger of Bank Holding Madison Park Bank, Peoria, Illinois; and Community Bank and Trust Companies Company of Canton, Canton, Illinois. 2. Norwest proposes to acquire First Interstate Trust Company of Wisconsin, Sheboygan, Wisconsin, and thereby engage in trust com- Norwest Corporation, Minneapolis, Minnesota ("Nor- pany activities; First Interstate Commercial Corporation of Wisconwest"), a bank holding company within the meaning of sin, Milwaukee, Wisconsin, and thereby engage in commercial finance activities; First Interstate Management Services of Wisconsin, Inc., the Bank Holding Company Act ("BHC Act"), has Sheboygan, Wisconsin, and thereby engage in data processing activapplied for the Board's approval under section 3(a)(5) ities, management consulting activities and courier services to be conducted in connection with the data processing activities; and First of the BHC Act (12 U.S.C. § 1842(a)(5)) to merge Brokerage Services, Sheboygan, Wisconsin, and thereby engage in with First Interstate Corporation of Wisconsin, brokerage activities. These activities are authorized for bank holding Kohler, Wisconsin ("First Interstate"), and thereby companies pursuant to the Board's Regulation Y, 12 C.F.R. 225.25(b)(1), (3), (10), (11), and (15). indirectly also acquire First Illini Bancorp, Inc., 3. 12 U.S.C. § 1842(d). Galesburg, Illinois ("First Illini").1 4. A bank holding company's home state is that state in which the operations of the bank holding company's banking subsidiaries were principally conducted on July 1, 1966, or the date on which the company became a bank holding company, whichever is later. 1. Upon the merger of Norwest into First Interstate, Norwest will 5. Wis. Stat. Ann. § 221.58 (West Supp. 1989). Minn. Stat. Ann. acquire the following banks: First Interstate Bank of Wisconsin, § 48.92, .93 (West 1988). See also The Marine Corporation, 73 Sheboygan, Wisconsin; First Interstate Bank of Wisconsin, N.A., Federal Reserve Bulletin 54 (1987). The Wisconsin interstate banking Green Bay, Wisconsin; First Interstate Bank of Wisconsin-Northeast, statute contains certain longevity requirements (Wis. Stat. Ann. § Green Valley, Wisconsin; First Interstate Bank of Wisconsin, N.A., 221.58 (West Supp. 1989)), which all the banks in this case satisfy. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 387 Wisconsin but does not include Minnesota. First divest First Interstate's Indiana bank subsidiary within Interstate is located in Wisconsin for purposes of two years of the acquisition of First Interstate by Illinois law, and thus was entitled to acquire First Norwest.9 Illini and its Illinois bank subsidiaries. First Inter- For these reasons, and based on the above commitstate had publicly announced its agreement to ac- ments made by Norwest in this case, the Board conquire First Illini some time before Norwest made its cludes that approval of Norwest's proposal to acquire proposal to acquire First Interstate. Norwest is lo- First Interstate is not barred by the Douglas Amendcated in Minnesota for purposes of the Illinois stat- ment. ute, and therefore is not authorized to acquire Illinois Norwest operates 30 banking subsidiaries located in banks. The Illinois interstate banking statute pro- Minnesota, Wisconsin, Arizona, Iowa, Montana, Nevides that a regional bank holding company, such as braska, North Dakota, and South Dakota. Norwest is First Interstate, that controls an Illinois bank and the second largest banking organization in Minnesota, that is subsequently acquired by a bank holding controlling approximately $8.0 billion in deposits, repcompany located outside the region must divest the resenting approximately 19.9 percent of the total depos- Illinois bank within such time and under such condi- its in commercial banking organizations in the state.10 tions as the Illinois Commissioner of Banks and Norwest is the 16th largest banking organization in Trust Companies ("Illinois Commissioner") finds Wisconsin, controlling approximately $196.3 million in appropriate to protect the safety and soundness of deposits, representing less than one percent of the total the Illinois bank.6 deposits in commercial banking organizations in the The Illinois Commissioner has reviewed Norwest's state. proposal and determined that the Illinois statute would First Interstate controls seven banking subsidiaries permit Norwest to acquire indirectly First Interstate's located in Wisconsin, four banking subsidiaries located Illinois banks provided that Norwest divests these in Illinois, and one banking subsidiary located in Indibanks within such period as the Illinois Commissioner ana. First Interstate is the fifth largest banking organidirects. Norwest has committed to divest the banks in zation in Wisconsin, controlling approximately $1.2 accordance with the time period set by the Illinois billion in deposits, representing approximately 3.4 per- Commissioner unless Norwest is permitted to own cent of the total deposits in commercial banking orgabanks in Illinois before divestiture is required.7 nizations in the state. First Interstate is the 34th largest First Interstate also has one subsidiary bank in banking organization in Indiana, controlling approxi- Indiana. The laws of Indiana allow acquisitions of mately $224.4 million in deposits, representing less than Indiana banks by "regional bank holding companies." one percent of the total deposits in commercial banking First Interstate is a regional bank holding company, as organizations in the state. Finally, First Interstate is the defined by Indiana law. Norwest does not qualify as a 68th largest banking organization in Illinois, controlling regional bank holding company under the Indiana approximately $254.0 million in deposits, representing statute, and therefore is not authorized to acquire an less than one percent of the total deposits in commercial Indiana bank. The Indiana interstate banking statute banking organizations in the state. provides that a regional bank holding company that Upon consummation of this proposal, Norwest controls an Indiana bank must divest the Indiana bank would remain the fifth largest banking organization in within two years of being acquired by a bank holding Wisconsin, controlling approximately $1.4 billion in company located outside the region.8 deposits, representing approximately 3.9 percent of The Indiana Department of Financial Institutions the total deposits in commercial banking organizations has informed the Board that the Indiana statute autho- in the state. Consummation of this proposal would not rizes Norwest to acquire First Interstate's Indiana have a significantly adverse effect on the concentration bank, provided that Norwest divests the Indiana bank of banking resources in Wisconsin. within two years of the date of its acquisition. Norwest Norwest does not compete directly with First Interhas committed that, absent a change in law, it will state or First Illini in any banking market. Accordingly, 6. See section 3.071(g) of the Illinois Interstate Banking Act, 111. Rev. Stat. ch. 17, para. 2510.01(g) (Smith-Hurd Supp. 1989). 9. Effective July 1, 1992, Indiana law (subject to certain deposit and 7. Effective December 1, 1990, Illinois law will allow for the age restrictions) will authorize the acquisition of an Indiana banking acquisition of an Illinois banking organization by an out-of-state institution by any out-of-state banking institution located in a state banking organization on a reciprocal basis. 111. Rev. Stat. ch. 17, para. which provides for reciprocal treatment of Indiana banking institu- 2510.01 (Smith-Hurd Supp. 1989), effective December 1, 1990. Min- tions. Ind. Code Ann. § 28-2-16-15, -16 (Burns Supp. 1989), effective nesota already would permit the acquisition of banks in that state by July 1, 1992. Minnesota law, however, does not permit acquisitions of bank holding companies located in Illinois on a reciprocal basis. Minn. Minnesota banks by Indiana banking institutions. Minn. Stat. Ann. Stat. Ann. § 48.92, .93 (West 1988, West Supp. 1990). § 48.92, .93 (West 1988). 8. Ind. Code Ann. § 28-2-15-22(b) (Burns Supp. 1989). 10. Banking data are as of December 31, 1989. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
388 Federal Reserve Bulletin • May 1990 consummation of this proposal would not have any consummated before the thirtieth calendar day followsignificantly adverse effect on the concentration of ing the effective date of this Order, or later than three banking resources or result in any significantly adverse months after the effective date of this Order, unless effect upon existing competition in any relevant bank- such period is extended for good cause by the Board or ing market. In light of the existence of numerous by the Federal Reserve Bank of Minneapolis, acting potential entrants into the relevant banking markets, the pursuant to delegated authority. The determinations as Board has concluded that consummation of this proposal to Norwest's nonbanking activities are subject to all of would not have any significantly adverse effect on prob- the conditions contained in the Board's Regulation Y, able future competition in any relevant market. including those in sections 225.4(d) and 25.23(b)(3) (12 The Board notes that Norwest is an adequately C.F.R. 225.4(d) and 225.23(b)(3)), and to the Board's capitalized institution and has the ability to serve as a authority to require such modification or termination source of financial strength to First Interstate's subsid- of the activities of a holding company or any of its iary banks. Furthermore, the Board has relied on subsidiaries as the Board finds necessary to assure Norwest's commitment to provide financial and mana- compliance with, or prevent evasions of, the provigerial support to these banks. Based on these and the sions and purposes of the BHC Act and the Board's other facts of record, the Board believes that the regulations and orders issued thereunder. financial resources of Norwest and its present and By order of the Board of Governors, effective proposed bank subsidiaries, as well as their future March 26, 1990. prospects, are consistent with approval. The managerial resources of Norwest and its present and proposed Voting for this action: Chairman Greenspan and Governors subsidiaries are consistent with approval. Considerations Johnson, Seger, Angell, Kelley, and LaWare. relating to the convenience and needs of the communities to be served are also consistent with approval. JENNIFER J. JOHNSON Associate Secretary of the Board Norwest has also applied, pursuant to section 4(c)(8) of the BHC Act, to acquire certain nonbanking subsidiaries of First Interstate. The Board has determined Orders Issued Under Financial Institutions by regulation that each of these activities is permissi- Reform, Recovery, and Enforcement Act ble for bank holding companies under section 4(c)(8) of the BHC Act, and Norwest proposes to conduct these March 2, 1990 activities in accordance with the Board's regulations. Norwest operates nonbanking subsidiaries engaged in Paul J. Polking commercial finance, trust services, data processing, Executive Vice President and General Counsel and brokerage services that compete with First Inter- NCNB Corporation state and its subsidiaries in these areas. Each of these One NCNB Plaza subsidiaries has a small market share and there are Charlotte, North Carolina 28255 numerous competitors for these services. Consummation of this proposal would have a de minimus effect on Dear Mr. Polking: existing competition in each of these markets, and the Board concludes that the proposal would not have any NCNB Corporation, Charlotte, North Carolina significantly adverse effect on competition in the pro- ("NCNB"), proposes that its bank subsidiary, NCNB vision of these services in any relevant market. Fur- Texas National Bank, Dallas, Texas, purchase the thermore, there is no evidence in the record to indicate assets and assume the liabilities of Interim Three that approval of this proposal would result in undue NCNB Texas, F.S.B., Dallas, Texas, its savings assoconcentration of resources, decreased or unfair com- ciation subsidiary, ("Interim Three NCNB"). NCNB petition, conflicts of interests, unsound banking prac- has requested Board approval of this transaction purtices, or other adverse effects on the public interest. suant to section 5(d)(3) of the Federal Deposit Insur- Accordingly, the Board has determined that the bal- ance Act ("FDI Act") as amended by the Financial ance of public interest factors it must consider under Institutions Reform, Recovery, and Enforcement Act section 4(c)(8) of the BHC Act is favorable and con- of 1989 (Pub. L. No. 101-73, § 206, 103 Stat. 183, 199 sistent with approval of Norwest's application to ac- (1989)). Interim Three NCNB has been established to quire the nonbanking subsidiaries of First Interstate. acquire certain assets and assume deposit liabilities of Based on the foregoing and other facts of record, Centennial Federal Savings and Loan Association, including the commitments made by Norwest, the F.A., Greenville, Texas ("Centennial"). Board has determined that the applications should be, The record in this case shows that: and hereby are, approved. The transaction shall not be (1) The aggregate amount of the total assets of all Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 389 depository institution subsidiaries of NCNB is $66.0 assets and assume the liabilities of Interim Four billion, an amount which is not less than 200 percent NCNB Texas, F.S.B., Dallas, Texas, its savings asof the total assets of Interim Three NCNB, which sociation subsidiary, ("Interim Four NCNB"). NCNB currently has $7.0 million in total assets; has requested Board approval of this transaction pur- (2) NCNB and all of its bank subsidiaries currently suant to section 5(d)(3) of the Federal Deposit Insurmeet all applicable capital standards and, upon ance Act ("FDI Act") as amended by the Financial consummation of the proposed transactions, will Institutions Reform, Recovery, and Enforcement Act continue to meet all applicable capital standards; of 1989 (Pub. L. No. 101-73, § 206, 103 Stat. 183, 199 (3) The transaction is not in substance the acquisition (1989)). Interim Four NCNB has been established to of a Bank Insurance Fund member bank by a Savings acquire certain assets and assume deposit liabilities of Association Insurance Fund member; Bankers Savings and Loan Association, Galveston, (4) Centennial, the predecessor to Interim Three Texas ("Bankers"). NCNB, had tangible capital of less than 4 percent The record in this case shows that: during the quarter preceding its acquisition by NCNB; (1) The aggregate amount of the total assets of all (5) The transaction, which involves the purchase of depository institution subsidiaries of NCNB is $66.0 assets and assumption of liabilities of Interim Three billion, an amount which is not less than 200 percent NCNB, a savings association located in Texas, by a of the total assets of Interim Four NCNB, which bank subsidiary of NCNB, a bank holding company currently has $39.1 million in total assets; whose banking subsidiaries' operations are princi- (2) NCNB and all of its bank subsidiaries currently pally conducted in North Carolina, would comply meet all applicable capital standards and, upon with the requirements of section 3(d) of the Bank consummation of the proposed transactions, will Holding Company Act if Interim Three NCNB were continue to meet all applicable capital standards; a state bank which NCNB was applying to acquire. (3) The transaction is not in substance the acquisition of a Bank Insurance Fund member bank by a Based on the foregoing and all of the other facts of Savings Association Insurance Fund member; record, the Staff Director of the Division of Banking (4) Bankers, the predecessor to Interim Four NCNB, Supervision and Regulation and the General Counsel had tangible capital of less than 4 percent during the of the Board, acting pursuant to authority delegated by quarter preceding its acquisition by NCNB; the Board of Governors, hereby approve your request (5) The transaction, which involves the purchase of to engage in the proposed transaction under section assets and assumption of liabilities of Interim Four 5(d)(3) of the FDI Act. This approval is subject to NCNB, a savings association located in Texas, by NCNB obtaining the required approval of the appro- a bank subsidiary of NCNB, a bank holding compriate Federal banking agency for the proposed merger pany whose banking subsidiaries' operations are under the Bank Merger Act. principally conducted in North Carolina, would comply with the requirements of section 3(d) of the Bank Holding Company Act if Interim Four NCNB were a Very truly yours, state bank which NCNB was applying to acquire. William W. Wiles Based on the foregoing and all of the other facts of Secretary of the Board record, the Staff Director of the Division of Banking cc: Federal Reserve Bank of Richmond Supervision and Regulation and the General Counsel of the Board, acting pursuant to authority delegated by March 16, 1990 the Board of Governors, hereby approve your request to engage in the proposed transaction under section Paul J. Polking 5(d)(3) of the FDI Act. This approval is subject to Executive Vice President and General Counsel NCNB obtaining the required approval of the appro- NCNB Corporation priate Federal banking agency for the proposed merger One NCNB Plaza under the Bank Merger Act. Charlotte, North Carolina 28255 Very truly yours, Dear Mr. Polking: William W. Wiles NCNB Corporation, Charlotte, North Carolina Secretary of the Board ("NCNB"), proposes that its bank subsidiary, NCNB Texas National Bank, Dallas, Texas, purchase the cc: Federal Reserve Bank of Richmond Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
390 Federal Reserve Bulletin • May 1990 APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant Bank(s) Bank date Alameda Bancorporation, Westside Bank, San Francisco March 2, 1990 Alameda, California Tracy, California AMCORE Financial, Inc., Central of Illinois, Inc., Chicago March 7, 1990 Rockford, Illinois Sterling, Illinois American National Corporation, The Northern Corporation, Kansas City March 21, 1990 Omaha, Nebraska Omaha, Nebraska Bancshares 2000, Inc., Jefferson Bank and Trust Richmond March 7, 1990 McLean, Virginia Company, Greenbelt, Maryland Carrollton Bancorp, The Carrollton Bank of Richmond March 14, 1990 Baltimore, Maryland Baltimore, Baltimore, Maryland Central National Bank Central National Bank, Atlanta March 15, 1990 Corporation, Winter Park, Florida Winter Park, Florida Community Bankshares, Inc., Community Bank of Parkersburg, Richmond March 5, 1990 Parkersburg, West Virginia Parkersburg, West Virginia El Paso Bancshares, Inc., Mid-Continent Corporation, Kansas City February 26, 1990 Monument, Colorado Mission Hills, Kansas Exchange Bankshares Exchange National Bank and Kansas City March 2, 1990 Corporation of Kansas, Trust Company, Atchison, Kansas Atchison, Kansas Fort National Bank, Easton, Kansas FCB Corporation, Bank of Waynesboro, Atlanta March 16, 1990 Manchester, Tennessee Waynesboro, Tennessee First Colonial Bankshares Burbank State Bank, Chicago March 16, 1990 Corporation, Burbank, Illinois Chicago, Illinois Inland Bancorp, Inc., Oak Brook, Illinois First Exchange Corp., First Exchange Bank of North St. Louis March 12, 1990 Cape Girardeau, Missouri St. Louis County, Florissant, Missouri First National Financial First National Bank of South Atlanta March 19, 1990 Corporation, Georgia, Albany, Georgia Albany, Georgia Fulton Financial Corporation, First Community Bancorp, Inc., Philadelphia February 23, 1990 Lancaster, Pennsylvania Nazareth, Pennsylvania Danville Bank Corporation, Danville, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 391 Section 3—Continued Reserve Effective Applicant Bank(s) Bank date Great River Bancshares, Inc., Hill-Dodge Banking Company, Chicago March 14, 1990 Warsaw, Illinois Warsaw, Illinois HNB Corporation, The First National Bank and Kansas City March 16, 1990 Arkansas City, Kansas Trust Company, Ponca City, Oklahoma Hometown Bancshares, Inc., The First National Bank of Cleveland March 16, 1990 Middlebourne, West Virginia Powhatan Point, Powhatan Point, Ohio INB Financial Corporation, CSB, Inc., Chicago March 14, 1990 Indianapolis, Indiana Chesterton, Indiana Iowa National Bankshares Corp., Monticello State Bank, Chicago March 2, 1990 Waterloo, Iowa Monticello, Iowa J.R. Montgomery Fort Sill National Bank, Kansas City February 28, 1990 Bancorporation, Fort Sill, Oklahoma Lawton, Oklahoma M & F Financial Corp., Texas Bank, Dallas March 12, 1990 Wilmington, Delaware Weatherford, Texas Texas Bank, Brownwood, Texas Mission-Valley Bancorp, Concord Commercial Bank, San Francisco February 23, 1990 Pleasanton, California Concord, California Nashoba Bancshares, Inc., Nashoba Bank, St. Louis February 28, 1990 Memphis, Tennessee Memphis, Tennessee NCNB Corporation, Carolina Mountain Holding Richmond March 14, 1990 Charlotte, North Carolina Company, Highlands, North Carolina Northern Interstate Financial, First National Bank, Minneapolis March 22, 1990 Inc., Norway, Michigan Norway, Michigan Peoples Banking Company, Peoples Bank, Atlanta March 13, 1990 Blackshear, Georgia Blackshear, Georgia Peoples Bankshares, Inc., The Peoples Bank of Mullens, Richmond March 21, 1990 Mullens, West Virginia Mullens, West Virginia Pioneer Bancshares, Inc., First National Bank of Poinsett St. Louis March 20, 1990 Trumann, Arkansas County, Trumann, Arkansas Pittsburg Bancshares, Inc., City National Bank of Pittsburg, Kansas City March 7, 1990 Pittsburg, Kansas Pittsburg, Kansas Southern Bancorp, Inc., Southern National Bank, Kansas City February 21, 1990 Tulsa, Oklahoma Tulsa, Oklahoma States National Bancshares, Inc., First National Bank of Palco, Kansas City March 8, 1990 Palco, Kansas Palco, Kansas Vandalia National Corporation, The National Bank of West Richmond February 27, 1990 Morgantown, West Virginia Virginia, Morgantown, West Virginia West Suburban Bancorp, Inc., LBM Bank, Chicago March 15, 1990 Lombard, Illinois Mascoutah, Illinois Yale Bancorporation, Farmers State Bank, Chicago March 9, 1990 Yale, Iowa Yale, Iowa Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
392 Federal Reserve Bulletin • May 1990 Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank date AMCORE Financial, Inc., Mid-American Financial Services Chicago February 27, 1990 Rockford, Illinois Company, Loves Park, Illinois CCNB Corporation, Parent Federal Savings Bank, Philadelphia March 9, 1990 New Cumberland, Lancaster, Pennsylvania Pennsylvania Irwin Union Corporation, Affiliated Capital Corporation, Chicago March 2, 1990 Columbus, Indiana Northbrook, Illinois Mid Am, Inc., The Citizens Loan and Building Cleveland February 28, 1990 Bowling Green, Ohio Company, Lima, Ohio Sections 3 and 4 .. Nonbanking Reserve Effective pp Activity/Company Bank date FDH Bancshares, Inc., Exchange Bancshares, Inc., St. Louis March 19, 1990 Little Rock, Arkansas El Dorado, Arkansas 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 First Virginia Bank - Damascus, First Virginia Bank of the Richmond March 2, 1990 Damascus, Virginia Cumberlands, Clint wood, Virginia First Virginia Bank - South First Virginia Bank - South, Richmond March 2, 1990 Central, Danville, Virginia Lynchburg, Virginia Iron and Glass Bank, Landmark Savings Association, Cleveland February 23, 1990 Pittsburgh, Pennsylvania Library, Pennsylvania Kent City State Bank, Ameribank Federal Savings Bank, Chicago March 2, 1990 Kent City, Michigan Muskegon, Michigan Pacific Western Bank, Northern California Division of San Francisco March 8, 1990 San Jose, California Household Bank, F.S.B., Newport Beach, California The Peoples Bank of Mullens, Peoples Interim Bank, Inc., Richmond March 21, 1990 Mullens, West Virginia Mullens, West Virginia United Jersey Bank/Commercial United Jersey Bank, New York March 19, 1990 Trust, Kackensack, New Jersey Jersey City, New Jersey Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Legal Developments 393 PENDING CASES INVOLVING THE BOARD OF GOVERNORS This list of pending cases does not include suits ernors, No. 89-70518 (9th Cir., filed November 22, against the Federal Reserve Banks in which the Board 1989). Petition for review of Board determination of Governors is not named a party. that a company would control a proposed insured bank for purposes of the Bank Holding Company California Association of Life Underwriters v. Board Act. of Governors, No. 90-70123 (9th Circuit, filed Consumers Union of U.S., Inc. v. Board of Gover- March 15, 1990). Petition for review of Board order nors, No. 89-3008 (D.D.C., filed November 1, approving acquisition of bank subsidiary to engage 1989). Challenge to various aspects of amendments in insurance activities pursuant to state law. to Regulation Z implementing the Home Equity Burke v. Board of Governors, No. 90-9505 (10th Loan Consumer Protection Act. The Board and Circuit, filed February 27, 1990). Petition for review Consumers Union have filed cross-motions for sumof Board orders assessing civil money penalties and mary judgment. issuing orders of prohibition. Synovus Financial Corp. v. Board of Governors, No. BancTEXAS Group, Inc. v. Board of Governors, No. 89-1394 (D.C. Cir., filed June 21, 1989). Petition for CA 3-90-0236-R (N.D. Texas, filed February 2, review of Board order permitting relocation of a 1990).Plaintiff seeks temporary restraining order and bank holding company's national bank subsidiary preliminary injunction enjoining the Board from from Alabama to Georgia. enforcing a temporary order to cease and desist MCorp v. Board of Governors, No. 89-2816 (5th requiring injection of capital into plaintiff's subsid- Cir., filed May 2, 1989). Appeal of preliminary iary banks under the Board's source of strength injunction against the Board enjoining pending and doctrine. The district court denied plaintiff's request future enforcement actions against bank holding for a temporary restraining order on February 6, company now in bankruptcy. Awaiting decision. 1990. Independent Insurance Agents of America v. Board Rutledge v. Board of Governors, No. CV90-L-0137S of Governors, No. 89-4030 (2d Cir., filed March 9, (N.D. Alabama, filed January 27, 1990). Tort suit 1989). Petition for review of Board order ruling challenging Board and Reserve Bank supervisory that the non-banking restrictions of section 4 of the actions. Bank Holding Company Act apply only to non- Woodward v. Board of Governors, No. 90-3031 (11th bank subsidiaries of bank holding companies. The Cir., filed January 16, 1990); Kaimowitz v. Board Board's order was upheld on November 29, 1989. of Governors, No. 90-3067 (11th Cir., filed Janu- Petitions in the Second Circuit and the Supreme ary 23, 1990). Petitions for review of Board order Court for a stay pending review have been denied. dated December 22, 1989, approving application Securities Industry Association v. Board of Goverby First Union Corporation to acquire Florida nors, No. 89-1127 (D.C. Cir., filed February 16, National Banks. Petitioners object to approval on 1989). Petition for review of Board order permitting Community Reinvestment Act grounds. The court five bank holding companies to engage to a limited denied their motion for a stay of the Board's order extent in additional securities underwriting and dealon January 26, 1990, and is considering jurisdic- ing activities. Awaiting decision. tional issues raised by the Board. American Land Title Assoc. v. Board of Governors, Securities Industry Association v. Board of Gover- No. 88-1872 (D.C. Cir., filed December 16, 1988). nors, No. 89-1730 (D.C. Cir., filed November 29, Petition for review of Board order ruling that 1989). Petition for review of Board order approving exemption G from the section 4(c)(8) prohibition application under section 4(c)(8) to engage in private on insurance activities, which grandfathers insurplacement and riskless principal activities. The case ance agency activities by bank holding companies has been held in abeyance pending the outcome of that conducted insurance agency activities before Securities Industry Association v. Board of Gover- January 1, 1971, does not limit those grandfathered nors, No. 89-1127 (D.C. Circuit). activities to the specific ones undertaken at that Babcock and Brown Holdings, Inc. v. Board of Gov- time. Board's order upheld on December 29, 1989. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
394 Federal Reserve Bulletin • May 1990 MCorp v. Board of Governors, No. CA3-88-2693 filed March 7, 1988). Action seeking disclosure of (N.D. Tex., filed October 10, 1988). Application for documents under the Freedom of Information Act. injunction to set aside temporary cease and desist Lewis v. Board of Governors, Nos. 87-3455, 87-3545 orders. Stayed pending outcome of MCorp v. Board (11th Cir., filed June 25, August 3, 1987). Petition for of Governors in Fifth Circuit. review of Board orders approving applications of White v. Board of Governors, No. CU-S-88-623-RDF non-Florida bank holding companies to expand ac- (D. Nev., filed July 29, 1988). Age discrimination tivities of Florida trust company subsidiaries. Matcomplaint. Board's motion to dismiss or for sum- ter stayed pending Supreme Court review of Contimary judgment pending. nental Illinois Corp. v. Lewis, 827 F.2d 1517 (11th Cohen v. Board of Governors, No. 88-1061 (D.N.J., Cir. 1987). FINAL ENFORCEMENT ORDERS ISSUED BY BOARD OF GOVERNORS Bank of New England Corporation Boston, Massachusetts The Federal Reserve Board announced on March 1, 1990, the issuance of a Cease and Desist Order against the Bank of New England Corporation, Boston, Massachusetts. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
395 Directors of Federal Reserve Banks and Branches Regional decentralization and a combination of chosen without discrimination as to race, creed, governmental and private characteristics are im- color, sex, or national origin. portant hallmarks of the uniqueness of the Fed- Class A directors of each Reserve Bank repreeral Reserve System. Under the Federal Reserve sent the stockholding member banks of the Fed- Act, decentralization was achieved by division of eral Reserve District. Class B and Class C directhe country into twelve regions called Federal tors represent the public and are chosen with Reserve Districts and the establishment in each due, but not exclusive, consideration to the in- District of a separately incorporated Federal terests of agriculture, commerce, industry, ser- Reserve Bank, with its own board of directors. vices, labor, and consumers; they may not be The blending of governmental and private char- officers, directors, or employees of any bank. In acteristics is provided through ownership of the addition, Class C directors may not be stockholdstock of the Reserve Bank by member banks in ers of any bank. The Board of Governors desigits District who also elect the majority of the nates annually one Class C director as chairman board of directors, and by the general supervi- of the board of directors of each District Bank, sion of the Reserve Banks by the Board of and designates another Class C director as dep- Governors, an agency of the federal government. uty chairman. The Board also appoints a minority of each board Each of the twenty-five Branches of the Fedof directors. Thus, there are essential elements of eral Reserve Banks has a board of either seven or regional participation and counsel in the conduct five directors, a majority of whom are appointed of the System's affairs for which the Federal by the parent Federal Reserve Bank; the others Reserve relies importantly on the contributions are appointed by the Board of Governors. One of of the directors of the Federal Reserve Banks the Board's appointees is designated annually as and Branches. chairman of the board of that Branch in a manner The following list of directors of Federal Re- prescribed by the parent Federal Reserve Bank. serve Banks and Branches shows for each direc- The names of the chairman and deputy chairtor the class of directorship, the principal busi- man of the board of directors of each Reserve ness affiliation, and the date the current term Bank and of the chairman of each Branch are expires. Each Federal Reserve Bank has nine published monthly in the Federal Reserve members on its board of directors: The member BulletinJ banks elect the three Class A and three Class B directors, and the Board of Governors appoints the three directors in Class C. Directors are 1. The current list appears on page A80 of this Bulletin. DISTRICT 1—BOSTON Term expires Dec. 31 Class A Richard D. Wardell President and Chief Executive Officer, National Bank of Salisbury, 1990 Salisbury, Connecticut William H. Chadwick Vice Chairman of the Board and Chief Operating Officer, Banknorth 1991 Group, Inc., Burlington, Vermont Terrence Murray Chairman of the Board, President, and Chief Executive Officer, 1992 Fleet/Norstar Financial Group, Inc., Providence, Rhode Island Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
396 Federal Reserve Bulletin • May 1990 DISTRICT 1—Continued Term expires Class B Dec. 31 Stephen R. Levy Chairman of the Board and Chief Executive Officer, Bolt Beranek 1990 and Newman, Inc., Cambridge, Massachusetts Edward H. Ladd Chairman and Chief Executive Officer, Standish, Ayer and Wood, 1991 Inc., Boston, Massachusetts Joan T. Bok Chairman of the Board, New England Electric System, 1992 Westborough, Massachusetts Class C Richard L. Taylor President, Taylor Properties, Inc., Boston, Massachusetts 1990 Dr. Jerome H. Grossman Chairman of the Board and Chief Executive Officer, New England 1991 Medical Center, Inc., Boston, Massachusetts Richard N. Cooper Maurits C. Boas Professor of International Economics, Harvard 1992 University, Cambridge, Massachusetts DISTRICT 2—NEW YORK Class A President and Chief Executive Officer, The Flemington National 1990 J. Kirby Fowler Bank and Trust Company, Flemington, New Jersey Chairman of the Board and Chief Executive Officer, Manufacturers 1991 John F. McGillicuddy Hanover Trust Company, New York, New York Chairman of the Board, President, and Chief Executive Officer, 1992 Victor J. Riley, Jr. KeyCorp, Albany, New York Class B Chairman of the Board and Chief Executive Officer, GE, Fairfield, 1990 John F. Welch, Jr. Connecticut Chairman of the Board and Chief Executive Officer, Bristol-Myers 1991 Richard L. Gelb Squibb Company, New York, New York Chairman of the Board and Chief Executive Officer, International 1992 John A. Georges Paper, Purchase, New York Class C Ellen V. Futter President, Barnard College, New York, New York 1990 Maurice R. Greenberg President and Chief Executive Officer, American International 1991 Group, Inc., New York, New York Cyrus R. Vance Presiding Partner, Simpson Thacher & Bartlett, New York, New 1992 York —BUFFALO BRANCH Appointed by the Federal Reserve Bank Norman W. Sinclair Chairman of the Board, Lockport Savings Bank, Lockport, New 1990 York Richard H. Popp Operating Partner, Southview Farm, Castile, New York 1991 Robert G. Wilmers Chairman of the Board and Chief Executive Officer, Manufacturers 1991 and Traders Trust Company, Buffalo, New York Wilbur F. Beh President and Chief Executive Officer, FNB Rochester Corp., 1992 Rochester, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Directors of Federal Reserve Banks and Branches 397 DISTRICT 2—Continued Term expires BUFFALO BRANCH—Continued Dec. 31 Appointed by the Board of Governors Paul E. McSweeney Executive Vice President, United Food and Commercial Workers, 1990 District Union Local One, AFL-CIO, Amherst, New York Mary Ann Lambertsen Vice President-Human Resources and Information Systems, 1991 Fisher-Price, Division of The Quaker Oats Company, East Aurora, New York Vacancy 1992 DISTRICT 3—PHILADELPHIA Class A Constantinos I. Costalas Chairman of the Board, President, and Chief Executive Officer, 1990 Glendale National Bank of New Jersey, Voorhees, New Jersey Gary E. Burl President, Delaware National Bank, Georgetown, Delaware 1991 Samuel A. McCullough Chairman of the Board and Chief Executive Officer, Meridian 1992 Bancorp, Inc., Reading, Pennsylvania Class B Chairman of the Board, Jackson-Cross Company, Philadelphia, 1990 Charles F. Seymour Pennsylvania Executive Vice President, AHOLD, U.S.A., Harrisburg, 1991 Nicholas Riso Pennsylvania President, RMS Technologies, Inc., Marlton, New Jersey 1992 David W. Huggins Class C Jane G. Pepper President, The Pennsylvania Horticultural Society, Philadelphia, 1990 Pennsylvania Chairman of the Board, President, and Chief Executive Officer, 1991 Gunnar E. Sarsten United Engineers & Constructors, Inc., Philadelphia, Pennsylvania Chairman of the Board, Quaker Chemical Corporation, 1992 Peter A. Benoliel Conshohocken, Pennsylvania DISTRICT 4—CLEVELAND Class A William H. May Chairman of the Board and President, First National Bank of 1990 Nelsonville, Nelsonville, Ohio William T. McConnell President, The Park National Bank, Newark, Ohio 1991 Frank Wobst Chairman of the Board and Chief Executive Officer, Huntington 1992 Bancshares Incorporated, Columbus, Ohio Class B Verna K. Gibson President, The Limited Stores, Inc., Columbus, Ohio 1990 Douglas E. Olesen President and Chief Executive Officer, Battelle Memorial Institute, 1991 Columbus, Ohio Laban P. Jackson, Jr. Chairman of the Board, Clearcreek Properties, Lexington, Kentucky 1992 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
398 Federal Reserve Bulletin • May 1990 DISTRICT 4—Continued Term expires Class C Dec. 31 Robert D. Storey Partner, Burke, Haber & Berick, Cleveland, Ohio 1990 John R. Miller Former President and Chief Operating Officer, The Standard Oil 1991 Company (Ohio), Cleveland, Ohio Charles W. Parry Retired Chairman and Chief Executive Officer, Aluminum Company 1992 of America, Pittsburgh, Pennsylvania —CINCINNATI BRANCH Appointed by the Federal Reserve Bank Jack W. Buchanan President, Sphar & Company, Inc., Winchester, Kentucky 1990 Jerry L. Kirby Chairman of the Board, President, and Chief Executive Officer, 1990 Citizens Federal Savings & Loan Association, Dayton, Ohio Allen L. Davis President and Chief Executive Officer, The Provident Bank, 1991 Cincinnati, Ohio Clay Parker Davis President and Chief Executive Officer, Citizens National Bank, 1992 Somerset, Kentucky Appointed by the Board of Governors Marvin Rosenberg Partner, Towne Properties, Ltd., Cincinnati, Ohio 1990 Kate Ireland National Chairman of the Board, Frontier Nursing Service, 1991 Wendover, Kentucky Vacancy 1992 —PITTSBURGH BRANCH Appointed by the Federal Reserve Bank George A. Davidson, Jr. Chairman of the Board and Chief Executive Officer, Consolidated 1990 Natural Gas Company, Pittsburgh, Pennsylvania Stephen C. Hansen President and Chief Executive Officer, Dollar Bank, F.S.B., 1990 Pittsburgh, Pennsylvania E. James Trimarchi President and Chief Executive Officer, First Commonwealth 1991 Financial Corporation, Indiana, Pennsylvania William F. Roemer President and Chief Executive Officer, Integra Financial 1992 Corporation, Pittsburgh, Pennsylvania Appointed by the Board of Governors Milton A. Washington President and Chief Executive Officer, Allegheny Housing 1990 Rehabilitation Corporation, Pittsburgh, Pennsylvania Jack B. Piatt Chairman of the Board and President, Millcraft Industries, Inc., 1991 Washington, Pennsylvania Robert P. Bozzone President and Chief Operating Officer, Allegheny Ludlum 1992 Corporation, Pittsburgh, Pennsylvania DISTRICT 5—RICHMOND Class A Director, Wachovia Bank & Trust Company, N.A. and The 1990 John F. McNair III Wachovia Corporation, Winston-Salem, North Carolina Chairman of the Board and President, Merchants & Miners National 1991 C.R. Hill, Jr. Bank, Oak Hill, West Virginia Chairman, President, and Chief Executive Officer, Virginia 1992 A. Pierce Stone Community Bank, Louisa, Virginia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Directors of Federal Reserve Banks and Branches 399 DISTRICT 5—Continued Term expires Class B Dec. 31 Jack C. Smith Chairman of the Board and Chief Executive Officer, K-VA-T Food 1990 Stores, Inc., Grundy, Virginia Edward H. Co veil President, The Covell Company, Easton, Maryland 1991 R.E. Atkinson, Jr. Chairman, Dilmar Oil Company, Inc., Latta, South Carolina 1992 Class C Hanne Merriman Retail Business Consultant, Washington, D.C. 1990 Anne Marie Whittemore Partner, McGuire, Woods, Battle & Boothe, Richmond, Virginia 1991 Henry J. Faison President, Faison Associates, Charlotte, North Carolina 1992 —BALTIMORE BRANCH Appointed by the Federal Reserve Bank Raymond V. Haysbert, Sr. President and Chief Executive Officer, Parks Sausage Company, 1990 Baltimore, Maryland H. Grant Hathaway Chairman of the Board, Maryland National Bank, Baltimore, 1991 Maryland Joseph W. Mosmiller Chairman of the Board, Loyola Federal Savings and Loan 1991 Association, Baltimore, Maryland Richard M. Adams Chairman and Chief Executive Officer, United Bankshares, Inc., 1992 Parkersburg, West Virginia Appointed by the Board of Governors Gloria L. Johnson Deputy Director of Administration, The Baltimore Museum of Art, 1990 Baltimore, Maryland Thomas R. Shelton President, Case Foods, Inc., Salisbury, Maryland 1991 John R. Hardesty, Jr. President, Preston Energy, Inc., Kingwood, West Virginia 1992 —CHARLOTTE BRANCH Appointed by the Federal Reserve Bank James M. Culberson, Jr. Chairman and President, The First National Bank of Randolph 1990 County, Asheboro, North Carolina Crandall C. Bowles President, The Springs Company, Lancaster, South Carolina 1991 James G. Lindley Chairman and Chief Executive Officer, South Carolina National 1991 Corporation, and Chairman, President, and Chief Executive Officer, The South Carolina National Bank, Columbia, South Carolina David B. Jordan President, Chief Executive Officer and Director, Omni Capital 1992 Group, Inc. and Home Federal Savings Bank, Salisbury, North Carolina Appointed by the Board of Governors William E. Masters President, Perception, Inc., Easley, South Carolina 1990 Harold D. Kingsmore President and Chief Operating Officer, Graniteville Company, 1991 Graniteville, South Carolina Anne M. Allen President, Allen-Austin, Inc., Greensboro, North Carolina 1992 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
400 Federal Reserve Bulletin • May 1990 DISTRICT 6—ATLANTA Term expires Class A Dec. 31 E.B. Robinson, Jr. Chairman of the Board and Chief Executive Officer, Deposit 1990 Guaranty National Bank and Deposit Guaranty Corporation, Jackson, Mississippi Virgil H. Moore, Jr. Chairman of the Board and Chief Executive Officer, First Farmers 1991 and Merchants National Bank, Columbia, Tennessee W.H. Swain Chairman of the Board, First National Bank, Oneida, Tennessee 1992 Class B Gary J. Chouest President and Chief Executive Officer, Edison Chouest Offshore, 1990 Inc., Galliano, Louisiana Saundra H. Gray Co-Owner, Gemini Springs Farm, DeBary, Florida 1991 J. Thomas Holton Chairman of the Board and President, Sherman International 1992 Corporation, Birmingham, Alabama Class C Senior Executive Vice President-Finance, Ryder System, Inc., 1990 Edwin A. Huston Miami, Florida Chairman and Chief Executive Officer, Genuine Parts Company, 1991 Larry L. Prince Atlanta, Georgia Chairman of the Board and President, Engraph, Inc., 1992 Leo Benatar Atlanta, Georgia —BIRMINGHAM BRANCH Appointed by the Federal Reserve Bank Harry B. Brock, Jr. Chairman of the Board and Chief Executive Officer, Central Bank of 1990 the South, Birmingham, Alabama Shelton E. Allred Chairman of the Board, President, and Chief Executive Officer, 1991 Frit Industries, Inc., Ozark, Alabama William F. Childress President, First American Federal Savings and Loan Association, 1991 Hunts ville, Alabama Robert M. Barrett Chairman and President, The First National Bank, Wetumpka, 1992 Alabama Appointed by the Board of Governors A.G. Trammell President, Alabama Labor Council, AFL-CIO, Birmingham, 1990 Alabama Roy D. Terry President and Chief Executive Officer, Terry Manufacturing 1991 Company, Inc., Roanoke, Alabama Nelda P. Stephenson President, Nelda Stephenson Chevrolet, Inc., Florence, Alabama 1992 —JACKSONVILLE BRANCH Appointed by the Federal Reserve Bank Hugh H. Jones, Jr. Chairman of the Board and Chief Executive Officer, 1990 Barnett Bank of Jacksonville, N.A., Jacksonville, Florida Perry M. Dawson President and Chief Executive Officer, 1991 Suncoast Schools Federal Credit Union, Tampa, Florida Samuel H. Vickers President and Chief Executive Officer, Design Containers, Inc., 1991 Jacksonville, Florida Merle L. Graser Chairman and Chief Executive Officer, First National Bank of 1992 Venice, Venice, Florida Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Directors of Federal Reserve Banks and Branches 401 DISTRICT 6—Continued Term expires JACKSONVILLE BRANCH—Continued Dec. 31 Appointed by the Board of Governors Joan Dial Ruffier General Partner, Sunshine Cafes and Vice President, Vista 1990 Landscaping, Orlando, Florida Hugh M. Brown President and Chief Executive Officer, BAMSI, Inc., Titusville, 1991 Florida Lana Jane Lewis-Brent Vice Chairman of the Board, President, and Chief Executive Officer, 1992 Sunshine Jr. Stores, Inc., Panama City, Florida —MIAMI BRANCH Appointed by the Federal Reserve Bank Robert M. Taylor Chairman of the Board and Chief Executive Officer, The Mariner 1990 Group, Inc., Fort Myers, Florida Frederick A. Teed President and Chief Executive Officer, Community Savings, F.A., 1990 North Palm Beach, Florida Roberto G. Blanco Vice Chairman of the Board and Chief Financial Officer, Republic 1991 National Bank of Miami, Miami, Florida A. Gordon Oliver President and Chief Executive Officer, Citizens and Southern 1992 National Bank of Florida, Fort Lauderdale, Florida Appointed by the Board of Governors Robert D. Apelgren President, Apelgren Corporation, Pahokee, Florida 1990 Dorothy C. Weaver Vice President, Intercap Investments, Inc., Miami, Florida 1991 Jose L. Saumat Chairman of the Board, Kaufman and Roberts, Inc., Miami, Florida 1992 —NASHVILLE BRANCH Appointed by the Federal Reserve Bank Vincent K. Hickam President and Chief Executive Officer, Executive Park National 1990 Bank, Kingsport, Tennessee William Baxter Lee III Chairman of the Board and President, Southeast Services 1991 Corporation, Knoxville, Tennessee Edwin W. Moats, Jr. Chairman of the Board and Chief Executive Officer, Metropolitan 1991 Federal Savings and Loan Association, Nashville, Tennessee James A. Rainey Chairman of the Board, Sovran Financial Corporation/Central 1992 South, Nashville, Tennessee Appointed by the Board of Governors Victoria B. Jackson President and Chief Executive Officer, Diesel Sales and Service, 1990 Inc. and Prodiesel, Inc., Nashville, Tennessee Shirley A. Zeitlin President, Shirley Zeitlin & Co. Realtors, Nashville, Tennessee 1991 Harold A. Black Professor and Head, Department of Finance, College of Business 1992 Administration, University of Tennessee, Knoxville, Tennessee —NEW ORLEANS BRANCH Appointed by the Federal Reserve Bank Ronald M. Boudreaux President and Chief Executive Officer, First National Bank of St. 1990 Landry Parish, Opelousas, Louisiana Joel B. Bullard, Jr. President, Joe Bullard Automotive Companies, Mobile, Alabama 1991 Stanley S. Scott President, Crescent Distributing Company, Harahan, Louisiana 1991 Earl W. Lundy Chairman of the Board and Chief Executive Officer, First National 1992 Bank of Vicksburg, Vicksburg, Mississippi Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
402 Federal Reserve Bulletin • May 1990 DISTRICT 6—Continued Term expires NEW ORLEANS BRANCH—Continued Dec. 31 Appointed by The Board of Governors Vacancy 1990 Andre M. Rubenstein Chairman of the Board and Chief Executive Officer, Rubenstein 1991 Brothers, Inc., New Orleans, Louisiana James A. Hefner President, Jackson State University, Jackson, Mississippi 1992 DISTRICT 7—CHICAGO Class A Barry F. Sullivan Chairman of the Board, First Chicago Corporation, Chicago, Illinois 1990 John W. Gabbert President and Chief Executive Officer, First of America 1991 Bank-LaPorte, N.A., LaPorte, Indiana B.F. Backlund Chairman of the Board and Chief Executive Officer, Bartonville 1992 Bank, Bartonville, Illinois Class B Edward D. Powers President, Fire Brick Engineers, Milwaukee, Wisconsin 1990 Max J. Naylor President, Naylor Farms, Inc., Jefferson, Iowa 1991 Paul J. Schierl Chairman of the Board and Chief Executive Officer, Fort Howard 1992 Corporation, Green Bay, Wisconsin Class C Dean, College of Business Administration, University of Illinois at 1990 Marcus Alexis Chicago, Chicago, Illinois Chairman of the Board and Chief Executive Officer, Wisconsin 1991 Charles S. McNeer Energy Corporation, Milwaukee, Wisconsin Chairman of the Board, President, and Chief Executive Officer, 1992 Richard G. Cline NICOR, Inc., Naperville, Illinois —DETROIT BRANCH Appointed by the Federal Reserve Bank James A. Aliber Chairman of the Board and Chief Executive Officer, FirstFed 1990 Michigan Corporation, Detroit, Michigan Frederik G.H. Meijer Chairman of the Board, Meijer, Incorporated, Grand Rapids, 1990 Michigan Robert J. Mylod Chairman of the Board, President and Chief Executive Officer, 1991 Michigan National Corporation, Farmington Hills, Michigan Norman F. Rodgers President and Chief Executive Officer, Hillsdale County National 1992 Bank, Hillsdale, Michigan Appointed by the Board of Governors Beverly Beltaire President, P R Associates, Inc., Detroit, Michigan 1990 Phyllis E. Peters Director, Professional Standards Review, Deloitte & Touche, 1991 Detroit, Michigan J. Michael Moore Chairman of the Board and Chief Executive Officer, Invetech 1992 Company, Detroit, Michigan Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Directors of Federal Reserve Banks and Branches 403 DISTRICT 8—ST. LOUIS Term expires Class A Dec. 31 H.L. Hembree III Chairman of the Executive Committee, Merchants National Bank, 1990 Fort Smith, Arkansas Henry G. River, Jr. President and Chief Executive Officer, First National Bank in 1991 Pinckneyville, Pinckneyville, Illinois W.E. Ayres Chairman of the Board and Chief Executive Officer, Simmons First 1992 National Bank of Pine Bluff, Pine Bluff, Arkansas Class B Roger W. Schipke Senior Vice President, GE Appliances, GE, Louisville, Kentucky 1990 Thomas F. McLarty III Chairman of the Board and Chief Executive Officer, Arkla, Inc., 1991 Little Rock, Arkansas Frank M. Mitchener, Jr. President, Mitchener Farms, Inc., Sumner, Mississippi 1992 Class C Janet McAfee Weakley President, Janet McAfee, Inc., Clayton, Missouri 1990 Robert H. Quenon President and Chief Executive Officer, Peabody Holding Company, 1991 Inc., St. Louis, Missouri H. Edwin Trusheim Chairman of the Board and Chief Executive Officer, General 1992 American Life Insurance Company, St. Louis, Missouri —LITTLE ROCK BRANCH Appointed by the Federal Reserve Bank David Armbruster President, First America Federal Savings Bank, 1990 Fort Smith, Arkansas W. Wayne Hartsfield President and Chief Executive Officer, First National Bank, Searcy, 1990 Arkansas Barnett Grace President and Chief Executive Officer, First Commercial Bank, 1991 N.A., Little Rock, Arkansas Patricia M. Townsend President, Townsend Company, Stuttgart, Arkansas 1992 Appointed by the Board of Governors William E. Love President, Sound-Craft Systems, Inc., Morrilton, Arkansas 1990 James R. Rodgers Airport Manager, Little Rock Regional Airport, Little Rock, 1991 Arkansas L. Dickson Flake President, Barnes, Quinn, Flake & Anderson, Inc., Little Rock, 1992 Arkansas —LOUISVILLE BRANCH Appointed by the Federal Reserve Bank Irving W. Bailey II Chairman of the Board, President, and Chief Executive Officer, 1990 Capital Holding Corporation, Louisville, Kentucky Wayne G. Overall, Jr. President, First Federal Savings Bank, Elizabethtown, Kentucky 1990 Douglas M. Lester Chairman of the Board, President, and Chief Executive Officer, 1991 Trans Financial Bancorp, Inc., Bowling Green, Kentucky Morton Boyd President, First Kentucky National Corporation, Louisville, 1992 Kentucky Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
404 Federal Reserve Bulletin • May 1990 DISTRICT 8—Continued Term expires LOUISVILLE BRANCH—Continued Dec. 31 Appointed by the Board of Governors Raymond M. Burse Partner, Wyatt, Tarrant and Combs, Louisville, Kentucky 1990 Lois H. Gray Chairman of the Board, James N. Gray Construction Company, 1991 Inc., Glasgow, Kentucky Vacancy 1992 —MEMPHIS BRANCH Appointed by the Federal Reserve Bank Thomas M. Garrott President and Chief Operating Officer, National Bank of Commerce 1990 and National Commerce Bancorporation, Memphis, Tennessee Larry A. Watson Chairman of the Board and President, Liberty Federal Savings 1990 Bank, Paris, Tennessee Ray U. Tanner Chairman of the Board and Chief Executive Officer, Jackson 1991 National Bank and Volunteer Bancshares, Inc., Jackson, Tennessee Michael J. Hennessey President, Munro & Company, Inc., Wynne, Arkansas 1992 Appointed by the Board of Governors Seymour B. Johnson Owner, Kay Planting Company, Indianola, Mississippi 1990 Katherine Hinds Smythe President, Memorial Park, Inc., Memphis, Tennessee 1991 Sandra B. Sanderson President and Chief Executive Officer, Sanderson Plumbing 1992 Products, Inc., Columbus, Mississippi DISTRICT 9—MINNEAPOLIS Class A Joel S. Harris President, Yellowstone Bank, Billings, Montana 1990 James H. Hearon III Chairman of the Board and Chief Executive Officer, National City 1991 Bank, Minneapolis, Minnesota Rodney W. Fouberg Chairman of the Board, Farmers and Merchants Bank and Trust 1992 Co., Aberdeen, South Dakota Class B Earl R. St. John, Jr. President, St. John Forest Products, Inc., Spalding, Michigan 1990 Duane E. Dingmann President, Trubilt Auto Body, Inc., Eau Claire, Wisconsin 1991 Bruce C. Adams Partner, Triple Adams Farms, Minot, North Dakota 1992 Class C Delbert W. Johnson President and Chief Executive Officer, Pioneer Metal Finishing, 1990 Minneapolis, Minnesota Michael W. Wright Chairman of the Board, Chief Executive Officer, and President, 1991 Super Valu Stores, Inc., Minneapolis, Minnesota Gerald A. Rauenhorst Chairman of the Board and Chief Executive Officer, Opus 1992 Corporation, Minneapolis, Minnesota Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Directors of Federal Reserve Banks and Branches 405 DISTRICT 9—Continued Term expires Dec. 31 —HELENA BRANCH Appointed by the Federal Reserve Bank Noble E. Vosburg President and Chief Executive Officer, Pacific Hide and Fur 1990 Corporation, Great Falls, Montana Robert H. Waller President and Chief Executive Officer, First Interstate Bank of 1990 Billings, N.A., Billings, Montana Beverly D. Harris President, Empire Federal Savings and Loan Association, 1991 Livingston, Montana Appointed by the Board of Governors J. Frank Gardner President, Montana Resources, Inc., Butte, Montana 1990 James E. Jenks Jenks Farms, Hogeland, Montana 1991 DISTRICT 10—KANSAS CITY Class A Co-Chairman of the Board, FirstBank Holding Company of 1990 Roger L. Reisher Colorado, Lake wood, Colorado Chairman of the Board and Chief Executive Officer, First National 1991 Robert L. Hollis Bank and Trust Co., Okmulgee, Oklahoma President and Chief Executive Officer, First National Bank, 1992 Harold L. Gerhart, Jr. Newman Grove, Nebraska Class B S. Dean Evans, Sr. Partner, Evans Grain Company, Salina, Kansas 1990 Frank J. Yaklich, Jr. President, CF & I Steel Corporation, Pueblo, Colorado 1991 Frank A. McPherson Chairman of the Board and Chief Executive Officer, Kerr-McGee 1992 Corporation, Oklahoma City, Oklahoma Class C Thomas E. Rodriguez President and General Manager, Thomas E. Rodriguez & 1990 Associates, P.C., Aurora, Colorado Burton A. Dole, Jr. Chairman of the Board and President, Puritan-Bennett Corporation, 1991 Overland Park, Kansas Fred W. Lyons, Jr. President, Marion Merrell Dow Inc., Kansas City, Missouri 1992 —DENVER BRANCH Appointed by the Federal Reserve Bank Junius F. Baxter Denver, Colorado 1990 Norman R. Corzine President and Chief Executive Officer, First National Bank in 1991 Albuquerque, Albuquerque, New Mexico W. Richard Scarlett III Chairman of the Board and Chief Executive Officer, Jackson State 1991 Bank, Jackson Hole, Wyoming Henry A. True III Partner, True Companies, Casper, Wyoming 1992 Appointed by the Board of Governors Gilbert Sanchez President, New Mexico Highlands University, Las Vegas, New 1990 Mexico Barbara B. Grogan President, Western Industrial Contractors, Inc., Denver, Colorado 1991 Sandra K. Woods Vice President, Corporate Real Estate, Adolph Coors Company, 1992 Golden, Colorado Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
406 Federal Reserve Bulletin • May 1990 DISTRICT 10—Continued Term expires Dec. 31 —OKLAHOMA CITY BRANCH Appointed by the Federal Reserve Bank W. Dean Hidy Chairman of the Board, Triad Bank, N.A., Tulsa, Oklahoma 1990 John Wm. Laisle President, MidFirst Savings and Loan Association, Oklahoma City, 1990 Oklahoma C. Kendric Fergeson Chairman of the Board and Chief Executive Officer, The National 1991 Bank of Commerce, Altus, Oklahoma Appointed by the Board of Governors John F. Snodgrass President and Trustee, The Samuel Roberts Noble Foundation, Inc., 1990 Ardmore, Oklahoma Ernest L. Holloway President, Langston University, Langston, Oklahoma 1991 —OMAHA BRANCH Appointed by the Federal Reserve Bank John R. Cochran President and Chief Executive Officer, Norwest Bank Nebraska, 1990 N.A., Omaha, Nebraska Sheila Griffin Associate Director, Lied Center for Performing Arts, University of 1991 Nebraska-Lincoln, Lincoln, Nebraska John T. Selzer Chairman of the Board and Chief Executive Officer, Scottsbluflf 1991 National Bank and Trust Company, Scottsbluflf, Nebraska Appointed by the Board of Governors Herman Cain President and Chief Executive Officer, Godfather's Pizza, Inc., 1990 Omaha, Nebraska Leroy William Thom President, T-L Irrigation Company, Hastings, Nebraska 1991 DISTRICT 11—DALLAS Class A T.C. Frost Chairman of the Board, The Frost National Bank, San Antonio, 1990 Texas Charles T. Doyle Chairman of the Board and Chief Executive Officer, Gulf National 1991 Bank, Texas City, Texas Robert G. Greer Chairman of the Board, Tanglewood Bank, N.A., Houston, Texas 1992 Class B Robert L. Pfluger Rancher, San Angelo, Texas 1990 Charles Dickie Williamson Chairman of the Board and Chief Executive Officer, 1991 Williamson-Dickie Manufacturing Company, Fort Worth, Texas Gary E. Wood President, Texas Research League, Austin, Texas 1992 Class C Bobby R. Inman Austin, Texas 1990 Hugh G. Robinson Chairman of the Board and Chief Executive Officer, The Tetra 1991 Group, Inc., Dallas, Texas Leo E. Linbeck, Jr. Chairman of the Board and Chief Executive Officer, Linbeck 1992 Construction Corporation, Houston, Texas Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Directors of Federal Reserve Banks and Branches 407 DISTRICT 11—Continued Term expires Dec. 31 —EL PASO BRANCH Appointed by the Federal Reserve Bank Henry B. Ellis President and Chief Credit Officer, MBank El Paso, N.A., El Paso, 1990 Texas Ethel Ortega Olson Owner, NAMBE of Ruidoso, Ruidoso, New Mexico 1990 Humberto F. Sambrano President, SamCorp General Contractors, El Paso, Texas 1991 Wayne Merritt Chairman of the Board and President, United Bank, N.A., Midland, 1992 Texas Appointed by the Board of Governors Diana S. Natalicio President, The University of Texas at El Paso, El Paso, Texas 1990 Donald G. Stevens Owner, Stevens Oil Company, Roswell, New Mexico 1991 W. Thomas Beard III President, Leoncita Cattle Company, Alpine, Texas 1992 —HOUSTON BRANCH Appointed by the Federal Reserve Bank Clive Runnells President and Director, Runnells Cattle Company, Bay City, Texas 1990 David E. Sheffield Member Relations Consultant, American Bankers Association, 1990 Washington, D.C. Jeff Austin, Jr. President, First National Bank of Jacksonville, Jacksonville, Texas 1991 Jenard M. Gross President, Gross Builders, Inc., Houston, Texas 1992 Appointed by the Board of Governors Andrew L. Jefferson, Jr. Attorney, Jefferson and Mims, Houston, Texas 1990 Gilbert D. Gaedcke, Jr. Chairman of the Board and Chief Executive Officer, Gaedcke 1991 Equipment Company, Houston, Texas Judy Ley Allen Allen Investments, Houston, Texas 1992 —SAN ANTONIO BRANCH Appointed by the Federal Reserve Bank Javier Garza Executive Vice President, The Laredo National Bank, Laredo, 1990 Texas Sam R. Sparks President, Sam R. Sparks, Inc., Progreso, Texas 1990 Jane Flato Smith Investor and Rancher, San Antonio, Texas 1991 Gregory W. Crane Chairman of the Board, President, and Chief Executive Officer, 1992 Broadway National Bank, San Antonio, Texas Appointed by the Board of Governors Vacancy 1990 Roger R. Hemminghaus Chairman of the Board and Chief Executive Officer, Diamond 1991 Shamrock R&M, Inc., San Antonio, Texas Lawrence E. Jenkins Austin, Texas 1992 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
408 Federal Reserve Bulletin • May 1990 DISTRICT 12—SAN FRANCISCO Term expires Class A Dec. 31 R. Blair Hawkes President and Chief Executive Officer, Ireland Bank, Malad City, 1990 Idaho William E.B. Siart Chairman of the Board, President, and Chief Executive Officer, First 1991 Interstate Bank of California, Los Angeles, California Warren K.K. Luke President and Director, Hawaii National Bancshares, Inc., and Vice 1992 Chairman of the Board, Hawaii National Bank, Honolulu, Hawaii Class B John N. Nordstrom Co-Chairman of the Board, Nordstrom, Inc., Seattle, Washington 1990 William L. Tooley Chairman of the Board, Tooley & Company, Investment Builders, 1991 Los Angeles, California James A. Vohs Chairman of the Board, President, and Chief Executive Officer, 1992 Kaiser Foundation Health Plan, Inc., and Kaiser Foundation Hospitals, Oakland, California Class C Executive Vice President and Director, Bechtel Group, Inc., San 1990 Cordell W. Hull Francisco, California President and Chief Executive Officer, Chambers Communications 1991 Carolyn S. Chambers Corp., Eugene, Oregon Chairman of the Board and Chief Executive Officer, The Times 1992 Robert F. Erburu Mirror Company, Los Angeles, California —LOS ANGELES BRANCH Appointed by the Federal Reserve Bank Ross M. Blakely Chairman of the Executive Committee of the Board, Coast Savings 1990 and Loan, Los Angeles, California David R. Lovejoy Vice Chairman of the Board, Security Pacific National Bank, 1991 Los Angeles, California Ignacio E. Lozano, Jr. Editor-in-Chief, La Opinion, Los Angeles, California 1991 Fred D. Jensen Chairman of the Board, President, and Chief Executive Officer, 1992 National Bank of Long Beach, Long Beach, California Appointed by the Board of Governors Richard C. Seaver Chairman, Hydril Company, Los Angeles, California 1990 Harry W. Todd Managing Partner, Carlisle Enterprises, L.P., Coronado, California 1991 Yvonne Brathwaite Burke Partner, Jones, Day, Reavis & Pogue, Los Angeles, California 1992 —PORTLAND BRANCH Appointed by the Federal Reserve Bank Stephen G. Kimball President and Chief Executive Officer, Baker Boyer Bancorp, Walla 1990 Walla, Washington G. Dale Weight Chairman of the Board, President, and Chief Executive Officer, The 1990 Benjamin Franklin Savings and Loan Association, Portland, Oregon Stuart H. Compton Chairman of the Board and Chief Executive Officer, Pioneer Trust 1991 Bank, N.A., Salem, Oregon E. Kay Stepp President, Portland General Electric, Portland, Oregon 1992 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Directors of Federal Reserve Banks and Branches 409 DISTRICT 12—Continued Term expires PORTLAND BRANCH—Continued Dec. 31 Appointed by the Board of Governors Sandra A. Suran Business Consultant, Lake Oswego, Oregon 1990 William A. Hilliard Editor, The Oregonian, Portland, Oregon 1991 Wayne E. Phillips, Jr. Vice President, Phillips Ranch, Inc., Baker, Oregon 1992 —SALT LAKE CITY BRANCH Appointed by the Federal Reserve Bank Curtis H. Eaton Vice President; Manager, Community Banking Area; and Member of 1990 the Board of Directors, First Security Bank of Idaho, N.A., Twin Falls, Idaho Virginia P. Kelson Senior Consultant, Ralston & Associates, Management and Training 1990 Consultants, Salt Lake City, Utah Gerald R. Christensen President and Chairman, First Federal Savings Bank, Salt Lake 1991 City, Utah Ronald S. Hanson President, Zions First National Bank, Salt Lake City, Utah 1992 Appointed by the Board of Governors Don M. Wheeler President, Wheeler Machinery Company, Salt Lake City, Utah 1990 D.N. Rose President and Chief Executive Officer, Mountain Fuel Supply 1991 Company, Salt Lake City, Utah Gary G. Michael Vice Chairman, Chief Financial and Corporate Development Officer, 1992 Albertson's, Inc., Boise, Idaho —SEATTLE BRANCH Appointed by the Federal Reserve Bank B.R. Beeksma Chairman of the Board, InterWest Savings Bank, Oak Harbor, 1990 Washington Gerry B. Cameron President and Chief Operating Officer, U.S. Bank of Washington, 1990 N.A., Seattle, Washington Robert P. Gray President, National Bank of Alaska, Anchorage, Alaska 1991 H.H. Larison President, Columbia Paint & Coatings, Spokane, Washington 1992 Appointed by the Board of Governors George F. Russell, Jr. Chairman, Frank Russell Company, Tacoma, Washington 1990 Bruce R. Kennedy Chairman and Chief Executive Officer, Alaska Air Group, Inc., 1991 Seattle, Washington Judith M. Runstad Partner, Foster Pepper and Shefelman, Seattle, Washington 1992 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
1 Financial and Business Statistics NOTE. The following tables may have some 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 WEEKLY REPORTING COMMERCIAL BANKS MONEY STOCK AND BANK CREDIT Assets and liabilities A3 Reserves, money stock, liquid assets, and debt A19 All reporting banks measures A20 Banks in New York City A4 Reserves of depository institutions, Reserve A21 Branches and agencies of foreign banks Bank credit A22 Gross demand deposits—individuals, A5 Reserves and borrowings—Depository partnerships, and corporations institutions A6 Selected borrowings in immediately available funds—Large member banks FINANCIAL MARKETS A23 Commercial paper and bankers dollar acceptances outstanding POLICY INSTRUMENTS A23 Prime rate charged by banks on short-term business loans A7 Federal Reserve Bank interest rates A24 Interest rates—money and capital markets A8 Reserve requirements of depository institutions A25 Stock market—Selected statistics A9 Federal Reserve open market transactions 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 • May 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 A38 Mortgage debt outstanding A59 Liabilities to and claims on foreigners A60 Liabilities to foreigners A62 Banks' own claims on foreigners CONSUMER INSTALLMENT CREDIT A63 Banks' own and domestic customers' claims on 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 A41 Funds raised in U.S. credit markets ENTERPRISES IN THE UNITED STATES A43 Direct and indirect sources of funds to credit markets A65 Liabilities to unaffiliated foreigners A44 Summary of credit market debt outstanding A66 Claims on unaffiliated foreigners A45 Summary of credit market claims, by holder 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 Q1 Q2 Q3 Q4 Oct. Nov. Dec. Jan. Feb. Reserves of depository institutions 1 Total -3.1 -8.7 .6 5.1 7.1 .1 7.8 -2.7 6.4 2 Required -3.2 -7.7 .5 5.0 5.5 1.7 8.4 -4.7 7.1 3 Nonborrowed 1.2 -10.2 8.7 7.2 10.0 4.3 9.5 -6.2 -13.9 4 Monetary base3 4.4 1.7 3.2 4.0 4.1 1.9 7.3 10.9 9.4 Concepts of money, liquid assets, and debt4 5 Ml -.1 -4.4 1.8 5.1 7.8 2.0 8.2 -.1 9.8 6 M2 2.3 1.6 6.9 7.0 6.9 7.3 7.3 3.4 9.4 7 M3 3.9 3.3 3.9 1.8 1.2 3.7 3.4 1.4 5.5 8 L 5.2 5.0 4.2 2.7 2.1 3.8 4.3 -.1 n.a. 9 Debt 8.2 7.7 7.2 7.9 8.4 8.8 4.8 5.4 n.a. Nontrgnsaction components 10 In M2 3.2 3.7 8.7 7.6 6.6 9.0 7.0 4.5 9.2 11 In M3 only6 9.6 9.1 -6.8 -17.2 -19.8 -9.7 -11.5 -6.6 -9.9 Time and savings deposits Commercial banks 12 Savings -5.5 -11.5 .4 7.1 6.3 9.5 7.3 8.7 12.5 13 MMDA -11.6 -10.8 5.2 12.3 10.1 16.6 10.6 2.9 11.9 14 Small-denomination time7 22.4 25.9 11.9 11.3 14.8 10.9 9.6 6.6 7.5 15 Large-denomination time8'9 16.5 16.3 3.0 2.7 5.0 8.0 -.1 -.7 -4.8 Thrift institutions 16 Savings -7.7 -14.9 -5.2 .3 -1.7 1.7 -.1 -.5 7.6 17 MMDA -22.6 -30.6 -6.2 4.8 4.9 7.0 -1.0 2.7 8.2 18 Small-denomination time 5.7 10.7 8.8 -2.5 -5.8 -4.2 -.9 -5.1 -9.1 19 Large-denomination time8 .7 7.5 -10.7 -28.6 -32.8 -31.7 -20.2 -30.3 -22.3 Debt components4 20 Federal 7.7 6.9 4.7 9.5 9.5 10.9 3.7 5.7 n.a. 21 Nonfederal 8.3 7.9 7.9 7.4 8.0 8.2 5.2 5.3 n.a. 1. Unless otherwise noted, rates of change are calculated from average funds. Excludes individual retirement accounts (IRA) and Keogh balances at amounts outstanding in preceding month or quarter. depository institutions and money market funds. Also excludes all balances held 2. Figures incorporate adjustments for discontinuities associated with the by U.S. commercial banks, money market funds (general purpose and brokerimplementation of the Monetary Control Act and other regulatory changes to dealer), foreign governments and commercial banks, and the U.S. government. reserve requirements. To adjust for discontinuities due to changes in reserve M3: M2 plus large-denomination time deposits and term RP liabilities (in requirements on reservable nondeposit liabilities, the sum of such required amounts of $100,000 or more) issued by commercial banks and thrift institutions, reserves is subtracted from the actual series. Similarly, in adjusting for discon- term Eurodollars held by U.S. residents at foreign branches of U.S. banks tinuities in the monetary base, required clearing balances and adjustments to worldwide and at all banking offices in the United Kingdom and Canada, and compensate for float also are subtracted from the actual series. balances in both taxable and tax-exempt, institution-only money market mutual 3. The monetary base not adjusted for discontinuities consists of total funds. Excludes amounts held by depository institutions, the U.S. government, reserves plus required clearing balances and adjustments to compensate for float money market funds, and foreign banks and official institutions. Also subtracted at Federal Reserve Banks plus the currency component of the money stock less is the estimated amount of overnight RPs and Eurodollars held by institution-only the amount of vault cash holdings of thrift institutions that is included in the money market mutual funds. currency component of the money stock plus, for institutions not having required L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term reserve balances, the excess of current vault cash over the amount applied to Treasury securities, commercial paper and bankers acceptances, net of money satisfy current reserve requirements. After the introduction of contemporaneous market mutual fund holdings of these assets. reserve requirements (CRR), currency and vault cash figures are measured over Debt: Debt of domestic nonfinancial sectors consists of outstanding credit the weekly computation period ending Monday. market debt of the U.S. government, state and local governments, and private Before CRR, all components of the monetary base other than excess reserves nonfinancial sectors. Private debt consists of corporate bonds, mortgages, conare seasonally adjusted as a whole, rather than by component, and excess sumer credit (including bank loans), other bank loans, commercial paper, bankers reserves are added on a not seasonally adjusted basis. After CRR, the seasonally acceptances, and other debt instruments. The source of data on domestic adjusted series consists of seasonally adjusted total reserves, which include nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted data are based on monthly averages. Growth rates for debt reflect adjustments for currency component of the money stock plus the remaining items seasonally discontinuities over time in the levels of debt presented in other tables. adjusted as a whole. 5. Sum of overnight RPs and Eurodollars, money market fund balances 4. Composition of the money stock measures and debt is as follows: (general purpose and broker-dealer), MMDAs, and savings and small time Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults deposits less the estimated amount of demand deposits and vault cash held by of depository institutions; (2) travelers checks of nonbank issuers; (3) demand thrift institutions to service their time and savings deposit liabilities. deposits at all commercial banks other than those due to depository institutions, 6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents, the U.S. government, and foreign banks and official institutions less cash items in money market fund balances (institution-only), less a consolidation adjustment the process of collection and Federal Reserve float; and (4) other checkable that represents the estimated amount of overnight RPs and Eurodollars held by deposits (OCD) consisting of negotiable order of withdrawal (NOW) and auto- institution-only money market mutual funds. matic transfer service (ATS) accounts at depository institutions, credit union 7. 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 depository institutions and overnight Eurodollars issued to U.S. 8. Large-denomination time deposits are those issued in amounts of $100,000 residents by foreign branches of U.S. banks worldwide, Money Market Deposit or more, excluding those booked at international banking facilities. Accounts (MMDAs), savings and small-denomination time deposits (time depos- 9. Large-denomination time deposits at commercial banks less those held by its—including retail RPs—in amounts of less than $100,000), and balances in both money market mutual funds, depository institutions, and foreign banks and taxable and tax-exempt general purpose and broker-dealer money market mutual official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A4 Domestic Nonfinancial Statistics • May 1990 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of Weekly averages of daily figures for week ending daily figures 1989 1990 Dec. Feb. Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 269,244 269,857 265,438 269,192 267,901 265,235 262,966 263,407 264,181 U.S. government securities1, 2 2 Bought outright-system account 223,031 221,432 217,8110 222,4100 220,5580 217,2280 214,3370 214,8950 216,1400 3 Held under repurchase agreements 1,111 985 Federal agency obligations 4 Bought outright 6,525 6,525 6,5250 6,5250 6,5250 6,5250 6,5250 6,5250 6,5250 5 Held under repurchase agreements 1508 1109 0 0 0 0 0 0 0 6 Acceptances Loans to depository institutions 7 Adjustment credit 182 341 75 158 305 763 815 996 1,600 8 Seasonal credit 87 44 61 39 42 50 37 40 59 9 Extended credit 20 27 1,738 22 32 38 28 36 229 10 Float 1,128 978 887 814 960 652 1,053 617 1,622 11 Other Federal Reserve assets 37,003 39,406 38,341 39,224 39,480 39,981 40,172 40,299 38,006 12 Gold stock 11,059 11,059 11,059 11,059 11,059 11,059 11,059 11,059 11,059 13 Special drawing rights certificate account.. 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 14 Treasury currency outstanding 19,585 19,650 19,724 19,640 19,645 19,655 19,669 19,683 19,710 ABSORBING RESERVE FUNDS 15 Currency in circulation 256,870 256,669 254,967 257,350 255,231 253,232 253,650 254,651 255,230 16 Treasury cash holdings 448 468 498 468 472 476 485 495 495 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,787 6,302 6,133 4,108 5,930 9,550 6,106 6,446 4,783 18 Foreign 286 255 218 248 217 255 190 213 236 19 Service-related balances and adjustments 1,817 2,075 1,906 2,094 2,125 1,882 2,334 2,035 2,024 20 Other 397 364 398 227 209 625 326 234 343 21 Other Federal Reserve liabilities and capital 8,242 8,928 8,973 8,949 9,021 9,011 8,867 8,829 8,985 22 Reserve balances with Federal Reserve Banks3 35,559 34,023 31,646 34,965 33,918 29,436 30,254 29,762 31,372 End-of-month figures Wednesday figures 1990 Feb. Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 276,622 265,926 265,805 271,289 269,550 265,926 262,399 263,771 265,705 U.S. government securities1, 2 24 Bought outright-system account 226,775 218,3920 219,1320 221,7480 221,9610 218,3920 212,4690 215,3120 215,8140 25 Held under repurchase agreements 1,592 Federal agency obligationsr 26 Bought outright 6,525 6,5250 6,5250 6,5250 6,5250 6,5250 6,5250 6,5205 6,5205 27 Held under repurchase agreements 5205 0 0 0 0 0 0 0 0 28 Acceptances Loans to depository institutions 29 Adjustment credit 375 656 57 81 565 656 1,670 947 2,488 30 Seasonal credit 86 42 59 40 42 42 35 37 59 31 Extended credit 20 35 1,662 26 33 35 28 42 1,332 32 Float 1,093 216 266 3,649 768 216 1,504 472 1,505 33 Other Federal Reserve assets 39,631 40,061 38,103 39,222 39,656 40,061 40,168 40,436 37,981 34 Gold stock 11,059 11,059 11,059 11,059 11,059 11,059 11,059 11,059 11,059 35 Special drawing rights certificate account.. 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 36 Treasury currency outstanding 19,615 19,655 19,724 19,640 19,645 19,655 19,669 19,683 19,710 ABSORBING RESERVE FUNDS 37 Currency in circulation 260,443 253,123 255,186 256,749 254,251 253,123 254,248 254,957 255,495 38 Treasury cash holdings 455 479 504 471 475 479 495 495 495 Deposits, other than reserve balances, with Federal Reserve Banks 39 Treasury 6,217 13,153 6,613 6,948 6,044 13,153 6,411 5,654 5,310 40 Foreign 589 251 309 273 188 251 203 180 224 41 Service-related balances and adjustments 1,618 1,882 1,906 2,094 2,125 1,882 2,334 2,035 2,024 42 Other 1,298 357 409 257 206 357 242 218 302 43 Other Federal Reserve liabilities and capital 8,486 8,884 8,449 8,692 8,824 8,621 8,478 8,782 44 Reserve balances with Federal Reserve Banks3 36,709 27,029 31,729 35,022 36,658 27,029 29,090 31,013 32,358 1. Includes securities loaned—fully guaranteed by U.S. government securities 3. Excludes required clearing balances and adjustments to compensate for pledged with Federal Reserve Banks—and excludes any securities sold and float. scheduled to be bought back under matched sale-purchase transactions. NOTE. For amounts of currency and coin held as reserves, see table 1.12. 2. Beginning with the May 1990 Bulletin, this table has been revised to Components may not add to totals because of rounding. correspond with the H.4.1 statistical release. 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 averages Reserve classification 1987 1989 Dec. Dec. Dec. Aug. Sept. Oct. Nov. Jan. Feb. 1 Reserve balances with Reserve Banks2 37,673 37,830 35,436 32,823 33,556 33,123 33,941 35,436 34.09C 30,933 2 Total vault cash* 26,185 27,205 28,782 28,362 28,089 28,897 28,519 28,782 30,354 31,641 3 Vault 24,449 25,909 27,374 26,735 26,570 27,275 27,048 27,374 28,841 29,694 4 Surplus5.... 1,736 1,296 1,409 1,627 1,519 1,622 1,472 1,409 1,513 1,947 5 Total reserves 62,123 63,739 62,810 59,559 60,126 60,397 60,989 62,810 62,93lr 60,627 6 Required reserves i 61,094 62,699 61,888 58,674 59,188 59,378 60,044 61,888 61,914 59,639 7 Excess reserve balances at Reserve Banks 1,029 1,040 922 885 938 1,020 945 922 1,016' 988 8 Total borrowings at Reserve Banks 777 1,716 265 675 693 555 349 265 440 1,448 9 Seasonal borrowings at Reserve Banks .. 93 130 84 490 452 330 134 84 47 51 10 Extended credit at Reserve Banks 483 1,244 20 41 22 21 21 20 26 535 Biweekly averages of daily figures for weeks ending 1989 1990 Nov. 1 Nov. 15 Nov. 29 Dec. 13 Dec. 27 Jan. 10 Jan. 24 Feb. 7 Feb. 21 Mar. 7 11 Reserve balances with Reserve Banks2 32,778 34,468 33,394 35,399 35,13c 36,627 34,423' 29,799' 30,597 32,740 12 Total vault cash* 28,875 27,908 29,156 27,821 29,415 29,695 29,338 33,327 31,932 29,372 1 1 3 4 V Su au rp lt l us . 5t 27 1 , , 1 6 7 9 7 8 26 1 , , 5 3 5 5 2 7 27 1 , , 5 5 7 8 4 2 26 1 , , 5 3 0 1 9 2 27 1 , , 9 5 0 1 3 3 28 1 , , 3 3 3 6 5 0 28 1 , , 0 2 4 9 5 4 3 2 1 , , 1 1 7 5 1 6 29 1 , , 9 9 5 7 6 6 27 1 , , 7 6 0 6 7 5 15 Total reserves6 59,955 61,019^ 60,967' 61,907' 63,033 64,961 62,468 60,955' 60,553 60,447 16 Required reserves i 58,827 60,139 59,958 61,149 62,015 63,844 61,627 59,735' 59,585 59,651 17 Excess reserve balances at Reserve Banks 1,128 881 1,009 759 1,018 1,117 841 1,220' 968 796 18 Total borrowings at Reserve Banks 345 272 441 151 351 339 300 865 1,480 1,967 19 Seasonal borrowings at Reserve Banks .. 280 147 115 87 89 58 41 44 50 60 20 Extended credit at Reserve Banks 23 20 23 22 19 19 27 33 133 1,841 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 • May 1990 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Member Banks1 Averages of daily figures, in millions of dollars 1989 week ending Monday MMaattuurriittyy aanndd ssoouurrccee Jan. 16 Jan. 23 Jan. 30 Feb. 6 Feb. 13 Feb. 20 Feb. 27 Mar. 6 Mar. 13 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 70,344 69,604 66,372 71,750 71,162 69,950 72,395 74,375 74,764 2 For all other maturities 10,870 10,424 9,947 10,289 10,627 11,937 11,378 11,061 11,208 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 26,331 24,937 27,974 27,292 29,241 27,903 25,142 31,371 30,195 4 For all other maturities 7,431 6,694 6,345 6,524 6,787 7,467 7,403 7,190 8,378 Repurchase agreements on U.S. government and federal agency securities in immediately available funds Brokers and nonbank dealers in securities 5 For one day or under continuing contract 14,513 15,955 16,041 14,289 14,754 15,077 15,031 16,834 15,413 6 For all other maturities 11,235 11,280 12,425 13,279 14,100 13,592 13,484 13,598 1144,,445566 All other customers 7 For one day or under continuing contract 29,334 28,826 28,775 27,966 27,901 27,792 29,237 27,612 27,710 8 For all other maturities 9,547 9,389 9,750 9,980 10,178 10,299 9,978 10,104 10,085 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 40,105 40,596 40,075 41,248 39,096 38,742 37,275 43,328 40,929 10 To all other specified customers2 14,111 14,784 13,584 17,118 15,055 16,176 15,684 17,158 16,936 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. 2. Brokers and nonbank dealers in securities; other depository institutions; These data also appear in the Board's H.5 (507) release. For address, see inside foreign banks and official institutions; and United States government agencies, front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels AAddjjuussttmmeenntt ccrreeddiitt Extended credit2 aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee SSeeaassoonnaall ccrreeddiitt11 First 30 days of borrowing After 30 days of borrowing3 BBBaaannnkkk On Effective Previous On Effective Previous On Effective Previous 3/22/90 date rate 3/22/90 date rate 3/22/90 date rate Effective date Boston 7 2/24/89 6 Vi 7 2/24/89 6V4 8. 85 3/22/90 8. 75 3/8/90 New York 2/24/89 2/24/89 3/22/90 3/8/90 Philadelphia 2/24/89 2/24/89 3/22/90 3/8/90 Cleveland 2/24/89 2/24/89 3/22/90 3/8/90 Richmond 2/24/89 2/24/89 3/22/90 3/8/90 Atlanta 2/24/89 2/24/89 3/22/90 3/8/90 Chicago 2/24/89 2/24/89 3/22/90 3/8/90 St. Louis 2/24/89 2/24/89 3/22/90 3/8/90 Minneapolis 2/24/89 2/24/89 3/22/90 3/8/90 Kansas City 2/24/89 2/24/89 3/22/90 3/8/90 Dallas 2/27/89 2/27/89 3/22/90 3/8/90 San Francisco ... 7 2/24/89 6V2 7 2/24/89 6V2 8.85 3/22/90 8.75 3/8/90 Range of rates for adjustment credit in recent years4 Range (or F.R. Range (or F.R. Range (or F.R. Effective date A le l v l e F l) . — R. Ba o n f k Effective date A le l v l e F l) . — R. B o an f k Effective date A le ll v e F l . s R - . B o a f n k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977, 6 6 1980—July 28. 10-11 10 1984—Apr. 9 8'/>-9 9 1978—Jan. 9 6-6V2 6V2 29 10 10 13 9 9 20 6V2 6V2 Sept. 26 11 11 Nov. 21 8^-9 8V2 May 11 evi-i 1 Nov. 17 12 12 26 m 8V2 12 7-7 I V 4 1 7V 4 Dec. 5 12-13 13 Dec. 24 8 8 July 3 7V4 10 I7V3/*4 1981—May 5 13-14 14 1985—May 20 lVi-% IVi Aug. 21 VA 8 14 14 24 IVi m O Se c p t. t . 2 2 1 2 0 6 8 8 -8 ! 8 ^ ^ 8 8 8 V 1/ 2 2 D N e o c v . . 4 2 6 13 1 1 - 3 2 1 4 1 1 1 3 3 2 1986—Mar. 1 7 0 1-l 7 V i 7 7 Nov. 1 8V4-9VJ 9 V2 Apr. 21 6Y2-1 6'/! 3 9Vl 91/2 1982—July 20 llVis-12 11'/! July 11 6 6 23 \\Vi II1/! Aug. 21 5 ¥2-6 5'/! 1979—July 20 10 1100 ^ Aug. 2 11-1 \Vi 11 22 51/2 5 Vi Aug. 2 1 0 7 1 1 0 0lO- V 1V0 ^ V -1 5i 1 10 Vi 1 3 6 I 1 O 1 V 2 1 1 1 0 'A 1987—Sept. 4 5V2--6 6 Sept. 19 II 11 27 HMOte 10 11 6 6 21 11 30 10 10 Oct. 8 11-12 12 Oct. 12 9'zi-lO 9Vi 1988—Aug. 9 6-6'/2 6 Vi 10 12 12 13 9Vi 9Vi 11 61/2 6'/i Nov. 22 9-9 Vi 9 1980—Feb. 15 12-13 13 26 9 9 1989—Feb. 24 6W-7 7 19 13 13 Dec. 14 S'/2-9 9 27 7 7 May 29 12-13 13 15 8'/l-9 8<A 30 12 12 17 8 Vi m In effect Mar. 22, 1990 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 V2 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 • May 1990 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Monetary Control Act Type of deposit, ai 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 lVi 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 1990 TTyyppee ooff ttrraannssaaccttiioonn 11998877 11998888 11998899 July Aug. Sept. Oct. Nov. Dec. Jan. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 1 Gross purchases 18,983 8,223 14,284 0 0 0 219 88,,779944 11,,888833 442233 ? Gross sales 6,051 587 12,818 5,517 934 0 1,633 0 0 1,489 Exchange 0 0 0 0 0 0 0 0 0 0 4 9,029 2,200 12,730 2,400 800 0 1,400 3,530 0 1,000 Others within 1 year 5 Gross purchases 3,659 2,176 327 0 0 0 0 115555 00 00 6 Gross sales 300 0 0 0 0 0 0 0 0 0 7 Maturity shift 21,504 23,854 28,848 1,749 4,200 1,832 852 3,915 1,268 1,201 8 Exchange -20,388 -24,588 -25,783 -1,073 -4,025 0 -2,678 -5,502 0 -2,489 9 Redemptions 70 0 500 0 0 0 500 0 0 0 1 to 5 years 10 Gross purchases 10,231 5,485 1,436 0 0 0 0 00 00 00 11 452 800 490 13 150 0 24 0 0 0 1? Maturity shift -17,975 -17,720 -25,534 -1,584 -3,321 -1,832 -758 -2,869 -1,268 -1,163 13 Exchange 18,938 22,515 23,250 787 3,425 0 2,552 4,902 0 2,373 5 to 10 years 14 2,441 1,579 287 0 0 0 0 0 00 00 15 Gross sales 0 175 29 9 0 0 0 0 0 0 16 Maturity shift -3,529 -5,946 -2,231 -165 -879 0 -95 -1,046 0 -38 17 Exchange 950 1,797 1,934 286 400 0 126 400 0 116 Over 10 years 18 Gross purchases 1,858 1,398 284 00 0 0 00 00 00 00 19 Gross sales 0 0 0 0 0 0 0 0 0 0 70 Maturity shift 0 -188 -1,086 0 0 0 0 0 0 0 21 Exchange 500 275 600 0 200 0 0 200 0 0 All maturities ?? Gross purchases 37,170 18,863 16,617 0 0 0 219 8,949 11,,888833 442233 ?3 6,803 1,562 13,337 5,539 1,084 0 1,657 0 0 1,489 24 Redemptions 9,099 2,200 13,230 2,400 800 0 1,900 3,530 0 1,000 Matched transactions 75 950,923 1,168,484 1,323,480 123,373 146,611 116,502 111,430 105,696 110033,,007777 112277,,772299 26 Gross purchases 950,935 1,168,142 1,326,542 118,221 147,228 120,144 111,893 105,243 104,827 121,411 Repurchase agreements2 77 Gross purchases 314,621 152,613 129,518 4,961 0 99,,339966 00 1155,,335500 2222,,773377 1166,,118855 28 Gross sales 324,666 151,497 132,688 4,961 0 9,396 0 15,350 21,145 17,777 29 Net change in U.S. government securities 11,234 15,872 -10,055 -13,091 -1,267 3,642 -2,875 4,966 5,225 -9,976 FEDERAL AGENCY OBLIGATIONS Outright transactions 30 Gross purchases 0 0 0 00 0 00 00 00 00 00 31 Gross sales 0 0 0 0 0 0 0 0 0 0 32 Redemptions 276 587 442 45 0 54 30 0 0 0 Repurchase agreements2 33 Gross purchases 80,353 57,259 38,835r 11,,113377 0 22,,887744'' 00 11,,224477 22,,999922 11,,774411 34 Gross sales 81,350 56,471 40,41r 1,137 0 2,874r 0 1,247 2,467 2,266 35 Net change in federal agency obligations -1,274 198 -2,018 -45 0 -54 -30 0 525 -525 36 Total net change in System Open Market Account 9,961 16,070 -12,073 — 13,136 -1,267 3,588 -2,905 4,966 55,,775500 --1100,,550011 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 • May 1990 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1990 1989 1990 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 Dec. Jan. Feb. Consolidated condition statement ASSETS 1 Gold certificate account 11,059 11,059 11,059 11,059 11,059 11,059 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 3 524 544 561 568 568 456 524 568 Loans 4 To depository institutions 733 1,733 1,027 3,879 1,779 481 733 1,779 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 0 0 0 0 0 0 0 0 U.S. Treasury securities Bought outright y Bills 96,197 90,274 93,118 93,620 96,937 104,581 96,197 96,937 10 Notes 91,381 91,381 91,381 91,239 91,239 91,381 91,381 91,239 n Bonds 30,814 30,814 30,814 30,955 30,955 30,814 30,814 30,955 12 Total bought outright 218,392 212,469 215,312 215,814 219,132 223,142 218,392 219,132 13 Held under repurchase agreements 0 0 0 0 0 1,592 0 0 14 Total U.S. Treasury securities 218,392 212,469 215,312 215,814 219,132 228,367 218,392 219,132 15 Total loans and securities 225,649 220,726 222,864 226,218 227,435 235,898 225,649 227,435 16 Items in process of collection 5,848 7,272 5,776 9,937 5,936 8,903 5,848 5,936 17 Bank premises 791 791 792 792 791 790 791 791 Other assets 18 Denominated in foreign currencies3 31,920 31,935 31,964 31,286 31,041 31,333 31,920 31,041 19 All other 7,723 7,494 7,568 6,099 6,320 7,465 7,723 6,320 20 Total assets 292,033 288,340 289,102 294,478 291,669 304,424 292,033 291,669 LIABILITIES 21 Federal Reserve notes 223344,,447711 235,619 223366,,333311 223366,,884499 223366,,553344 224411,,773399 223344,,447711 223366,,553344 Deposits 22 To depository institutions 29,464 31,529 33,003 34,215 33,811 38,327 29,464 33,811 23 U.S. Treasury—General account 13,153 6,411 5,654 5,310 6,613 6,217 13,153 6,613 24 Foreign—Official accounts 251 203 180 224 309 590 251 309 25 Other 357 242 218 302 409 1,298 357 409 26 Total deposits 43,228 38,385 39,055 40,051 41,142 46,430 43,228 41,142 27 Deferred credit items 5,452 5,715 5,238 8,795 5,543 7,773 5,452 5,543 28 Other liabilities and accrued dividends 3,911 3,740 3,599 3,852 3,853 3,994 3,911 3,853 29 Total liabilities 287,060 283,459 284,223 289,548 287,073 299,935 287,060 287,073 CAPITAL ACCOUNTS 30 Capital paid in 2,249 2,255 2,260 2,274 2,275 2,243 2,249 2,275 31 Surplus 2,243 2,243 2,243 2,243 2,219 2,243 2,243 2,219 32 Other capital accounts 481 384 376 413 103 0 481 103 33 Total liabilities and capital accounts 292,033 288,340 289,102 294,478 291,669 304,423 292,033 291,669 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 228,073 229,647 227,586 225,040 224,626 233,048 228,073 224,626 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 279,920 280,146 280,461 280,516 280,388 279,665 279,920 280,388 36 LESS: Held by bank 45,449 44,527 44,130 43,667 43,854 37,926 45,449 43,854 37 Federal Reserve notes, net 234,471 235,619 223366,,333311 223366,,884499 223366,,553344 224411,,773399 223344,,447711 223366,,553344 Collateral held against notes net: 38 Gold certificate account 11,059 11,059 11,059 11,059 11,059 11,059 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 214,894 216,042 216,754 217,272 216,957 222,162 214,894 216,957 42 Total collateral 234,471 235,619 236,331 236,849 236,534 241,739 234,471 236,534 1. Some of these data also appear in the Board's H.4.1 (503) release. For 3. Valued monthly at market exchange rates. address, see inside front cover. Components may not add to totals because of 4. Includes special investment account at the Federal Reserve Bank of Chicago rounding. in Treasury bills maturing within 90 days. 2. Includes securities loaned—fully guaranteed by U.S. Treasury securities 5. Includes exchange-translation account reflecting the monthly revaluation at pledged with Federal Reserve Banks—and excludes securities sold and scheduled market exchange rates of foreign-exchange commitments. to be bought back under matched sale-purchase transactions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Federal Reserve Banks All 1.19 FEDERAL RESERVE BANKS Maturity Distribution of Loan and Security Holding Millions of dollars Wednesday End of month Type and maturity groupings 1990 1989 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 Dec. 29 Jan. 31 1 Loans—Total 850 1,733 1,027 3,879 1,874 481 850 2 Within 15 days 848 1,715 1,025 3,878 1,867 469 848 3 16 days to 90 days 02 108 02 02 07 101 02 4 91 days to 1 year 0 0 0 0 0 0 0 5 Acceptances—Total 0 0 0 0 0 0 0 6 Within 15 days 0 0 0 0 0 0 0 7 16 days to 90 days 0 0 0 0 0 0 0 8 91 days to 1 year 9 U.S. Treasury securities—Total .. 218,392 212,469 215,312 215,814 219,132 228,367 218,392 10 Within 15 days1 10,372 11,871 15,178 7,624 10.656 9,413 10,372 11 16 days to 90 days 47,233 42,435 46,374 47,108 46,479 55,523 47,233 12 91 days to 1 year 68,022 65,398 60,995 65,655 66.657 70,687 68,022 13 Over 1 year to 5 years 53,452 53,452 53,452 56,568 56,481 53,509 53,452 14 Over 5 years to 10 years 12,607 12,607 12,607 12,607 12,607 12,529 12,607 15 Over 10 years 26,706 26,706 26,706 26,252 26,252 26,706 26,706 16 Federal agency obligations—Total 6,525 6,5250 6,525 6,525 6,525 7,050 6,525 17 Within 15 days' 119 280 280 255 678 119 18 16 days to 90 days 668 723 498 498 558 568 668 19 91 days to 1 year 1,253 1,317 1,317 1,317 1,342 1,346 1,253 20 Over 1 year to 5 years 3,238 3,238 3,183 3,183 3,123 3,198 3,238 21 Over 5 years to 10 years 1,057 1,057 1,057 1,057 1,057 1,071 1,057 22 Over 10 years 188 188 188 188 189 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 • May 1990 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1989' 1990 1986 1987 1988 1989 IItteemm Dec. Dec. Dec. Dec.' July Aug. Sept. Oct. Nov. Dec. Jan/ Feb. Seasonally adjusted AADDJJUUSSTTEEDD FFOORR CHANGES IN RESERVE REQUIREMENTS2 1 Total reserves3 58.02' 58.57' 60.59' 60.03 58.87 58.91 59.29 59.64 59.65 60.03 59.90 60.22 2 Nonborrowed reserves 57.20' 57.80' 58.87' 59.77 58.17 58.23 58.60 59.08 59.30 59.77 59.46 58.77 3 Nonborrowed reserves plus extended credit 57.50' 58.28' 60.11' 59.79 58.28 58.27 58.62 59.11 59.32 59.79 59.48 59.31 4 Required reserves 56.65' 57.55' 59.55' 59.11 57.90 58.02 58.35 58.62 58.70 59.11 58.88 59.23 5 Monetary base5 241.51' 258.14' 275.41' 285.11 280.14 280.92 281.97 282.94 283.38 285.11 287.70 289.96 Not seasonally adjusted 6 Total reserves3 59.46 60.06 62.21 61.67 59.04 58.40 59.02 59.27 59.87 61.67 61.58 59.20 7 Nonborrowed reserves 58.64 59.28 60.50 61.40 58.35 57.72 58.33 58.72 59.52 61.40 61.14 57.76 8 Nonborrowed reserves plus extended credit 58.94 59.76 61.74 61.42 58.46 57.77 58.35 58.74 59.54 61.42 61.17 58.29 9 Required reserves 58.09 59.03 61.17 60.75 58.08 57.51 58.09 58.25 58.92 60.75 60.56 58.21 10 Monetary base 245.25 262.08 279.71 289.61 282.19 281.19 280.82 281.50 284.27 289.61 288.87 286.74 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS6 11 Total reserves3 59.56 62.12 63.74 62.81 60.25 59.56 60.13 60.40 60.99 62.81 62.93 60.63 12 Nonborrowed reserves 58.73 61.35 62.02 62.54 59.56 58.88 59.43 59.84 60.64 62.54 62.49 59.18 N Nonborrowed reserves plus extended credit 59.04 61.83 63.27 62.56 59.67 58.93 59.46 59.86 60.66 62.56 62.52 59.71 14 Required reserves 58.19 61.09 62.70 61.89 59.29 58.67 59.19 59.38 60.04 61.89 61.91 59.64 15 Monetary base5 247.71 266.16 283.18 292.71 285.39 284.23 283.78 284.49 287.35 292.71 292.33 290.27 1. Latest monthly and biweekly figures are available from the Board's H.3(502) the terms and conditions established for the extended credit program to helpdestatistical release. Historical data and estimates of the impact on required reserves pository institutions deal with sustained liquidity pressures. Because there isnot of changes in reserve requirements are available from the Monetary and Reserves the same need to repay such borrowing promptly as there is with traditional Projections Section. Division of Monetary Affairs. Board of Governors of the short-term adjustment credit, the money market impact of extended credit is Federal Reserve System, Washington, D.C. 20551. similar to that of nonborrowed reserves. 2. Figures incorporate adjustments for discontinuities associated with the 5. The monetary base not adjusted for discontinuities consists of total reserves implementation of the Monetary Control Act and other regulatory changes to plus required clearing balances and adjustments to compensate for float at Federal reserve requirements. To adjust for discontinuities due to changes in reserve Reserve Banks and the currency component of the money stock plus, for instirequirements on reservable nondeposit liabilities, the sum of such required tutions not having required reserve balances, the excess of current vault cash over reserves is subtracted from the actual series. Similarly, in adjusting for disconti- the amount applied to satisfy current reserve requirements. Currency and vault nuities in the monetary base, required clearing balances and adjustments to cash figures are measured over the weekly computation period ending Monday. compensate for float also are subtracted from the actual series. The seasonally adjusted monetary base consists of seasonally adjusted total 3. Total reserves not adjusted for discontinuities consist of reserve balances reserves, which include excess reserves on a not seasonally adjusted basis, plus with Federal Reserve Banks, which exclude required clearing balances and the seasonally adjusted currency component of the money stock and the remainadjustments to compensate for float, plus vault cash held during the lagged ing items seasonally adjusted as a whole. computation period by institutions having required reserve balances at Federal 6. Reflects actual reserve requirements, including those on nondeposit liabili- Reserve Banks plus the amount of vault cash equal to required reserves during the ties, with no adjustments to eliminate the effects of discontinuities associated with maintenance period at institutions having no required reserve balances. implementation of the Monetary Control Act or other regulatory changes to 4. Extended credit consists of borrowing at the discount window under reserve requirements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Monetary and Credit Aggregates A13 1.21 MONEY STOCK, LIQUID ASSETS, AND DEBT MEASURES1 Billions of dollars, averages of daily figures 1989 1990 IItteemm22 DD 1199 ee 88 cc 66 // DD 1199 ee 88 cc 77 // DD 1199 ee 88 cc 88 // DD 1199 ee 88 cc 99 // Nov. Dec. Jan. Feb. Seasonally adjusted 1 Ml 724.7 750.4 787.5 794.8 789.4 794.8 794.7 801.2 2 M2 2,814.2 2,913.2 3,072.4 3,220.1 3,200.7 3,220.1 3,229.1 3,254.4 3 M3 3,494.5 3,678.7 3,918.4 4,040.1 4,028.7 4,040.1 4,044.7 4,063.2 4 L 4,135.5 4,338.9 4,676.0 4,863.9 4,846.5 4,863.9 4,863.5 n.a. 5 Debt 7,597.0 8,316.2 9,070.7 9,771.6 9,732.5 9,771.6 9,815.5 n.a. Ml components 6 Currency3 180.6 196.7 211.8 221.9 220.4 221.9 224.6 226.6 7 Travelers checks': 6.5 7.0 7.5 7.4 7.4 7.4 7.5 7.6 8 Demand deposits 302.1 287.0 287.0 279.7 278.8 279.7 277.3 280.2 9 Other checkable deposits 235.5 259.7 281.3 285.7 282.8 285.7 285.3 286.8 Nontransactions components 10 In M27 2,089.6 2,162.8 2,284.9 2,425.3 2,411.3 2,425.3 2,434.4 2,453.2 11 In M3 only8 680.3 765.5 845.9 820.1 828.0 820.1 815.6 808.9 Money market deposit accounts 12 Commercial banks 377.7 356.4 350.2 351.5 348.5 351.5 352.4 355.9 13 Thrift institutions 193.3 167.4 150.1 132.2 132.4 132.2 132.5 133.5 Savings deposits 14 Commercial Banks 155.8 178.3 192.0 188.5 187.3 188.5 189.9 191.8 15 Thrift institutions 214.3 236.6 235.9 220.5 220.6 220.5 220.5 221.9 Small-denomination time deposits9 16 Commercial Banks 366.3 388.1 447.5 528.6 524.4 528.6 531.5 534.8 17 Thrift institutions 489.9 529.7 583.5 613.6 614.1 613.6 611.0 606.4 Money market mutual funds 18 General purpose and broker-dealer. 208.7 222.0 240.9 311.5 309.0 311.5 318.0 326.3 19 Institution-only 83.8 89.0 87.1 102.3 101.1 102.3 103.2 103.7 Large-denomination time deposits10 20 Commercial Banks" 289.8 326.9 368.2 401.4 401.5 401.4 401.2 399.6 21 Thrift institutions 150.0 161.9 172.9 156.8 159.5 156.8 152.9 150.0 Debt components 22 Federal debt 1,805.8 1,957.4 2,113.5 2,265.4 2,258.5 2,265.4 2,276.1 n.a. 23 Nonfederal debt 5,791.2 6,358.6 6,957.2 7,506.2 7,474.0 7,506.2 7,539.4 n.a. Not seasonally adjusted 2 2 2 2 2 4 5 6 7 8 M M L M D e 2 l 3 b t 7 2 3 4 , , , , 5 5 8 1 7 8 0 2 5 4 0 8 6 1 0 . . . . . 8 7 5 5 5 2 3 4 8 . . , , 6 9 3 2 7 9 2 5 9 6 2 5 5 7 6 . . . . . 7 4 6 2 7 4 9 3 3 , , , , 6 0 9 0 8 9 5 3 8 0 2 2 5 6 4 . . . . . 7 5 2 5 0 4 4 9 3 , . . , 7 0 8 2 8 5 5 8 3 1 7 4 1 2 2 . . . . . 0 2 3 1 9 4 4 9 3 . , , . 0 8 7 2 7 3 5 0 0 9 8 5 1 4 1 . . . . . 4 4 9 7 3 4 4 9 3 . . , , 0 8 7 8 2 5 8 5 1 3 4 1 7 2 2 . . . . . 3 1 2 0 9 4 4 9 3 , , , , 8 0 8 2 8 0 5 8 4 0 5 3 2 2 0 . . . . . 4 2 8 1 9 4 3 , , n n 0 2 7 . . 5 4 8 a a 1 7 2 . . . . . 8 8 3 2 3 3 3 9 1 2 0 Ml C O T D r u t e c a h r m o v r e m e e a r n n l p c e c d o h r y s n e d 3 e c c e n k h p t a e o s b c s k l i e t s s '* d eposits 2 3 1 3 1 8 7 6 4 3 . . . . 5 0 0 0 2 2 1 6 9 9 6 2 8 9 . . . . 0 6 5 3 2 2 28 9 1 6 3 8 4 . . . . 9 8 9 8 2 2 2 8 9 2 8 1 6 5 . . . . 4 6 9 3 2 2 28 8 2 7 2 1 1 . . . . 1 0 5 0 2 2 2 8 9 2 6 8 1 5 . . . . 4 9 6 3 2 2 2 8 8 2 7 9 3 2 . . . . 3 0 0 9 2 2 2 7 8 2 1 5 7 4 . . . . 4 0 2 3 Nontransactions components 3 3 3 4 M M 3 2 7 o nly8 2,0 6 8 82 6 . . 3 0 2,1 7 5 6 9 7 . . 2 0 2,2 8 8 4 0 7 . . 8 3 2,4 8 2 2 0 1 . . 8 3 2,4 8 1 34 2 . . 1 6 2,4 8 2 2 0 1 . . 8 3 2,4 8 3 1 8 2 . . 7 9 2,4 8 5 0 4 9. . 5 5 3 3 5 6 Mo T C n h o e r m y if m t m i e n a r r s c k t i i a e t l u t t B d io e a n p n s o k s s i t accounts 3 1 7 9 9 2 . . 8 9 3 1 5 6 9 7 . . 0 5 3 1 5 5 3 0 . . 2 6 3 1 5 3 5 2 . . 0 9 3 1 5 3 0 2 . . 3 8 3 1 5 3 5 2 . . 0 9 3 1 5 3 6 3 . . 3 0 3 1 5 3 7 3 . . 7 4 Savings deposits 3 3 7 8 T C h o r m if m t i e n r s c t i i a t l u t B io a n n s k s 2 1 1 5 2 4 . . 7 4 2 1 3 7 4 6 . . 9 9 2 1 3 9 4 0 . . 2 6 2 1 1 8 9 7 . . 0 2 2 1 2 8 0 7 . . 5 1 2 1 1 8 9 7 . . 0 2 2 1 1 8 8 9 . . 9 0 2 1 1 9 9 0 . . 5 5 Small-denomination time deposits9 39 Commercial Banks 366.1 387.3 446.0 526.4 523.1 526.4 530.9 535.2 40 Thrift institutions 489.8 529.1 582.4 612.3 614.2 612.3 613.1 608.6 Money market mutual funds 4 4 2 1 G In e s n ti e t r u a t l i o p n u - r o p n o ly s e and broker-dealer. 2 8 0 4 8 . . 4 0 22 8 1 9 . . 5 6 24 8 0 7 . . 5 6 3 1 1 0 1 2 . . 2 9 3 1 0 0 9 2 . . 7 1 3 1 1 0 1 2 . . 2 9 3 1 1 0 6 6 . . 8 0 3 1 2 0 7 7 . . 8 0 Large-denomination time deposits10 43 Commercial Banks11 289.2 325.8 366.9 399.8 401.9 399.8 398.9 399.3 44 Thrift institutions 150.7 162.9 174.2 158.3 161.7 158.3 154.0 150.4 Debt components 45 Federal debt 1,803.9 1,955.6 2,111.8 2,264.2 2,250.8 2,264.2 2,275.5 n.a. 46 Nonfederal debt 5,776.8 6,342.0 6,944.2 7,492.8 7,451.0 7,492.8 7,529.9 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A14 DomesticN onfinancial Statistics • May 1990 NOTES TO TABLE 1.21 1. Latest monthly and weekly figures are available from the Board's H.6 (508) Debt: Debt of domestic nonfinancial sectors consists of outstanding credit release. Historical data are available from the Monetary and Reserves Projection market debt of the U.S. government, state and local governments, and private section, Division of Monetary Affairs, Board of Governors of the Federal Reserve nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- System, Washington, D.C. 20551. sumer credit (including bank loans), other bank loans, commercial paper, bankers 2. Composition of the money stock measures and debt is as follows: acceptances, and other debt instruments. The source of data on domestic Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults nonfinancial debt is the Federal Reserve Board's flow of funds accounts. Debt of depository institutions; (2) travelers checks of nonbank issuers; (3) demand data are based on monthly averages. deposits at all commercial banks other than those due to depository institutions, 3. Currency outside the U.S. Treasury, Federal Reserve Banks, and vaults of the U.S. government, and foreign banks and official institutions less cash items in depository institutions. the process of collection and Federal Reserve float; and (4) other checkable 4. Outstanding amount of U.S. dollar-denominated travelers checks of nondeposits (OCD) consisting of negotiable order of withdrawal (NOW) and auto- bank issuers. Travelers checks issued by depository institutions are included in matic transfer service (ATS) accounts at depository institutions, credit union demand deposits. share draft accounts, and demand deposits at thrift institutions. 5. Demand deposits at commercial banks and foreign-related institutions other M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs) than those due to depository institutions, the U.S. government, and foreign banks issued by all depository institutions and overnight Eurodollars issued to U.S. and official institutions less cash items in the process of collection and Federal residents by foreign branches of U.S. banks worldwide, MMDAs, savings and Reserve float. small-denomination time deposits (time deposits—including retail RPs—in 6. Consists of NOW and ATS balances at all depository institutions, credit amounts of less than $100,000), and balances in both taxable and tax-exempt union share draft balances, and demand deposits at thrift institutions. general purpose and broker-dealer money market mutual funds. Excludes indi- 7. Sum of overnight RPs and overnight Eurodollars, money market fund vidual retirement accounts (IRA) and Keogh balances at depository institutions balances (general purpose and broker-dealer), MMDAs, and savings and small and money market funds. Also excludes all balances held by U.S. commercial time deposits. banks, money market funds (general purpose and broker-dealer), foreign govern- 8. Sum of large time deposits, term RPs, and term Eurodollars of U.S. ments and commercial 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. Small-denomination time deposits—including retail RPs—are those issued worldwide and at all banking offices in the United Kingdom and Canada, and in amounts of less than $100,000. All individual retirement accounts (IRA) and balances in both taxable and tax-exempt, institution-only money market mutual Keogh accounts at commercial banks and thrifts are subtracted from small time funds. Excludes amounts held by depository institutions, the U.S. government, deposits. money market funds, and foreign banks and official institutions. Also subtracted 10. Large-denomination time deposits are those issued in amounts of $100,000 is the estimated amount of overnight RPs and Eurodollars held by institution-only or more, excluding those booked at international banking facilities. money market mutual funds. 11. Large-denomination time deposits at commercial banks less those held by L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term money market mutual funds, depository institutions, and foreign banks and Treasury securities, commercial paper and bankers acceptances, net of money official institutions. market mutual fund holdings of these assets. 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 1199887722 July Aug. Sept. Oct. Nov. Dec. DEBITS TO Seasonally adjusted Demand deposits3 1 All insured banks 217,116.2 226,888.4 272,793.1 276,453.7 292,446.5 281,432.2 293,424.9 296,768.7 280,074.4 ? Major New York City banks 104,496.3 107,547.3 121,727.5 114,991.8 121,378.1 125,206.9 136,039.0 130,440.2 131,681.3 3 Other banks 112,619.8 119,341.2 150,898.9 161,461.9 171,068.3 156,225.3 155,385.9 166,328.5 148,393.1 4 ATS-NOW accounts4 2,402.7 2,757.7 3,501.8 3,596.3 3,943.1 3,601.9 3,911.9 3,855.2 3,727.5 5 Savings deposits5 526.5 583.0 636.6 580.4 650.0 672.3 665.4 610.3 615.8 DEPOSIT TURNOVER Demand deposits3 6 All insured banks 612.1 641.2 781.0 788.4 841.8 802.2 826.4 855.7 797.7 7 Major New York City banks 2,670.6 2,903.5 3,401.6 3,222.3 3,402.4 3,482.2 3,486.5 3,499.8 3,578.1 8 Other banks 357.0 376.8 481.5 512.6 548.8 496.2 492.5 537.3 472.1 9 ATS-NOW accounts4 13.8 14.7 18.3 19.1 20.6 18.8 20.1 19.7 18.9 10 Savings deposits5 3.1 3.1 3.5 3.2 3.6 3.7 3.6 3.3 3.3 DEBITS TO Not seasonally adjusted Demand deposits3 11 All insured banks 217,125.1 227,010.7 271,957.3 268,243.0 304,407.5 266,882.2 292,750.0 285,372.8 228833,,660033..33 12 Major New York City banks 104,518.8 107,565.0 122,241.8 117,276.1 132,158.8 115,187.4 138,964.6 129,905.5 129,690.0 N Other banks 112,606.2 119,445.7 149,715.5 150,966.9 172,248.7 151,694.7 153,785.5 155,467.3 153,913.3 14 ATS-NOW accounts4 2,404.8 2,754.7 3,496.5 3,549.0 3,762.6 3,702.7 3,891.4 3,611.5 3,904.0 15 MMDA 1,954.2 2,430.1 2,790.8 2,686.7 3,068.7 2,554.3 2,651.5 2,569.1 2,880.5 16 Savings deposits5 526.8 578.0 635.8 610.4 656.7 665.2 690.4 555.9 630.1 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 612.3 641.7 779.0 761.3 891.5 763.1 829.6 815.6 769.3 18 Major New York City banks 2,674.9 2,901.4 3,415.4 3,247.5 3,911.6 3,279.7 3,594.8 3,548.5 3,250.4 19 Other banks 356.9 377.1 477.8 477.4 559.9 482.2 489.4 496.3 468.1 70 ATS-NOW accounts4 13.8 14.7 18.3 18.9 20.0 19.5 20.3 18.5 19.5 71 MMDA 5.3 6.9 8.3 8.2 9.2 7.6 7.8 7.4 8.2 22 Savings deposits5 3.1 3.1 3.5 3.4 3.6 3.7 3.8 3.0 3.4 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 • May 1990 1.23 LOANS AND SECURITIES All Commercial Banks' Billions of dollars; averages of Wednesday figures 1989 1990 CCaatteeggoorryy Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Seasonally adjusted 1 Total loans and securities2 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 2,603.5 2 U.S. government securities ... 368.0 370.5 372.5 373.7 374.0 375.5 378.1 389.8 394.6 394.2 402.3 411.5 3 Other securities 189.3 188.3 187.8 187.3 186.3 183.8 183.1 181.0 179.4 180.4 180.2 180.8 4 Total loans and leases2 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 2,011.2 5 Commercial and industrial .. 619.1 621.7 626.6 627.1 631.8 636.1 637.7 641.3 645.0 641.6 638.1 637.2 6 Bankers acceptances held 8.4 8.3 8.3 8.2 7.9 8.1 8.4 8.8 8.1 7.6 7.4 8.0 7 Other commercial and industrial 610.7 613.4 618.4 618.9 623.9 628.0 629.3 632.6 636.9 634.0 630.7 629.2 8 U.S. addressees4....... 604.2 607.0 612.8 613.2 619.8 624.3 625.4 628.4 631.8 628.6 623.0 623.4 9 Non-U.S. addressees4 .. 6.5 6.4 5.6 5.8 4.0 3.7 3.9 4.2 5.1 5.5 7.7 5.8 10 Real estate 689.9 698.9 705.6 713.0 720.1 727.7 735.8 742.1 748.4 755.8 759.1 767.2 11 Individual 358.9 361.6 363.5 363.8 365.8 367.5 370.3 372.6 374.5 375.7 377.8 378.9 12 Security 43.8 40.0 38.5 40.6 40.1 39.1 39.8 41.3 41.6 39.6 39.2 39.7 13 Nonbank financial institutions 30.1 29.6 29.3 30.5 31.3 31.5 31.8 32.7 33.3 32.7 32.3 33.0 14 Agricultural 29.7 29.7 29.9 30.0 30.0 29.9 29.6 29.6 29.9 30.3 30.9 31.0 15 State and political subdivisions 43.4 43.3 43.1 42.8 42.5 42.2 41.7 41.3 40.8 40.1 38.6 38.9 16 Foreign banks 7.4 7.3 8.0 7.9 7.9 8.1 7.5 8.5 8.0 8.6 7.9 7.8 17 Foreign official institutions .. 4.7 4.7 4.5 4.2 4.0 3.8 3.8 3.6 3.3 3.3 2.9 2.8 18 Lease financing receivables . 30.0 30.0 30.2 30.2 30.7 31.0 31.3 31.7 31.6 31.4 31.7 32.0 19 All other loans 46.1 43.7 43.3 44.9 47.9 51.2 48.3 47.2 47.2 47.4 43.9 42.7 Not seasonally adjusted 20 Total loans and securities2 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 2,605.8 21 U.S. government securities ... 369.5 370.4 371.6 371.3 372.1 376.1 377.2 387.1 394.7 395.4 404.0 416.1 2 2 2 3 T O o th ta e l r l s o e a c n u s r i a t n ie d s leases2 1,8 1 9 8 6 8 . . 7 8 1,9 1 1 8 1 7 . . 5 5 1,9 1 2 8 3 7 . . 5 1 1,9 1 3 8 8 6 . . 5 5 1,9 1 5 8 0 4 . . 2 7 1,9 1 6 8 1 3 . . 2 8 1,9 1 7 8 7 3 . . 0 3 1,9 1 9 8 3 1 . . 9 9 2,0 1 0 8 4 0 . . 5 7 2,0 1 1 8 2 1 . . 5 4 2,0 1 0 8 5 0 . . 9 7 2,0 1 0 8 9 0 . . 2 6 2 2 4 5 Co B m a m nk e e rc rs ia l a c a c n e d p t i a n n d c u e s s t ri h a e l ld . 3 621 8 . . 1 3 625 8 . . 9 1 630 8 . . 6 1 62 8 9. . 6 0 631 7 . . 9 6 63 8 3. . 4 1 633 8 . . 7 4 638 8 . . 7 9 642 8 . . 3 2 64 7 1 . . 7 6 63 7 6 . . 5 6 637 8 . . 9 1 26 Other commercial and 27 U.S. i n a d d u d s r t e ri s a s l e es4 6 60 1 7 2 . . 4 8 6 6 1 1 2 7. . 9 5 6 6 1 2 6 2 . . 9 5 6 6 1 2 6 1 . . 0 6 6 6 1 2 8 4 . . 6 3 6 6 1 2 9 5 . . 8 3 6 6 1 2 9 5 . . 8 3 6 6 2 2 4 9 . . 2 8 6 6 2 3 8 4 . . 6 0 6 6 3 2 3 8 . . 8 5 6 62 2 4 9 . . 1 1 6 6 2 2 5 9 . . 0 8 28 Non-U.S. addressees 5.4 5.4 5.6 5.6 5.7 5.5 5.5 5.6 5.5 5.3 5.0 4.8 29 Real estate 687.5 697.2 704.6 712.9 720.7 729.2 737.8 743.4 750.1 756.6 759.1 764.7 30 Individual 355.8 359.0 361.2 362.1 364.3 367.7 372.1 373.7 375.9 380.2 381.4 378.1 31 Security 44.8 42.6 39.0 43.0 40.2 38.5 38.9 40.2 40.4 38.6 37.5 39.2 32 Nonbank financial institutions 29.4 29.5 29.2 30.8 31.4 31.3 31.4 32.4 33.6 33.7 33.0 32.6 33 Agricultural 28.7 28.8 29.5 30.3 30.7 30.7 30.5 30.4 30.2 30.2 30.3 30.1 34 State and political subdivisions 43.6 43.3 43.0 42.6 42.1 41.9 41.6 41.2 40.6 39.7 39.5 39.3 35 Foreign banks 7.0 7.0 7.9 8.1 8.0 8.1 7.8 8.8 8.1 8.4 8.0 7.7 36 Foreign official institutions .. 4.7 4.7 4.5 4.2 4.0 3.8 3.8 3.6 3.3 3.3 2.9 2.8 37 Lease financing receivables . 29.9 30.1 30.2 30.2 30.4 30.9 31.1 31.6 31.6 31.5 32.1 32.2 38 All other loans 44.3 43.5 43.7 44.8 46.3 45.9 48.1 49.9 48.3 48.7 45.4 44.7 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 Source Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan/ Feb. Seasonally adjusted 1 Total nondeposit funds 215.2 209.7 216.0 234.8 237.8 237.6 245.5 254.1 255.7 256.0 256.2 265.0 2 Net balances due to related foreign offices3 — 7.6 2.8 .3 7.3 10.4 8.7 10.3 10.4 9.0 7.6 10.8 14.5 3 Borrowings from other than commercial banks in United States 207.6 206.9 215.6 227.5 227.3 228.9 235.2 243.7 246.8 248.4 245.5 250.5 4 Domestically chartered banks 168.7 167.5 173.8 185.4 182.8 183.9 189.1 195.3 196.8 198.5 194.4 198.4 5 Foreign-related banks 38.9 39.4 41.9 42.1 44.6 44.9 46.1 48.4 50.0 49.9 51.0 52.1 Not seasonally adjusted 6 Total nondeposit fiinds 219.9 211.4 223.7 238.8 233.4 237.1 242.1 249.4 254.6 249.5 252.8 268.1 7 Net balances due to related foreign offices3 — 6.6 .4 2.3 7.9 8.3 9.1 10.9 9.8 10.0 9.9 10.4 14.1 8 Domestically chartered banks -19.5 -22.8 -21.9 -18.3 -16.4 -15.5 -14.2 -14.8 -15.2 -19.0 -14.7 -11.3 9 Foreign-related banks 26.1 23.2 24.2 26.3 24.7 24.6 25.1 24.6 25.2 28.9 25.1 25.3 10 Borrowings from other than commercial banks in United States4 213.3 211.0 221.4 230.9 225.2 228.0 231.2 239.5 244.6 239.6 242.4 254.0 11 Domestically chartered banks 173.5 171.0 178.9 187.0 180.2 183.5 186.1 192.3 197.0 192.2 190.5 200.4 12 Federal funds and security RP borrowings 170.0 166.5 174.8 183.2 177.2 180.5 183.1 189.3 194.6 189.6 187.9 196.6 13 Other 3.5 4.5 4.0 3.8 3.1 3.0 3.0 3.0 2.4 2.5 2.7 3.7 14 Foreign-related banks 39.8 40.0 42.5 43.9 44.9 44.5 45.1 47.2 47.6 47.4 51.9 53.7 MEMO Gross large time deposits 15 Seasonally adjusted 447.1 452.3 457.0 460.0 463.4 462.0 460.0 461.4 464.0 464.3 462.7 460.5 16 Not seasonally adjusted 449.9 452.3 457.4 459.4 461.1 462.6 461.5 462.6 464.4 462.7 460.4 460.3 U.S. Treasury demand balances at commercial banks8 17 Seasonally adjusted 20.9 21.3 25.5 25.7 22.4 22.3 22.8 21.5 20.4 21.1 20.2 17.8 18 Not seasonally adjusted 18.1 20.2 34.3 26.2 23.0 15.8 24.9 20.6 14.7 19.6 23.2 21.9 1. Data have been revised because of benchmarking and seasonal adjustment 4. Other borrowings are borrowings through any instrument, such as a revisions beginning January 1973. Commercial banks are those in the 50 states and promissory note or due bill, given for the purpose of borrowing money for the the District of Columbia with national or state charters plus agencies and branches banking business. This includes borrowings from Federal Reserve Banks and of foreign banks, New York investment companies majority owned by foreign from foreign banks, term federal funds, loan RPs, and sales of participations in banks, and Edge Act corporations owned by domestically chartered and foreign pooled loans. banks. 5. Based on daily average data reported weekly by approximately 120 large These data also appear in the Board's G.10 (411) release. For address, see banks and quarterly or annual data reported by other banks. inside front cover. 6. Figures are partly daily averages and partly averages of Wednesday data. 2. Includes federal funds, RPs, and other borrowing from nonbanks and net 7. Time deposits in denominations of $100,000 or more. Estimated averages of balances due to related foreign offices. daily data. 3. Reflects net positions of U.S. chartered banks, Edge Act corporations, and 8. U.S. Treasury demand deposits and Treasury tax-and-loan notes at com- U.S. branches and agencies of foreign banks with related foreign offices plus net mercial banks. Averages of daily data. positions with own IBFs. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A18 Domestic Nonfinancial Statistics • May 1990 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1989' 1990 AAccccoouunntt Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan/ Feb. ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 2,624.7 2,661.2 2,664.8 2,679.0 2,694.2 2,700.5 2,733.9 2,769.8 2,776.9 2,787.3 2,795.5 ? Investment securities 538.3 539.7 541.0 538.2 542.8 541.4 544.6 548.2 548.9 561.2 568.1 3 U.S. government securities 356.2 357.5 360.9 359.6 364.7 365.1 369.8 374.2 373.8 387.4 394.6 4 Other 182.1 182.2 180.0 178.6 178.1 176.3 174.8 174.0 175.1 173.8 173.5 5 Trading account assets 17.8 19.2 18.2 19.8 18.7 18.3 26.6 27.6 23.4 32.0 30.5 6 Total loans 2,068.5 2,102.3 2,105.6 2,120.9 2,132.7 2,140.8 2,162.8 2,194.0 2,204.6 2,194.1 2,197.0 7 Interbank loans 156.3 169.4 163.9 168.6 170.4 165.4 171.8 187.6 189.8 188.0 185.7 8 Loans excluding interbank 1,912.2 1,932.9 1,941.8 1,952.4 1,962.3 1,975.3 1,991.0 2,006.3 2,014.8 2,006.1 2,011.3 9 Commercial and industrial 628.3 631.1 628.6 636.6 632.4 632.1 638.2 642.2 643.2 635.5 639.7 10 Real estate 699.6 706.7 716.2 722.4 732.6 739.6 744.5 752.7 758.0 760.6 766.7 11 Individual 360.3 361.4 363.1 364.9 369.6 373.8 374.2 376.7 382.2 381.4 377.9 12 All other 224.1 233.8 233.8 228.4 227.8 229.9 234.1 234.8 231.5 228.6 227.0 13 Total cash assets 212.1 245.8 212.2 210.5 210.6 218.5 212.2 234.4 258.3 221.9 228.6 14 Reserves with Federal Reserve Banks. 33.4 27.8 28.0 30.6 28.8 31.8 28.5 38.7 42.8 24.5 29.3 15 Cash in vault 26.8 27.8 27.5 27.4 28.4 27.9 27.8 30.7 31.5 28.0 27.9 16 Cash items in process of collection ... 78.9 107.8 78.8 75.4 77.5 82.6 77.5 84.2 98.8 89.8 91.5 17 Demand balances at U.S. depository institutions 27.4 33.9 28.7 28.1 29.1 28.5 28.3 28.5 32.1 30.2 31.0 18 Other cash assets 45.6 48.5 49.2 49.1 46.9 47.6 50.1 52.4 53.1 49.4 48.9 19 Other assets 212.7 218.6 208.6 213.4 209.8 214.1 210.1 207.7 214.4 220.3 215.7 20 Total assets/total liabilities and capital.... 3,049.4 3,125.5 3,085.6 3,102.9 3,114.6 3,133.1 3,156.2 3,211.9 3,249.6 3,229.5 3,239.8 21 Deposits 2,137.2 2,185.8 2,140.9 2,154.2 2,169.0 2,177.0 2,195.9 2,223.0 2,267.4 2,243.7 2,257.8 72 Transaction deposits 592.7 626.7 578.5 577.4 581.4 586.5 585.8 600.4 641.4 611.8 615.9 23 Savings deposits 511.4 508.5 505.7 512.0 516.9 518.6 525.6 535.5 538.2 540.5 545.8 74 Time deposits 1,033.1 1,050.5 1,056.7 1,064.9 1,070.7 1,072.0 1,084.6 1,087.1 1,087.8 1,091.4 1,096.1 75 Borrowings 490.9 515.0 516.7 513.8 507.6 519.8 530.2 546.5 534.8 556.2 545.9 76 Other liabilities 217.4 218.5 219.5 226.3 227.4 226.0 223.7 235.1 239.3 222.6 227.3 27 Residual (assets less liabilities) 203.9 206.2 208.5 208.7 210.6 210.3 206.3 207.4 208.1 206.9 208.9 MEMO 28 U.S. government securities (including trading account) 369.1 370.7 373.1 372.8 376.9 377.2 389.4 394.7 339900..44 441122..55 441177..99 29 Other securities (including trading account) 187.0 188.2 186.1 185.2 184.6 182.5 181.8 181.2 181.9 180.7 118800..77 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,407.5 2,445.6 2,440.3 2,452.5 2,467.5 2,477.6 2,511.0 2,531.2 2,540.2 2,552.6 2,560.0 31 Investment securities 514.5 515.4 517.3 514.7 519.9 519.1 521.2 522.5 523.2 534.2 540.7 32 U.S. government securities 345.0 345.9 349.8 348.6 354.4 355.4 359.2 362.4 363.0 374.6 381.4 33 Other 169.5 169.5 167.5 166.1 165.5 163.7 162.0 160.1 160.2 159.6 159.3 34 Trading account assets 17.8 19.2 18.2 19.8 18.7 18.3 26.6 27.6 23.4 32.0 30.5 35 Total loans 1,875.2 1,911.1 1,904.9 1,918.0 1,928.8 1,940.2 1,963.2 1,981.0 1,993.5 1,986.5 1,988.8 36 Interbank loans 122.4 137.6 123.8 130.5 132.3 130.7 140.7 148.5 152.0 150.5 148.2 37 Loans excluding interbank 1,752.8 1,773.5 1,781.1 1,787.5 1,796.5 1,809.5 1,822.5 1,832.6 1,841.5 1,836.0 1,840.6 38 Commercial and industrial 511.9 515.3 511.3 516.0 512.4 511.3 516.4 517.7 518.4 515.0 519.2 39 Real estate 675.6 682.0 691.5 696.8 706.2 713.0 717.5 724.2 729.1 730.4 736.0 40 Individual 360.3 361.4 363.1 364.9 369.6 373.8 374.2 376.7 382.2 381.4 377.9 41 All other 205.0 214.8 215.2 209.9 208.3 211.4 214.4 213.9 211.8 209.2 207.6 47 Total cash assets 191.1 223.3 188.7 187.3 188.9 194.9 188.9 206.8 232.0 198.1 203.1 43 Reserves with Federal Reserve Banks. 30.7 26.7 26.6 29.6 27.0 29.5 26.7 37.9 41.7 22.7 27.5 44 Cash in vault 26.8 27.8 27.5 27.3 28.4 27.9 27.8 30.6 31.5 28.0 27.8 45 Cash items in process of collection ... 77.9 106.8 77.9 74.5 76.6 81.3 76.2 82.3 97.4 88.3 90.2 46 Demand balances at U.S. depository institutions 25.7 31.9 26.7 26.4 27.4 26.8 26.4 26.6 30.2 28.3 28.9 47 Other cash assets 30.0 30.1 30.0 29.5 29.5 29.3 31.8 29.5 31.2 30.8 28.7 48 Other assets 142.1 141.8 139.7 136.5 136.2 140.1 130.7 136.8 140.8 143.3 139.8 49 Total assets/liabilities and capital 2,740.7 2,810.8 2,768.7 2,776.2 2,792.6 2,812.5 2,830.6 2,874.8 2,913.0 2,894.0 2,902.9 50 Deposits 2,058.7 2,105.9 2,061.2 2,073.2 2,088.9 2,095.8 2,113.7 2,140.6 2,184.2 2,161.2 2,175.6 51 Transaction deposits 583.1 616.9 569.1 568.0 572.6 576.6 576.1 590.5 631.2 601.4 605.7 5? Savings deposits 508.8 505.9 503.0 509.3 514.3 515.8 522.9 532.7 535.3 537.7 542.8 53 Time deposits 966.8 983.0 989.1 995.9 1,002.0 1,003.4 1,014.7 1,017.4 1,017.6 1,022.2 1,027.1 54 Borrowings 369.2 384.6 389.2 381.8 376.7 392.4 395.1 406.8 400.6 407.0 397.2 55 Other liabilities 112.4 117.6 113.5 116.2 120.0 117.5 119.1 123.6 123.7 122.5 124.8 56 Residual (assets less liabilities) 200.3 202.6 204.9 205.1 207.0 206.7 202.7 203.8 204.5 203.3 205.3 MEMO 57 Real estate loans, revolving 43.5 44.5 45.2 45.5 46.8 47.6 48.1 48.7 49.4 50.6 50.8 58 Real estate loans, other 632.1 637.6 646.3 651.2 659.4 665.4 669.4 675.6 679.7 679.8 685.2 1. Data have been revised because of benchmarking to new call reports condition report data. Data for other banking institutions are estimates made for beginning January 1988. Back data are available from the Banking and Monetary the last Wednesday of the month based on a weekly reporting sample of Statistics section, Board of Governors of the Federal Reserve System, Washing- foreign-related institutions and quarter-end condition reports. ton, D.C., 20551. 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. 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 1990 AAccccoouunntt Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 1 Cash and balances due from depository institutions 141,952 119,669 144,053 112,801 110,335' 102,833 107,714 119,830 113,345 2 Total loans, leases, and securities, net 1,275,71c 1,268,787' 1,280,289' 1,272,610' 1,283,949' 1,282,507 1,285,586 1,288,336 1,285,681 3 U.S. Treasury and government agency 163,514 166,819 168,891 170,776 173,950' 175,706 175,172 175,115 175,480 4 Trading account 20,969 23,342 25,605 24,812 25,135' 24,643 23,500 23,440 23,340 5 Investment account 142,545 143,477 143,286 145,964 148,814 151,064 151,671 151,675 152,139 6 Mortgage-backed securities2 72,119 71,800 72,905 75,745 76,674 77,348 76,997 76,228 77,080 All other maturing in 7 One year or less 20,370 20,957 20,815 21,161 21,860 22,966 23,609 23,310 23,570 8 Over one through five years 33,986 34,508 34,016 34,381 34,396 34,483 34,553 35,072 34,404 9 Over five years 16,070 16,212 15,551 14,675 15,884 16,267 16,512 17,066 17,085 10 Other securities 67,485 67,070 67,140 67,226 67,004' 66,697 66,838 67,081 66,943 11 Trading account 1,244 1,056 960 887 80C 681 653 589 644 12 Investment account 66,241 66,014 66,180 66,338 66,204' 66,016 66,184 66,492 66,299 13 States and political subdivisions, by maturity 37,672 37,459 37,357 37,296 37,120 37,032 36,990 36,859 36,747 14 One year or less 4,778 4,644 4,614 4,643 4,676 4,783 4,752 4,728 4,777 15 Over one year 32,894 32,814 32,743 32,653 32,444 32,248 32,238 32,131 31,970 16 Other bonds, corporate stocks, and securities 28,568 28,555 28,823 29,043 29,085 28,985 29,194 29,633 29,551 17 Other trading account assets 5,576 6,000 5,471 6,011 6,011' 6,777 6,478 6,164 6,495 18 Federal funds sold3 72,872 66,654 71,534 65,054 71,328 69,807 71,047 71,072 69,583 19 To commercial banks 55,314 48,007 52,004 45,791 50,288 49,471 49,269 50,975 49,544 20 To nonbank brokers and dealers in securities 12,650 12,595 13,274 13,961 13,679 13,542 14,829 13,765 13,297 21 To others 4,907 6,052 6,255 5,302 7,361 6,794 6,949 6,332 6,742 22 Other loans and leases, gross 1,009,601' 1,005,166' 1,010,381' 1,007,135' 1,008,942' 1,006,947 1,009,522 1,012,388 1,010,540 23 Other loans, gross 983,137r 978,474' 983,598' 980,112' 981,923' 980,024 982,557 985,470 983,656 24 Commercial and industrial 321,721r 320,565' 319,291' 318,666' 319,513' 320,690 320,013 320,704 323,218 25 Bankers acceptances and commercial paper 1,425 1,387 1,451 1,325 1,425 1,508 1,495 1,493 1,536 26 All other 320,296r 319,178' 317,840' 317,341' 318,088' 319,182 318,518 319,211 321,682 27 U.S. addressees 318,503' 317,429' 316,158' 315,740' 316,514' 317,604 317,141 317,776 320,252 28 Non-U.S. addressees 1,793 1,749 1,682 1,601 1,574 1,578 1,377 1,435 1,430 29 Real estate loans 358,165r 358,529' 358,804' 359,144' 359,232' 360,878 362,020 362,364 362,538 30 Revolving, home equity 27,773 27,864 27,921 28,081 28,210 28,244 28,354 28,372 28,392 31 All other 330,392' 330,666' 330,883' 331,063' 331,023' 332,634 333,665 333,992 334,146 32 To individuals for personal expenditures 181,006' 180,659' 180,319' 180,383' 180,249' 178,152 178,150 178,348 177,369 33 To depository and financial institutions 50,448 49,918 53,596 52,485 52,183 51,869 50,784 51,244 49,768 34 Commercial banks in the United States 22,611 23,233 25,787 26,782 26,353 25,549 24,802 24,622 23,742 35 Banks in foreign countries 5,201 4,136 5,193 4,136 4,093 4,288 4,240 4,832 3,867 36 Nonbank depository and other financial institutions .. 22,636 22,548 22,616 21,566 21,737 22,031 21,742 21,791 22,159 37 For purchasing and carrying securities 14,650 14,767 16,453 16,251 16,041 14,704 17,909 18,492 16,465 38 To finance agricultural production 5,675 5,617 5,575 5,548 5,515 5,476 5,491 5,447 5,439 39 To states and political subdivisions 25,040 24,916 24,834 24,816 24,756 24,771 24,672 24,905 24,581 40 To foreign governments and official institutions 1,319 1,201 1,207 1,143 1,181 1,026 1,047 1,220 1,124 41 All other 25,114r 22,303' 23,518' 21,675' 23,251' 22,457 22,472 22,745 23,153 42 Lease financing receivables 26,464' 26,692' 26,784' 27,022 27,020 26,922 26,965 26,918 26,884 43 LESS: Unearned income 4,938 4,928 4,924 4,924 4,849' 4,847 4,855 4,851 4,811 44 Loan and lease reserve 38,400 37,994 38,205 38,668 38,436' 38,580 38,615 38,633 38,549 45 Other loans and leases, net 966,263' 962,244' 967,253' 963,543' 965,657' 963,519 966,052 968,904 967,180 46 All other assets 139,807'' 135,771' 134,499' 133,671' 138,638' 136,935 135,559 132,475 135,889 47 Total assets 1,557,470' 1,524,228' 1,558,841' 1,519,083' 1,532,923' 1,522,275 1,528,860 1,540,641 1,534,915 48 Demand deposits 271,700' 235,257' 260,734' 219,512' 232,147' 219,835 225,608 234,643 233,381 49 Individuals, partnerships, and corporations 214,962' 188,219' 204,598' 173,898' 184,992' 176,676 182,594 183,418 185,812 50 States and political subdivisions 8,112 6,170 6,770 6,560 7,160 6,016 6,291 6,350 6,935 51 U.S. government 2,730 3,554 4,504 4,127 2,246 3,495 3,185 3,815 2,987 52 Depository institutions in the United States 26,478 20,995' 27,495' 20,012 21,208 18,981 19,362 24,386 22,397 53 Banks in foreign countries 8,088 6,119 6,833 6,362 6,021 5,647 5,355 7,187 5,679 54 Foreign governments and official institutions 746 606 676 720 780 643 654 822 669 55 Certified and officers' checks 10,585 9,595 9,857 7,833 9,739 8,377 8,166 8,665 8,901 56 Transaction balances other than demand deposits 86,524 83,724 83,015 78,982 80,298' 81,684 79,712 80,104 81,177 57 Nontransaction balances 722,592 723,942 723,028 719,576 719,887 725,049 726,098 726,054 724,937 58 Individuals, partnerships, and corporations 684,634' 684,566' 683,887' 680,353' 680,906' 685,584 686,444 686,648 685,519 59 States and political subdivisions 29,478' 30,343' 30,188' 30,414' 30,154' 30,784 30,944 30,771 3300,,889944 60 U.S. government 913 944 933 831 850 842 851 855 886688 61 Depository institutions in the United States 6,995' 7,516' 7,422' 7,380 7,392 7,261 7,268 7,199 7,078 62 Foreign governments, official institutions, and banks .. 573 572 598 597 584 577 590 582 577 63 Liabilities for borrowed money 291,188 290,147 301,150 306,965 307,089' 306,967 303,467 307,943 299,912 64 Borrowings from Federal Reserve Banks 0 0 0 475 590 1,641 925 3,755 1,613 65 Treasury tax-and-loan notes 2,084 5,978 12,350 24,045 25,565 14,791 15,349 9,404 10,569 66 All other liabilities for borrowed money 289,104 284,170 288,799 282,445 280,934' 290,535 287,193 294,784 287,730 67 Other liabilities and subordinated notes and debentures .. 86,885' 90,999' 92,084' 95,583' 93,367' 88,619 93,338 91,446 94,551 68 Total liabilities l,458,889r 1,424,071' 1,460,011' 1,420,618' 1,432,788' 1,422,155 1,428,223 1,440,191 1,433,958 69 Residual (total assets minus total liabilities)6 98,581 100,157 98,830 98,464 100,134' 100,120 100,636 100,450 100,956 MEMO 70 Total loans and leases (gross) and investments adjusted . 1,241,124' 1,240,469' 1,245,626' 1,243,629' 1,250,594' 1,250,914 1,254,984 1,256,223 1,255,755 71 Total loans and leases (gross) adjusted 1,004,548' 1,000,580' 1,004,124' 999,616' 1,003,629' 1,001,733 1,006,498 1,007,863 1,006,837 72 Time deposits in amounts of $100,000 or more 218,564 218,338 217,513' 217,171 215,881' 217,110 217,571 216,759 215,330 73 U.S. Treasury securities maturing in one year or less 18,753 19,652 19,243 20,510 21,792 23,450 23,755 22,533 23,096 74 Loans sold outright to affiliates—total8 537 541 544 542 540 545 545 546 552 75 Commercial and industrial 239 242 239 253 242 243 245 249 254 76 Other 298 299 305 290 298 302 300 297 298 77 Nontransaction savings deposits (including MMDAs) 275,728 276,506 275,917 272,733 273,730 276,180 276,361 277,042 276,959 1. Beginning Jan. 6, 1988, the "Large bank" reporting group was revised or more on Dec. 31, 1977, see table 1.13. somewhat, eliminating some former reporters with less than $2 billion of assets 6. This is not a measure of equity capital for use in capital-adequacy analysis or and adding some new reporters with assets greater than $3 billion. for other analytic uses. 2. Includes U.S. government-issued or guaranteed certificates of participation 7. Exclusive of loans and federal funds transactions with domestic commercial in pools of residential mortgages. banks. 3. Includes securities purchased under agreements to resell. 8. Loans sold are those sold outright to a bank's own foreign branches, 4. Includes allocated transfer risk reserve. nonconsolidated nonbank affiliates of the bank, the bank's holding company (if 5. Includes federal funds purchased and securities sold under agreements to not a bank), and nonconsolidated nonbank subsidiaries of the holding company. repurchase; for information on these liabilities at banks with assets of $1 billion Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A20 Domestic Nonfinancial Statistics • May 1990 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1990 AAccccoouunntt Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 1 Cash balances due from depository institutions 27,408 25,306 28,816 24,988 21,895 21,537 21,037 23,559 20,672 2 Total loans, leases, and securities, net2 211,295 207,205 213,833 212,264 215,737 213,386 217,250 217,966 214,702 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 16,076 16,172 16,809 18,641 19,307 19,274 19,487 19,155 19,568 6 Mortgage-backed securities4 8,242 8,235 9,000 10,807 11,138 11,117 11,286 11,355 11,886 All other maturing in 7 One year or less 2,264 2,367 2,241 2,168 2,256 2,283 2,343 1,934 1,860 8 Over one through five years 3,536 3,536 3,524 3,620 3,658 3,572 3,543 3,592 3,542 9 Over five years 2,034 2,034 2,044 2,046 2,254 2,302 2,315 2,273 2,279 10 Other securities 0 0 0 0 0 0 0 0 0 11 Trading account3 0 0 0 0 0 0 0 0 0 12 Investment account 14,525 14,576 14,625 14,849 14,847 14,795 14,695 15,019 14,832 13 States and political subdivisions, by maturity 7,829 7,816 7,789 7,807 7,749 7,727 7,698 7,650 7,616 14 One year or less 1,065 1,057 1,044 1,072 1,076 1,081 1,059 1,055 1,052 15 Over one year 6,763 6,759 6,745 6,734 6,673 6,647 6,639 6,5% 6,564 16 Other bonds, corporate stocks, and securities 6,696 6,760 6,835 7,042 7,098 7,068 6,997 7,368 7,216 17 Other trading account assets 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold5 17,988 15,702 17,962 16,456 18,516 17,589 18,732 18,455 17,848 19 To commercial banks 11,957 8,731 10,819 10,452 10,403 9,846 9,658 11,373 10,376 20 To nonbank brokers and dealers in securities 3,332 3,425 3,574 3,081 3,539 3,898 4,764 3,414 3,425 21 To others 2,699 3,546 3,569 2,923 4,574 3,845 4,310 3,668 4,047 22 Other loans and leases, gross 182,400 179,833 183,517 181,408 182,285 181,033 183,650 184,665 181,713 23 Other loans, gross 176,691 174,135 177,830 175,721 176,611 175,368 178,011 179,086 176,149 24 Commercial and industrial 57,712' 57,762' 57,546' 57,608' 58,264' 58,741 59,046 58,912 59,658 25 Bankers acceptances and commercial paper 166 101 91 85 93 93 90 104 98 76 All other 57,546' 57,661' 57,455' 57,523' 58,17c 58,649 58,956 58,808 59,560 27 U.S. addressees 56,980' 57,093' 56,807' 56,949' 57,598' 58,079 58,406 58,219 58,964 28 Non-U.S. addressees 566 567 648 574 572 570 550 589 596 29 Real estate loans 61,652' 61,907' 61,872' 61,735' 62,006' 62,052 62,333 62,177 61,854 30 Revolving, home equity 3,941 3,949 3,955 3,964 3,969 3,966 3,974 3,976 3,978 31 All other 57,711' 57,958' 57,918' 57,771' 58,037' 58,086 58,358 58,201 57,875 32 To individuals for personal expenditures 20,096 20,096 20,081 20,117 20,121 20,076 20,098 20,146 20,060 33 To depository and financial institutions 20,511 19,024 21,044 19,603 19,296 18,999 18,419 19,177 17,934 34 Commercial banks in the United States 9,055 8,597 9,444 9,258 8,887 8,160 7,705 7,737 7,161 35 Banks in foreign countries 3,987 2,888 3,867 2,970 2,847 3,154 3,090 3,589 2,741 36 Nonbank depository and other financial institutions 7,469 7,539 7,732 7,375 7,562 7,685 7,623 7,851 8,032 37 For purchasing and carrying securities 5,208 5,260 6,551 6,658 5,988 5,068 7,494 7,656 5,768 38 To finance agricultural production 107 117 111 100 105 108 114 107 114 39 To states and political subdivisions 5,387 5,326 5,317 5,312 5,316 5,324 5,332 5,577 5,316 40 To foreign governments and official institutions 296 228 246 214 326 259 288 468 486 41 All other 5,723 4,414 5,061 4,374 5,189 4,740 4,886 4,865 4,958 42 Lease financing receivables 5,709 5,698 5,688 5,687 5,674 5,665 5,639 5,579 5,564 43 LESS: Unearned income 1,820 1,818 1,819 1,824 1,820 1,821 1,825 1,838 1,827 44 Loan and lease reserve 17,873 17,261 17,261 17,266 17,397 17,484 17,489 17,489 17,431 45 Other loans and leases, net6 162,707 160,754 164,437 162,318 163,068 161,728 164,335 165,337 162,455 46 All other assets 65,902 62,252 64,560 61,211 63,950 62,525 62,415 61,492 64,191 47 Total assets 304,605 294,763 307,210 298,464 301,583 297,449 300,702 303,017 299,566 Deposits 48 Demand deposits 60,264 53,284 58,254 49,609 51,287 48,206 49,689 53,008 49,208 49 Individuals, partnerships, and corporations 43,850 37,261 40,746 34,652 35,897 35,057 36,144 36,315 35,072 50 States and political subdivisions 1,040 916 834 689 773 668 580 718 613 51 U.S. government 295 661 611 784 278 651 569 771 450 52 Depository institutions in the United States 4,617 5,332 6,341 5,115 5,324 3,738 4,615 5,839 5,761 53 Banks in foreign countries 6,690 4,844 5,423 5,044 4,664 4,468 4,266 5,438 4,218 54 Foreign governments and official institutions 578 470 510 557 659 508 480 689 504 55 Certified and officers' checks 3,194 3,800 3,790 2,768 3,692 3,115 3,035 3,238 2,590 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 9,403 9,146 9,073 8,659 8,760 8,799 8,569 8,572 8,661 57 Nontransaction balances 117,550 116,804 117,392 116,209 116,676 116,706 116,821 117,382 117,022 58 Individuals, partnerships, and corporations 109,041 108,307 108,884 107,697 108,165 108,198 108,332 108,884 108,522 59 States and political subdivisions 6,447 6,504 6,523 6,527 6,540 6,606 6,604 6,618 6,643 60 U.S. government 25 26 26 27 28 27 28 30 39 61 Depository institutions in the United States 1,795 1,736 1,727 1,726 1,723 1,668 1,647 1,646 1,608 62 Foreign governments, official institutions, and banks 241 231 233 232 220 207 211 203 209 63 Liabilities for borrowed money 65,457 61,668 68,106 64,150 67,277 71,381 67,862 67,504 65,667 64 Borrowings from Federal Reserve Banks 0 0 0 0 0 921 0 2,465 0 65 Treasury tax-and-loan notes 322 1,091 2,799 6,541 6,721 3,621 3,639 1,910 2,237 66 All other liabilities for borrowed money 65,135 60,577 65,307 57,609 60,556 66,839 64,223 63,130 63,431 67 Other liabilities and subordinated notes and debentures 27,880 29,828 30,482 35,893 33,717 28,384 33,530 32,536 34,973 68 Total liabilities 280,554 270,731 283,308 274,519 277,717 273,475 276,471 279,002 275,531 69 Residual (total assets minus total liabilities)9 24,051 24,032 23,901 23,945 23,866 23,973 24,230 24,015 24,034 MEMO 70 Total loans and leases (gross) and investments adjusted2' 209,977 208,956 212,650 211,644 215,665 214,685 219,202 218,185 216,423 71 Total loans and leases (gross) adjusted10 179,377 178,207 181,216 178,154 181,511 180,616 185,019 184,011 182,023 72 Time deposits in amounts of $100,000 or more 41,336 40,855 41,683 41,147 41,281 41,142 41,422 41,357 41,027 73 U.S. Treasury securities maturing in one year or less 2,615 2,744 2,835 2,950 3,391 3,659 3,736 3,403 3,224 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 FRAinS pEooRls of 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.stlouis6f. eIdnc.olurdges/ allocated 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 1990 AAccccoouunntt Jan. 3 Jan. 10 Jan. 17 Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 1 Cash and due from depository institutions ... 12,719 13,077 12,920 13,708 12,637 13,280 12,785 13,347 13,155 2 Total loans and securities 143,274 142,536 140,223 141,533 143,025 140,770 141,852 145,442 144,228 3 U.S. Treasury and government agency securities 8,429 9,013 9,280 9,538 9,828 9,202 9,409 9,882 10,152 4 Other securities 7,038 6,893 6,741 6,770 6,747 6,738 6,646 6,704 6,685 5 Federal funds sold2 6,153 6,403 4,678 7,639 6,993 5,000 6,408 7,561 5,904 6 To commercial banks in the United States . 4,626 4,942 3,165 5,989 5,643 3,598 5,052 5,942 4,482 7 To others 1,527 1,461 1,513 1,650 1,350 1,402 1,356 1,619 1,422 8 Other loans, gross 121,654 120,227 119,524 117,586 119,457 119,830 119,389 121,295 121,487 9 Commercial and industrial 74,243 72,964 73,060 72,006 72,210 73,544 72,388 72,780 72,330 10 Bankers acceptances and commercial paper 1,811 1,755 1,886 2,058 1,983 2,348 2,210 2,246 2,183 U AU other 72,432 71,209 71,174 69,948 70,227 71,196 70,178 70,534 70,147 12 U.S. addressees 70,822 69,751 69,701 68,388 68,732 69,662 68,635 69,148 68,723 13 Non-U.S. addressees 1,610 1,458 1,473 1,560 1,495 1,534 1,543 1,386 1,424 14 Loans secured by real estate3 18,950 19,138 19,450 19,433 19,488 19,606 19,696 19,814 19,848 15 To financial institutions 24,832 24,762 23,447 22,695 23,902 23,384 23,967 24,909 25,955 16 Commercial banks in the United States.. 17,900 17,817 16,900 16,628 17,943 17,671 17,704 18,666 19,569 17 Banks in foreign countries 1,833 1,867 1,421 1,231 1,144 921 1,370 1,478 1,651 18 Nonbank financial institutions 5,099 5,078 5,126 4,836 4,815 4,792 4,893 4,765 4,735 19 To foreign governments and official institutions 382 263 254 246 254 266 246 224455 224477 20 For purchasing and carrying securities 1,510 1,436 1,702 1,559 1,585 1,452 1,439 2,176 1,601 21 All other3 1,737 1,664 1,611 1,647 2,018 1,578 1,653 1,371 1,506 22 Other assets (claims on nonrelated parties) .. 37,674 37,111 35,294 35,407 36,563 36,364 36,020 34,393 35,868 23 Net due from related institutions 15,131 16,059 16,458 14,558 15,184 13,997 16,045 12,963 15,432 24 Total assets 208,798 208,785 204,898 205,206 207,410 204,412 206,702 206,144 208,684 25 Deposits or credit balances due to other than directly related institutions 50,156 49,780 50,664 50,089 50,151 50,569 49,965 50,370 49,483 26 Transaction accounts and credit balances . 4,085 3,917 4,210 4,531 4,574 4,084 3,991 4,884 4,036 27 Individuals, partnerships, and corporations 2,656 2,542 2,725 2,572 3,096 2,715 2,797 3,404 2,625 28 Other 1,429 1,375 1,485 1,959 1,478 1,369 1,194 1,480 1,411 29 Nontransaction accounts 46,071 45,863 46,454 45,558 45,577 46,485 45,974 45,486 45,447 30 Individuals, partnerships, and corporations 38,881 38,392 38,272 38,352 38,761 39,073 39,091 38,686 38,497 31 Other 77,,119900 7,471 8,182 7,206 6,816 7,412 6,883 6,800 6,950 32 Borrowings from other than directly related institutions 92,991 94,130 93,780 95,181 96,982 92,696 95,358 9911,,555577 96,665 33 Federal funds purchased 42,000 41,983 41,876 42,456 44,025 40,690 43,716 41,695 47,077 34 From commercial banks in the United States 19,993 20,900 19,264 18,687 20,677 17,098 19,259 18,176 22,176 35 From others 22,007 21,083 22,612 23,769 23,348 23,592 24,457 23,519 24,901 36 Other liabilities for borrowed money 50,991 52,147 51,904 52,725 52,957 52,006 51,642 49,862 49,588 37 To commercial banks in the United States 32,549 32,566 33,265 33,537 33,864 32,675 32,074 31,207 30,819 38 To others 18,442 19,581 18,639 19,188 19,093 19,331 19,568 18,655 18,769 39 Other liabilities to nonrelated parties 37,341 36,900 34,957 35,253 36,724 35,824 35,547 34,244 36,336 40 Net due to related institutions 28,310 27,975 25,496 24,684 23,552 25,322 25,832 29,972 26,198 41 Total liabilities 208,798 208,785 204,898 205,206 207,410 204,412 206,702 206,144 208,684 MEMO 42 Total loans (gross) and securities adjusted .. 120,748 119,777 120,158 118,916 119,439 119,501 119,096 120,834 120,177 43 Total loans (gross) adjusted 105,281 103,871 104,137 102,608 102,864 103,561 103,041 104,248 103,340 1. Effective Jan. 4, 1989, the reporting panel includes a new group of large U.S. separate component of Other loans, gross. Formerly, these loans were included in branches and agencies of foreign banks. Earlier data included 65 U.S. branches "All other", line 21. and agencies of foreign banks that included those branches and agencies with 4. Includes credit balances, demand deposits, and other checkable deposits. assets of $750 million or more on June 30, 1980, plus those branches and agencies 5. Includes savings deposits, money market deposit accounts, and time that had reached the $750 million asset level on Dec. 31, 1984. These data also deposits. appear in the Board's H.4.2 (504) release. For address, see inside front cover. 6. Includes securities sold under agreements to repurchase. 2. Includes securities purchased under agreements to resell. 7. Exclusive of loans to and federal funds sold to commercial banks in the 3. Effective Jan. 4, 1989, loans secured by real estate are being reported as a United States. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A22 Domestic Nonfinancial Statistics • May 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 321.0 363.6 343.5 354.7 337.8 354.7 330.4 329.3 337.3 352.2 2 Financial business 32.3 41.4 36.3 38.6 34.8 38.6 36.3 33.0 33.7 33.8 3 Nonfinancial business 178.5 202.0 191.9 201.2 190.3 201.2 182.2 185.9 190.4 202.5 4 Consumer 85.5 91.1 90.0 88.3 87.8 88.3 87.4 86.6 87.9 90.3 5 Foreign 3.5 3.3 3.4 3.7 3.2 3.7 3.7 2.9 2.9 3.1 6 21.2 25.8 21.9 22.8 21.7 22.8 20.7 21.0 22.4 22.5 Weekly reporting banks 1988 1989 1199885522 11998866 11998877 11998888 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Sept. Dec. Mar. June Sept. Dec. 7 AU 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): ail 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 1990 1985 1986 1987 1988 1989 Dec. Dec. Dec. Dec. Dec'. Aug. Sept. Oct. Nov. Dec. Jan. Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 298,779 329,991 357,129 455,017 525,266 516,476 507,090 508,043 517,574 525,266 533,137 Financial companies' Dealer-placed paper1 2 Total 78,443 101,072 101,958 159,947 186,362 182,083 177,080 175,722 182,459 186,362 183,401 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 paper4 4 Total 135,320 151,820 173,939 192,442 209,551 208,915 206,521 210,855 210,560 209,551 214,996 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 companies5 85,016 77,099 81,232 102,628 129,353 125,478 123,489 121,466 124,555 129,353 134,740 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 68,413 64,974 70,565 66,631 62,972 65,764 63,814 63,660 63,802 62,972 60,019 Holder 8 Accepting banks 11,197 13,423 10,943 9,086 9,433 9,935 9,526 10,811 9,923 9,433 9,954 9 Own bills 9,471 11,707 9,464 8,022 8,510 8,874 8,779 9,108 8,548 8,510 8,467 10 Bills bought 1,726 1,716 1,479 1,064 924 1,061 747 1,703 1,375 924 1,488 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 1,014 1,016 1,016 1,034 1,066 1,069 13 Others 56,279 50,234 58,658 56,052 52,473 54,815 53,370 51,833 52,846 52,473 48,996 Basis 14 Imports into United States 15,147 14,670 16,483 14,984 15,651 16,140 16,101 16,157 15,691 15,651 15,100 15 Exports from United States 13,204 12,960 15,227 14,410 13,683 14,895 14,304 14,275 14,385 13,683 13,437 16 All other 40,062 37,344 38,855 37,237 33,638 34,729 33,409 33,228 33,726 33,638 n.a. 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 panel is revised every January and currently has 4. As reported by financial companies that place their paper directly with about 100 respondents. The current reporting group accounts for over 90 percent investors. of total acceptances activity. 1.33 PRIME RATE CHARGED BY BANKS on Short-Term Business Loans Percent per year Period Average Average Period rate rate 7.75 1987 8.21 1988— Jan. 8.75 1989— July .. 8.00 1988 9.32 Feb. 8.51 Aug. . 8.25 1989 10.87 Mar. 8.50 Sept. . 8.75 Apr. 8.50 Oct. .. 9.25 1987— Jan. 7.50 May 8.84 Nov. . 9.00 Feb. 7.50 June 9.00 Dec. . 8.75 Mar. 7.50 July 9.29 Apr. 7.75 Aug. 9.84 1990— Jan. .. 8.50 May 8.14 Sept. 10.00 Feb. . 9.00 June 8.25 Oct. 10.00 Mar. . 9.50 July 8.25 Nov. 10.05 10.00 Aug. 8.25 Dec. 10.50 10.50 Sept. 8.70 11.00 Oct. 9.07 1989— Jan. 10.50 Nov. 8.78 Feb. 10.93 1111..0500 Dec. 8.75 Mar. 11.50 Apr. 11.50 10.50 May 11.50 June 11.07 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 • May 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 1990 IInnssttrruummeenntt 11998877 11998888 •• 11998899 Nov. Dec. Jan. Feb. Jan. 26 Feb. 2 Feb. 9 Feb. 16 Feb. 23 MONEY MARKET RATES 1 Federal funds1'2 6.66 7.57 9.21 8.55 8.45 8.23 8.24 8.23 8.24 8.22 8.21 8.25 2 Discount window borrowing1, >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 paper4'5 3 1-month 6.74 7.58 9.11 8.47 8.61 8.20 8.22 8.19 8.22 8.23 8.19 8.22 4 3-month 6.82 7.66 8.99 8.35 8.29 8.10 8.14 8.12 8.14 8.15 8.12 8.15 5 6-month 6.85 7.68 8.80 8.00 7.93 7.96 8.04 8.02 8.04 8.04 8.00 8.05 Finance paper, directly placed4'5 6 1-month 6.61 7.44 8.99 8.33 8.40 8.09 8.13 8.09 8.14 8.15 8.11 8.13 7 3-month 6.54 7.38 8.72 8.07 8.01 7.90 7.97 7.89 7.96 7.98 7.95 7.99 8 6-month 6.37 7.14 8.16 7.45 7.33 7.34 7.40 7.33 7.38 7.41 7.34 7.41 Bankers acceptances5'6 9 3-month 6.75 7.56 8.87 8.21 8.15 7.97 8.03 8.00 8.01 8.02 8.01 8.05 10 6-month 6.78 7.60 8.67 7.86 7.78 7.83 7.91 7.88 7.91 7.91 7.88 7.95 Certificates of deposit, secondary market 11 1-month 6.75 7.59 9.11 8.44 8.65 8.17 8.19 8.17 8.18 8.19 8.18 8.20 12 3-month 6.87 7.73 9.09 8.39 8.32 8.16 8.22 8.19 8.20 8.22 8.20 8.24 13 6-month 7.01 7.91 9.08 8.21 8.12 8.17 8.26 8.22 8.25 8.27 8.22 8.29 14 Eurodollar deposits. 3-month8 7.07 7.85 9.16 8.42 8.39 8.22 8.24 8.26 8.25 8.25 8.23 8.23 U.S. Treasury bills5 Secondary market9 15 3-month 5.78 6.67 8.11 7.69 7.63 7.64 7.74 7.69 7.76 7.80 7.66 7.74 16 6-month 6.03 6.91 8.03 7.49 7.42 7.55 7.70 7.59 7.71 7.74 7.63 7.74 17 1-year 6.33 7.13 7.92 7.25 7.21 7.38 7.55 7.46 7.54 7.58 7.50 7.61 Auction average 18 3-month 5.82 6.68 8.12 7.65 7.64 7.64 7.76 7.66 7.77 7.83 7.65 7.80 19 6-month 6.05 6.92 8.04 7.46 7.45 7.52 7.72 7.58 7.73 7.72 7.65 7.77 20 1-year 6.33 7.17 7.91 7.17 7.14 7.21 7.42 n.a. n.a. n.a. 7.42 n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds11 Constant maturities12 21 1-year 6.77 7.65 8.53 7.77 7.72 7.92 8.11 8.01 8.09 8.13 8.05 8.19 22 2-year 7.42 8.10 8.57 7.80 7.78 8.09 8.37 8.22 8.31 8.37 8.30 8.48 23 3-year 7.68 8.26 8.55 7.80 7.77 8.13 8.39 8.28 8.38 8.38 8.30 8.49 24 5-year 7.94 8.47 8.50 7.81 7.75 8.12 8.42 8.27 8.39 8.44 8.36 8.53 25 7-year 8.23 8.71 8.52 7.86 7.85 8.20 8.48 8.33 8.43 8.47 8.40 8.60 26 10-year 8.39 8.85 8.49 7.87 7.84 8.21 8.47 8.36 8.47 8.48 8.39 8.58 27 20-year n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 28 30-year 8.59 8.96 8.45 7.90 7.90 8.26 8.50 8.40 8.50 8.51 8.43 8.61 Composite13 29 Over 10 years (long-term) 8.64 8.98 8.58 8.03 8.02 8.39 8.66 8.53 8.64 8.66 8.61 8.78 State and local notes and bonds Moody's series14 30 Aaa 7.14 7.36 7.00 6.77 6.72 6.81 7.05 7.05 7.05 7.05 6.95 7.15 31 Baa 8.17 7.83 7.40 7.16 7.03 7.35 7.26 7.40 7.30 7.10 7.21 7.41 32 Bond Buyer series15 7.63 7.68 7.23 7.14 6.98 7.10 7.22 7.19 7.24 7.20 7.16 7.27 Corporate bonds Seasoned issues16 33 All industries 9.91 10.18 9.66 9.32 9.30 9.43 9.64 9.50 9.60 9.64 9.62 9.69 34 Aaa 9.38 9.71 9.26 8.89 8.86 8.99 9.22 9.05 9.15 9.22 9.21 9.27 35 Aa 9.68 9.94 9.46 9.14 9.11 9.27 9.45 9.32 9.41 9.45 9.43 9.49 36 A 9.99 10.24 9.74 9.42 9.39 9.54 9.75 9.61 9.71 9.75 9.72 9.82 37 Baa 10.58 10.83 10.18 9.81 9.82 9.94 10.14 10.00 10.10 10.13 10.11 10.19 38 A-rated, recently offered utility bonds17 9.96 10.20 9.79 9.28 9.36 9.63 9.84 9.75 9.83 9.75 9.84 9.94 MEMO: Dividend/price ratio18 39 Preferred stocks 8.37 9.23 9.05 8.73 8.75 8.80 8.90 8.82 8.88 8.82 8.90 8.96 40 Common stocks 3.08 3.64 3.45 3.39 3.33 3.41 3.54 3.52 3.54 3.50 3.53 3.58 1. Weekly, monthly and annual figures are averages of all calendar days, places. Thus, average issuing rates in bill auctions will be reported using two where the rate for a weekend or holiday is taken to be the rate prevailing on the rather than three decimal places. preceding business day. The daily rate is the average of the rates on a given day 11. Yields are based on closing bid prices quoted by at least five dealers. weighted by the volume of transactions at these rates. 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields 2. Weekly figures are averages for statement week ending Wednesday. are read from a yield curve at fixed maturities. Based on only recently issued, 3. Rate for the Federal Reserve Bank of New York. actively traded securities. 4. Unweighted average of offering rates quoted by at least five dealers (in the 13. Averages (to maturity or call) for all outstanding bonds neither due nor case of commercial paper), or finance companies (in the case of finance paper). callable in less than 10 years, including one very low yielding "flower" bond. Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. General obligations based on Thursday figures; Moody's Investors Service. and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 15. General obligations only, with 20 years to maturity, issued by 20 state and 150-179 days for finance paper. local governmental units of mixed quality. Based on figures for Thursday. 5. Yields are quoted on a bank-discount basis, rather than in an investment 16. Daily figures from Moody's Investors Service. Based on yields to maturity yield basis (which would give a higher figure). on selected long-term bonds. 6. Dealer closing offered rates for top-rated banks. Most representative rate 17. Compilation of the Federal Reserve. This series is an estimate of the yield (which may be, but need not be, the average of the rates quoted by the dealers). on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 7. Unweighted average of offered rates quoted by at least five dealers early in call protection. Weekly data are based on Friday quotations. the day. 18. Standard and Poor's corporate series. Preferred stock ratio based on a 8. Calendar week average. For indication purposes only. sample often issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H.15 (519) and G.13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1989 1990 IInnddiiccaattoorr 11998877 11998888 11998899 June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 161.78 149.97 180.13 180.76 185.15 192.93 193.02 192.49 188.50 192.67 187.96 182.55 2 Industrial 195.31 180.83 228.04 216.75 221.74 231.32 230.86 229.40 224.38 230.12 225.79 220.60 3 Transportation 140.52 134.09 174.90 173.47 179.32 197.53 202.02 190.36 174.26 177.25 173.67 166.69 4 Utility 74.29 72.22 94.33 87.95 90.40 92.90 93.44 94.67 94.95 99.73 95.69 92.15 5 Finance 146.48 127.41 162.01 154.08 157.78 164.86 165.51 166.55 160.89 155.63 150.11 142.68 6 Standard & Poor's Corporation (1941-43 = 10)' 287.00 265.88 323.05 323.73 331.92 346.61 347.33 347.40 340.22 348.57 339.97 330.45 7 American Stock Exchange (Aug. 31, 1973 = 50? 316.78 295.08 356.67 362.73 368.52 379.28 382.75 383.63 371.92 373.87 367.40 355.30 Volume of trading (thousands of shares) 8 New York Stock Exchange 188,922 161,386 165,568 180,680 162,501 171,683 151,752 182,394 144,389 160,671 172,420 155,960 9 American Stock Exchange 13,832 9,955 13,124 13,519 11,702 14,538 12,631 13,853 12,001 13,298 14,831 13,735 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 31,990 32,740 34,320 34,730 34,360 33,940 35,020 35,110 34,630 34,320 32,640 31,480 Free credit balances at brokers* 11 Margin-account5 4,750 5,660 7,040 6,900 5,420 5,580 5,680 6,000 5,815 7,040 6,755 6,575 12 Cash-account 15,640 16,595 18,505 19,080 16,345 16,015 15,310 16,340 16,345 18,505 17,370 16,200 Margin requirements (percent of market value and effective date)6 Mar. 11, 1968 June 8, 1968 May 6, 1970 Dec. 6, 1971 Nov. 24, 1972 Jan. 3, 1974 13 Margin stocks 70 80 65 55 65 50 14 Convertible bonds 50 60 50 50 50 50 15 Short sales 70 80 65 55 65 50 1. Effective July 1976, includes a new financial group, banks and insurance "margin securities" (as defined in the regulations) when such credit is collatercompanies. With this change the index includes 400 industrial stocks (formerly alized by securities. Margin requirements on securities other than options are the 425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40 difference between the market value (100 percent) and the maximum loan value of financial. collateral as prescribed by the Board. Regulation T was adopted effective Oct. 15, 2. Beginning July 5, 1983, the American Stock Exchange rebased its index 1934; Regulation U, effective May 1, 1936; Regulation G, effective Mar. 11, 1968; effectively cutting previous readings in half. and Regulation X, effective Nov. 1, 1971. 3. Beginning July 1983, under the revised Regulation T, margin credit at On Jan. 1, 1977, the Board of Governors for the first time established in broker-dealers includes credit extended against stocks, convertible bonds, stocks Regulation T the initial margin required for writing options on securities, setting acquired through exercise of subscription rights, corporate bonds, and govern- it at 30 percent of the current market-value of the stock underlying the option. On ment securities. Separate reporting of data for margin stocks, convertible bonds, Sept. 30, 1985, the Board changed the required initial margin, allowing it to be the and subscription issues was discontinued in April 1984. same as the option maintenance margin required by the appropriate exchange or 4. Free credit balances are in accounts with no unfulfilled commitments to the self-regulatory organization; such maintenance margin rules must be approved by brokers and are subject to withdrawal by customers on demand. the Securities and Exchange Commission. Effective Jan. 31, 1986, the SEC 5. New series beginning June 1984. approved new maintenance margin rules, permitting margins to be the price of the 6. These regulations, adopted by the Board of Governors pursuant to the option plus 15 percent of the market value of the stock underlying the option. Securities Exchange Act of 1934, limit the amount of credit to purchase and carry Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A26 Domestic Nonfinancial Statistics • May 1990 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1989 AAccccoouunntt 11998877 11998888 Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. SAIF-insured institutions 1 Assets 1,250,855 1,350,500 1,340,502 1,345,347 1,346,564 1,338,576 1,331,940 1,318,118 1,301,059 1,288,722 1,279,067 1,251,844 2 Mortgages 721,593 764,513 769,398 773,386 774,358 772,720 771,716 770,117 764,699 757,718 753,993 743,441 3 Mortgage-backed securities 201,828 214,587 215,203 216,129 216,256 211,325 204,364 195,308 188,436 181,627 176,541 170,883 4 Contra-assets to mortgage assets1 . 42,344 37,950 37,842 37,791 37,504 37,540 37,172 36,763 36,292 34,925 33,990 34,149 5 Commercial loans 23,163 33,889 32,866 32,812 33,009 33,073 33,198 33,026 32,925 32,562 32,334 32,218 6 Consumer loans 57,902 61,922 61,402 61,710 61,869 60,769 61,098 60,978 60,423 59,793 59,496 58,780 7 Contra-assets to nonmortgage loans . 3,467 3,056 3,074 2,899 2,918 3,192 3,203 3,167 3,120 3,106 3,202 3,461 8 Cash and investment securities 169,717 186,986 177,094 175,841 174,333 175,222 175,135 171,565 169,582 172,612 172,333 165,882 9 Other3 122,462 129,610 125,455 126,065 127,161 126,200 126,803 127,055 124,415 122,440 121,561 118,250 10 Liabilities and net worth . 1,250,855 1,350,500 1,340,502 1,345,347 1,346,564 1,338,576 1,331,940 1,318,118 1,301,059 1,288,722 1,279,067 1,251,844 11 Savings capital 932,616 971.700 956,663 954,495 955,566 960,073 963,158 960,344 958,911 948,512 946,668 945,582 12 Borrowed money 249,917 299,400 312,988 318,671 318,367 312,093 301,572 289,634 281,474 275,977 268,462 252,139 13 FHLBB 116,363 134,168 146,007 148,000 146,520 144,217 141,875 138,331 133,633 130,514 127,671 124,739 14 Other 133,554 165,232 166,981 170,671 171,847 167,876 159,697 151,303 147,841 145,463 140,791 127,400 15 Other 21,941 24,216 29,593 31,629 33,585 29,892 31,881 33,807 29,899 30,960 31,991 27,539 16 Net worth 46,382 55,185 57,113 56,068 54,596 52,741 50,907 49,930 46,685 48,345 47,177 33,764 SAIF-insured federal savings banks 17 Assets 284,270 425,983 443,167 455,143 469,939 495,739 507,020 504,187 501,128 502,589 18 Mortgages 161,926 227,869 241,076 249,940 257,187 276,613 285,072 285,503 283,188 283,674 19 Mortgage-backed securities 45,826 64,957 68,086 69,964 73,963 73,943 74,341 72,082 72,438 72,318 20 Contra-assets to mortgage assets' . 9,100 13,140 12,896 13,049 13,227 13,662 13,972 13,859 13,821 13,492 21 Commercial loans 6,504 16,731 16,313 16,497 16,934 18,014 18,279 18,169 18,195 18,301 22 Consumer loans 17,696 24,222 26,096 26,768 27,957 28,157 28,996 28,985 28,766 28,326 23 Contra-assets to nonmortgage loans . 678 889 977 863 888 976 980 987 1,029 1,051 n.a. n. a. 24 Finance leases plus interest 591 880 1,011 1,047 1,072 1,083 1,088 1,075 1,092 1,087 25 Cash and investment ... 35,347 61,029 60,272 61,278 62,002 65,778 66,068 65,109 64,232 65,277 26 Other 24,069 35,428 34,964 37,333 38,021 39,644 40,340 40,534 40,680 40,756 27 Liabilities and net worth . 284,270 425,983 443,167 455,143 469,939 495,739 507,020 504,187 501,128 502,589 28 Savings capital 203,196 298,197 307,580 315,725 324,369 342,145 352,547 352,099 353,461 355,903 29 Borrowed money 60,716 99,286 107,179 110,004 114,854 121,895 121,195 117,970 115,628 114,232 30 FHLBB 29,617 46,265 51,532 53,519 55,463 58,505 59,781 59,189 57,941 57,793 31 Other 31,099 53,021 55,647 56,485 59,391 63,390 61,414 58,781 57,687 56,439 32 Other 5,324 8,075 8,649 9,306 10,174 9,825 10,697 11,443 9,904 10,298 33 Net worth 15,034 20,235 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 Mar. Apr. May June July Aug. Sept. Oct. Nov Dec.. Credit unions4 34 Total assets/liabilities and capital 174,593 178,175 177,417 178,812 180,664 179,029 180,035 181,812 181,527 182,856 183,688 f 35 Federal 114,566 117,555 115,416 116,705 117,632 117,475 117,463 118,746 118,887 119,682 120,666 36 State 1 60,027 60,620 62,001 62,107 63,032 61,554 62,572 63,066 62,640 63,174 63,022 37 Loans outstanding n.a. 113,191 114,572 115,249 116,947 119,101 119,720 120,577 122,522 122,997 122,899 122,608 38 Federal 73,766 74,395 75,003 76,052 77,729 78,472 78,946 80,548 80,570 80,601 80,272 39 State 39,425 40,177 40,246 40,895 41,372 41,248 41,631 41,874 42,427 42,298 42,336 40 Savings 159,010 164,322 161,388 162,134 164,415 162,405 162,754 164,050 164,695 165,533 167,371 41 Federal 104,431 107,368 105,208 105,787 106,984 106,266 106,038 106,633 107,588 108,319 109,653 42 State 54,579 56,954 56,180 56,347 57,431 56,139 56,716 57,417 57,107 57,214 57,718 Life insurance companies 43 Assets 1,044,459 1,157,140 1,199,125 1,209,242 1,221,332 1,232,195 1,247,341 1,257,045 1,266,773 1,276,181 1,289,467 Securities 44 Government 84,426 84,051 84,485 82,873 83,847 84,564 84,438 83,225 82,867 83,727 83,609 45 United States5 57,078 58,564 58,417 57,127 57,790 57,817 57,698 56,978 56,684 57,726 57,290 46 State and local 10,681 9,136 8,860 8,911 8,953 9,036 9,061 9,002 9,037 9,019 9,280 47 Foreign6 16,667 16,351 17,208 16,835 17,104 17,711 17,679 17,245 17,146 16,982 17,039 48 Business 569,199 660,416 687,777 697,703 706,960 714,398 726,599 735,441 742,537 748,075 758,803 n.a. 49 Bonds 472,684 556,043 579,232 587,889 595,500 601,786 606,686 614,585 621,856 628,695 637,690 50 Stocks 96,515 104,373 108,545 109,814 111,460 112,612 119,913 120,856 120,681 119,380 121,113 51 Mortgages 203,545 232,863 234,632 235,312 236,651 237,444 237,865 238,944 240,189 242,391 243,728 52 Real estate 34,172 37,371 37,842 37,976 38,598 38,190 38,622 38,822 38,942 39,343 39,339 53 Policy loans 53,626 54,236 54,921 55,201 55,525 55,746 55,812 56,077 56,403 56,727 56,916 54 Other assets 89,586 93,358 99,468 100,173 99,751 101,853 104,005 104,536 105,835 105,918 107,072 1. Contra-assets are credit-balance accounts that must be subtracted from the insured by the FSLIC and based on the FHLBB thrift Financial Report. corresponding gross asset categories to yield net asset levels. Contra-assets to FSLlC-insured federal savings banks: Estimates by the FHLBB for federal mortgage loans, contracts, and pass-through securities include loans in process, savings banks insured by the FSLIC and based on the FHLBB thrift Financial unearned discounts and deferred loan fees, valuation allowances for mortgages Report. "held for sale," and specific reserves and other valuation allowances. Savings banks: Estimates by the National Council of Savings Institutions for all 2. Contra-assets are credit-balance accounts that must be subtracted from the savings banks in the United States and for FDIC-insured savings banks that have corresponding gross asset categories to yield net asset levels. Contra-assets to converted to federal savings banks. nonmortgage loans include loans in process, unearned discounts and deferred loan Credit unions: Estimates by the National Credit Union Administration for fees, and specific reserves and valuation allowances. federally chartered and federally insured state-chartered credit unions serving 3. Holding of stock in Federal Home Loan Bank and Finance leases plus natural persons. interest are included in "Other" (line 9). Life insurance companies: Estimates of the American Council of Life Insurance 4. Data include all federally insured credit unions, both federal and state for all life insurance companies in the United States. Annual figures are annualchartered, serving natural persons. statement asset values, with bonds carried on an amortized basis and stocks at 5. Direct and guaranteed obligations. Excludes federal agency issues not year-end market value. Adjustments for interest due and accrued and for guaranteed, which are shown in the table under "Business" securities. differences between market and book values are not made on each item separately 6. Issues of foreign governments and their subdivisions and bonds of the but are included, in total, in "other assets." International Bank for Reconstruction and Development. As of June 1989 Savings bank data are no longer available. NOTE. FSLlC-insured institutions: Estimates by the FHLBB for all institutions Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A28 Domestic Nonfinancial Statistics • May 1990 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year Fiscal Fiscal Type of account or operation year year year 1989 1987 1989 Sept. Oct. Nov. Dec. Feb. U.S. budget1 1 Receipts, total 854,143 908,166 990,789 99,233 68,426 71,213 89,130 99,542 65,170 2 On-budget 640,741 666,675 727,123 75,711 50,122 51,989 69,052 74,247 44,133 3 Off-budget 213,402 241,491 263,666 23,522 18,304 19,223 20,077 25,295 21,037 4 Outlays, total 1,003,804 1,063,318 1,142,777 105,299 94,515 100,172 103,770 89,622 101,588 5 On-budget 809,972 860,626 931,556 86,548 75,096 80,794 91,249 71,082 82,025 6 Off-budget 193,832 202,691 211,221 18,750 19,419 19,378 12,522 18,540 19,563 7 Surplus, or deficit (-), total -149,661 -155,151 -151,988 -6,066 -26,089 -28,959 -14,641 9,920 -36,417 8 On-budget -169,231 -193,951 -204,433 -10,837 -24,974 -28,804 -22,196 3,165 -37,892 9 Off-budget 19,570 38,800 52,445 4,771 -1,115 -155 7,556 6,755 1,474 Source of financing (total) 10 Borrowing from the public 151,717 166,139 140,156 6,618 36,690 19,790 6,821 15,841 18,221 11 Operating cash (decrease, or increase (-)), -5,052 -7,963 3,425 -15,589 -2,513 21,772 -5,221 -18,116 25,462 12 Other 2 2,996 -3,025 8,407 14,977 -12,603 13,040 -7,644 -7,266 MEMO 13 Treasury operating balance (level, end of period) 36,436 44,398 40,973 40,973 43,486 21,715 26,935 45,051 19,589 14 Federal Reserve Banks 9,120 13,024 13,452 13,452 13,124 5,501 6,217 13,153 6,613 15 Tax and loan accounts 27,316 31,375 27,521 27,521 30,362 16,214 20,718 31,899 12,976 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 1989 1990 1988 1989 H2 H2 Jan. Feb. RECEIPTS 1 All sources 908,166 990,691 475,724 449,320 527,574 470,329 89,130 99,538 65,170 2 Individual income taxes, net 401,181 445,690 207,659 200,300 233,572 218,661 37,385 56,044 28,830 4 3 5 6 P W R N r e o e i f t n s h u i w h d n i e e d t l n s h d t h i e al l d E lection Campaign Fund . 3 1 4 7 3 1 2 2 , , , 4 4 1 3 8 9 3 5 7 9 3 3 1 7 6 5 0 1 4 , , , 5 3 8 8 6 3 3 6 7 9 2 1 1 6 6 0 3 9 1 , , , 2 3 6 8 0 2 1 3 0 8 4 1 2 7 9 9 9 , , , 1 8 6 8 8 0 6 0 0 4 1 1 6 7 2 2 4 1 , , , 2 2 5 5 3 2 6 1 0 8 3 1 3 9 7 3 3 , , , 9 3 2 4 0 9 3 3 6 3 35 2 , , 4 7 7 4 1 7 3 7 5 0 3 2 4 2 , , 1 3 5 7 8 1 2 9 0 7 3 4 2 , ,8 9 9 5 8 6 2 6 4 0 Corporation income taxes 7 Gross receipts 109,683 117,015 58,002 56,409 61,585 52,269 19,731 4,277 2,678 8 Refunds 15,487 13,723 8,706 7,250 7,259 6,842 853 1,159 1,447 9 Social insurance taxes and contributions, net 334,335 359,416 181,058 157,603 200,127 162,574 25,805 32,863 29,055 10 Employment taxes and contributions2 305,093 332,859 164,412 144,983 184,569 152,407 25,266 31,767 26,473 11 Self-employment taxes and 0 contributions3 17,691 18,405 14,839 3,032 16,371 1,947 1,213 1,500 12 Unemployment insurance 24,584 22,011 14,363 10,359 13,279 7,909 161 742 2,230 13 Other net receipts4 4,659 4,547 2,284 2,262 2,277 2,260 377 354 352 14 Excise taxes 35,540 34,386 16,440 19,299 16,814 16,844 2,763 2,624 2,260 15 Customs deposits 15,411 16,334 7,522 8,107 7,918 8,667 1,293 1,440 1,228 16 Estate and gift taxes 7,594 8,745 3,863 4,054 4,583 4,451 850 805 664 17 Miscellaneous receipts 19,909 22,829 9,950 10,799 10,235 13,703 2,156 2,644 1,902 OUTLAYS 18 All types 1,063,318 1,142,680 512,856 552,727 565,524 587,303 103,903' 90,118' 101,588 19 National defense 290,361 303,551 143,080 150,496 148,098 149,613 28,570 21,978 24,870 2 2 2 2 2 0 1 2 3 4 N I E G A n n a e g t e e t n r u r i r e c g n r r u a y a a l l l t t i r u o s e r c n e s i a o e l u n a r c c f e f e , a s i s r p a s a n c d e, e n a v n i d r o t n ec m h e n n o t logy . 1 1 1 1 2 0 0 4 7 , , , , , 2 4 8 6 2 9 7 4 2 1 7 1 1 5 0 1 1 1 9 3 5 2 6 , , , , , 7 5 9 8 9 4 9 8 9 4 5 6 5 1 8 7 5 6 7 , , , , 3 1 8 7 5 6 5 7 7 5 1 0 2 6 5 2 5 9 6 1 , , , , , 8 9 6 0 9 5 1 3 7 6 2 1 6 2 6 6 6 7 2 9 , , , , , 2 6 0 2 6 3 0 2 2 1 8 5 2 1 9 5 7 9 4 l, , , , , 3 9 0 1 1 9 8 9 3 8 1 1 2 3 7 r 1 1 1 1 , , , , 2 3 3 2 0 0 0 9 1 9 6 2 7 9 3 ' 1 1 1 1 , , , , 0 1 2 1 4 5 1 4 2 8 3 8 0 9 ' ' 1 1 1 , , , 1 0 0 9 4 3 6 8 4 4 4 6 3 9 25 Commerce and housing credit 18,828 27,810 5,951 19,836 4,129 22,200 1,107 -2,286 3,040 26 Transportation 27,272 27,623 12,700 14,922 13,035 14,982 2,515 2,409 2,097 27 Community and regional development .. 5,294 5,755 2,765 2,690 1,833 4,879 841 575 28 Education, training, employment, and social services 31,938 35,697 16,152 18,663 3,496 3,421 29 Health 44,490 48,391 22,643 23,360 24,078 25,339 4,435 4,663 4,459 30 Social security and medicare 297,828 317,506 135,322 149,017 162,195 162,322 27,166 28,228 28,291 31 Income security 129,332 136,765 65,555 64,978 70,937 67,950 13,217 12,010 13,609 32 Veterans benefits and services 29,406 30,066 13,241 15,797 14,891 14,864 3,664 1,086 2,608 33 Administration of justice 8,436 9,396 4,379 4,361 4,801 4,963 968 811 819 34 General government 9,518 8,940 4,337 5,1370 3,8580 4,753 745 972 484 35 General-purpose fiscal assistance 1,816 n.a. 448 n.a. n.a. n.a. n.a. 36 Net interest 151,748 169,314 76,098 78,317 86,009 87,927 14,579 14,281 15,924 37 Undistributed offsetting receipts7 -36,967 -37,212 -17,766 -18,771 -18,131 -18,935 -2,271 -2,967 -2,884 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 • May 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 2,245.2' 4 Held by agencies 477.6 490.8 534.2 550.4 589.2 607.5 657.8 676.7 707.8' 5 Agency securities 3.5 5.6 7.4 12.4 22.9 22.7 24.0 23.7 22.5' 6 Held by public 2.7 5.1 7.0 12.2 22.6 22.3 23.6 23.5 22.4' 7 Held by agencies .8 .6 .5 .2 .3 .4 .5 .1 .r 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 1989 TTyyppee aanndd hhoollddeerr 11998866 11998877 11998888 11998899 Ql 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 5 927.5 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 issues2 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 403.1 477.6 589.2 707.8 607.5 657.8 676.7 707.8 16 Federal Reserve Banks 211.3 222.6 238.4 228.4 228.6 231.8 220.6 228.4 17 Private investors 1,602.0 1,745.2 1,852.8 2,011.0 1,900.2 1,905.4 1,954.0' 2,011.0 18 Commercial banks 203.5 201.5 193.8 190.0 200.9 199.2' 181.5 190.0 19 Money market funds 28.0 14.6 11.8r 14.4 13.0 11.3' 14.4 20 Insurance companies 105.6 104.9 107. y n.a. 107.4' 106.3 107.7 n.a. 21 Other companies 68.8 84.6 87. V 93.8 90.6' 92.1' 93.5 93.8 22 State and local Treasurys 262.8 284.6 313.6 n.a. 320.4 322.1 325.2 n.a. Individuals 23 Savings bonds 92.3 101.1 109.6 117.7 112.2 114.0 115.7 117.7 24 Other securities 70.4 70.2 76.4r 91.5 87.4' 92.5' 92.1 91.5 25 Foreign and international 263.4 299.7 362.1 392.9 375.6 367.9 393.5 392.9 26 Other miscellaneous investors 506.6 584.0 591.r n.a. 592.7' 600.0 631.9 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 1990 IItteemm 11998877 11998888 11998899 Dec. Jan. Feb. Jan. 24 Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 Immediate delivery2 1 U.S. Treasury securities 110,050 101,623 112,715 84,153 118,584 124,931 123,689r 133,945 123,692 140,580 118,794 115,431 By maturity 7 Bills 37,924 29,387 30,733 26,756 32,817 31,798 30,796 35,767 28,536 37,376 31,729 29,538 3 Other within 1 year 3,271 3,426 3,182 2,559 3,438 3,048 2,568 4,216 2,527 3,652 3,110 2,913 4 1-5 years 27,918 27,777 33,662 25,884 32,925 37,110 36,446 37,091 36,094 36,241 42,228 34,902 5 5-10 years 24,014 24,939 28,679 18,240 31,345 31,836 33,252 34,744 34,801 36,006 23,094 31,697 6 Over 10 years 16,923 16,093 16,458 10,714 18,059 21,139 20,628 22,126 21,734 27,305 18,633 16,381 By type of customer 7 U.S. government securities dealers 2,936 2,761 3,287 2,545 3,141 3,943 3,149 3,890 3,837 4,564 3,794 3,547 8 U.S. government securities brokers 61,539 59,844 66,417 45,753 71,886 72,038 76,535 81,668 69,300 83,014 68,474 66,652 9 All others3 45,575 39,019 43,011 35,854 43,557 48,950 44,006 48,387 50,555 53,003 46,527 45,232 10 Federal agency securities 18,084 15,903 18,623 17,939 19,950 19,069 18,123 18,496 22,328 20,747 14,101 18,111 11 Certificates of deposit 4,112 3,369 2,798 1,597 2,283 1,756 2,476 2,142 1,698 1,946 1,575 1,767 1? Bankers acceptances 2,965 2,316 2,222 1,635 1,843 1,574 1,744 1,550 1,434 1,477 1,654 1,748 13 Commercial paper 17,135 22,927 31,805 32,267 37,311 35,190 35,886 35,764r 33,625 32,510 38,480 36,805 Futures contracts 14 Treasury bills 3,233 2,627 2,525 2,523 2,684 2,393 2,784 2,464 1,864 3,550 2,284 1,852 15 Treasury coupons 8,963 9,695 9,603 5,836 12,345 13,730 12,746 16,908 13,760 13,686 13,244 14,133 16 Federal agency securities 5 1 8 3 14 23 24 4 1 30 49 16 Forward transactions 17 U.S. Treasury securities 2,029 2,095 2,126 1,821 1,786 3,009 2,770 1,358 5,971 1,360 2,690 1,952 18 Federal agency securities 9,290 8,008 9,484 9,520 11,594 12,885 10,104 8,710 14,363 15,509 10,749 10,495 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 • May 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 Dec. Jan. Feb. Jan. 31 Feb. 7 Feb. 14 Feb. 21 Feb. 28 Positions Net immediate2 1 U.S. Treasury securities -6,216 -22,765 -5,948 25,224 18,285r 7,869 17,227' 7,191 9,738 5,169 8,836 2 Bills 4,317 2,238 7,831 26,823 24,925 19,033 25,234 22,067 19,784 17,484 16,485 3 Other within 1 year 1,557 -2,236 -1,528 -1,171 -836 -950 -1,007 -528 -363 -1,415 -1,589 4 1-5 years 649 -3,020 2,334 12,398 13,976 11,238 15,787 11,343 13,123 8,802 11,198 5 5-10 years -6,564 -9,663 -8,133 -7,230 -10,475r -8,493 -11,943' -11,907 -9,283 -7,221 -5,307 6 Over 10 years -6,174 -10,084 -6,452 -5,596 -9,305 -12,959 -10,845 -13,784 -13,524 -12,482 -11,951 7 Federal agency securities 31,911 28,230 31,914 35,928 35,551 36,745 33,184 35,261 40,719 36,991 34,056 8 Certificates of deposit 8,188 7,300 6,674 6,884 5,972 5,338 5,993 5,942 5,394 4,958 4,981 9 Bankers acceptances 3,660 2,486 2,089 1,736 1,703 1,653 1,692 1,708 1,670 1,796 1,467 10 Commercial paper 7,496 6,152 8,243 8,152 7,663 7,925 8,286 8,014 7,239 8,291 8,228 Futures positions 11 Treasury bills -3,373 -2,210 -4,599 -10,135 -9,896 -12,782 -12,323 -11,936 -12,397 -13,115 -13,748 12 Treasury coupons 5,988 6,224 -2,919 -11,022 -6,388 -4,845 -4,241 -4,847 -5,423 -3,910 -5,014 13 Federal agency securities -95 0 14 30 27 103 31 35 49 148 188 Forward positions 14 U.S. Treasury securities -1,211 346 -546 -145 -2,093' -1,046 -2,188' -1,929 -899 -1,047 -310 15 Federal agency securities -18,817 -16,348 -16,878 -16,522 -13,814 -15,942 -10,056 -13,195 -19,405 -16,205 -15,016 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 126,709 136,327 157,955 143,024 150,660 167,362 159,429 159,916 183,488 154,675 171,370 17 Term 148,288 177,477 225,126 219,169 216,646 216,957 231,526 248,679 213,418 206,934 198,798 Repurchase agreements 18 Overnight and continuing 170,763 172,695 219,083 233,258 240,341 242,687 243,687 241,664 257,221 228,467 243,396 19 Term 121,270 137,056 179,555 179,487 179,484 180,708 194,294 208,420 180,123 171,805 162,483 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 1990 AAggeennccyy 11998866 11998877 11998888 11998899 Sept. Oct. Nov. Dec. Jan. 1 Federal and federally sponsored agencies 307,361 341,386 381,498 411,805 408,591 409,113 412,234 411,805 n.a. 2 Federal agencies 36,958 37,981 35,668 35,664 36,584 36,378 35,855 35,664 34,995 3 Defense Department1 33 13 8 7 7 7 7 7 7 4 Export-Import Bank • 14,211 11,978 11,033 10,985 10,990 10,990 10,990 10,985 10,985 5 Federal Housing Administration4 138 183 150 328 295 301 308 328 239 6 Government National Mortgage Association participation certificates 2,165 1,615 0 0 0 00 0 00 00 7 Postal Service6 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 18,847 18,635 18,105 17,899 17,319 9 United States Railway Association6 85 0 0 0 0 0 0 0 0 10 Federally sponsored agencies7 270,553 303,405 345,830 376,141 372,007 372,735 376,379 376,141 n.a. 11 Federal Home Loan Banks 88,758r 115,727r 135,836'" 136,087 143,578 140,854 138,229 136,087 133,699 12 Federal Home Loan Mortgage Corporation 13,589 17,645 22,797 26,882 26,738 25,097 27,018 26,882 n.a. 13 Federal National Mortgage Association 93,563 97,057 105,459 116,064 111,507 111,776 115,774 116,064 115,164 14 Farm Credit Banks8 62,478 55,275 53,127 54,864 54,015 54,029 54,131 54,864 55,809 15 Student Loan Marketing Association 12,171 16,503 22,073 28,705 27,126 27,440 27,688 28,705 n.a. 16 Financing Corporation10 0 1,200 5,850 8,170 8,170 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 Corporation12 0 0 0 4,522 0 4,522 4,522 4,522 9,524 MEMO 19 Federal Financing Bank debt13 157,510 152,417 142,850 134,873 136,092 135,841 135,213 134,873 134,263 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 14,205 11,972 11,027 10,979 10,984 1100,,998844 10,984 1100,,997799 1100,,997799 21 Postal Service6 2,854 5,853 5,892 6,195 6,195 6,195 6,195 6,195 6,195 22 Student Loan Marketing Association 4,970 4,940 4,910 4,880 4,910 4,880 4,880 4,880 4,880 23 Tennessee Valley Authority 15,797 16,709 16,955 16,519 17,467 17,255 16,725 16,519 15,939 24 United States Railway Association6 85 0 0 0 0 0 0 0 0 Other Lending14 25 Farmers Home Administration 65,374 59,674 58,496 53,311 53,311 53,311 53,311 53,311 53,461 26 Rural Electrification Administration 21,680 21,191 19,246 19,265 19,275 19,233 19,249 19,265 19,212 27 Other 32,545 32,078 26,324 23,724 23,950 23,983 23,869 23,724 23,597 1. Consists of mortgages assumed by the Defense Department between 1957 shown on line 21. and 1963 under family housing and homeowners assistance programs. 10. The Financing Corporation, established in August 1987 to recapitalize the 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. Federal Savings and Loan Insurance Corporation, undertook its first borrowing in 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. October 1987. 4. Consists of debentures issued in payment of Federal Housing Administration 11. The Farm Credit Financial Assistance Corporation (established in January insurance claims. Once issued, these securities may be sold privately on the 1988 to provide assistance to the Farm Credit System) undertook its first securities market. borrowing in July 1988. 5. Certificates of participation issued before fiscal 1969 by the Government 12. The Resolution Funding Corporation, established by the Financial Institu- National Mortgage Association acting as trustee for the Farmers Home Admin- tions Reform, Recovery, and Enforcement Act of 1989, undertook its first istration; Department of Health, Education, and Welfare; Department of Housing borrowing in October 1989. and Urban Development; Small Business Administration; and the Veterans 13. Includes FFB purchases of agency assets and guaranteed loans; the latter Administration. contain loans guaranteed by numerous agencies with the guarantees of any 6. Off-budget. particular agency being generally small. The Farmers Home Administration item 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- consists exclusively of agency assets, while the Rural Electrification Administratures. Some data are estimated. tion entry contains both agency assets and guaranteed loans. 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, 14. The FFB, which began operations in 1974, is authorized to purchase or sell shown in line 17. obligations issued, sold, or guaranteed by other federal agencies. Since FFB 9. Before late 1981, the Association obtained financing through the Federal incurs debt solely for the purpose of lending to other agencies, its debt is not Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is included in the main portion of the table in order to avoid double counting. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A34 Domestic Nonfinancial Statistics • May 1990 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1989 1990 TTyyppee ooff iissssuuee oorr iissssuueerr,, 11998877 11998888 11998899 oorr uussee July Aug. Sept. Oct. Nov. Dec. Jan.r Feb. 1 All issues, new and refunding1 102,407 114,522 113,646 8,735 9,824 10,818 9,075 9,564 13,636 6,694 5,040 Type of issue 2 General obligation 30,589 30,312 35,774 3,789 2,199 3,500 3,273 3,328 2,158 2,675 2,691 3 Revenue 71,818 84,210 77,873 4,946 7,625 7,318 5,802 6,237 11,478 4,019 2,349 Type of issuer 4 State 10,102 8,830 11,8^ 970 694 764 1,330 930 9ir 712 1,024 5 Special district and statutory authority 65,460 74,409 71,022 4,868 7,027 7,567 4,770 5,473 9,391 4,744 2,643 6 Municipalities, counties, and townships 26,845 31,193 30,805 2,897 2,103 2,487 2,975 3,161 3,334 1,238 1,373 7 Issues for new capital, total 56,789 79,665 84,062 6,816 6,612 7,470 7,266 7,777 10,195 6,263 4,538 Use of proceeds 8 Education 9,524 15,021 15,133 998 1,302 1,639 1,006 1,058 1,495 1,374 1,210 9 Transportation 3,677 6,825 6,870 500 556 976 280 675 645 98 416 10 Utilities and conservation 7,912 8,496 11,427 551 813 622 718 1,137 2,219 1,747 432 11 Social welfare 11,106 19,027 16,703 1,632 1,553 1,242 1,803 1,441 2,518 1,017 349 12 Industrial aid 7,474 5,624 5,036 440 447 381 345 444 1,119 200 107 13 Other purposes 18,020 24,672 28,894 2,695 1,941 2,610 3,114 3,022 2,199 1,827 2,024 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 1990 Type of issue or issuer, 11998877 11998888 11998899 or use June July Aug. Sept. Oct. Nov. Dec. Jan. 1 All issues 392,339 409,925 232,307r 24,770r 18,094r 14,950' 14,629 24,654' 20,697' 21,537' 14,278 2 Bonds2 325,838 352,124 201,031' 21,942r 13,040r 12,915' 12,356 20,974' 16,457' 17,592' 12,000 Type of offering 3 Public, domestic 209,455 201,246 178,433' 19,034'' 11,620' 12,099' 11,156 19,866' 14,383' 15,987' 10,000 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 22,598' 2,908 1,420 816 1,200 1,108 2,074 1,605' 2,000 Industry group 6 Manufacturing 61,266 70,595 42,366r 3,502 2,850 2,670 2,247 3,646 3,551' 4,193' 1,847 7 Commercial and miscellaneous 49,773 62,070 15,968' 1,649 1,354' 1,090 1,393 1,830 1,253 347 551 8 Transportation 11,974 10,076 3,586 480 0 423 30 906 312 1,083 35 9 Public utility 23,004 19,318 13,682' 2,936 1,346 705 1,059 1,748' 1,022' 1,098' 825 10 Communication 7,340 5,951 3,859 4 300 358 308 632 812 577 15 11 Real estate and financial 172,474 184,114 121,574r 13,372' 7,190' 7,669' 7,320 12,213 9,507' 10,296' 8,727 12 Stocks2 66,508 57,802 32,225 2,828 5,054 2,035 2,273 3,680 4,240 3,945 2,278 Type 13 Preferred 10,123 6,544 6,194 335 920 1,013 519 570 160 626 50 14 Common 43,225 35,911 26,030 2,493 4,134 1,023 1,754 3,110 4,080 3,319 2,228 15 Private placement 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 5,081 630 593 393 193 190 378 279 835 17 Commercial and miscellaneous 12,888 8,449 4,428 512 438 343 155 728 498 1,045 248 18 Transportation 2,439 1,535 532 0 0 0 0 50 0 0 0 19 Public utility 4,322 1,898 2,297 125 25 137 709 465 211 244 106 20 Communication 1,458 515 471 25 29 20 0 0 0 0 0 21 Real estate and financial 31,521 37,798 19,250 1,536 3,969 1,020 1,195 2,214 3,153 2,377 1,090 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 1990 IItteemm 11998888 11998899 June July Aug. Sept. Oct. Nov. Dec/ Jan. INVESTMENT COMPANIES1 1 Sales of own shares2 271,237 306,445 25,817 25,330 26,800 23,911 23,872 24,673 30,982 35,620 2 Redemptions of own shares3 267,451 272,165 22,562 20,053 22,262 21,499 21,702 19,573 24,967 27,331 3 Net sales 3,786 34,280 3,255 5,277 4,538 2,412 2,170 5,100 6,015 8,289 4 Assets4 472,297 553,871 515,814 535,910 539,553 539,814 534,922 549,892 553,871 535,185 5 Cash position5 45,090 44,780 48,428 47,888 47,209 47,163 46,146 47,875 44,780 48,898 6 Other 427,207 509,091 467,386 488,022 492,344 492,651 488,776 502,017 509,091 486,287 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 11998899rr Ql Q2 Q3 Q4 Ql Q2 Q3 Q4 1 Corporate profits with inventory valuation and capital consumption adjustment 298.7 328.6 299.2 318.1 325.3 330.9 340.2 316.3 307.8 295.2 n.a. 2 Profits before tax 266.7 306.8 288.5 288.8 305.3 314.4 318.8 318.0 296.0 275.0 n.a. 3 Profits tax liability 124.7 137.9 129.2 129.0 138.4 141.2 143.2 144.4 134.9 122.6 n.a. 4 Profits after tax 142.0 168.9 159.3 159.9 166.9 173.2 175.6 173.6 161.1 152.4 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 37.2 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 22.0' Source. Survey of Current Business (Department of Commerce). 1.50 TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment • 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 430.17 475.18 505.49 427.54 435.61 442.11 459.47 470.86 484.93 485.45 503.46 1 Manufacturing 1111..IISS 8833..0055 8833..2222 7777..3388 7799..1155 8800..5566 8811..2266 8822..9977 8855..6666 8822..3300 8866..8844 *> 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 ATrade and services are no longer being reported separately. They are included 2. "Other" consists of construction; wholesale and retail trade; finance and in Commercial and other, line 10. insurance; personal and business services; and communication. 1. Anticipated by business. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A36 Domestic Nonfinancial Statistics • May 1990 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period 1988 1989 AAccccoouunntt 11998855 11998866 11998877 Ql Q2 Q3 Q4 Ql Q2 Q3 ASSETS Accounts receivable, gross2 1 Consumer 111.9 134.7 141.1 141.5 144.4 146.3 146.2 140.2 144.9 147.2 2 Business 157.5 173.4 207.4 219.7 224.0 223.3 236.5 243.1 250.5 248.8 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 Debt 12 Other short-term 12.7 17.5 28.0 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 13 Long-term 94.4 117.5 137.1 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 14 Due to parent n.a. n.a. n.a. 49.0 51.4 51.5 50.6 56.8 59.7 60.4 15 Not elsewhere classified n.a. n.a. n.a. 132.4 139.8 139.3 137.9 134.5 141.3 146.1 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 1989 1990 TTyyppee 11998877 11998899 Aug. Sept. Oct. Nov. Dec. Jan. 1 205,810 234,529 257,762 253,822 258,851 259,083 257,930 257,762 253,802 Retail financing of installment sales 2 Automotive 35,782 36,548 38,534 39,355 39,258 38,952 38,187 38,534 38,297 3 Equipment 25,170 28,298 29,781 29,039 29,639 29,594 29,568 29,781 29,810 4 Pools of securitized assets n.a. n.a. 698 793 755 715 739 698 720 Wholesale 5 Automotive 30,507 33,300 34,357 33,566 37,243 35,210 33,537 34,357 30,422 6 Equipment 5,600 5,983 6,945 6,497 6,602 6,843 6,933 6,945 7,119 7 All other 8,342 9,341 9,949 9,990 9,957 9,927 9,895 9,949 9,939 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 26,739 26,865 27,442 27,547 26,856 26,567 10 Equipment 43,335 57,455 67,506 64,186 65,170 66,787 67,677 67,506 67,783 11 Pools of securitized assets n.a. n.a. 1,247 990 948 1,199 1,093 1,247 1,242 12 Loans on commercial accounts receivable and factored commercial accounts receivable 18,078 17,796 18,442 20,098 19,611 19,487 18,892 18,442 18,019 13 All other business credit 17,043 21,134 23,447 22,571 22,804 22,926 23,861 23,447 23,884 Net change (during period) 14 33,750 22,662 21,789 2,697 5,029 232 -1,153 -168 -3,960 Retail financing of installment sales 15 Automotive 9,767 766 1,988 172 -97 -305 -765 347 -237 16 Equipment 2,058 1,384 1,483 911 600 -45 -25 213 29 17 Pools of securitized assets n.a. n.a. -26 24 -38 -40 24 -41 22 Wholesale 18 Automotive 7,497 2,793 1,057 332 3,677 -2,033 -1,673 820 -3,935 19 Equipment 252 226 962 253 104 242 90 11 174 20 All other 1,309 999 609 -11 -32 -30 -32 54 -11 21 Pools of securitized assets nn..aa.. n.a. 0 0 00 0 0 0 0 Leasing 22 Automotive 2,125 2,721 2,184 38 126 577 105 -691 -290 23 Equipment 5,156 9,962 8,646 99 984 1,618 890 -171 277 24 Pools of securitized assets2 n.a. 526 103 -42 251 -106 154 -5 25 Loans on commercial accounts receivable and factored commercial accounts receivable 2,100 -282 646 109 -487 -124 -595 -450 -422 26 All other business credit 3,486 4,091 3,719 667 234 122 934 -414 437 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 137.0 150.0 159.6 160.8 160.6 153.1 152.8 162.7 148.5 148.9 2 Amount of loan (thousands of dollars) 100.5 110.5 117.0 119.4 118.6 111.3 110.4 119.9 107.3 109.0 3 Loan/price ratio (percent) 75.2 75.5 74.5 75.6 75.3 73.2 73.0 74.4 73.4 74.6 4 Maturity (years) 27.8 28.0 28.1 28.3 28.4 27.3 27.1 27.9 27.1 27.4 5 Fees and charges (percent of loan amount) 2.26 2.19 2.06 2.31 2.14 1.95 1.81 2.18 1.85 1.87 6 Contract rate (percent per year) 8.94 8.81 9.76 9.83 9.87 9.77 9.78 9.70 9.59 9.56 Yield (percent per year) 1 OTS series3 9.31 9.18 10.11 10.22 10.24 10.11 10.09 10.07 9.91 9.88 8 HUD series4 10.17 10.30 10.21' 10.05 10.04 9.79 9.72 9.72' 10.00 10.12 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 10.16 10.49 10.24 9.95 9.94 9.73 9.69 9.72 10.01 10.22 10 GNMA securities6 9.44 9.83 9.70 9.56 9.44 9.18 9.07 9.07 9.28 9.45 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 95,030 101,329 104,974 105,896 107,052 108,180 109,076 110,721 111,329 111,628 12 FHA/VA-insured 21,660 19,762 19,640 19,589 19,608 19,843 19,953 20,283 20,471 20,614 13 Conventional 73,370 81,567 85,335 86,307 87,444 88,337 89,123 90,438 90,858 91,014 Mortgage transactions (during period) 14 Purchases 20,531 23,110 22,518 2,724 2,223 2,267 2,376 2,982 2,214 1,537 Mortgage commitments7 15 Contracted (during period) 25,415 23,435 27,409 2,842 2,328 2,963 2,536 2,495 1,787 3,216 16 Outstanding (end of period) 4,886 2,148 6,037 5,755 5,865 6,548 6,645 6,037 5,619 4,977 FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of periodf 17 Total 12,802 15,105 20,105 21,024 20,650 21,342 21,809 21,852 n.a. n.a. 18 FHA/VA 686 620 590 589 589' 588 588 584 n.a. n.a. 19 Conventional 12,116 14,485 19,516 20,435 20,061' 20,754' 21,221 21,269 n.a. n.a. Mortgage transactions (during period) 20 Purchases 76,845 44,077 78,588 7,283 7,889 7,884 7,653 8,718 n.a. n.a. 21 Sales 75,082 39,780 73,446r 6,650 8,050 7,058 7,058' 8,526 6,845 5,789 Mortgage commitments9 22 Contracted (during period) 71,467 66,026 88,519 5,705 7,708 7,555 10,949 7,820 n.a. n.a. 1. Weighted averages based on sample surveys of mortgages originated by 6. Average net yields to investors on Government National Mortgage Associmajor institutional lender groups; compiled by the Federal Home Loan Bank ation guaranteed, mortgage-backed, fully modified pass-through securities, as- Board in cooperation with the Federal Deposit Insurance Corporation. suming prepayment in 12 years on pools of 30-year FHA/VA mortgages carrying 2. Includes all fees, commissions, discounts, and "points" paid (by the the prevailing ceiling rate. Monthly figures are averages of Friday figures from the borrower or the seller) to obtain a loan. Wall Street Journal. 3. Average effective interest rates on loans closed, assuming prepayment at the 7. Includes some multifamily and nonprofit hospital loan commitments in end of 10 years. addition to 1- to 4-family loan commitments accepted in FNMA's free market 4. Average contract rates on new commitments for conventional first mort- auction system, and through the FNMA-GNMA tandem plans. gages; from Department of Housing and Urban Development. 8. Includes participation as well as whole loans. 5. Average gross yields on 30-year, minimum-downpayment, Federal Housing 9. Includes conventional and government-underwritten loans. FHLMC's mort- Administration-insured first mortgages for immediate delivery in the private gage commitments and mortgage transactions include activity under mortgage/ secondary market. Based on transactions on first day of subsequent month. Large securities swap programs, while the corresponding data for FNMA exclude swap monthly movements in average yields may reflect market adjustments to changes activity. in maximum permissable contract rates. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A38 Domestic Nonfinancial Statistics • May 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 Q4P 1 All holders 2,977,293 3,268,285 3,524,474 3,268,285 3,328,824 3,391,259 3,454,053 3,524,474 2 1- to 4-family 1,959,607 2,189,475 2,384,076 2,189,475 2,230,006 2,281,317 2,331,366 2,384,076 3 Multifamily 273,954 290,355 306,652 290,355 296,139 297,860 302,121 306,652 4 Commercial 654,863 701,652 747,277 701,652 716,695 725,341 733,988 747,277 5 88,869 86,803 86,468 86,803 85,984 86,741 86,578 86,468 6 Selected financial institutions 1,664,211 1,831,446 1,919,269 1,831,446 1,859,663 1,884,903 1,901,728 1,919,269 7 Commercial banks2 591,369 669,160 756,786 669,160 688,662 715,049 737,979 756,786 8 1- to 4-family 276,270 314,283 358,652 314,283 324,681 338,872 349,739 358,652 9 Multifamily 33,330 34,131 36,994 34,131 34,172 34,954 36,075 36,994 10 Commercial 267,340 305,242 343,841 305,242 313,941 324,878 335,296 343,841 11 Farm 14,429 15,504 17,299 15,504 15,868 16,345 16,869 17,299 12 Savings institutions3 860,467 929,647 921,410 929,647 936,091 933,694 927,982 921,410 13 1- to 4-family 602,408 678,263 675,891 678,263 682,658 684,828 680,572 675,891 14 Multifamily 106,359 111,302 108,534 111,302 112,507 110,009 109,353 108,534 15 Commercial 150,943 139,416 136,343 139,416 140,255 138,201 137,406 136,343 16 Farm 757 666 641 666 671 656 651 641 17 Life insurance companies 212,375 232,639 241,073 232,639 234,910 236,160 235,767 241,073 18 1- to 4-family 13,226 15,284 13,531 15,284 12,690 12,745 13,045 13,531 19 Multifamily 22,524 23,562 26,646 23,562 24,636 25,103 25,913 26,646 20 Commercial 166,722 184,124 191,369 184,124 188,073 188,756 187,208 191,369 21 Farm 9,903 9,669 9,527 9,669 9,511 9,556 9,601 9,527 22 Finance companies4 40,349 43,521 50,728 43,521 45,389 47,251 48,906 50,728 23 Federal and related agencies 192,721 200,570 212,370 200,570 199,847 201,909 206,673 212,370 24 Government National Mortgage Association 444 26 24 26 26 24 23 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 42,080 42,018 41,780 40,711 41,117 42,080 28 1- to 4-family 18,169 18,347 19,091 18,347 18,347 18,391 18,405 19,091 29 Multifamily 8,044 8,513 9,168 8,513 8,615 8,778 8,916 9,168 30 Commercial 6,603 5,343 4,463 5,343 5,101 3,885 4,366 4,463 31 Farm 10,235 9,815 9,358 9,815 9,717 9,657 9,430 9,358 32 Federal Housing and Veterans Administration 5,574 5,973 6,220 5,973 6,075 6,424 6,023 6,220 33 1- to 4-family 2,557 2,672 3,009 2,672 2,550 2,827 2,900 3,009 34 Multifamily 3,017 3,301 3,211 3,301 3,525 3,597 3,123 3,211 35 Federal National Mortgage Association 96,649 103,013 110,970 103,013 101,991 103,309 107,052 110,970 36 1- to 4-family 89,666 95,833 102,863 95,833 94,727 95,714 99,168 102,863 37 Multifamily 6,983 7,180 8,107 7,180 7,264 7,595 7,884 8,107 38 Federal Land Banks 34,131 32,115 30,788 32,115 31,261 31,467 30,943 30,788 39 1- to 4-family 2,008 1,890 1,889 1,890 1,839 1,851 1,821 1,889 40 Farm 32,123 30,225 28,899 30,225 29,422 29,616 29,122 28,899 41 Federal Home Loan Mortgage Corporation 12,872 17,425 22,289 17,425 18,714 19,974 21,515 22,289 42 1- to 4-family 11,430 15,077 19,182 15,077 16,192 17,305 18,493 19,182 43 Multifamily 11,430 15,077 3,107 15,077 16,192 17,305 18,493 3,107 44 Mortgage pools or trusts6 718,297 810,887 931,619 810,887 839,684 861,827 898,388 931,619 45 Government National Mortgage Association 317,555 340,527 374,650 340,527 348,622 353,154 361,291 374,650 46 1- to 4-family 309,806 331,257 362,865 331,257 337,563 341,951 349,830 362,865 47 Multifamily 7,749 9,270 11,785 9,270 11,059 11,203 11,461 11,785 48 Federal Home Loan Mortgage Corporation 212,634 226,406 266,407 226,406 234,695 242,789 256,896 266,407 49 1- to 4-family 205,977 219,988 259,443 219,988 228,389 236,404 250,123 259,443 50 Multifamily 6,657 6,418 6,965 6,418 6,306 6,385 6,773 6,965 51 Federal National Mortgage Association 139,960 178,250 216,600 178,250 188,071 196,501 208,894 216,600 52 1- to 4-family 137,988 172,331 207,765 172,331 181,352 188,774 200,302 207,765 53 Multifamily 1,972 5,919 8,835 5,919 6,719 7,727 8,592 8,835 54 Farmers Home Administration 245 104 79 104 96 85 78 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 402,064 425,382 461,216 425,382 429,630 442,620 447,264 461,216 60 1- to 4-family 242,053 258,598 285,966 258,598 260,768 272,310 275,694 285,966 61 Multifamily 75,458 78,411 83,299 78,411 78,814 79,840 81,009 83,299 62 Commercial 63,192 67,489 71,239 67,489 69,291 69,595 69,690 71,239 63 Farm 21,361 20,884 20,711 20,884 20,757 20,875 20,871 20,711 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 1990 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998888 11998899rr May June July Aug. Sept. Oct. Nov. Dec.r Jan. Amounts outstanding (end of period) 1 Total 659,507 716,508 698,132 700,849 700,344 703,001 704,371 707,562 712,160 716,508 720,051 By major holder ? 318,925 334,541 323,363 324,438 323,621 326,135 327,327 330,746 332,675 334,541 337,009 3 145,180 140,484 145,523 146,055 145,488 144,386 144,188 141,273 141,396 140,484 141,481 4 86,118 89,717 89,890 90,073 89,852 90,016 89,892 89,856 89,677 89,717 90,367 5 43,498 42,744 41,323 41,649 41,798 41,989 42,221 42,319 42,554 42,744 42,724 6 62,099 57,285 61,311 59,920 60,092 59,229 59,883 58,890 58,264 57,285 57,229 7 3,687 3,835 3,897 4,017 3,936 3,976 3,886 3,804 3,828 3,835 3,811 8 Pools of securitized assets n.a. 47,902 32,826 34,696 35,557 37,270 36,974 40,675 43,766 47,902 47,429 By major type of credit 9 281,174 289,111 290,741 290,192 288,526 288,533 287,754 288,747 289,200 289,111 290,975 10 123,259 127,028 125,118 125,592 124,881 126,597 126,759 128,238 128,654 127,028 128,662 11 41,326 42,784 42,687 42,684 42,624 42,747 42,733 42,761 42,720 42,784 43,094 1? 97,204 83,572 90,976 91,184 90,213 89,439 88,317 84,814 84,707 83,572 83,836 13 19,385 17,210 18,566 18,032 17,972 17,603 17,990 17,692 17,504 17,210 17,193 14 Pools of securitized assets4 n.a. 18,517 13,395 12,700 12,835 12,147 11,955 15,243 15,615 18,517 18,189 15 174,792 203,175 186,502 189,622 191,028 194,398 195,302 196,379 199,240 203,175 203,418 16 117,572 122,364 115,407 115,561 115,967 117,012 117,868 118,801 119,254 122,364 122,624 17 38,692 37,804 36,504 36,814 36,963 37,134 37,355 37,435 37,639 37,804 37,810 18 Gasoline companies 3,687 3,835 3,897 4,017 3,936 3,976 3,886 3,804 3,828 3,835 3,811 19 10,151 10,698 11,008 10,951 11,176 11,206 11,183 10,998 10,881 10,698 10,688 70 4,691 5,396 5,109 5,162 5,192 5,244 5,279 5,319 5,351 5,396 5,435 21 Pools of securitized assets4 n.a. 23,077 14,578 17,117 17,795 19,827 19,731 20,021 22,286 23,077 23,050 ?? 25,744 22,558 23,952 23,685 23,630 22,938 22,991 22,947 22,567 22,558 22,541 73 8,974 9,019 8,878 8,847 8,830 8,808 8,788 8,724 8,941 9,019 8,978 74 7,186 4,846 5,684 5,674 5,624 5,100 5,087 5,272 4,783 4,846 4,877 25 Savings institutions 9,583 8,694 9,390 9,163 9,176 9,030 9,116 8,951 8,843 8,694 8,685 ?6 Other 177,798 201,664 196,936 197,349 197,161 197,132 198,324 199,490 201,154 201,664 203,117 77 69,120 76,131 73,960 74,438 73,944 73,718 73,912 74,983 75,826 76,131 76,744 78 40,790 52,066 48,863 49,197 49,650 49,847 50,784 51,187 51,906 52,066 52,768 ?9 40,102 41,537 42,094 42,228 42,036 42,025 41,880 41,776 41,606 41,537 41,838 30 4,807 4,940 4,819 4,834 4,835 4,855 4,866 4,884 4,914 4,940 4,915 31 22,981 20,683 22,347 21,773 21,769 21,390 21,593 21,249 21,036 20,683 20,663 32 Pools of securitized assets n.a. 6,308 4,853 4,879 4,927 5,296 5,288 5,411 5,865 6,308 6,190 Net change (during period) 33 Total 51,786 57,001 4,221 2,717 -505 2,657 1,371 3,191 4,598 4,347 3,543 By major holder 34 Commercial banks 36,015 15,616 2,904 1,076 -817 2,514 1,192 3,418 1,930 11,,886666 22,,446677 35 Finance companies 4,899 -4,696 1,145 532 -567 -1,102 -198 -2,915 124 -913 998 36 Credit unions 6,031 3,599 560 184 -222 164 -124 -36 -179 40 650 37 Retailers3 2,523 -754 21 326 149 192 231 98 235 190 -20 38 Savings institutions 2,248 -4,814 -609 -1,390 172 -863 654 -993 -626 -980 -56 39 Gasoline companies 69 148 110 120 -81 39 -89 -82 23 7 -24 40 Pools of securitized assets4 n.a. 19,075 89 1,870 861 1,713 -296 3,701 3,091 4,136 -473 By major type of credit 41 Automobile 15,198 7,937 1,087 -549 -1,667 7 --777799 999933 445533 -89 11,,886644 47 Commercial banks 14,058 3,769 1,239 474 -711 1,716 162 1,479 416 -1,626 1,634 43 Credit unions 975 1,458 177 -3 -60 123 -14 28 -40 64 310 44 Finance companies -991 -13,632 708 208 -970 -775 -1,122 -3,503 -107 -1,135 264 45 Savings institutions 1,157 -2,175 -300 -533 -61 -369 387 -298 -188 -294 -17 46 Pools of securitized assets4 n.a. 3,475 -737 -695 135 -688 -192 3,288 372 2,902 -328 47 Revolving 20,908 28,383 2,002 3,120 1,406 3,370 904 1,076 2,861 3,935 243 48 Commercial banks 18,453 4,792 1,277 154 405 1,045 856 933 453 3,110 260 49 Retailers 2,303 -888 7 310 149 171 221 80 205 165 5 50 Gasoline companies 69 148 110 120 -81 39 -89 -82 23 7 -24 51 Savings institutions -216 547 90 -57 225 30 -22 -185 -117 -183 -10 57 Credit unions 300 705 74 53 30 52 35 40 32 45 39 53 Pools of securitized assets4 n.a. 12,588 444 2,539 678 2,032 -96 290 2,265 791 -27 54 Mobile home -643 -3,186 -41 -267 -56 -692 53 -44 -380 -9 -18 55 Commercial banks -246 45 42 -31 -18 -22 -20 -64 218 77 -41 56 Finance companies -576 -2,340 25 -10 -50 -524 -13 185 -489 63 32 57 Savings institutions 177 -889 -108 -227 12 -146 86 -165 -109 -149 -8 58 Other 16,323 23,866 1,173 413 -189 -29 1,192 1,166 1,664 510 1,453 59 Commercial banks 3,750 7,011 346 478 -494 -226 194 1,071 843 304 613 60 Finance companies 6,466 11,276 412 334 453 197 937 403 719 159 702 61 Credit unions 4,758 1,435 309 133 -191 -11 -145 -104 -170 -69 301 67 Retailers 221 133 15 16 0 21 11 18 30 25 -25 63 Savings institutions 1,131 -2,298 -291 -574 -5 -379 203 -344 -212 -354 -20 64 Pools of securitized assets4 n.a. 3,012 382 26 48 369 -8 123 454 443 -118 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 • May 1990 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1989 1990 IItteemm 11998877 11998888 11998899 July Aug. Sept. Oct. Nov. Dec. Jan. INTEREST RATES Commercial banks2 1 48-month new car3 10.45 10.85 12.07 n.a. 12.13 n.a. n.a. 11.94 n.a. n.a. 2 24-month personal 14.22 14.68 15.44 n.a. 15.45 n.a. n.a. 15.42 n.a. n.a. 3 120-month mobile home3 13.38 13.54 14.11 n.a. 14.13 n.a. n.a. 13.97 n.a. n.a. 4 Credit card 17.92 17.78 18.02 n.a. 18.07 n.a. n.a. 18.07 n.a. n.a. Auto finance companies New car 10.73 12.60 12.62 11.94 12.22 12.42 13.04 13.27 13.27 12.64 6 Used car 14.60 15.11 16.18 16.37 16.31 16.22 16.17 16.09 16.10 15.77 OTHER TERMS4 Maturity (months) 7 New car 53.5 56.2 54.2 52.9 52.9 53.1 54.4 55.1 55.1 54.7 8 Used car 45.2 46.7 46.6 46.4 46.2 46.2 45.8 45.6 45.5 45.5 Loan-to-value ratio 9 New car 93 94 91 91 90 88 88 89 89 89 10 Used car 98 98 97 97 96 96 96 96 96 95 Amount financed (dollars) 11 New car 11,203 11,663 12,001 12,108 11,949 11,841 11,965 12,279 12,301 12,381 12 Used car 7,420 7,824 7,954 7,988 7,874 7,856 7,904 8,063 8,0% 8,040 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 11998855 11998866 11998877 11998888 11998899 Q2 Q3 Q4 Ql Q2' Q3' Q4 Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 846.3 831.1 693.2 754.5' 695.2 817.5' 749.3' 734.2' 770.6' 641.7 693.6 675.1 By sector and instrument 2 U.S. government 223.6 215.0 144.9 157.5 149.8 113.7 162.5 142.1 199.9 70.9 149.0 179.4 3 Treasury securities 223.7 214.7 143.4 140.0 150.0 106.0 141.6 100.5 201.1 65.8 149.1 184.0 4 Agency issues and mortgages -.1 .4 1.5 17.4 -.2 7.7 20.9 41.6 -1.2 5.1 -.2 -4.6 Private domestic nonfinancial sectors 622.7 616.1 548.3 597.r 545.4 703.8' 586.8' 592.2' 570.6' 570.8 544.7 495.7 6 Debt capital instruments 451.4 460.3 458.5 454.6' 393.8 551.C 458.8' 432.4' 418.C 396.9 374.8 385.6 7 Tax-exempt obligations 135.4 22.7 34.1 34.0 24.2 37.9 34.8 34.3 29.3 23.0 32.2 12.4 8 Corporate bonds 73.8 121.3 99.9 114.1' 114.2 135.2' 110.9' 98.4' 100.0' 127.9 102.4 126.4 9 Mortgages 242.2 316.3 324.5 306.5r 255.5 377.9' 313.1' 299.7 288.7' 246.1 240.2 246.9 10 Home mortgages 156.8 218.7 234.9 231.C 196.1 299.8' 230.9' 214.0 206.6' 197.6 180.6 199.8 11 Multifamily residential 29.8 33.5 24.4 16.7' 15.8 14.5' 19.4' 17.3 27.4' 7.9 19.0 8.7 12 Commercial 62.2 73.6 71.6 60.8' 43.9 65.2' 65.4 67.7 59.1' 38.5 40.6 37.3 13 Farm -6.6 -9.5 -6.4 -2.1 -.3 -1.6 -2.6 .7 -4.4 2.1 .0 1.0 14 Other debt instruments 171.3 155.8 89.7 142.5r 151.6 152.8' 128.C 159.8' 152.6' 173.9 169.9 110.0 15 Consumer credit 82.5 58.0 32.9 51.1 46.1 51.9 35.5 73.1 34.8 46.0 34.5 69.2 16 Bank loans n.e.c 38.6 66.7 10.8 38.4 33.0 58.8 7.3 66.6 23.1 29.9 59.0 20.0 17 Open market paper 14.6 -9.3 2.3 11.6 20.8 6.8 17.1 20.0 41.4' 39.2 16.7 -14.3 18 Other 35.6 40.5 43.8 41.5' 51.7 35.2' 68^ .1' 53.3' 58.7 59.7 35.1 19 By borrowing sector 622.7 616.1 548.3 597. V 545.4 703.8' 586.8' 592.2' 570.6' 570.8 544.7 495.7 20 State and local governments 90.9 36.2 33.6 29.8 24.7 37.0 28.1 30.6 29.7 27.6 29.5 11.9 ?1 Households 284.6 289.2 271.9 289.8' 258.5 346.2' 291.4' 283.5' 264.5' 239.4 258.4 271.9 ??. Nonfinancial business 247.2 290.7 242.8 277.5' 262.2 320.6' 267.3' 278.0' 276.4' 303.7 256.8 211.9 73 Farm -14.5 -16.3 -10.6 -7.5 .3 -3.3 -2.2 -11.8 -2.2 .2 4.7 -1.5 24 Nonfarm noncorporate 129.3 103.2 107.9 87.4' 65.9 83.6 100.5 80.4' 85^ 65.8 67.2 44.7 25 Corporate 132.4 203.7 145.5 197.5' 196.0 240.3' 169.0' 209.4' 192.8' 237.7 184.9 168.7 26 Foreign net borrowing in United States 1.2 9.7 4.9 6.9 8.0 5.4 4.1 13.3 -1.1 -1.9 24.3 10.6 27 Bonds 3.8 3.1 7.4 6.9 5.1 2.6 5.9 5.1 3.2 10.7 8.4 -1.9 7.8 Bank loans n.e.c -2.8 -1.0 -3.6 -1.8 1.0 -3.3 .0 -5.7 4.9 1.7 -1.2 -1.4 29 Open market paper 6.2 11.5 2.1 9.6 12.3 6.5 10.3 21.0 12.1 -8.1 20.4 24.9 30 U.S. government loans -6.0 -3.9 -1.0 -7.8 -10.5 -.4 -12.1 -7.1 -21.4 -6.3 -3.3 -10.9 31 Total domestic plus foreign 847.5 840.9 698.1 761.4r 703.2 822.9' 753.3' 747.6' 769.5' 639.8 718.0 685.7 Financial sectors 32 Total net borrowing by financial sectors 201.3 318.9 315.0 246.5r 201.5 245.9' 216.3' 302.5' 384.0' 119.0 141.1 161.9 By instrument 33 U.S. government related 101.5 187.9 185.8 119.8'" 140.4 86.3' 128.6' 156.7' 205.7' 101.4 129.7 124.8 34 Sponsored credit agency securities 20.6 15.2 30.2 44.9 25.0 11.1 46.5 62.3 84.9 12.5 10.0 -7.4 35 Mortgage pool securities 79.9 173.1 156.4 74.9r 115.4 75.1' 82.1' 94.4' 120.8' 88.9 119.6 132.2 36 Loans from U.S. government 1.1 -.4 -.8 .0 .0 .0 .0 .0 .0 .0 .0 .0 37 Private financial sectors 99.7 131.0 129.2 126.7 61.1 159.6 87.7 145.8 178.3 17.6 11.4 37.1 38 Corporate bonds 50.9 82.9 78.9 51.7 38.7 71.1 32.5 43.0 52.7 31.4 25.5 45.0 39 Mortgages .1 .1 .4 .3 -.1 .1 -.1 1.2 .3 .0 .0 -.5 40 Bank loans n.e.c 2.6 4.0 -3.3 1.4 1.3 5.7 -5.6 -.3 3.0 .3 1.7 .1 41 Open market paper 32.0 24.2 28.8 53.6 32.2 70.5 35.1 70.4 53.2 2.8 27.9 44.9 42 Loans from Federal Home Loan Banks 14.2 19.8 24.4 19.7 -11.0 12.3 25.8 31.4 69.1 -16.9 -43.7 -52.4 By sector 43 201.3 318.9 315.0 246.5' 201.5 245^ 216.3' 302.5' 384.0' 119.0 141.1 161.9 44 Sponsored credit agencies 21.7 14.9 29.5 44.9 25.0 11.1 46.5 62.3 84.9 12.5 10.0 -7.4 45 Mortgage pools 79.9 173.1 156.4 74.9' 115.4 75.1' 82.1' 94.4' 120.8' 88.9 119.6 132.2 46 Private financial sectors 99.7 131.0 129.2 126.7 61.1 159.6 87.7 145.8 178.3 17.6 11.4 37.1 47 Commercial banks -4.9 -3.6 7.1 -3.9 .7 -1.6 -.9 3.7 -13.4 -.9 12.3 4.7 48 Bank affiliates 16.6 15.2 14.3 5.2 7.5 22.4 6.1 .8 6.4 6.5 16.5 .8 49 Savings and loan associations 17.3 20.9 19.6 19.9 -14.6 19.1 24.1 26.3 71.3 -16.2 -48.3 -65.2 50 Mutual savings banks 1.5 4.2 8.1 1.9 -1.6 1.1 .5 3.8 -2.8 -1.1 -3.3 .8 51 Finance companies 57.2 54.5 40.3 67.0 49.0 85.4 40.7 63.6 78.4 32.8 29.7 55.0 52 REITs .5 1.0 .8 4.1 -1.2 1.7 -5.9 15.0 -.9 -2.2 -1.4 -.4 53 SCO Issuers 11.5 39.0 39.1 32.5 21.3 31.5 23.1 32.5 39.3 -1.4 5.9 41.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A42 Domestic Nonfinancial Statistics • May 1990 1.57—Continued 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998855 11998866 11998877 11998888 11998899 Q2 Q3 Q4 Ql Q2' Q3' Q4 All sectors 54 Total net borrowing 1,048.8 1,159.8 1,013.2 L,007.Y 904.7 l,068.8R 969.7' 1,050.1' 1,153.4' 758.8 859.1 847.6 55 U.S. government securities 324.2 403.4 331.5 277.2' 290.2 200.0' 291.1' 298.8' 405.6' 172.3 278.6 304.2 56 State and local obligations 135.4 22.7 34.1 34.0 24.2 37.9 34.8 34.3 29.3 23.0 32.2 12.4 57 Corporate and foreign bonds 128.4 207.3 186.3 172.7' 157.9 208.8' 149.3' 146.4' 155.9' 170.0 136.3 169.5 58 Mortgages 242.2 316.4 324.9 306.7' 255.4 378.0' 313.0' 300.8 289.0' 246.1 240.3 246.4 59 Consumer credit 82.5 58.0 32.9 51.1 46.1 51.9 35.5 73.1 34.8 46.0 34.5 69.2 60 Bank loans n.e.c 38.3 69.7 3.8 38.0 35.3 61.2 1.7 60.7 31.1 31.9 59.6 18.7 61 Open market paper 52.8 26.4 33.2 74.9 65.3 83.9 62.5 111.5 106.8' 34.0 65.0 55.5 62 Other loans 45.0 56.1 66.5 53.4r 30.2 47.1' 81.7' 24.4' 101.0' 35.5 12.7 -28.2 63 MEMO: U.S. government, cash balance 14.4 .0 -7.9 10.4 -10.7 1.2 10.6 -17.9 -22.5 43.7 -16.6 -47.5 Totals net of changes in U.S. government cash balances 64 Net borrowing by domestic nonfinancial 831.9 831.2 701.1 744.2r 706.0 816.3' 738.6' 752.2' 793.1' 598.0 710.2 722.6 65 Net borrowing by U.S. government 209.3 215.0 152.8 147.1 160.5 112.5 151.8 160.0 222.4 27.2 165.6 227.0 External corporate equity funds raised in United States 66 Total net share issues 20.1 90.5 14.3 -117.9 -60.9 -133.7 -73.5 -163.5 -163.9R -48.8 -40.8 10.0 67 Mutual funds 84.4 159.0 71.6 -.7 38.2 -6.6 1.5 11.9 3.6 24.0 54.3 70.9 68 All other -64.3 -68.5 -57.3 -117.2 -99.0 -127.0 -75.0 -175.4 -167.4' -72.7 -95.1 -60.9 69 Nonfinancial corporations -81.5 -80.8 -76.5 -130.5 -130.8 -140.0 -92.0 -195.0 -180.0 -105.0 -145.0 -93.0 70 Financial corporations 13.5 11.1 21.4 12.4 14.1 19.0 14.6 13.5 9.0' 17.3 16.0 14.0 71 Foreign shares purchased in United States 3.7 1.2 -2.1 .9 17.7 -6.0 2.4 6.1 3.6 15.0 33.9 18.2 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 Transaction category, or sector 11998855 11998866 11998877 11998888'''' 11998899 Q2 Q3 Q4 Ql' Q2' Q3' Q4 1 Total funds advanced in credit markets to domestic nonfinancial sectors 846.3 831.1 693.2 754.5 695.2 817.5 749.3 734.2 770.6 641.7 693.6 675.1 By public agencies and foreign 2 Total net advances 202.0 314.0 262.8 215.5 202.8 167.5 181.2 255.8 326.4 -1.1 255.0 230.7 3 U.S. government securities 45.9 69.4 70.1 85.0 45.9 43.3 24.1 119.6 97.6 -103.9 130.2 59.5 4 Residential mortgages 94.6 170.1 153.2 86.3 129.7 89.9 82.4 105.5 122.9 102.2 139.3 154.3 5 FHLB advances to thrifts 14.2 19.8 24.4 19.7 -11.0 12.3 25.8 31.4 69.1 -16.9 -43.7 -52.4 6 Other loans and securities 47.3 54.7 15.1 24.4 38.2 22.1 49.0 -.7 36.8 17.6 29.2 69.4 Total advanced, by sector 7 U.S. government 17.8 9.7 -7.9 -9.4 -.9 -7.6 4.3 -27.1 -2.4 -3.7 -5.6 8.1 8 Sponsored credit agencies 103.5 187.2 183.4 112.0 127.4 87.7 114.4 152.8 211.0 11.2 157.9 129.5 9 Monetary authorities 18.4 19.4 24.7 10.5 -7.3 5.0 15.5 18.9 5.2 -3.9 -30.7 .1 10 Foreign 62.3 97.8 62.7 102.3 83.6 82.5 47.0 111.2 112.5 -4.6 133.3 93.0 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools.. 101.5 187.9 185.8 119.8 140.4 86.3 128.6 156.7 205.7 101.4 129.7 124.8 12 Foreign 1.2 9.7 4.9 6.9 8.0 5.4 4.1 13.3 -1.1 -1.9 24.3 10.6 Private domestic funds advanced 13 Total net advances 747.0 714.8 621.1 665.8 640.8 741.6 700.8 648.5 648.8 742.2 592.6 579.7 14 U.S. government securities 278.2 333.9 261.4 192.2 244.3 156.7 267.0 179.3 308.0 276.2 148.5 244.7 15 State and local obligations 135.4 22.7 34.1 34.0 24.2 37.9 34.8 34.3 29.3 23.0 32.2 12.4 16 Corporate and foreign bonds 40.8 84.2 87.5 97.6 98.3 117.5 86.8 66.5 80.5 131.0 103.8 78.0 17 Residential mortgages 91.8 82.0 106.1 161.3 82.2 224.5 167.9 125.8 111.1 103.3 60.4 54.2 18 Other mortgages and loans 214.8 211.8 156.5 200.3 180.7 217.4 170.0 274.0 188.9 191.8 204.2 138.0 19 LESS: Federal Home Loan Bank advances 14.2 19.8 24.4 19.7 -11.0 12.3 25.8 31.4 69.1 -16.9 -43.7 -52.4 Private financial intermediation 20 Credit market funds advanced by private financial institutions 579.9 744.0 560.8 561.2 492.4 553.6 429.1 634.9 600.6 492.1 308.7 568.5 21 Commercial banking 186.0 197.5 136.8 155.3 171.6 194.5 118.4 220.5 120.6 158.6 166.6 240.6 22 Savings institutions 87.9 107.6 136.8 120.4 -75.3 135.0 156.9 94.0 62.6 -100.2 -136.3 -127.2 23 Insurance and pension funds 154.4 174.6 210.9 198.0 177.1 182.5 152.2 190.1 257.1 162.7 121.6 166.9 24 Other finance 151.6 264.2 76.3 87.4 219.1 41.6 1.7 130.3 160.4 271.1 156.8 288.2 25 Sources of funds 579.9 744.0 560.8 561.2 492.4 553.6 429.1 634.9 600.6 492.1 308.7 568.5 26 Private domestic deposits and RPs 214.3 262.6 144.1 219.9 215.1 103.5 191.3 277.9 146.8 186.8 271.9 254.7 27 Credit market borrowing 99.7 131.0 129.2 126.7 61.1 159.6 87.7 145.8 178.3 17.6 11.4 37.1 28 Other sources 265.9 350.4 287.5 214.6 216.3 290.5 150.1 211.2 275.5 287.7 25.3 276.6 29 Foreign funds 19.7 12.9 43.7 9.3 -1.1 94.5 -41.5 45.2 -28.6 -19.4 22.7 20.9 30 Treasury balances 10.3 1.7 -5.8 7.3 -8.3 -16.3 5.6 -4.1 -21.6 26.6 -15.0 -23.1 31 Insurance and pension reserves 131.9 149.3 176.1 177.6 143.7 176.0 87.3 253.9 187.9 123.1 ' 33.8 229.8 32 Other, net 104.1 186.5 73.6 20.4 82.0 36.4 98.8 -83.7 137.7 157.3 -16.2 49.1 Private domestic nonfinancial investors 33 Direct lending in credit markets 266.8 101.8 189.6 231.3 209.5 347.6 359.3 159.4 226.5 267.7 295.4 48.4 34 U.S. government securities 157.8 60.9 100.0 131.8 141.6 78.0 209.3 140.5 194.7 126.8 164.6 80.4 35 State and local obligations 37.7 -21.7 45.6 33.9 14.7 37.4 56.0 22.1 35.8 -9.1 33.0 -.9 36 Corporate and foreign bonds 4.2 39.3 24.1 -4.1 11.3 63.2 -6.1 -29.4 -34.7 72.5 8.9 -1.5 37 Open market paper 47.5 5.4 6.6 37.2 17.3 95.0 75.6 -1.3 50.4 16.3 63.8 -61.2 38 Other 19.6 17.9 13.3 32.6 24.6 74.0 24.5 27.4 -19.7 61.3 25.1 31.5 39 Deposits and currency 224.6 283.0 160.2 222.5 236.4 111.4 215.1 248.7 192.0 226.2 248.1 279.4 40 Currency 12.4 14.4 19.0 14.7 12.5 13.8 29.3 5.1 19.3 12.6 9.1 9.0 41 Checkable deposits 41.9 95.0 -3.0 12.4 6.8 -30.2 -22.3 97.8 -56.3 -91.4 -2.9 178.0 42 Small time and savings accounts 138.5 120.6 76.0 122.8 105.1 131.8 73.1 86.1 23.7 114.5 124.0 158.4 43 Money market fund shares 8.9 38.3 27.2 22.8 85.2 -21.0 -3.5 58.1 51.1 111.8 124.3 53.6 44 Large time deposits 7.4 -11.4 26.7 40.7 2.3 -3.6 136.9 12.6 96.8 24.4 14.6 -126.7 45 Security RPs 17.7 20.2 17.2 21.2 15.6 26.5 7.0 23.3 31.6 27.5 12.0 -8.6 46 Deposits in foreign countries -2.1 5.9 -2.8 -12.1 8.9 -5.9 -5.5 -34.4 25.9 26.8 -32.9 15.7 47 Total of credit market instruments, deposits, and currency 491.4 384.8 349.8 453.8 445.9 459.1 574.4 408.1 418.5 493.9 543.5 327.8 48 Public holdings as percent of total 23.8 37.3 37.6 28.3 28.8 20.4 24.1 34.2 42.4 -.2 35.5 33.7 49 Private financial intermediation (in percent) 77.6 104.1 90.3 84.3 76.8 74.7 61.2 97.9 92.6 66.3 52.1 98.1 50 Total foreign funds 82.0 110.7 106.4 111.6 82.5 177.0 5.4 156.4 83.9 -24.0 156.0 113.9 MEMO: Corporate equities not included above 51 Total net issues 20.1 90.5 14.3 -117.9 -60.9 -133.7 -73.5 -163.5 -163.9 -48.8 -40.8 10.0 52 Mutual fund shares 84.4 159.0 71.6 -.7 38.2 -6.6 1.5 11.9 3.6 24.0 54.3 70.9 53 Other equities -64.3 -68.5 -57.3 -117.2 -99.0 -127.0 -75.0 -175.4 -167.4 -72.7 -95.1 -60.9 54 Acquisitions by financial institutions 45.6 53.7 21.4 .5 5.7 -.6 13.2 20.9 -1.1 -8.4 -7.0 39.3 55 Other net purchases -25.5 36.8 -7.1 -118.4 -66.6 -133.1 -86.7 -184.4 -162.8 -40.4 -33.8 -29.4 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 • May 1990 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1988 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998855 11998866 11998877 11998888 Q2 Q3 Q4 Q1 Q2 Q3r Q4 Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 6,795.1 7,631.2 8,335.0 9,080.8 8,682.6' 8,856.6' 9,080.8' 9,246.2' 9,413.0' 9,591.5 9,790.1 By sector and instrument 2 U.S. government 1,600.4 1,815.4 1,960.3 2,117.8 2,022.3 2,063.9 2,117.8 2,155.7 2,165.7 2,204.3 2,267.6 3 Treasury securities 1,597.1 1,811.7 1,955.2 2,095.2 2,015.3 2,051.7 2,095.2 2,133.4 2,142.1 2,180.7 2,245.2 4 Agency issues and mortgages 3.3 3.6 5.2 22.6 7.0 12.2 22.6 22.3 23.6 23.5 22.4 5 Private domestic nonfinancial sectors 5,194.7 5,815.8 6,374.7 6,963.1 6,660.4' 6,792.7' 6,963.1' 7,090.5' 7,247.3' 7,387.3 7,522.5 6 Debt capital instruments 3,485.5 3,957.5 4,428.0 4,881.8 4,648.4' 4,763.3' 4,881.8' 4,973.4' 5,073.3' 5,173.3 5,275.7 7 Tax-exempt obligations 655.5 679.1 713.2 759.8 727.2 746.1 759.8 764.7 769.9' 780.8 784.0 8 Corporate bonds 542.9 664.2 764.1 878.2 825.9' 853.6' 878.2' 903.2' 935.2' 960.7 992.3 9 Mortgages 2,287.1 2,614.2 2,950.7 3,243.8 3,095.3' 3,163.6' 3,243.8' 3,305.5' 3,368.2' 3,431.7 3,499.3 10 Home mortgages 1,490.2 1,720.8 1,943.1 2,173.9 2,055.1' 2,117.8' 2,173.9' 2,215.4' 2,266.8' 2,317.3 2,370.1 11 Multifamily residential 213.0 246.2 270.0 286.7 276.6 281.0 286.7' 292.6 294.4 298.8 302.5 12 Commercial 478.1 551.4 648.7 696.4 675.9' 677.9' 696.4' 711.5' 720.3' 729.0 740.2 13 Farm 105.9 95.8 88.9 86.8 87.8 87.0 86.8 86.0 86.7 86.6 86.5 14 Other debt instruments 1,709.3 1,858.4 1,946.7 2,081.3 2,012.0 2,029.4 2,081.3' 2,117.0' 2,174.0' 2,214.0 2,246.8 15 Consumer credit 601.8 659.8 692.7 743.7 705.8 721.2 743.7 745.0 761.0 776.2 797.9 16 Bank loans n.e.c 592.7 656.1 664.3 702.6 687.2 687.7 702.6 717.6 729.8 743.8 745.6 17 Open market paper 72.2 62.9 73.8 85.4 77.8 80.3 85.4 96.1 110.1 113.3 107.1 18 Other 442.6 479.6 516.0 549.5 541.1' 540.2 549.5' 558.3' 573.2' 580.7 596.2 19 By borrowing sector 5,194.7 5,815.8 6,374.7 6,963.1 6,660.4' 6,792.7' 6,963.1' 7,090.5' 7,247.3' 7,387.3 7,522.5 20 State and local governments 473.9 510.1 543.7 573.5 556.0 565.7 573.5 578.5 584.8 595.1 598.2 21 Households 2,295.5 2,591.8 2,864.5 3,151.7 2,989.9' 3,068.C 3,151.7' 3,206.1' 3,269.2' 3,342.1 3,423.2 22 Nonfinancial business 2,425.4 2,714.0 2,966.5 3,237.9 3,114.4' 3,159.0r 3,237.9' 3,305.9' 3,393.2' 3,450.1 3,501.1 23 Farm 173.4 156.6 145.5 137.6 143.9 143.6 137.6 135.9 139.5 141.2 137.9 24 Nonfarm noncorporate 898.3 1,001.6 1,109.4 1,200.9 1,151.9 1,172.6 1,200.9' 1,223.3' 1,239.1' 1,251.2 1,266.8 25 Corporate 1,353.6 1,555.8 1,711.6 1,899.4 1,818.6' 1,842.9' 1,899.4' 1,946.6' 2,014.7' 2,057.8 2,096.4 26 Foreign credit market debt held in United States 234.7 236.4 242.9 249.8 245.9 246.1 249.8' 249.8' 249.4' 254.6 257.6 27 Bonds 71.8 74.9 82.3 89.2 86.0 87.4 89.2 90.5 92.1' 94.2 94.3 28 Bank loans n.e.c 27.9 26.9 23.3 21.5 22.4 22.7 21.5 21.6 22.7 22.6 22.5 29 Open market paper 33.9 37.4 41.2 50.9 44.0 46.3 50.9 54.9 52.7 57.5 63.0 30 U.S. government loans 101.1 97.1 96.1 88.3 93.5 89.8 88.3' 82.8' 81.9^ 80.3 77.8 31 Total domestic plus foreign 7,029.9 7,867.6 8,578.0 9,330.7 8,928.5' 9,102.8' 9,330.7' 9,496.0' 9,662.4' 9,846.1 10,047.7 Financial sectors 32 Total credit market debt owed by financial sectors 1,213.2 1,563.6 1,885.5 2,084.1 1,942.8' 1,996.5' 2,084.1' 2,190.5' 2,229.6' 2,264.5 2,318.1 By instrument 33 U.S. government related 632.7 844.2 1,026.5 1,098.4 1,019.2' 1,054.6' 1,098.4' 1,140.8' 1,166.5' 1,202.6 1,238.7 34 Sponsored credit agency securities .... 257.8 273.0 303.2 348.1 317.9 328.5 348.1 364.3 369.0 370.4 373.1 35 Mortgage pool securities 368.9 565.4 718.3 745.3 696.3' 721.1' 745.3' 771.5' 792.5' 827.2 860.7 36 Loans from U.S. government 6.1 5.7 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 37 Private financial sectors 580.5 719.5 859.0 985.7 923.6 941.9 985.7 1,049.7 1,063.1 1,062.0 1,079.3 38 Corporate bonds 204.5 287.4 366.3 418.0 397.9 406.4 418.0 458.2 465.8 472.5 484.6 39 Mortgages 2.7 2.7 3.1 3.4 3.1 3.1 3.4 3.5 3.5 3.5 3.3 40 Bank loans n.e.c 32.1 36.1 32.8 34.2 34.3 32.9 34.2 32.2 33.8 34.1 35.5 41 Open market paper 252.4 284.6 323.8 377.4 353.4 358.0 377.4 392.0 398.3 400.8 414.1 42 Loans from Federal Home Loan Banks 88.8 108.6 133.1 152.8 134.8 141.6 152.8 163.8 161.9 151.1 141.8 43 Total, by sector 1,213.2 1,563.6 1,885.5 2,084.1 1,942.8' 1,996.5' 2,084.1' 2,190.5' 2,229.6' 2,264.5 2,318.1 44 Sponsored credit agencies 263.9 278.7 308.2 353.1 322.9 333.5 353.1 369.3 374.0 375.4 378.1 45 Mortgage pools 368.9 565.4 718.3 745.3 696.3' 721.1' 745.3' 771.5' 792.5' 827.2 860.7 46 Private financial sectors 580.5 719.5 859.0 985.7 923.6 941.9 985.7 1,049.7 1,063.1 1,062.0 1,079.3 47 Commercial banks 79.2 75.6 82.7 78.8 77.2 76.6 78.8 73.3 74.5 77.0 79.4 48 Bank affiliates 106.2 116.8 131.1 136.2 136.3 136.3 136.2 140.0 141.2 143.9 143.8 49 Savings and loan associations 98.9 119.8 139.4 159.3 141.9 148.1 159.3 170.1 167.9 155.7 144.7 50 Mutual savings banks 4.4 8.6 16.7 18.6 17.6 18.1 18.6 17.8 17.7 17.5 17.1 51 Finance companies 261.2 328.1 378.8 445.8 419.8 427.7 445.8 463.8 478.0 483.0 499.2 52 REITs 5.6 6.5 7.3 11.4 9.1 7.6 11.4 11.1 10.6 10.3 10.2 53 SCO issuers 25.0 64.0 103.1 135.7 121.8 127.5 135.7 173.5 173.1 174.6 185.0 All sectors 54 Total credit market debt 8,243.1 9,431.2 10,463.4 11,414.8 10,871.3' 11,099.3' 11,414.8' 11,686.5' 11,892.0' 12,110.7 12,365.7 55 U.S. government securities.. 2,227.0 2,653.8 2,981.8 3,211.1 3,036.4' 3,113.5' 3,211.1' 3,291.5' 3,327.2' 3,401.8 3,501.3 56 State and local obligations... 655.5 679.1 713.2 759.8 727.2 746.1 759.8 764.7 769.9' 780.8 784.0 57 Corporate and foreign bonds 819.2 1,026.4 1,212.7 1,385.4 1,309.8' 1,347.4' 1,385.4' 1,451.9' 1,493.1' 1,527.5 1,571.3 58 Mortgages 2,289.8 2,617.0 2,953.8 3,247.2 3,098.5' 3,166.7' 3,247.2' 3,309.0' 3,371.7' 3,435.2 3,502.6 59 Consumer credit 601.8 659.8 692.7 743.7 705.8 721.2 743.7 745.0 761.0 776.2 797.9 60 Bank loans n.e.c 652.7 719.1 720.3 758.3 744.0 743.3 758.3 771.4 786.2 800.5 803.6 61 Open market paper 358.5 384.9 438.8 513.6 475.3 484.6 513.6 543.1 561.1 571.6 584.2 62 Other loans 638.6 691.1 750.2 795.6 774.4' 776.5' 795.6' 809.9' 821.9' 817.1 820.8 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. 1988r 1989 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998855 11998866 11998877 11998888 Q2 Q3 Q4 Qlr Q2' Q3r Q4 1 Total funds advanced in credit markets to domestic nonfinancial sectors 6,795.1 7,631.2 8,335.0 9,080.8 8,682.6 8,856.6 9,080.8 9,246.2 9,413.0 9,591.5 9,790.1 By public agencies and foreign 2 Total held 1,460.5 1,794.7 2,044.9 2,196.5 2,093.6 2,130.2 2,196.5 2,256.3 22,,226622..55 22,,332288..66 22,,339944..33 3 U.S. government securities 423.8 493.2 563.3 648.3 610.1 613.3 648.3 666.2 644.2 673.6 694.2 4 Residential mortgages 518.2 712.3 862.0 900.4 848.3 873.3 900.4 927.1 951.2 990.9 1,030.1 5 FHLB advances to thrifts 88.8 108.6 133.1 152.8 134.8 141.6 152.8 163.8 161.9 151.1 141.8 6 Other loans and securities 429.7 480.5 486.6 495.0 500.3 502.1 495.0 499.3 505.1 513.0 528.2 7 Total held, by type of lender 1,460.5 1,794.7 2,044.9 2,196.5 2,093.6 2,130.2 2,196.5 2,256.3 2,262.5 2,328.6 2,394.3 8 U.S. government 246.7 253.3 238.0 212.7 235.8 226.3 212.7 208.0 207.7 206.7 206.8 9 Sponsored credit agencies and mortgage pools ... 659.8 869.8 1,048.9 1,113.0 1,037.9 1,071.2 1,113.0 1,155.3 1,159.6 1,204.1 1,240.4 10 Monetary authority 186.0 205.5 230.1 240.6 229.7 230.8 240.6 235.4 238.4 227.6 233.3 11 Foreign 367.9 466.1 527.9 630.3 590.2 601.9 630.3 657.6 656.8 690.2 713.8 Agency and foreign debt not in line 1 12 Sponsored credit agencies and mortgage pools ... 632.7 844.2 1,026.5 1,098.4 1,019.2 1,054.6 1,098.4 1,140.8 1,166.5 1,202.6 11,,223388..77 13 Foreign 234.7 236.4 242.9 249.8 245.9 246.1 249.8 249.8 249.4 254.6 257.6 Private domestic holdings 14 Total private holdings 6,202.1 6,917.1 7,559.5 8,232.5 7,854.1 8,027.2 8,232.5 8,380.4 8,566.4 8,720.2 88,,889922..11 15 U.S. government securities 1,803.2 2,160.6 2,418.5 2,562.8 2,426.4 2,500.3 2,562.8 2,625.3 2,683.0 2,728.2 2,807.2 16 State and local obligations 655.5 679.1 713.2 759.8 727.2 746.1 759.8 764.7 769.9 780.8 784.0 17 Corporate and foreign bonds 517.6 601.3 689.6 787.2 748.9 770.6 787.2 808.6 840.0 865.9 885.6 18 Residential mortgages 1,185.1 1,254.7 1,351.1 1,560.2 1,483.3 1,525.5 1,560.2 1,581.0 1,610.0 1,625.3 1,642.5 19 Other mortgages and loans 2,129.7 2,330.0 2,520.1 2,715.2 2,603.2 2,626.3 2,715.2 2,764.6 2,825.4 2,871.1 2,914.7 20 LESS: Federal Home Loan Bank advances 88.8 108.6 133.1 152.8 134.8 141.6 152.8 163.8 161.9 151.1 141.8 Private financial intermediation 21 Credit market claims held by private financial institutions 5,283.1 6,025.7 6,604.6 7,167.5 6,903.0 7,002.7 7,167.5 7,310.3 7,456.5 7,537.9 7,676.6 7.7. Commercial banking 1,978.9 2,176.3 2,313.1 2,468.4 2,382.6 2,421.6 2,468.4 2,490.9 2,538.2 2,588.6 2,640.0 7.3 Savings institutions 1,191.2 1,297.9 1,445.5 1,567.7 1,505.5 1,535.2 1,567.7 1,567.3 1,551.1 1,521.1 1,491.0 7,4 Insurance and pension funds 1,369.7 1,544.3 1,755.2 1,953.3 1,861.4 1,901.9 1,953.3 2,007.0 2,051.1 2,085.0 2,130.3 25 Other finance 743.4 1,007.1 1,090.7 1,178.1 1,153.5 1,144.0 1,178.1 1,245.1 1,316.1 1,343.2 1,415.2 76 Sources of funds 5,283.1 6,025.7 6,604.6 7,167.5 6,903.0 7,002.7 7,167.5 7,310.3 7,456.5 7,537.9 7,676.6 7.7 Private domestic deposits and RPs 2,930.0 3,188.4 3,324.8 3,560.2 3,438.6 3,480.0 3,560.2 3,589.0 3,639.0 3,702.4 3,775.3 28 Credit market debt 580.5 719.5 859.0 985.7 923.6 941.9 985.7 1,049.7 1,063.1 1,062.0 1,079.3 79 Other sources 1,772.7 2,117.9 2,420.8 2,621.5 2,540.7 2,580.7 2,621.5 2,671.6 2,754.4 2,773.6 2,822.0 30 Foreign funds 5.6 18.6 62.2 71.5 62.2 52.0 71.5 61.8 50.0 55.7 70.4 31 Treasury balances 25.8 27.5 21.6 29.0 32.6 34.2 29.0 13.5 34.4 30.3 20.7 32 Insurance and pension reserves 1,289.4 1,427.9 1,597.2 1,761.8 1,692.5 1,722.3 1,761.8 1,811.1 1,843.8 1,861.9 1,898.5 33 Other, net 451.8 643.9 739.6 759.2 753.5 772.4 759.2 785.2 826.2 825.7 832.3 Private domestic nonfinancial investors 34 Credit market claims 1,499.5 1,610.8 1,813.9 2,050.7 1,874.8 1,966.4 2,050.7 2,119.9 2,173.1 2,244.2 22,,229944..99 35 U.S. government securities 814.7 899.1 992.0 1,077.8 962.4 1,022.3 1,077.8 1,105.2 1,127.4 1,177.5 1,219.4 36 Tax-exempt obligations 231.9 211.2 256.8 303.7 270.3 289.0 303.7 307.2 308.8 315.6 318.4 37 Corporate and foreign bonds 38.0 77.8 102.2 93.9 104.8 106.1 93.9 125.3 135.4 140.6 134.6 38 Open market paper 131.0 136.4 160.7 200.9 177.4 185.8 200.9 209.4 218.7 224.7 223.5 39 Other 283.8 286.2 302.3 374.5 359.9 363.2 374.5 372.8 382.8 385.9 399.0 40 Deposits and currency 3,120.4 3,399.2 3,553.9 3,791.9 3,668.5 3,710.3 3,791.9 3,824.0 3,887.8 3,939.6 4,028.4 41 Currency 171.9 186.3 205.4 220.1 209.9 213.4 220.1 220.7 226.4 224.4 232.6 47 Checkable deposits 422.5 517.4 514.0 525.3 510.4 495.9 525.3 492.3 493.8 485.1 532.2 43 Small time and savings accounts 1,831.9 1,948.3 2,017.1 2,156.5 2,117.0 2,137.3 2,156.5 2,170.2 2,191.5 2,225.1 2,261.7 44 Money market fund shares 227.3 265.6 292.8 315.6 306.1 303.6 315.6 340.3 359.9 389.2 400.8 45 Large time deposits 339.9 328.5 355.2 395.9 349.0 384.7 395.9 412.1 415.4 421.0 398.2 46 Security RPs 108.3 128.5 145.7 166.9 156.2 158.6 166.9 174.1 178.4 182.0 182.5 47 Deposits in foreign countries 18.5 24.5 23.7 11.6 19.9 16.8 11.6 14.4 22.5 12.8 20.5 48 Total of credit market instruments, deposits, and currency 4,619.9 5,010.0 5,367.8 5,842.6 5,543.2 5,676.7 5,842.6 5,943.9 6,060.9 6,183.8 6,323.2 49 Public holdings as percent of total 20.8 22.8 23.8 23.5 23.4 23.4 23.5 23.8 23.4 23.6 23.8 50 Private financial intermediation (in percent) 85.2 87.1 87.4 87.1 87.9 87.2 87.1 87.2 87.0 86.4 86.3 51 Total foreign funds 373.5 484.7 590.2 701.8 652.4 653.8 701.8 719.4 706.8 745.9 784.3 MEMO: Corporate equities not included above 52 Total market value 2,823.9 3,360.6 3,325.0 3,620.3 3,622.7 3,577.6 3,620.3 3,731.5 4,072.2 4,398.7 4,311.7 53 Mutual fund shares 240.2 413.5 460.1 478.3 486.8 478.1 478.3 486.3 514.8 539.6 548.0 54 Other equities 2,583.7 2,947.1 2,864.9 3,142.0 3,136.0 3,099.5 3,142.0 3,245.2 3,557.4 3,859.1 3,763.7 55 Holdings by financial institutions 800.0 972.1 1,013.8 1,186.1 1,167.4 1,160.0 1,186.1 1,253.4 1,377.4 1,509.4 1,496.7 56 Other holdings 2,023.9 2,388.4 2,311.2 2,434.2 2,455.4 2,417.6 2,434.2 2,478.1 2,694.8 2,889.3 2,815.0 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 2/1 ine 1 and 13. 19. Includes farm and commercial mortgages. 50. Line 21/line 14. 27. Line 40 less lines 41 and 47. 51. Sum of lines 11 and 30. 28. Excludes equity issues and investment company shares. Includes line 20. 52-54. Includes issues by financial institutions. 30. Foreign deposits at commercial banks plus bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts affiliates, less claims on foreign affiliates and deposits by banking in foreign banks. outstanding may be obtained from Flow of Funds Section, Stop 95, Division of 31. Demand deposits and note balances at commercial banks. Research and Statistics, Board of Governors of the Federal Reserve System, Digitized for FRASER Washington, D.C. 20551. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A46 Domestic Nonfinancial Statistics • May 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 June July Aug. Sept. Oct. Nov.' Dec.' Jan.' Feb. 1 Industrial production 129.8 137.2 n.a. 142.0 141.9 142.5 142.3 141.8 142.3 142.4 141.0 141.8 Market groupings ? Products, total 138.3 145.9 n.a. 152.5 151.8 152.5 152.4 151.5 115522..44 153.4 115511..55 115522..88 3 Final, total 136.8 144.3 n.a. 151.2 150.2 151.1 150.8 149.4 150.1 151.3 148.9 150.5 4 Consumer goods 127.7 133.9 n.a. 139.9 138.7 139.3 139.0 140.2 140.3 141.0 138.0 139.7 5 Equipment 148.8 158.2 n.a. 166.1 165.5 166.8 166.5 161.7 163.2 164.8 163.5 164.9 6 Intermediate 143.3 151.5 n.a. 157.0 157.5 157.5 157.8 158.6 160.1 160.9 160.5 160.6 7 Materials 118.3 125.3 n.a. 127.7 128.3 128.8 128.6 128.7 128.6 127.3 126.7 126.8 Industry groupings 8 Manufacturing 134.6 142.8 n.a. 148.7 148.5 149.2 148.8 148.0 114488..66 148.4 114477..44 114488..55 Capacity utilization (percent)2 9 Manufacturing 81.1 83.5 83.9 84.4 84.0 84.2 83.7 83.1 83.1 82.8 82.0 8822..44 10 Industrial materials industries 80.5 83.7 83.7 83.6 83.7 83.9 83.6 83.5 83.3 82.3 81.7 81.6 11 Construction contracts (1982 = 100)3 164.8' 166.1' 167.0' 166.0' 168.C 168.0' 181.0' 173.0' 158.0 160.0 154.0 147.0 12 Nonagricultural employment, total4 123.9 128.0 131.6 131.7 131.9 132.0 132.3 132.4 132.7 132.9 133.3 133.7 n Goods-producing, total 101.5 103.7 105.3 105.4 105.4 105.5 105.2 105.2 105.2 104.9 104.8 105.4 14 Manufacturing, total 96.7 98.6 99.6 99.8 99.8 99.8 99.4 99.2 99.1 99.0 98.3 98.8 15 Manufacturing, production- worker ... 91.9 93.9 94.8 94.8 94.8 94.8 94.2 94.1 93.9 93.8 92.9 93.5 16 Service-producing 133.3 138.2 142.7 142.7 143.0 143.1 143.6 143.8 144.2 144.6 145.2 145.6 17 Personal income, total 235.0 252.8 275.5 274.8 276.4 277.3 277.9 280.1' 282.7 284.1 286.3 n.a. 18 Wages and salary disbursements 226.3 244.4 264.7' 263.8 266.1 266.7 268.5 271.0' 271.1 272.8 274.4 n.a. 19 Manufacturing 183.8 196.5 207.3 207.0 207.5 208.8 208.8 211.1 209.1 209.2 208.4 n.a. 7,0 Disposable personal income 232.4 252.1 274.0 273.8 275.4 276.1 276.5 278.5' 281.2 282.4 284.8 287.3 21 Retail sales6 213.6' 228.0r 240.6r 240.5' 242.2' 244.2' 245.2' 241.9' 243.7 242.8 249.8 247.7 Prices7 27 Consumer (1982-84 = 100) 113.6 118.3 124.0 124.1 124.4 124.6 125.0 125.6 125.9 126.1 127.4 128.0 23 Producer finished goods (1982 = 100) ... 105.4 108.0 113.5 114.3 114.1 113.4 113.6 114.8 115.3 117.5 117.4 1. A major revision of the industrial production index and the capacity 5. Based on data in Survey of Current Business (U.S. Department of Comutilization rates was released in July 1985. See "A Revision of the Index of merce). Industrial Production" and accompanying tables that contain revised indexes 6. Based on Bureau of Census data published in Survey of Current Business. (1977=100) through December 1984 in the Federal Reserve Bulletin, vol. 71 (July 7. Data without seasonal adjustment, as published in Monthly Labor Review. 1985), pp. 487-501. The revised indexes for January through June 1985 were Seasonally adjusted data for changes in the price indexes may be obtained from shown in the September Bulletin. the Bureau of Labor Statistics, U.S. Department of Labor. 2. Ratios of indexes of production to indexes of capacity. Based on data from Federal Reserve, McGraw-Hill Economics Department, Department of Com- NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, merce, and other sources. and indexes for series mentioned in notes 3 and 7 may also be found in the Survey 3. Index of dollar value of total construction contracts, including residential, of Current Business. nonresidential and heavy engineering, from McGraw-Hill Information Systems Figures for industrial production for the last two months are preliminary and Company, F. W. Dodge Division. estimated, respectively. 4. Based on data in Employment and Earnings (U.S. Department of Labor). Series covers employees only, excluding personnel in the Armed Forces. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Selected Measures A47 2.11 LABOR FORCE, EMPLOYMENT, AND UNEMPLOYMENT Thousands of persons; monthly data are seasonally adjusted. Exceptions noted. 1989 1990 CCaatteeggoorryy 11998877 11998888 11998899 July Aug. Sept. Oct. Nov. Dec. Jan.' Feb. HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 185,010 186,837 188,601 188,672 188,808 188,948 189,096 189,238 189,381 189,506 189,607 2 Labor force (including Armed Forces)1 122,122 123,893 126,077 126,202 126,280 126,245 126,373 126,709 126,762 126,610 126,825 3 Civilian labor force 119,865 121,669 123,869 124,013 124,070 124,023 124,148 124,488 112244,,554466 124,397 112244,,663300 Employment 4 Nonagricultural industries2 109,232 111,800 114,142 114,219 114,275 114,200 114,388 114,676 114,691 114,728 114,957 5 Agriculture 3,208 3,169 3,199 3,217 3,275 3,219 3,197 3,160 3,197 3,134 3,079 Unemployment 6 Number 7,425 6,701 6,528 6,577 6,520 6,604 6,563 6,652 6,658 6,535 6,594 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 62,470 62,528 62,703 62,723 62,529 62,619 62,896 62,782 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 102,200 105,584 108,573 108,767 108,887 109,096 109,171 109,452 109,570' 109,902 110,274 10 Manufacturing 19,024 19,403 19,611 19,649 19,644 19,559 19,537 19,517 19,489 19,359 19,449 11 Mining 717 721 722 706 729 730 731 737 739 746 747 12 Contract construction 4,967 5,125 5,302 5,314 5,321 5,325 5,335 5,355 5,304' 5,408 5,468 13 Transportation and public utilities 5,372 5,548 5,703 5,736 5,618 5,709 5,729 5,753 5,834' 5,855 5,876 14 Trade 24,327 25,139 25,807 25,823 25,877 25,896 25,957 26,044 26,029' 26,162 26,173 15 Finance 6,547 6,676 6,814 6,815 6,836 6,852 6,851 6,871 6,885' 6,897 6,912 16 Service 24,236 25,600 26,889 26,973 27,058 27,159 27,188 27,345 27,419' 27,564 27,710 17 Government 17,010 17,372 17,726 17,751 17,804 17,866 17,843 17,830 17,871' 17,911 17,939 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1984 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A48 Domestic Nonfinancial Statistics • May 1990 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1989 1989 1989 SSeerriieess Ql Q2 Q3 Q4r Ql Q2 Q3 Q4 Ql Q2 Q3 Q4r 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 101.8 102.0 102.7 103.7 125.1 124.7 124.3 123.8 81.3 81.8 82.6 83.8 3 Utilities 116.0 115.7 113.9 118.4 141.0 141.4 141.7 142.0 82.3 81.8 80.4 83.4 4 Manufacturing 147.0 148.3 148.8 148.3 174.3 175.7 177.2 178.7 84.4 84.4 84.0 83.0 5 Primary processing 127.8 127.6 128.8 128.5 146.5 147.8 149.1 150.4 87.3 86.4 86.4 85.5 6 Advanced processing. .. 158.6 160.8 160.9 160.2 191.0 192.6 194.2 195.8 83.0 83.5 82.9 81.9 7 Materials 127.6 127.9 128.6 128.2 151.7 152.6 153.5 154.4 84.1 83.9 83.8 83.0 8 Durable goods 138.6 139.0 140.4 138.6 170.1 171.3 172.5 173.7 81.5 81.1 81.4 79.8 9 Metal materials 98.4 96.0 97.8 93.6 110.2 110.6 111.0 111.4 83.8 81.4 82.3 78.4 10 Nondurable goods 136.3 137.1 137.9 137.8 152.7 154.2 155.8 157.4 89.3 88.9 88.5 87.6 11 Textile, paper, and chemical .. 139.2 139.8 141.1 140.3 153.5 155.3 157.0 158.8 90.7 90.0 89.8 88.4 12 Paper 148.4 146.1 149.8 151.7 154.0 155.8 157.6 159.4 96.4 93.8 95.1 95.1 13 Chemical 145.4 145.7 146.5 145.3 161.4 163.7 165.9 168.2 90.1 89.0 88.3 86.4 14 Energy materials 100.7 100.7 99.8 101.6 118.4 118.3 118.1 118.0 85.0 85.1 84.5 86.1 Previous cycle Latest cycle 1989 1990 High Low High Low Feb. June July Aug. Sept. Oct. Nov/ Dec/ Jan/ Feb. Capacity utilization rate (percent) 15 Total industry 88.6 72.1 86.9 69.5 83.9 84.0 83.7 83.9 83.6 83.1 83.2 83.0 82.0 82.3 16 Mining 92.8 87.8 95.2 76.9 80.6 81.5 82.1 82.4 83.4 84.2 84.6 82.6 84.8 84.4 17 Utilities 95.6 82.9 88.5 78.0 82.6 80.8 80.5 80.0 80.8 81.4 81.3 87.3 78.0 77.3 18 Manufacturing 87.7 69.9 86.5 68.0 84.3 84.4 84.0 84.2 83.7 83.1 83.1 82.8 82.0 82.4 19 Primary processing.. 9 86 1 . . 0 9 7 68 1 . . 3 1 8 8 5 9 . . 1 1 6 6 9 5 . . 5 0 8 87 3 . . 0 0 8 86 3 . . 2 5 8 8 6 2 . . 7 9 8 8 3 6 . . 2 6 8 85 2 . . 8 6 8 86 1 . . 2 6 8 8 5 2 . . 6 0 8 8 2 4 . . 0 6 8 85 0 . . 0 7 8 84 1 . . 4 5 20 Advanced processing 92.0 70.5 89.1 68.5 84.0 83.6 83.7 83.9 83.6 83.5 83.3 82.3 81.7 81.6 21 Materials 91.8 64.4 89.8 60.9 81.5 81.1 81.3 81.7 81.2 80.3 80.0 79.0 78.3 78.8 22 Durable goods 99.2 67.1 93.6 45.7 83.8 80.6 82.3 82.7 81.9 81.5 77.7 76.1 79.0 78.3 23 Metal materials 91.1 66.7 88.1 70.7 89.0 88.7 89.2 88.8 87.5 88.3 87.8 86.7 86.6 85.7 24 Nondurable goods .. 92.8 64.8 89.4 68.8 90.3 89.8 90.6 90.1 88.8 89.4 88.6 87.1 87.4 86.4 25 Textile, paper, and 98.4 70.6 97.3 79.9 95.8 93.7 95.0 95.1 95.1 96.4 94.7 94.3 93.5 26 Pa c p h e e r mical 92.5 64.4 87.9 63.5 89.8 88.5 89.5 88.6 86.7 87.4 87.0 84.8 85.9 2287 EnerCgyh emmaitcearli als 94.6 86.9 94.0 82.3 84.9 83.8 83.9 84.3 85.4 86.1 86.3 85.9 84.9 84.3 1. These data also appear in the Board's G.3 (402) release. For address, see 2. Monthly high 1973; monthly low 1975. inside front cover. 3. Monthly highs 1978 through 1980; monthly lows 1982. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Selected Measures A49 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1 Monthly data are seasonally adjusted 1977 1989 pro- 1989 Groups por- avg. tion Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov/ Dec. Jan/ Feb/ Index (1977 = 100) MAJOR MARKET 1 Total index 100.00 140.5 140.7 141.7 141.6 142.0 141.9 142.5 142.3 141.8 142.3 142.4 141.0 141.8 ? 57.72 150.0 150.5 151.6 151.7 152.5 151.8 152.5 152.4 151.5 152.4 153.4 151.5 152.8 44.77 148.6 148.9 150.2 150.4 151.2 150.2 151.1 150.8 149.4 150.1 151.3 148.9 150.5 4 25.52 138.7 138.4 139.5 139.2 139.9 138.7 139.3 139.0 140.2 140.3 141.0 138.0 139.7 19.25 161.6 162.8 164.3 165.4 166.1 165.5 166.8 166.5 161.7 163.2 164.8 163.5 164.9 6 12.94 155.1 156.1 156.5 156.3 157.0 157.5 157.5 157.8 158.6 160.1 160.9 160.5 160.6 7 Materials 42.28 127.4 127.3 128.2 127.9 127.7 128.3 128.8 128.6 128.7 128.6 127.3 126.7 126.8 8 6.89 131.6 130.1 132.2 131.2 130.8 127.3 128.7 127.9 127.9 127.5 112288..33 111199..66 112277..22 9 2.98 131.6 128.9 131.7 128.6 125.6 120.2 122.3 120.6 119.2 120.3 123.9 100.3 117.9 10 1.79 133.1 128.3 131.7 127.4 123.3 114.6 119.3 117.1 113.1 114.7 118.3 79.5 109.6 11 1.16 96.0 95.0 98.8 96.0 91.4 81.2 86.4 92.7 91.5 84.3 84.2 56.4 79.0 1 N 1 ? 4 3 1 . . . 9 6 1 1 3 9 2 1 1 0 2 3 1 9 1 . . . 9 4 6 1 1 1 9 2 3 0 9 1 . . . 0 8 1 1 1 1 3 9 3 1 2 2 . . . 7 8 6 1 1 1 8 3 3 5 0 3 . . . 5 4 3 1 1 1 8 3 2 2 4 9 . . . 5 8 1 1 1 1 7 2 3 6 8 2 . . . 7 7 7 1 1 1 8 2 3 0 6 3 . . . 7 5 5 1 1 1 6 2 3 2 5 3 . . . 4 9 4 1 1 1 5 2 3 3 8 4 . . . 3 3 4 1 1 1 7 2 3 1 8 3 . . . 2 8 0 1 1 1 8 3 3 1 2 1 . . . 7 3 7 1 1 1 3 2 3 1 2 4 . . . 7 3 2 1 1 1 6 3 3 6 0 4 . . . 4 4 3 is Appliances, A/C and TV 1.24 153.9 151.6 151.7 151.3 155.6 148.1 152.1 151.9 151.7 145.0 141.8 148.5 148.8 16 Appliances and TV 1.19 153.0 152.3 152.5 151.4 155.0 147.0 149.4 148.3 147.3 142.3 137.7 146.8 17 Carpeting and furniture .96 141.3 140.7 142.8 144.3 143.1 141.3 139.8 139.9 141.9 143.6 144.7 147.1 18 Miscellaneous home goods 1.71 110.1 110.9 113.0 114.1 115.0 116.8 116.6 116.5 117.8 118.3 117.1 116.7 19 18.63 141.4 141.4 142.2 142.1 143.3 142.8 143.2 143.1 144.7 145.0 145.7 144.8 144.4 70 Consumer staples 15.29 149.7 149.9 150.7 150.7 151.9 151.4 152.0 151.8 153.8 154.6 155.6 154.1 154.0 7 "> 7 \ 7 7 . . 4 8 9 0 1 1 5 4 5 4 . . 4 3 1 1 5 4 6 3 . . 9 3 1 1 5 4 6 4 . . 9 7 1 1 5 4 6 4 . . 9 7 1 1 5 4 8 5 . . 4 7 1 14 5 4 8 . . 2 9 1 1 5 4 8 5 . . 7 6 1 1 5 4 7 5 . . 9 9 1 1 6 4 0 7 . . 0 9 1 1 6 4 0 9 . . 4 1 1 14 6 8 2 . . 8 6 1 1 5 4 9 8 . . 9 5 160.0 71 Consumer chemical products 2.75 187.8 188.9 187.3 189.1 191.0 193.1 192.5 187.9 192.0 190.6 192.8 194.1 74 Consumer paper products 1.88 177.0 180.4 180.9 180.9 183.6 183.0 184.7 186.6 188.3 191.3 190.0 189.8 75 Consumer energy 2.86 110.1 110.7 112.0 110.1 110.7 110.4 109.2 110.3 110.8 111.1 115.6 107.5 110066..44 76 1.44 95.0 95.6 97.3 93.6 95.6 97.0 96.0 95.7 96.1 95.7 94.5 96.8 27 Residential utilities 1.42 125.4 126.1 127.0 127.0 126.1 124.0 122.7 125.1 125.8 126.8 137.1 Equipment 78 Business and defense equipment 18.01 167.9 168.9 170.3 171.5 172.0 171.3 172.5 172.1 167.1 168.6 170.5 168.9 170.3 79 Business equipment 14.34 165.0 166.3 167.8 169.1 169.6 168.5 169.9 169.6 164.8 166.7 168.8 166.6 168.3 30 Construction, mining, and farm 2.08 75.6 76.9 77.6 76.3 74.8 73.0 72.1 74.7 75.2 75.5 76.0 76.0 77.1 31 3.27 137.8 138.6 139.7 140.9 142.8 143.8 143.5 143.1 142.0 141.8 141.2 142.6 142.5 37 1.27 92.7 93.0 93.6 93.3 92.5 92.8 94.2 93.8 94.8 94.9 94.2 95.0 93.7 33 5.22 254.3 257.6 260.1 263.2 264.5 263.8 265.6 265.1 259.3 262.4 263.2 263.3 261.7 34 Transit 2.49 125.2 123.9 124.8 125.3 124.8 120.1 124.4 122.2 107.7 111.7 122.9 107.7 120.7 35 Defense and space equipment 3.67 179.3 178.7 179.9 180.7 181.1 182.0 182.7 182.1 176.0 176.3 177.2 177.9 178.2 Intermediate products 36 Construction supplies 5.95 139.5 139.3 140.2 140.2 141.2 142.2 141.5 114400..99 142.6 114444..55 114455..88 114455..88 114455..33 37 Business supplies 6.99 168.4 170.4 170.4 170.0 170.4 170.6 171.2 172.3 172.3 173.3 173.8 172.9 38 General business supplies 5.67 175.4 177.4 177.9 177.3 177.9 177.8 178.8 180.1 179.9 181.6 181.0 182.1 39 Commercial energy products 1.31 138.3 140.3 138.0 138.2 138.4 139.6 138.1 138.5 139.5 137.5 142.6 133.4 40 20.50 138.6 137.9 139.0 138.7 139.4 139.9 140.9 140.4 139.2 139.0 113377..55 113366..66 113377..88 41 4.92 112.1 110.7 110.8 111.8 111.6 109.9 111.9 110.7 108.9 108.4 104.7 99.0 104.1 47 5.94 175.2 175.3 176.9 177.1 177.5 179.1 180.0 179.6 177.6 179.5 178.3 179.1 179.9 43 9.64 129.7 128.8 130.0 128.9 130.0 131.0 131.6 131.4 131.1 129.8 129.1 129.7 129.1 44 Basic metal materials 4.64 98.4 95.9 98.0 94.4 95.5 97.7 98.4 97.4 96.4 92.7 91.7 94.5 93.5 45 Nondurable goods materials 10.09 135.9 136.0 137.1 136.8 137.3 138.5 138.3 136.7 138.4 138.2 136.8 137.3 136.3 46 Textile, paper, and chemical 7.53 138.6 139.0 140.3 139.1 140.0 141.8 141.5 140.0 141.4 140.7 113388..99 113399..99 113388..88 47 1.52 110.7 111.8 114.6 116.4 117.2 116.4 117.0 115.6 115.1 113.6 113.8 112.2 48 Pulp and paper materials 1.55 147.5 147.3 146.7 145.2 146.5 149.1 149.9 150.5 153.1 151.0 151.0 150.2 49 4.46 145.0 145.4 146.8 144.7 145.5 147.9 147.0 144.6 146.3 146.3 143.3 145.8 50 Miscellaneous nondurable materials ... 2.57 128.0 127.2 127.8 129.9 129.4 129.0 128.9 127.3 129.8 131.1 130.8 51 11.69 100.5 101.0 101.7 101.1 99.1 99.1 99.5 100.9 101.7 101.9 101.3 100.2 99.4 57 Primary energy 7.57 104.4 103.7 104.1 104.6 103.0 103.2 104.2 105.6 107.0 107.0 103.6 105.9 53 Converted fuel materials 4.12 93.3 96.1 97.4 94.7 92.0 91.6 91.0 92.2 91.9 92.5 97.1 89.6 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A50 Domestic Nonfinancial Statistics • May 1990 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1989 1990 GGrroouuppss c S o I d C e pr 11 o 99 p 77 o 77 r - aa 1 vv 98 gg 9 .. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov.r Dec. Jan.p Feb.e Index (1977 = 100) MAJOR INDUSTRY 15.79 106.8 107.5 107.9 107.2 106.3 106.6 106.5 107.7 108.6 108.8 110.4 107.1 106.4 9.83 100.9 101.5 102.4 102.0 101.5 102.1 102.4 103.5 104.4 104.7 102.2 104.7 104.2 3 Utilities 5.96 116.5 117.5 117.1 115.6 114.3 114.0 113.3 114.5 115.6 115.5 124.1 111.0 110.1 84.21 146.8 147.0 148.0 148.1 148.7 148.5 149.2 148.8 148.0 148.6 148.4 147.4 148.5 35.11 148.1 148.6 149.6 149.5 150.5 150.8 151.1 151.1 152.4 152.6 151.9 152.5 152.2 4499..1100 145.9 114455..88 146.9 114477..11 114477..44 146.8 147.8 147.2 144.9 145.6 145.9 143.7 145.8 Mining 7 Metal 10 .50 98.6 98.1 96.8 94.0 101.2 106.2 103.7 104.3 104.0 106.6 111.8 8 Coal 11.12 1.60 134.7 137.7 145.5 137.1 129.2 130.2 135.4 144.2 144.4 144.4 138.3 152.4 146.3 9 Oil and gas extraction 13 7.07 89.5 89.6 89.1 90.5 90.6 90.8 90.3 90.0 90.9 91.2 88.2 87.8 10 Stone and earth minerals 14 .66 142.5 143.5 144.5 146.6 150.2 152.1 151.5 148.8 151.8 151.8 157.0 165.7 Nondurable manufactures 11 Foods 20 7.96 146.3 145.4 146.6 147.2 147.9 147.3 148.3 148.8 150.3 151.6 151.3 150.7 12 Tobacco products 21 .62 104.7 101.5 109.2 105.9 104.2 97.1 99.9 97.3 99.2 98.4 13 Textile mill products 22 2.29 119.4 119.7 122.5 123.6 123.8 123.5 123.2 123.2 123.5 120.2 121.4 120.6 14 Apparel products 23 2.79 110.2 109.9 111.3 111.5 111.9 111.4 111.1 111.2 110.0 109.3 108.5 109.1 15 Paper and products 26 3.15 151.7 151.7 150.7 150.1 150.2 152.4 152.8 153.4 155.5 153.5 153.1 153.2 16 Printing and publishing 27 4.54 194.6 198.5 200.1 199.0 200.5 199.9 200.6 203.1 204.8 206.9 205.6 207.8 209.3 17 Chemicals and products 28 8.05 158.5 159.2 159.3 158.2 159.9 162.2 161.5 159.3 161.3 162.1 161.0 163.2 18 Petroleum products 29 2.40 96.3 97.0 97.3 96.9 97.9 98.3 97.7 98.4 98.1 98.3 95.6 97.9 97.8 19 Rubber and plastic products 30 2.80 175.0 176.4 178.0 180.5 182.3 182.3 183.6 184.2 186.0 185.4 185.2 182.0 20 Leather and products 31 .53 62.9 61.2 61.4 60.3 60.5 60.8 60.2 60.4 60.0 57.5 58.0 58.8 Durable manufactures 21 Lumber and products 24 2.30 132.8 133.4 135.1 135.5 137.2 136.9 136.5 135.7 137.4 140.4 142.6 114422..66 22 Furniture and fixtures 25 1.27 164.8 165.8 168.0 170.2 170.8 169.0 168.0 167.6 167.5 167.8 168.4 170.4 23 Clay, glass, and stone products .. 32 2.72 125.4 125.5 124.7 123.9 123.9 122.9 123.9 123.4 123.6 124.3 124.6 124.2 24 Primary metals 33 5.33 91.1 88.4 90.1 87.2 87.3 89.2 90.3 89.2 89.0 85.0 82.7 86.5 85.3 25 Iron and steel 331.2 3.49 79.1 75.9 77.0 73.2 72.9 75.4 75.9 75.4 76.4 72.0 70.2 74.3 26 Fabricated metal products 34 6.46 124.5 123.8 123.1 124.8 125.2 125.4 125.5 124.4 124.1 125.3 124.5 122.9 124.1 27 Nonelectrical machinery 35 9.54 180.8 183.0 184.7 186.5 187.5 186.7 187.8 188.2 184.1 187.5 188.1 187.4 187.3 28 Electrical machinery 36 7.15 181.7 181.6 182.2 181.6 181.9 181.4 183.7 182.7 182.2 181.6 180.0 181.0 181.2 29 Transportation equipment 37 9.13 136.4 134.8 136.4 135.5 134.2 131.3 133.2 131.9 123.9 125.3 129.0 115.4 126.5 30 Motor vehicles and parts 371 5.25 123.4 120.4 122.0 119.7 116.4 110.4 114.2 112.7 110.1 110.4 110.7 86.3 104.8 31 Aerospace and miscellaneous transportation equipment.. 372-6.9 3.87 154.0 154.4 155.9 157.1 158.4 159.6 159.0 157.9 142.7 145.6 153.9 154.9 155.9 32 Instruments 38 2.66 161.3 161.8 163.0 164.3 165.7 166.0 164.1 163.1 162.5 162.4 160.1 162.4 162.7 33 Miscellaneous manufactures 39 1.46 117.4 107.6 110.0 114.5 114.7 117.1 119.6 118.5 119.2 122.9 125.8 125.9 122.6 Utilities 44..1177 113355..33 113377..00 113377..11 113355..88 113344..66 113344..99 113344..22 113355..55 113366..88 113366..77 114477..00 131.5 113300..44 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 35 Products, total 517.5 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 1,884.7 1,894.3 1,847.8 1,883.5 36 Final 405.7 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 1,439.0 1,449.7 1,405.3 1,443.0 37 Consumer goods 272.7 934.3 928.0 939.4 928.5 929.3 915.5 919.9 917.7 926.2 930.0 937.6 905.9 927.9 38 Equipment 133.0 515.2 514.8 521.1 521.1 520.9 514.5 518.2 518.8 506.5 509.1 512.1 499.4 515.1 39 Intermediate 111.9 429.6 435.3 433.5 435.9 436.0 438.0 437.3 438.3 442.3 445.6 444.6 442.5 440.5 1. These data also appear in the Board's G.12.3 (414) release. For address, see Industrial Production" and accompanying tables that contain revised indexes inside front cover. (1977 = 100) through December 1984 in the Federal Reserve Bulletin, vol. 71 (July A major revision of the industrial production index and the capacity 1985), pp. 487-501. The revised indexes for January through June 1985 were utilization rates was released in July 1985. See "A Revision of the Index of shown in the September Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Selected Measures A51 2.14 HOUSING AND CONSTRUCTION Monthly figures are at seasonally adjusted annual rates except as noted. 1989 1990 IItteemm 11998877 11998888 11998899'' Apr. May June July Aug. Sept. Oct. Nov.' Dec/ Jan. Private residential real estate activity (thousands of units) NEW UNITS 1 Permits authorized 1,535 1,456 1,332 1,334 1,347 1,308 1,281 1,328 1,319 1,356 1,342 1,376 1,745 2 1-family 1,024 994 934 954 905 874 906 927 946 961 979 970 1,004 3 2-or-more-family 511 462 398 380 442 434 375 401 373 395 363 406 741 4 Started 1,621 1,488 1,376 1,341 1,308 1,414 1,424 1,325 1,263 1,423 1,347 1,273 1,588 5 1-family 1,146 1,081 1,003 1,028 977 971 1,029 987 969 1,023 1,010 931 1,109 6 2-or-more-family 474 407 373 313 331 443 395 338 294 400 337 342 479 7 Under construction, end of period1 . 987 919 851 923' 912' 915' 918 901' 892' 894 881 886 895 8 1-family 591 570 536 578' 573r 572 576 565 565' 565 558 567 573 9 2-or-more-family 397 350 316 345 339 343' 342 336' 327 329 323 319 322 10 Completed 1,669 1,530 1,423 1,546' 1,444' 1,355 1,375' 1,437' 1,366' 1,317 1,486 1,304 1,424 11 1-family 1,123 1,085 1,026 1,109' 1,038' 964 967' 1,037' 959' 987 1,078 928 1,003 12 2-or-more-family 546 445 397 437 406' 391 408' 40C 407' 330 408 376 421 13 Mobile homes shipped 233 218 198 202 205 200 179 194 186 190 189 189 230 Merchant builder activity in 1-family units 14 Number sold 672 675 650 610' 651' 646' 741' 1W 638' 636' 687 632 589 15 Number for sale, end of period1 — 366r 367r 361 376' 379' 376' 369 364 364 363r 363 361 364 Price (thousands of dollars)2 Median 16 Units sold 104.7 113.3 120.4 116.7 119.0 122.8 116.0 122.9 120.0 123.0 125.0 125.0 125.0 17 Units sold 127.9 139.0 148.5 144.7 145.1 153.6 140.3 158.6 151.1 147.8' 151.4 156.0 154.2 EXISTING UNITS (1-family) 18 Number sold 3,530 3,594 3,439 3,440' 3,250' 3,330' 3,380' 3,440' 3,510' 3,490 3,560 3,560 3,520 Price of units sold (thousands of dollars) 19 Median 85.6 89.2 92.9 92.9 92.6 93.5' 95.2' 95.8' 93.8' 92.4 93.1 92.5 96.3 20 Average 106.2 112.5 118.0 117.9' 118.0 IRC 121.C 121.6' 118.3' 116.7' 117.9 118.1 120.0 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 397,721 409,663 414,683 411,891 416,540 412,523 410,269 416,279 416,176 414,590 416,869 416,561 424,033 77 Private 320,108 328,738 330,425 332,537 330,591 329,035 328,785 331,884 329,564 329,782 328,000 321,695 333,112 73 Residential 194,656 198,101 163,854 200,735 196,984 194,229 195,165 194,393 192,765 193,124 191,129 190,205 195,750 24 Nonresidential, total 112255,,445522 113300,,663377 166,571 131,802 133,607 134,806 133,620 137,491 136,799 136,658 136,871 131,490 137,362 Buildings 75 Industrial 13,707 14,931 16,756 16,245 15,945 16,302 16,424 17,526 17,927 17,746 18,014 17,312 19,865 76 Commercial 55,448 58,104 57,485 55,581 56,796 57,434 56,640 57,680 57,132 58,238 57,672 54,516 55,654 77 Other 15,464 17,278 17,366 16,645 17,343 17,179 16,768 18,455 17,962 17,277 17,790 16,218 17,347 28 Public utilities and other 40,833 40,324 74,964 43,331 43,523 43,891 43,788 43,830 43,778 43,397 43,395 43,444 44,496 79 Public 77,612 80,922 84,254 80,420 85,130 81,914 81,484 84,395 86,612 84,807 88,869 94,865 90,920 30 Military 4,327 3,579 3,663 2,054 3,870 4,324 3,194 3,779 4,916 3,342 3,919 3,922 3,667 31 Highway 25,343 28,524 27,663 27,772 27,432 27,321 26,128 27,367 27,581 26,062 28,503 33,165 28,872 32 Conservation and development... 5,162 4,474 4,814 3,068 6,053 4,699 4,567 4,708 4,906 5,860 5,095 5,669 5,338 33 Other 42,780 44,345 48,114 47,526 47,775 45,570 47,595 48,541 49,209 49,543 51,352 52,109 53,043 t. Not at annual rates. NOTE. Census Bureau estimates for all series except (1) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices comparable with data in previous periods because of changes by the Bureau of the of existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from the originating agency. Permit Construction Reports (C-30-76-5), issued by the Bureau in July 1976. authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A52 Domestic Nonfinancial Statistics • May 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 month earlier months earlier (at annual rate) 1990 1989 1990 Feb. Feb. Sept. Dec. Oct. Nov. Jan. CONSUMER PRICES2 (1982-84=100) 1 All items 4.8 5.3 5.3 2.3 2 Food 6.2 6.8 7.8 5.6 3.6 5.5 .4 2.0 3 Energy items 2.6 8.0 9.7 22.7 -12.6 3.9 1.0 5.1 4 All items less food and energy. 4.8 4.6 5.5 3.8 3.5 4.7 .5 .6 5 Commodities 4.2 3.5 3.8 2.4 1.3 3.4 .4 .4 6 Services 5.0 5.2 5.9 4.6 4.5 5.7 .5 .7 PRODUCER PRICES (1982=100) 7 Finished goods 5.3 5.1 9.0 5.8 .4 5.0 .5 .1 .6 1.8 8 Consumer foods 7.1 6.1 11.2 -2.3 .7 12.0 1.4 .9 .6 2.1 9 Consumer energy 5.6 11.7 33.0 34.3 -15.3 -4.8 .2 -3.2 1.9 13.6 10 Other consumer goods 5.0 4.0 5.4 6.0 2.3 4.6 .3 .2 .6 .0 11 Capital equipment 3.8 3.3 4.6 4.5 4.4 1.7 -.R .2' .2 .2 12 Intermediate materials3 6.1 1.6 7.9 2.9 -.7 .4 .2 -.1 .0 1.2 13 Excluding energy 6.9 .2 5.5 .3 -.7 -1.3 .1 .0 -.4 .1 Crude materials 14 Foods 11.3 3.1 14.8 -16.9 -2.2 18.4 1.7' 2.5 1.0 15 Energy 2.3 14.6 48.3 23.6 -7.0 13.2 .3 2.2 5.0 16 Other 6.6 -6.4 9.7 -7.7 .6 -16.3 -2.4' -2.1 .2 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds. rental equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Selected Measures A53 2.16 GROSS NATIONAL PRODUCT* AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1989 1987 1988 1989r Q4 Ql Q2 Q3 GROSS NATIONAL PRODUCT 1 Total 4,524.3 4,880.6 5,234.0 5,017.3 5,113.1 5,201.7 5,281.0 By source 2 Personal consumption expenditures 3,010.8 3,235.1 3,471.1 3,324.0 3,381.4 3.444.1 3,508.1 3 Durable goods 421.0 455.2 473.2 467.4 466.4 471.0 486.1 4 Nondurable goods 998.1 1,052.3 1,123.4 1,078.4 1,098.3 1,121.5 1,131.4 5 Services 1,591.7 1,727.6 1,874.4 1,778.2 1,816.7 1,851.7 1,890.6 6 Gross private domestic investment 699.9 750.3 773.4 752.8 769.6 775.0 779.1 7 Fixed investment 670.6 719.6 746.3 734.1 742.0 747.6 751.7 8 Nonresidential 444.3 487.2 511.7 495.8 503.1 512.5 519.6 9 Structures 133.8 140.3 144.9 142.5 144.7 142.4 146.2 10 Producers' durable equipment 310.5 346.8 366.7 353.3 358.5 370.1 373.4 11 Residential structures 226.4 232.4 234.6 238.4 238.8 235.1 232.1 12 Change in business inventories 29.3 30.6 27.1 18.7 27.7 27.4 27.4 13 Nonfarm 30.5 34.2 22.2 40.8 19.1 23.6 19.8 14 Net exports of goods and services -112.6 -73.7 -47.1 -70.8 -54.0 -50.6 -45.1 15 Exports 448.6 547.7 625.9 579.7 605.6 626.1 628.5 16 Imports 561.2 621.3 673.0 650.5 659.6 676.6 673.6 17 Government purchases of goods and services .. 926.1 968.9 1,036.6 1,011.4 1,016.0 1.033.2 1,038.9 18 Federal 381.6 381.3 403.2 406.4 399.0 406.0 402.7 19 State and local 544.5 587.6 633.4 604.9 617.0 627.2 636.2 By major type of product 20 Final sales, total 4,495.0 4,850.0 5,206.9 4,998.7 5,085.4 5,174.3 5,253.6 21 Goods 1,785.2 1,931.9 2,072.3 1,987.4 2,030.9 2,079.1 2,096.3 22 Durable 777.6 863.6 909.1 888.5 894.7 905.2 930.1 23 Nondurable 1,007.6 1,068.3 1,163.2 1,098.9 1,136.2 1,173.9 1,166.2 24 Services 2,304.5 2,499.2 2,702.7 2,570.0 2,620.8 2,667.5 2,728.1 25 Structures 434.6 449.5 459.1 459.9 461.3 455.1 456.6 26 Change in business inventories 29.3 30.6 27.1 18.7 27.7 27.4 27.4 27 Durable goods 22.0 25.0 11.9 32.0 22.0 6.0 5.2 28 Nondurable goods 7.2 5.6 15.3 -13.3 5.7 21.4 22.2 MEMO 3,853.7 4,024.4 4,144.1 4,069.4 4,106.8 4,132.5 4,162.9 29 Total GNP in 1982 dollars NATIONAL INCOME 3,665.4 3,972.6 4,266.5 4,097.4 4,185.2 4,249.6 4,287.3 30 Total 2.690.0 2,907.6 3,144.4 2,997.2 3,061.7 3.118.2 3,171.9 31 Compensation of employees 2,249.4 2,429.0 2.631.1 2,505.1 2.560.7 2,608.8 2,654.7 32 Wages and salaries 419.2 446.5 476.9 456.3 466.9 473.5 480.2 33 Government and government enterprises .. 1.830.1 1,982.5 2.154.2 2,048.9 2.093.8 2.135.3 2,174.5 34 Other 440.7 478.6 513.3 492.0 501.0 509.4 517.2 35 Supplement to wages and salaries 227.8 249.7 265.0 255.6 259.7 263.4 266.6 36 Employer contributions for social insurance 212.8 228.9 248.3 236.5 241.3 246.0 250.7 37 Other labor income 38 Proprietors' income1 311.6 327.8 352.1 328.3 359.3 355.5 343.3 39 Business and professional 270.0 288.0 305.9 296.3 300.3 304.2 307.2 40 Farm1 41.6 39.8 46.2 32.0 59.0 51.3 36.1 41 Rental income of persons2 13.4 15.7 7.9 16.1 11.8 9.8 5.4 42 Corporate profits1 298.7 328.6 301.3 340.2 316.3 307.8 295.2 43 Profits before tax3 266.7 306.8 290.6 318.8 318.0 296.0 275.0 44 Inventory valuation adjustment -18.9 -25.0 -18.7 -20.1 -38.3 -20.5 -6.3 45 Capital consumption adjustment 50.9 46.8 29.3 41.5 36.6 32.3 26.5 46 Net interest 351.7 392.9 460.8 415.7 436.1 458.4 471.5 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A54 Domestic Nonfinancial Statistics • May 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 Q1 Q2 Q3 Q4r PERSONAL INCOME AND SAVING 1 Total personal income 3,777.6 4,064.5 4,427.3 4,185.2 4,317.8 4,400.3 4,455.9 4,535.3 2 Wage and salary disbursements 2,249.4 2,429.0 2,631.1 2,505.1 2,560.7 2,608.8 2,654.7 2,700.1 3 Commodity-producing industries 649.9 696.3 738.2 714.7 726.6 733.7 742.6 749.7 4 Manufacturing 490.3 524.0 552.9 538.1 546.3 549.9 555.7 559.6 5 Distributive industries 531.9 571.9 615.1 587.5 598.8 610.8 619.4 631.2 6 Service industries 648.3 714.4 801.0 746.7 768.4 790.8 812.4 832.2 7 Government and government enterprises 419.2 446.5 476.9 456.3 466.9 473.5 480.2 487.0 8 Other labor income 212.8 228.9 248.3 236.5 241.3 246.0 250.7 255.3 9 Proprietors' income1 311.6 327.8 352.1 328.3 359.3 355.5 343.3 350.3 10 Business and professional1 270.0 288.0 305.9 296.3 300.3 304.2 307.2 311.8 41.6 39.8 46.2 32.0 59.0 51.3 36.1 38.5 12 Rental income of persons 13.4 15.7 7.9 16.1 11.8 9.8 5.4 4.8 13 Dividends 92.0 102.2 112.4 106.4 109.4 111.4 113.2 115.7 14 Personal interest income 523.2 571.1 657.4 598.6 629.0 655.1 667.8 677.7 15 Transfer payments 548.2 584.7 632.3 593.8 616.4 626.8 636.4 649.7 16 Old-age survivors, disability, and health insurance benefits ... 282.9 300.5 325.3 304.0 316.9 322.9 327.9 333.4 17 LESS: Personal contributions for social insurance 172.9 194.9 214.2 199.6 210.0 213.0 215.4 218.2 18 EQUALS: Personal income 3,777.6 4,064.5 4,427.3 4,185.2 4,317.8 4,400.3 4,455.9 4,535.3 19 LESS: Personal tax and nontax payments 571.7 586.6 648.5 597.8 628.3 652.6 649.1 664.1 20 EQUALS: Disposable personal income 3,205.9 3,477.8 3,778.8 3,587.4 3,689.5 3,747.7 3,806.8 3,871.3 21 LESS: Personal outlays 3,104.1 3,333.1 3,574.4 3,424.0 3,483.8 3,547.0 3,611.7 3,655.3 22 EQUALS: Personal saving 101.8 144.7 204.4 163.4 205.7 200.7 195.1 216.0 MEMO Per capita (1982 dollars) 23 Gross national product 15,793.9 16,332.8 16,656.4 16,455.3 1166,,556666..44 16,629.8 1166,,771111..88 16,709.8 24 Personal consumption expenditures 10,302.0 10,545.5 10,729.9 10,625.6 10,653.5 10,678.9 10,799.3 10,783.4 25 Disposable personal income 10,970.0 11,337.0 11,680.0 11,466.0 11,625.0 11,622.0 11,717.0 11,755.0 26 Saving rate (percent) 3.2 4.2 5.4 4.6 5.6 5.4 5.1 5.6 GROSS SAVING 27 Gross saving 553.8 642.4 701.7 647.4 693.5 695.8 709.9 707.5 28 Gross private saving 663.8 738.6 806.2 769.3 792.1 793.7 809.7 829.4 29 Personal saving 101.8 144.7 204.4 163.4 205.7 200.7 195.1 216.0 30 Undistributed corporate profits 75.3 80.3 49.5 81.7 53.4 52.0 49.3 43.3 31 Corporate inventory valuation adjustment -18.9 -25.0 -18.7 -20.1 -38.3 -20.5 -6.3 -9.7 Capital consumption allowances 303.1 321.7 344.9 329.7 333355..22 333399..77 334499..99 335544..99 33 Noncorporate 183.6 191.9 207.4 194.4 197.8 201.3 215.3 215.2 34 Government surplus, or deficit (-), national income and product accounts -110.1 -96.1 -104.6 -121.9 -98.7 -97.9 -99.8 -121.9 35 Federal -161.4 -145.8 -148.5 -167.6 -147.5 -145.4 -144.7 -156.6 51.3 49.7 44.0 45.7 48.8 47.5 44.9 34.7 37 Gross investment 549.0 632.8 677.3 630.8 669.3 677.5 684.3 677.8 699.9 750.3 773.4 752.8 769.6 775.0 779.1 770.1 39 Net foreign -150.9 -117.5 -96.2 -122.0 -100.3 -97.5 -94.8 -92.2 -4.7 -9.6 -24.4 -16.6 -24.1 -18.3 -25.5 -29.6 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 Item credits or debits Q4 Q1 Q2 Q3' Q4P 1 Balance on current account -143,700 -126,548 -105,879 -28,677 -30,391r -31,999' -22,909 -20,571 2 Not seasonally adjusted -28,191 -25,994 -31,888 -27,854 -20,142 3 Merchandise trade balance -159,500 -127,215 - ii3,248 -32,019 —28,355' -27,529' -28,558 -28,806 4 Merchandise exports 250,266 319,251 361,872 83,729 87,783' 91,284' 90,691 92,114 5 Merchandise imports -409,766 -446,466 -475,120 -115,748 -116,138' -118,813' -119,249 -120,920 6 Military transactions, net -2,856 -4,606 -5,662 -1,604 -1,498 -1,518 -1,175 -1,471 7 Investment income, net 71,151 61,974 76,170 21,329 15,459' 13,417' 21,360 25,934 8 Other service transactions, net 10,585 17,702 26,279 5,475 5,433' 5,981' 7,449 7,425 9 Remittances, pensions, and other transfers -4,063 -4,279 -4,028 -1,090 -1,147' -972' -975 -935 10 U.S. government grants (excluding military) -10,149 -10,377 -10,248 -3,928 -2,340 -1,857 -2,510 -3,541 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) 997 2,999 1,037 3,413 1,049 -309 502 -206 12 Change in U.S. official reserve assets (increase, -). 9,1490 -3,5660 -25,2930 2,2710 -4,0000 -12,0950 -5,9960 -3,2020 13 Gold 14 Special drawing rights (SDRs) -509 474 -535 173 -188 68 -211 -204 15 Reserve position in International Monetary Fund. 2,070 1,025 471 307 316 -159 337 -23 16 Foreign currencies 7,588 -5,064 -25,229 1,791 -4,128 -12,004 -6,122 -2,975 17 Change in U.S. private assets abroad (increase, -). -86,363 -81,544 -101,451 -38,332 -27,939' 13,210' -39,228 -47,495 18 Bank-reported claims3 -42,119 -54,481 -47,244 -30,916 -22,132 27,238 -20,700 -31,650 19 Nonbank-reported claims 5,201 -1,684 608 4,569 1,835 -2,954 1,727 20 U.S. purchase of foreign securities, net -5,251 -7,846 -22,551 -3,047 -2,568 -5,737 -10,392 -3,854 21 U.S. direct investments abroad, net -44,194 -17,533 -32,264 -8,938 -5,074' -5,337' -9,863 -11,991 22 Change in foreign official assets in United States (increase, 23 U. + S. ) Treasury securities 4 4 5 3 , , 1 2 9 3 3 8 4 3 1 8 , , 6 8 8 8 3 2 7,3 3 6 2 9 3 1 11 0 , , 8 5 9 8 7 9 4 7 , , 6 4 3 7 4 7 - -9 5 , , 7 2 3 0 8 1 1 1 2 2 , , 0 7 9 4 7 6 - -7 7 , , 3 0 1 0 9 5 24 Other U.S. government obligations 1,564 1,309 1,383 697 721 -97 190 569 25 Other U.S. government liabilities -2,520 -1,284 55 -232 -304 417 -385 326 26 Other U.S. liabilities reported by U.S. banks3 3,918 -331 3,751 -1,036 1,974 3,620 -1,097 -746 27 Other foreign official assets5 -1,007 -2,495 1,857 -737 452 597 643 165 28 Change in foreign private assets in United States (increase, 2 3 3 3 3 9 0 1 2 3 U F U F F o o o . . S + r S r r e e e . . ) i i i g g b g n n n n a o n n p d p k b r i u - a r i r r v e n e c c a k p h t t - e o a r i s r e n p t e p v e s u o d e r r o s c t l t f h e i m a d a o b e s t i n e h l l i s t e i a s t r b i o e i i f U l n s i J < U t . i U S e . . s n S i . s t e e T c d r u e r S a it t s i a u e t r s e y , s , n s n e e t e c t u rities, net 1 - 8 4 4 7 7 9 2 6 2 2 , , , , , , 6 4 0 8 1 8 4 5 2 9 4 2 3 0 6 4 7 0 1 6 2 2 5 8 6 0 8 6 8 0 , , , , , , 5 1 8 4 4 4 5 4 3 3 4 1 8 4 2 5 8 7 1 5 2 4 6 8 1 9 7 0 9 , , , , , 4 9 3 3 3 2 1 8 3 0 1 6 1 3 4 2 3 1 7 3 2 2 5 6 2 0 3 , , , , , , 7 8 3 2 1 0 0 2 7 3 7 3 2 3 1 6 0 8 5 1 1 2 8 2 8 3 9 , , , , , , 8 6 5 5 2 1 5 6 2 6 9 6 2 5 9 1 0 1 -2 1 1 9 3 2 - 3 , 3 , , , , 4 6 4 2 2 6 2 1 5 7 6 1 2 2 2 6 7 - 2 5 1 1 1 2 5 8 2 0 2 , , , , , , 1 1 6 7 4 4 7 7 1 1 7 3 8 7 9 4 0 6 4 7 1 1 " 0 4 5 1 6 , , , , , 9 7 8 5 3 6 4 5 2 9 7 2 5 3 7 0 0 0 0 0 0 0 0 34 Allocation of SDRs 35 Discrepancy 1,878 -10,641 34,914 -19,434 1,275' 32,982' -3,085 3,737 36 Owing to seasonal adjustments 4,431 3,700' -2,825' -5,370 4,490 37 Statistical discrepancy in recorded data before seasonal adjustment 1,878 -10,641 34,914 -2,425 35,807 2,285 -753 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 9,149 -3,566 -25,293 2,271 -4,000 -12,095 -5,996 -3,202 39 Foreign official assets in United States (increase, +) excluding line 25 47,713 40,166 7,314 10,821 7,781 -5,618 12,482 -7,331 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22 above) -9,956 -3,109 10,680 672 7,143 433 -1,411 41 Transfers under military grant programs (excluded from lines 4, 6, and 10 above) 53 92 47 40 12 13 14 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 • May 1990 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1989 1990 IItteemm 11998877 11998888 11998899'' Julyr Aug/ Sept/ Oct/ Nov/ Dec/ Jan.p 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 254,073 322,426 363,983 29,662 30,249 30,367 31,474 30,627 30,843 32,072 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 406,241 440,952 472,977 39,216 40,424 38,524 41,915 40,739 38,522 41,325 Trade balance 3 Customs value -152,169 -118,526 -108,994 -9,553 -10,176 -8,157 -10,441 -10,112 -7,678 -9,253 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 11998866 11998877 11998888 Aug. Sept. Oct. Nov. Dec. Jan. Feb/ 1 Total 48,511 45,798 47,802 62,364 68,418 70,560 70,560 74,609 75,506 74,173 2 Gold stock, including Exchange Stabilization Fund1 11,064 11,078 11,057 11,066 11,065 11,062 11,060 11,059 11,059 11,059 3 Special drawing rights2'3 8,395 10,283 9,637 9,240 9,487 9,473 9,751 9,951 10,041 10,216 4 Reserve position in International Monetary Fund 11,730 11,349 9,745 8,644 8,786 8,722 9,047 9,048 99,,117733 8,985 5 Foreign currencies4 17,322 13,088 17,363 33,413 39,080 41,552 42,702 44,551 45,233 43,913 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. 1 Deposits 287 244 347 265 325 252 307 589 251 309 Assets held in custody 2 U.S. Treasury securities 155,835 195,126 232,547 238,007 235,597 230,804 231,059 224,911 225,618 221,798 3 Earmarked gold 14,048 13,919 13,636 13,516 13,506 13,460 13,458 13,456 13,458 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 1990 AAsssseett aaccccoouunntt 11998866 11998877 11998888 July Aug. Sept. Oct. Nov. Dec. Jan. All foreign countries 1 Total, all currencies 456,628 518,618 505,595 534,425 522,489 520,845 533,641 548,074' 545,366' 549,367 7 Claims on United States 114,563 138,034 169,111 179,839 177,299 182,440 184,505 195,913' 198,835' 192,887 83,492 105,845 129,856 133,359 134,479 142,339 145,034 154,825' 157,092' 149,245 4 Other banks in United States 13,685 16,416 14,918 15,744 15,225 14,164 14,248 15,301 17,042 17,768 5 17,386 15,773 24,337 30,736 27,595 25,937 25,223 25,787 24,701 25,874 6 312,955 342,520 299,728 310,426 299,265 289,996 300,814 302,525r 300,575' 307,802 7 Other branches of parent bank 96,281 122,155 107,179 117,438 108,893 104.683 110,684 111,053 113,810 119,271 8 105,237 108,859 96,932 95,621 92,465 90,510 93,357 95,098 90,703 92,649 9 23,706 21,832 17,163 16,948 16,656 16,215 16,721 16,148 16,456 15,418 10 Nonbank foreigners 87,731 89,674 78,454 80,419 81,251 78,588 80,052 80,226' 79,606' 80,464 11 Other assets 29,110 38,064 36,756 44,160 45,925 48,409 48,322 49,636r 45,956' 48,678 12 Total payable in U.S. dollars 317,487 350,107 357,573 372,076 369,287 359,924 369,898 380,282' 382,414' 374,995 n 110,620 132,023 163,456 171,265 170,497 174,628 176,228 188,105' 191,184' 184,981 14 Parent bank 82,082 103,251 126,929 128,287 130,168 137,481 139,224 149,908' 152,294' 144,015 15 Other banks in United States 12,830 14,657 14,167 14,734 14,688 13,217 13,597 14,543 16,386 16,946 16 15,708 14,115 22,360 28,244 25,641 23,930 23,407 23,654 22,504 24,020 17 Claims on foreigners 195,063 202,428 177,685 181,441 177,911 164,461 171,691 168,404' 169,690' 167,599 18 Other branches of parent bank 72,197 88,284 80,736 90,077 83,036 77,858 83,945 79,585 82,949 85,029 19 66,421 63,707 54,884 49,913 50,885 46,786 47,349 48,966 48,396 46,322 70 Public borrowers 16,708 14,730 12,131 11,616 11,774 11,646 11,579 11,446 10,961 10,358 21 Nonbank foreigners 39,737 35,707 29,934 29,835 32,216 28,171 28,818 28,407' 27,384' 25,890 22 Other assets 11,804 15,656 16,432 19,370 20,879 20,835 21,979 23,773' 21,540' 22,415 United Kingdom 23 Total, all currencies 140,917 158,695 156,835 161,882 158,860 157,673 164,155 164,916 161,947 166,915 74 Claims on United States 24,599 32,518 40,089 42,147 41,914 40,085 42,424 44,661 39,212 41,208 75 Parent bank 19,085 27,350 34,243 37,713 38,031 36,046 38,938 40,848 35,847 37,292 76 Other banks in United States 1,612 1,259 1,123 1,121 1,112 1,265 1,200 1,199 1,058 1,441 77 3,902 3,909 4,723 3,313 2,771 2,774 2,286 2,614 2,307 2,475 78 Claims on foreigners 109,508 115,700 106,388 106,586 102,231 102,097 106,430 105,349 107,657 109,837 79 Other branches of parent bank 33,422 39,903 35,625 35,440 32,392 32,611 35,252 35,064 37,728 37,701 30 39,468 36,735 36,765 36,519 36,073 37,146 38,048 36,317 36,159 37,668 31 Public borrowers 4,990 4,752 4,019 3,788 3,586 3,265 3,346 3,181 3,293 3,128 32 Nonbank foreigners 31,628 34,310 29,979 30,839 30,180 29,075 29,784 30,787 30,477 31,340 33 Other assets 6,810 10,477 10,358 13,149 14,715 15,491 15,301 14,906 15,078 15,870 34 Total payable in U.S. dollars 95,028 100,574 103,503 103,512 104,036 99,238 106,869 106,086 103,427 103,038 35 Claims on United States 23,193 30,439 38,012 38,506 39,135 37,108 39,715 41,504 36,404 38,261 36 Parent bank 18,526 26,304 33,252 36,041 36,375 34,537 37,404 39,304 34,329 35,731 37 Other banks in United States 1,475 1,044 964 821 1,007 1,017 951 861 843 1,118 38 Nonbanks 3,192 3,091 3,7% 1,644 1,753 1,554 1,360 1,339 1,232 1,412 39 Claims on foreigners 68,138 64,560 60,472 59,137 57,706 55,340 59,389 56,872 59,062 56,939 40 Other branches of parent bank 26,361 28,635 28,474 27,955 25,368 25,542 28,084 26,961 29,872 28,655 41 23,251 19,188 18,494 17,080 18,298 17,612 18,275 16,884 16,579 16,399 47 Public borrowers 3,677 3,313 2,840 2,702 2,679 2,521 2,553 2,404 2,371 2,321 43 Nonbank foreigners 14,849 13,424 10,664 11,400 11,361 9,665 10,477 10,623 10,240 9,564 44 Other assets 3,697 5,575 5,019 5,869 7,195 6,790 7,765 7,710 7,961 7,838 Bahamas and Caymans 45 Total, all currencies 142,592 160,321 170,639 173,014 165,401 164,684 164,836 172,762 176,006' 167,384 46 78,048 85,318 105,320 108,055 106,693 111,043 109,910 118,037 124,205' 117,376 47 Parent bank 54,575 60,048 73,409 67,641 69,404 76,426 75,900 82,605 87,882' 79,485 48 Other banks in United States 11,156 14,277 13,145 13,712 13,294 12,141 12,059 13,185 15,071 15,331 49 12,317 10,993 18,766 26,702 23,995 22,476 21,951 22,247 21,252 22,560 50 Claims on foreigners 60.005 70,162 58,393 57,135 50,808 45,962 47,214 46,391 44,168 42,475 51 Other branches of parent bank 17,296 21,277 17,954 24,462 16,802 14,688 16,961 14,414 11,309 12,283 57 27.476 33,751 28,268 21,591 20,688 20,162 19,579 21,641 22,611 21,056 53 Public borrowers 7.051 7,428 5,830 5,405 5,407 5,435 5,289 5,340 5,217 4,790 54 Nonbank foreigners 8,182 7,706 6,341 5,677 7,911 5,677 5,385 4,996 5,031 4,346 55 Other assets 4,539 4,841 6,926 7,824 7,900 7,679 7,712 8,334 7,633 7,533 56 Total payable in U.S. dollars 136,813 151,434 163,518 167,484 160,821 160,274 159,643 167,182 170,780' 160,843 1. Beginning with June 1984 data, reported claims held by foreign branches from $50 million to $150 million equivalent in total assets, the threshold now have been reduced by an increase in the reporting threshold for "shell" branches applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A58 International Statistics • May 1990 3.14—Continued 1989 1990 July Aug. Sept. Oct. Nov. Dec. Jan. All foreign countries 57 Total, all currencies 456,628 518,618 505,595 534,425 522,489 520,845 533,641 548,074' 545,366' 549,367 58 Negotiable CDs 31,629 30,929 28,511 28,882 29,524 26,679 26,776 26,555 23,500 23,510 59 To United States 152,465 161,390 185,577 177,769 177,542 183,203 183,576 190,149 197,239' 183,530 60 Parent bank 83,394 87,606 114,720 110,326 110,917 121,003 123,229 128,799 138,187' 115,378 61 Other banks in United States 15,646 20,355 14,737 13,353 13,269 13,015 11,476 10,811 11,704' 18,174 62 Nonbanks 53,425 53,429 56,120 54,090 53,356 49,185 48,871 50,539 47,348' 49,978 63 To foreigners 253,775 304,803 270,923 301,583 288,566 283,435 294,486 302,346 296,850 310,909 64 Other branches of parent bank 95,146 124,601 111,267 119,765 113,752 104,853 114,180 115,484 119,591 121,335 65 Banks 77,809 87,274 72,842 80,069 75,589 77,618 75,758 81,200 76,452 82,217 66 Official institutions 17,835 19,564 15,183 18,846 17,591 17,349 19,361 18,938 16,750 18,927 67 Nonbank foreigners 62,985 73,364 71,631 82,903 81,634 83,615 85,187 86,724 84,057 88,430 68 Other liabilities 18,759 21,496 20,584 26,191 26,857 27,528 28,803 29,024' 27,777' 31,418 69 Total payable in U.S. dollars 336,406 361,438 367,483 382,104 379,771 371,301 384,495 392,983' 396,282' 384,735 70 Negotiable CDs 28,466 26,768 24,045 24,914 25,483 22,927 22,260 22,539 19,619 18,512 71 To United States 144,483 148,442 173,190 163,834 166,041 170,512 171,458 179,927 187,286' 172,560 72 Parent bank 79,305 81,783 107,150 100,726 103,396 112,255 115,314 122,910 132,338' 109,116 73 Other banks in United States 14,609 18,951 13,468 11,875 11,964 11,837 10,273 9,512 10,5^ 16,884 74 Nonbanks 50,569 47,708 52,572 51,233 50,681 46,420 45,871 47,505 44,429' 46,560 75 To foreigners 156,806 177,711 160,766 181,166 175,270 165,321 177,703 177,459 176,460 180,539 76 Other branches of parent bank 71,181 90,469 84,021 91,907 87,123 77,987 85,781 82,912 87,636 86,207 77 Banks 33,850 35,065 28,493 31,215 31,939 30,232 31,986 33,370 30,537 32,910 78 Official institutions 12,371 12,409 8,224 11,176 10,680 10,195 11,445 11,713 9,873 10,986 79 Nonbank foreigners 39,404 39,768 40,028 46,868 45,528 46,907 48,491 49,464 48,414 50,436 80 Other liabilities 6,651 8,517 9,482 12,190 12,977 12,541 13,074 13,058' 12,917' 13,124 United Kingdom 81 Total, all currencies 140,917 158,695 156,835 161,882 158,860 157,673 164,155 164,916 161,947 166,915 82 Negotiable CDs 27,781 26,988 24,528 25,342 25,905 23,122 23,152 22,837 20,056 19,791 83 To United States 24,657 23,470 36,784 29,954 31,551 31,076 34,181 33,101 36,036 31,893 84 Parent bank 14,469 13,223 27,849 19,885 21,841 24,013 25,061 25,430 29,726 23,256 85 Other banks in United States 2,649 1,536 2,037 1,852 1,767 1,687 2,002 1,0% 1,256 1,545 86 Nonbanks 7,539 8,711 6,898 8,217 7,943 5,376 7,118 6,575 5,054 7,092 87 To foreigners 79,498 98,689 86,026 94,335 88,661 91,101 93,700 %,509 92,307 99,720 88 Other branches of parent bank 25,036 33,078 26,812 26,556 24,326 24,769 26,936 26,656 27,397 29,216 89 Banks 30,877 34,290 30,609 33,047 30,790 31,330 30,688 33,016 29,780 33,568 90 Official institutions 6,836 11,015 7,873 9,586 8,868 8,878 10,132 9,724 8,551 9,368 91 Nonbank foreigners 16,749 20,306 20,732 25,146 24,677 26,124 25,944 27,113 26,579 27,568 92 Other liabilities 8,981 9,548 9,497 12,251 12,743 12,374 13,122 12,469 13,548 15,511 93 Total payable in U.S. dollars 99,707 102,550 105,907 105,700 106,915 102,361 110,358 109,116 108,178 106,676 94 Negotiable CDs 26,169 24,926 22,063 23,132 23,679 21,156 20,433 20,715 18,143 16,931 95 To United States 22,075 17,752 32,588 24,618 27,232 26,592 30,433 30,130 33,056 28,542 % Parent bank 14,021 12,026 26,404 16,909 19,580 21,588 23,247 24,578 28,812 22,428 97 Other banks in United States 2,325 1,308 1,752 1,477 1,502 1,511 1,835 863 1,065 1,217 98 Nonbanks 5,729 4,418 4,432 6,232 6,150 3,493 5,351 4,689 3,179 4,897 99 To foreigners 48,138 55,919 47,083 52,179 49,913 48,557 52,902 52,135 50,517 54,574 1(H) Other branches of parent bank 17,951 22,334 18,561 18,388 17,060 16,673 18,926 16,845 18,384 19,660 101 Banks 15,203 15,580 13,407 14,173 13,578 12,331 13,177 13,587 12,244 14,701 102 Official institutions 4,934 7,530 4,348 6,131 5,825 5,532 6,605 6,755 5,454 5,649 103 Nonbank foreigners 10,050 10,475 10,767 13,487 13,450 14,021 14,194 14,948 14,435 14,564 104 Other liabilities 3,325 3,953 4,173 5,771 6,091 6,056 6,590 6,136 6,462 6,629 Bahamas and Caymans 105 Total, all currencies 142,592 160,321 170,639 173,014 165,401 164,684 164,836 172,762 176,006' 167,384 106 Negotiable CDs 847 885 953 717 691 669 669 671 678 681 107 To United States 106,081 113,950 122,332 116,324 113,179 117,611 114,701 121,021 124,859' 119,637 108 Parent bank 49,481 53,239 62,894 61,263 58,765 64,859 6666,,229922 70,107 74,%3' 63,170 109 Other banks in United States 11,715 17,224 11,494 10,227 10,076 10,026 88,,008888 8,438 8,883' 15,001 110 Nonbanks 44,885 43,487 47,944 44,834 44,338 42,726 40,321 42,476 41,013' 41,466 111 To foreigners 34,400 43,815 45,161 53,042 48,712 43,818 46,906 47,521 47,382 44,162 112 Other branches of parent bank 12,631 19,185 23,686 29,279 25,770 20,678 23,086 23,352 23,414 19,367 113 Banks 8,617 10,769 8,336 8,308 8,613 8,802 8,985 9,137 8,823 8,729 114 Official institutions 2,719 1,504 1,074 1,223 1,081 928 1,003 1,131 1,097 1,520 115 Nonbank foreigners 10,433 12,357 12,065 14,232 13,248 13,410 13,832 13,901 14,048 14,546 116 Other liabilities 1,264 1,671 2,193 2,931 2,819 2,586 2,560 3,549 3,087 2,904 117 Total payable in U.S. dollars 138,774 152,927 162,950 167,213 160,800 160,133 160,028 167,835 171,250' 162,297 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 1990 IItteemm 11998877 11998888 July Aug. Sept. Oct. Nov. Dec.' Jan.p 1 Total1 259,556 299,782 307,516 317,591 314,782 315,501 314,916' 307,944 304,673 By type 2 Liabilities reported by banks in the United States 31,838 31,519 39,216 38,171 36,393 42,561 39,030' 36,203 33,519 3 U.S. Treasury bills and certificates3 88,829 103,722 87,734 88,325 86,350 81,465 82,474 76,985 76,157 U.S. Treasury bonds and notes 4 Marketable 122,432 149,056 163,281 173,238 174,037 173,017 174,703 176,008 117766,,443355 5 Nonmarketable4 , 300 523 549 553 557 561 564 568 572 6 U.S. securities other than U.S. Treasury securities 16,157 14,962 16,736 17,304 17,445 17,897 18,145 18,180 17,990 By area 7 Western Europe1 124,620 125,097 126,533 134,232 133,694 134,336 137,743' 134,679 113344,,991111 8 Canada 4,961 9,584 9,424 9,560 8,989 8,609 9,051 9,474 9,289 9 Latin America and Caribbean 8,328 10,099 7,166 7,986 9,511 10,014 9,892' 8,807 7,926 10 Asia 116,098 145,608 155,786 157,197 154,315 154,110 149,705' 146,999 144,005 11 Africa 1,402 1,369 949 810 867 910 1,019 994 834 12 Other countries6 4,147 7,501 7,113 7,257 6,849 6,962 6,941 6,422 7,133 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 1989 IItteemm 11998866 11998877 11998888 Mar. June Sept. Dec. 1 Banks' own liabilities 222999,,,777000222 555555,,,444333888 777444,,,999888000 777666,,,555444555 666999,,,000666777 777222,,,555666000 666666,,,555666999 2 Banks' own claims 222666,,,111888000 555111,,,222777111 666888,,,999888333 777222,,,999000444 666222,,,777555888 777000,,,777111555 666555,,,111666555 111444,,,111222999 111888,,,888666111 222555,,,111000000 222555,,,999333888 222333,,,888444555 222333,,,999888333 222000,,,333777555 111222,,,000555222 333222,,,444111000 444333,,,888888444 444666,,,999666666 333888,,,999111333 444666,,,777333111 444444,,,777888999 5 Claims of banks' domestic customers2 222,,,555000777 555555111 333666444 333777666 777222333 222,,,555555888 333,,,111000000 1. Data on claims exclude foreign currencies held by U.S. monetary author- 2. Assets owned by customers of the reporting bank located in the United ities. States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A60 International Statistics • May 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 1990 HHoollddeerr aanndd ttyyppee ooff lliiaabbiilliittyy 11998877 11998888 11998899rr July Aug. Sept. Oct. Nov/ Dec/ Jan." 1 All foreigners 618,874 685,339 732,047 665,330 679,994 694,304 704,598 727,864 732,047 700,485 2 Banks' own liabilities 470,070 514,532 575,597 503,147 516,883 530,517 543,946 564,771 575,597 542,241 3 Demand deposits 22,383 21,863 21,706 21,363 19,718 21,550 21,069 21,313 21,706 19,854 4 Time deposits 148,374 152,164 170,281 149,753 155,494 157,273 162,372 165,924 170,281 160,550 5 Other. 51,677 51,366 65,752 64,303 63,732 56,157 64,979 66,173 65,752 60,978 6 Own foreign offices 247,635 289,138 317,858 267,728 277,939 295,536 295,526 311,361 317,858 300,858 7 Banks' custody liabilities5 148,804 170,807 156,450 162,184 163,111 163,787 160,652 163,093 156,450 158,244 8 U.S. Treasury bills and certificates 110011,,774433 115,056 90,501 99,365 99,683 99,209 9955,,227788 96,356 90,501 90,122 9 Other negotiable and readily transferable instruments7 16,776 16,426 17,195 16,893 17,260 17,091 16,741 16,819 17,195 16,326 10 Other 30,285 39,325 48,754 45,925 46,168 47,487 48,633 49,918 48,754 51,796 11 Nonmonetary international and regional organizations 4,464 3,224 4,772 4,240 4,418 4,945 5,769 5,905 4,772 4,714 12 Banks' own liabilities 2,702 2,527 3,156 2,716 3,402 33,,334477 3,733 4,587 3,156 3,115 13 Demand deposits 124 71 96 41 66 8899 53 62 96 36 14 Time deposits 1,538 1,183 927 918 1,079 1,702 1,043 1,075 927 1,032 15 Other3 1,040 1,272 2,133 1,756 2,257 1,555 2,638 3,449 2,133 2,044 16 Banks' custody liabilities5 1,761 698 1,616 1,524 1,016 1,598 2,036 1,318 1,616 1,599 17 U.S. Treasury bills and certificates 265 57 197 345 107 84 568 321 197 102 18 Other negotiable and readily transferable instruments7 1,497 641 1,417 1,179 909 1,479 1,454 996 1,417 1,497 19 Other 0 0 2 0 1 35 14 0 2 0 20 Official institutions9 120,667 135,241 113,189 126,951 126,496 122,743 124,026 121,503 113,189 109,676 21 Banks' own liabilities 28,703 27,109 30,855 34,132 33,238 31,615 37,524 34,099 30,855 30,004 22 Demand deposits 1,757 1,917 2,187 1,959 1,625 2,026 2,057 1,829 2,187 1,598 23 Time deposits 12,843 9,767 10,510 10,072 8,837 8,994 12,078 11,217 10,510 9,058 24 Other3 14,103 15,425 18,158 22,101 22,776 20,595 23,389 21,053 18,158 19,348 25 Banks' custody liabilities5 91,965 108,132 82,333 92,818 93,258 91,127 86,502 87,404 82,333 79,672 26 U.S. Treasury bills and certificates 88,829 103,722 76,985 87,734 8888,,332255 8866,,335500 8811,,446655 8822,,447744 76,985 76,157 27 Other negotiable and readily transferable instruments 2,990 4,130 4,988 4,821 4,735 4,588 4,734 4,805 4,988 3,427 28 Other 146 280 361 263 198 189 303 125 361 88 29 Banks10 414,280 459,523 513,080 443,172 457,463 476,027 482,104 505,880 513,080 490,164 30 Banks' own liabilities 371,665 409,501 453,063 387,306 400,975 415,761 420,918 443,548 453,063 426,399 31 Unaffiliated foreign banks 124,030 120,362 135,205 119,578 123,036 120,225 125,392 132,187 135,205 125,543 32 Demand deposits 10,898 9,948 10,332 10,145 9,101 10,695 9,884 10,735 10,332 9,600 33 Time deposits 79,717 80,189 92,169 75,166 80,603 80,789 83,913 87,344 92,169 81,555 34 Other3 33,415 30,226 32,704 34,267 33,333 28,741 31,594 34,109 32,704 34,388 35 Own foreign offices 247,635 289,138 317,858 267,728 277,939 295,536 295,526 311,360 317,858 300,856 36 Banks' custody liabilities5 42,615 50,022 60,017 55,865 56,488 60,265 61,186 62,332 60,017 63,766 37 U.S. Treasury bills and certificates 9,134 7,602 9,278 7,674 77,,883388 99,,003322 99,,225511 9,499 9,278 9,531 38 Other negotiable and readily transferable instruments7 5,392 5,725 4,715 5,326 5,284 5,095 4,770 4,446 4,715 4,625 39 Other 28,089 36,694 46,023 42,866 43,365 46,138 47,165 48,388 46,023 49,610 40 Other foreigners 79,463 87,351 101,007 90,968 91,617 90,590 92,699 94,576 101,007 95,930 41 Banks' own liabilities 67,000 75,396 88,523 78,992 79,268 79,793 81,771 8822,,553377 88,523 82,724 42 Demand deposits 9,604 9,928 9,091 9,218 8,926 8,739 9,075 88,,668888 9,091 8,620 43 Time deposits 54,277 61,025 66,675 63,596 64,975 65,787 65,338 66,288 66,675 68,905 44 Other3 3,119 4,443 12,757 6,179 5,367 5,267 7,357 7,561 12,757 5,198 45 Banks' custody liabilities5 12,463 11,956 12,484 11,976 12,349 10,796 10,928 12,038 12,484 13,207 46 U.S. Treasury bills and certificates 3,515 3,675 4,041 3,612 3,413 3,743 3,993 4,062 4,041 4,332 47 Other negotiable and readily transferable instruments7 6,898 5,929 6,075 5,566 6,332 5,929 5,783 6,572 6,075 6,777 48 Other 2,050 2,351 2,368 2,797 2,604 1,125 1,152 1,405 2,368 2,098 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 7,314 6,425 5,057 5,261 5,199 5,237 5,160 4,815 5,057 6,425 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 1990 AArreeaa aanndd ccoouunnttrryy 11998877 11998888 11998899'' July Aug. Sept. Oct. Nov. Dec.' Jan." 1 Total 618,874 685,339 732,047 665,330 679,994 694,304 704,598 727,864' 732,047 700,485 2 Foreign countries 614,411 682,115 727,275 661,091 675,576 689,359 698,829 721,959' 727,275 695,771 3 Europe 234,641 231,912 236,563 222,146 226,366 222,040 232,513 241,994' 236,563 229,824 4 Austria 920 1,155 1,224 1,417 1,404 1,345 1,193 1,467 1,224 1,404 5 Belgium-Luxembourg 9,347 10,022 10,457 8,949 9,286 10,158 10,841 10,322 10,457 11,213 6 Denmark 760 2,200 1,409 1,348 1,956 1,265 1,442 1,912 1,409 1,239 7 Finland 377 285 684 436 460 519 464 577 684 683 8 France 29,835 24,777 26,689 22,290 24,864 23,031 23,882 25,924' 26,689 22,889 9 Germany 7,022 6,772 7,409 8,875 7,651 8,345 8,700 9,089' 7,409 7,405 10 Greece 689 672 1,012 862 828 797 845 1,024 1,012 1,086 11 Italy 12,073 14,599 16,135 12,892 14,597 14,542 14,220 14,649 16,135 13,036 12 Netherlands 5,014 5,316 6,565 5,029 5,106 4,989 5,426 7,214' 6,565 7,629 13 Norway 1,362 1,559 2,399 1,522 1,453 1,698 1,342 1,952 2,399 1,254 14 Portugal 801 903 2,405 1,419 1,945 2,206 2,292 2,248 2,405 2,378 15 Spain 2,621 5,494 4,341 5,910 5,390 5,277 4,986 4,890' 4,341 5,400 16 Sweden 1,379 1,284 1,489 1,248 2,002 1,680 1,663 1,920 1,489 2,301 17 Switzerland 33,766 34,199 34,299 28,581 28,931 29,001 29,554 31,498' 34,299 33,661 18 Turkey 703 1,012 1,815 1,053 1,022 1,085 1,199 1,370 1,815 1,084 19 United Kingdom 116,852 111,811 101,824 105,310 104,055 102,210 106,285 108,805' 101,824 101,786 20 Yugoslavia 710 529 1,490 604 691 774 858 1,016 1,490 1,348 21 Other Western Europe1 9,798 8,598 13,451 13,667 13,824 12,312 16,389 15,163 13,451 12,642 22 U.S.S.R 32 138 746 175 201 244 338 286 746 229 23 Other Eastern Europe 582 591 720 559 699 562 595 668 720 1,155 24 Canada 30,095 21,062 18,754 17,472 16,958 17,960 16,670 18,193' 18,754 19,186 25 Latin America and Caribbean 220,372 271,146 308,449 266,403 275,557 284,996 286,588 297,177' 308,449 297,712 26 Argentina 5,006 7,804 7,184 7,397 8,047 8,446 8,069 7,694' 7,184 7,261 27 Bahamas 74,767 86,863 99,220 84,526 90,317 90,622 93,171 96,309' 99,220 95,102 28 Bermuda 2,344 2,621 2,784 2,269 2,209 2,124 2,458 2,549 2,784 2,457 29 Brazil 4,005 5,314 6,245 5,396 5,539 5,892 6,080 6,228 6,245 6,622 30 British West Indies 81,494 113,840 137,398 113,243 115,870 122,677 120,932 128,324 137,398 130,745 31 Chile 2,210 2,936 3,172 2,683 2,739 2,765 3,014 3,061 3,172 3,054 32 Colombia 4,204 4,374 4,527 4,235 4,365 4,199 4,887 4,681 4,527 4,286 33 Cuba 12 10 10 9 10 14 10 15 10 30 34 Ecuador 1,082 1,379 1,370 1,411 1,376 1,363 1,342 1,324 1,370 1,210 35 Guatemala 1,082 1,195 1,290 1,297 1,279 1,293 1,276 1,289 1,290 1,313 36 Jamaica 160 269 207 227 231 233 206 189 207 200 37 Mexico 14,480 15,185 14,869 13,705 13,769 14,981 14,642 14,410' 14,869 14,264 38 Netherlands Antilles 4,975 6,420 6,263 6,434 6,071 6,062 5,939 6,249 6,263 6,157 39 Panama 7,414 4,353 4,196 4,357 4,400 4,424 4,393 4,359 4,196 4,416 40 Peru 1,275 1,671 1,945 1,770 1,778 1,828 1,902 1,921 1,945 1,898 41 Uruguay 1,582 1,898 2,261 2,152 2,121 2,340 2,214 2,315 2,261 2,397 42 Venezuela 9,048 9,147 9,405 9,500 9,398 9,520 9,552 9,800' 9,405 9,787 43 Other 5,234 5,868 6,101 5,790 6,039 6,213 6,503 6,460' 6,101 6,513 44 Asia 121,288 147,838 155,140 144,106 145,917 153,564 150,975 115500,,996655'' 115555,,114400 114400,,332211 China 45 Mainland 1,162 1,895 1,867 1,522 1,700 1,804 1,985 1,655' 1,867 1,777 46 Taiwan 21,503 26,058 19,474 27,128 25,427 24,119 22,403 21,211' 19,474 19,048 47 Hong Kong 10,180 12,248 12,169 11,346 12,268 12,292 12,127 12,028 12,169 11,681 48 India 582 699 774 871 940 875 836 984 774 901 49 Indonesia 1,404 1,180 1,276 1,096 1,042 1,042 1,144 1,300 1,276 1,055 50 Israel 1,292 1,461 1,229 1,058 953 1,041 2,221 1,081 1,229 1,022 51 Japan 54,322 74,015 80,837 68,700 71,028 78,824 73,573 75,215 80,837 69,938 52 Korea 1,637 2,541 3,022 3,556 2,907 3,037 3,099 3,339 3,022 2,420 53 Philippines 1,085 1,163 1,734 936 1,083 1,055 1,158 1,242 1,734 1,083 54 Thailand i 1,345 1,236 2,071 1,254 1,776 1,430 1,686 1,887 2,071 2,365 55 Middle-East oil-exporting countries 13,988 12,083 13,324 12,368 12,524 13,021 13,450 13,574 13,324 13,187 56 Other 12,788 13,260 17,362 14,271 14,270 15,024 17,293 17,448 17,362 15,845 57 Africa 3,945 3,991 3,797 3,618 3,265 3,536 3,486 3,747 3,797 4,273 58 Egypt 1,151 911 679 738 549 574 577 633 679 636 59 Morocco 194 68 75 66 72 96 71 75 75 85 60 South Africa 202 437 202 231 201 246 220 291 202 253 61 Zaire 67 85 86 92 87 81 71 60 86 82 62 Oil-exporting countries 1,014 1,017 1,123 942 897 1,036 1,047 1,118 1,123 1,693 63 Other 1,316 1,474 1,631 1,548 1,459 1,502 1,501 1,569 1,631 1,524 64 Other countries 4,070 6,165 4,573 7,346 7,513 7,262 8,597 9,884' 4,573 4,455 65 Australia 3,327 5,293 3,833 6,620 6,721 6,518 8,046 9,115 3,833 3,777 66 All other 744 872 740 726 792 744 552 769' 740 678 67 Nonmonetary international and regional organizations 4,464 3,224 4,772 4,240 4,418 4,945 5,769 5,905' 4,772 4,714 68 International 2,830 2,503 3,825 2,881 3,084 3,390 4,450 4,768' 3,825 3,657 69 Latin American regional 1,272 589 684 961 690 1,201 919 586 684 842 70 Other regional6 362 133 263 397 644 353 400 551 263 214 1. Includes the Bank for International Settlements and Eastern European 4. Comprises Algeria, Gabon, Libya, and Nigeria. countries that are not listed in line 23. 5. Excludes "holdings of dollars" of the International Monetary Fund. 2. Comprises Bulgaria, Czechoslovakia, the German Democratic Republic, 6. Asian, African, Middle Eastern, and European regional organizations, Hungary, Poland, and Romania. except the Bank for International Settlements, which is included in "Other 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and Western Europe." United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A62 International Statistics • May 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 1990 AArreeaa aanndd ccoouunnttrryy 11998877 11998888 11998899'' July Aug. Sept. Oct. Nov. Dec.' Jan." 1 Total 459,877 491,165 534,133 481,051 488,861 499,388 514,686 534,369' 534,133 512,590 2 Foreign countries 456,472 489,094 530,501 477,264 485,737 496,466 512,009 531,632' 530,501 508,535 3 Europe 102,348 116,928 118,954 106,459 107,359 111,180 113,398 111,987' 118,954 105,471 4 Austria 793 483 415 854 549 480 575 559 415 855 5 Belgium-Luxembourg 9,397 8,515 6,478 7,558 7,510 7,404 7,497 6,606 6,478 6,367 6 Denmark 717 483 582 562 768 557 513 609 582 664 7 Finland 1,010 1,065 1,027 1,395 1,401 1,233 1,707 1,129 1,027 1,324 8 France 13,548 13,243 16,146 16,008 16,415 16,249 16,391 16,055 16,146 15,722 9 Germany 2,039 2,329 2,865 3,461 3,316 3,463 3,371 2,657 2,865 1,970 10 Greece 462 433 788 602 624 634 650 700 788 735 11 Italy 7,460 7,936 6,662 5,994 5,494 6,043 5,577 5,718 6,662 4,974 12 Netherlands 2,619 2,541 1,904 1,957 1,454 1,994 1,886 2,259 1,904 1,659 13 Norway 934 455 609 796 665 644 647 635 609 599 14 Portugal 477 261 376 283 264 252 258 275 376 292 15 Spain 1,853 1,823 1,930 2,092 1,738 1,684 1,733 1,840 1,930 2,766 16 Sweden 2,254 1,977 1,778 2,003 2,046 2,286 2,087 2,555 1,778 2,718 17 Switzerland 2,718 3,895 6,137 4,123 4,479 5,018 4,522 4,940 6,137 4,797 18 Turkey 1,680 1,233 1,049 891 960 1,028 1,021 1,044 1,049 1,074 19 United Kingdom 50,823 65,706 65,423 53,464 54,809 57,187 59,838 59,919 65,423 54,395 20 Yugoslavia 1,700 1,390 1,329 1,406 1,346 1,338 1,373 1,281 1,329 1,243 21 Other Western Europe2 619 1,152 1,302 974 1,247 1,312 1,504 1,245 1,302 1,133 22 U.S.S.R 389 1,255 1,234 1,227 1,456 1,574 1,453 1,075' 1,234 1,204 23 Other Eastern Europe 852 754 921 810 819 799 794 883 921 980 24 Canada 25,368 18,889 16,087 14,493 15,073 14,763 13,800 16,177 16,087 18,264 25 Latin America and Caribbean 214,789 214,264 230,035 217,371 216,073 219,948 220,182 232,053' 230,035 223,828 26 Argentina 11,996 11,826 9,444 10,705 10,730 10,460 10,444 10,274 9,444 9,112 27 Bahamas 64,587 66,954 77,905 70,488 68,113 70,906 7711,,442200 78,568 77,905 74,297 28 Bermuda 471 483 1,315 463 522 1,104 880044 841' 1,315 564 29 Brazil 25,897 25,735 23,888 25,824 25,597 24,999 25,075 24,418 23,888 23,685 30 British West Indies 50,042 55,888 67,981 59,670 61,493 63,543 63,023 68,625' 67,981 68,992 31 Chile 6,308 5,217 4,353 4,793 4,803 4,707 4,601 4,474 4,353 4,214 32 Colombia 2,740 2,944 2,700 2,525 22,,550044 22,,447777 22,,880000 22,,778844 22,,770000 2,532 33 Cuba 1 1 1 9 11 11 11 11 11 0 34 Ecuador 2,286 2,075 1,698 1,933 1,918 1,905 1,864 1,858 1,698 1,594 35 Guatemala 144 198 197 189 203 196 188 190 197 213 36 Jamaica 188 212 297 270 272 282 270 260 297 285 37 Mexico 29,532 24,637 23,563 23,369 23,169 22,813 22,751 23,292 23,563 22,193 38 Netherlands Antilles 980 1,306 1,840 1,159 1,022 1,103 1,120 1,018 1,840 1,728 39 Panama 4,744 2,521 1,739 2,320 2,030 1,834 1,832 1,792 1,739 1,747 40 Peru 1,329 1,013 771 867 870 823 851 836 771 750 41 Uruguay 963 910 928 854 866 899 903 915 928 932 42 Venezuela 10,843 10,733 9,688 10,269 10,024 10,064 10,269 10,119 9,688 9,306 43 Other Latin America and Caribbean 1,738 1,612 1,726 1,665 1,936 1,833 1,965 1,787 1,726 1,682 44 Asia 106,096 113300,,888811 115577,,118811 113300,,336699 113377,,668877 114400,,770044 115533,,773377 115588,,775522 115577,,118811 115511,,993377 China Mainland 968 762 634 644 575 615 594 610 634 625 46 Taiwan 4,592 4,184 2,730 3,949 3,356 3,331 2,831 2,677 2,730 2,113 47 Hong Kong 8,218 10,143 11,124 8,153 8,800 10,358 10,047 10,442 11,124 7,677 48 India 510 560 621 477 547 638 617 637 621 625 49 Indonesia 580 674 651 645 614 615 685 655 651 641 50 Israel 1,363 1,136 813 964 911 859 1,185 758 813 955 51 Japan 68,658 90,149 111,070 91,806 96,118 97,699 110,425 114,498 111,070 113,127 52 Korea 5,148 5,213 5,285 5,774 6,007 5,686 5,713 5,838 5,285 5,150 53 Philippines 2,071 1,876 1,344 1,607 1,543 1,617 1,549 1,498' 1,344 1,307 54 Thailand 496 848 1,153 1,060 1,117 1,203 1,058 1,076 1,153 1,184 55 Middle East oil-exporting countries 4,858 6,213 10,149 5,550 8,879 8,581 8,365 8,675 10,149 8,905 56 Other Asia 8,635 9,122 11,607 9,741 9,221 9,502 10,669 11,387' 11,607 9,629 57 Africa 4,742 5,718 5,927 6,066 6,032 6,028 5,763 5,914' 5,927 6,647 58 Egypt 521 507 502 577 494 501 475 471 502 470 59 Morocco 542 511 559 518 535 524 538 547 559 575 60 South Africa 1,507 1,681 1,628 1,702 1,713 1,709 1,679 1,686 1,628 1,619 61 Zaire 15 17 16 17 16 20 15 16 16 16 62 Oil-exporting countries 1,003 1,523 1,689 1,587 1,608 1,629 1,546 1,641 1,689 1,781 63 Other 1,153 1,479 1,533 1,664 1,666 1,645 1,510 1,553' 1,533 2,186 64 Other countries 3,129 2,413 2,318 2,505 3,512 3,843 5,129 6,750 2,318 2,389 65 Australia 2,100 1,520 1,788 1,518 2,499 3,078 4,301 6,174 1,788 1,760 66 Allother 1,029 894 530 987 1,013 765 828 576 530 629 67 Nonmonetary international and regional organizations 33,,440044 22,,007711 33,,663311 33,,778877 3,124 2,922 2,677 2,737 3,631 4,054 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 1990 TTyyppee ooff ccllaaiimm 11998877 11998888 11998899'' July Aug. Sept. Oct. Nov.' Dec.' Jan." 1 Total 444444499999997777777,,,,,,,666666633333335555555 555555533333338888888,,,,,,,666666688888889999999 555555588888888888888,,,,,,,111111144444447777777 555555555555551111111,,,,,,,555555544444443333333 555555588888888888888,,,,,,,111111144444447777777 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444455555559999999,,,,,,,888888877777777777777 444444499999991111111,,,,,,,111111166666665555555 555555533333334444444,,,,,,,111111133333333333333 481,051 488,861 444444499999999999999,,,,,,,333333388888888888888 514,686 534,369 555555533333334444444,,,,,,,111111133333333333333 512,590 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666664444444,,,,,,,666666600000005555555 '''''''66666662222222,,,,,,,666666655555558888888 66666660000000,,,,,,,444444499999998888888 62,832 62,765 66666662222222,,,,,,,000000055555551111111 63,425 62,255 66666660000000,,,,,,,444444499999998888888 58,636 44 OOwwnn ffoorreeiiggnn ooffffiicceess 222222222222224444444,,,,,,,777777722222227777777 222222255555557777777,,,,,,,444444433333336666666 222222299999995555555,,,,,,,666666677777772222222 248,987 252,281 222222266666665555555,,,,,,,777777788888886666666 276,547 296,756 222222299999995555555,,,,,,,666666677777772222222 290,326 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222227777777,,,,,,,666666600000009999999 111111122222229999999,,,,,,,444444422222225555555 111111133333334444444,,,,,,,777777755555551111111 128,919 132,478 111111133333331111111,,,,,,,111111122222224444444 131,249 133,883 111111133333334444444,,,,,,,777777755555551111111 123,988 66 DDeeppoossiittss 66666660000000,,,,,,,666666688888887777777 66666665555555,,,,,,,888888899999998888888 77777777777777,,,,,,,999999911111116666666 68,888 72,576 77777772222222,,,,,,,666666655555554444444 72,048 75,599 77777777777777,,,,,,,999999911111116666666 69,519 77 OOtthheerr 66666666666666,,,,,,,999999922222222222222 66666663333333,,,,,,,555555522222227777777 55555556666666,,,,,,,888888833333335555555 60,031 59,903 55555558888888,,,,,,,444444477777770000000 59,200 58,284 55555556666666,,,,,,,888888833333335555555 54,470 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444442222222,,,,,,,999999933333336666666 44444441111111,,,,,,,666666644444446666666 44444443333333,,,,,,,222222211111112222222 40,313 41,336 44444440000000,,,,,,,444444422222228888888 43,464 41,475 44444443333333,,,,,,,222222211111112222222 39,638 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 33333337777777,,,,,,,777777755555558888888 44444447777777,,,,,,,555555522222224444444 55555554444444,,,,,,,000000011111114444444 55555552222222,,,,,,,111111155555554444444 55555554444444,,,,,,,000000011111114444444 3333333,,,,,,,666666699999992222222 8888888,,,,,,,222222288888889999999 11111114444444,,,,,,,999999911111116666666 11111111111111,,,,,,,222222255555559999999 11111114444444,,,,,,,999999911111116666666 11 Negotiable and readily transferable 22222226666666,,,,,,,666666699999996666666 22222225555555,,,,,,,777777700000000000000 22222224444444,,,,,,,555555500000007777777 22222224444444,,,,,,,222222288888886666666 22222224444444,,,,,,,555555500000007777777 12 Outstanding collections and other 7777777,,,,,,,333333377777770000000 11111113333333,,,,,,,555555533333335555555 11111114444444,,,,,,,555555599999991111111 11111116666666,,,,,,,666666600000009999999 11111114444444,,,,,,,555555599999991111111 13 MEMO: Customer liability on 22222223333333,,,,,,,111111100000007777777 11111119999999,,,,,,,555555599999996666666 11111112222222,,,,,,,888888800000009999999 11111112222222,,,,,,,888888822222228888888 11111112222222,,,,,,,888888800000009999999 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States3.... 40,909 45,568 43,970 48,485 49,575 46,486 44,665 46,232 43,970 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 1989 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998866 11998877 11998888 Mar. June Sept. Dec." 1 Total 232,295 235,130 233,184 231,686 231,374 236,330 238,551 By borrower 2 Maturity of 1 year or less 160,555 163,997 172,634 168,608 167,307 169,100 178,167 3 Foreign public borrowers 24,842 25,889 26,562 24,479 23,759 24,200 23,956 4 All other foreigners 135,714 138,108 146,071 144,129 143,548 144,900 154,212 5 Maturity over 1 year 71,740 71,133 60,550 63,078 64,067 67,230 60,383 6 Foreign public borrowers 39,103 38,625 35,291 37,935 38,108 41,839 35,954 7 All other foreigners 32,637 32,507 25,259 25,142 25,959 25,391 24,429 By area Maturity of 1 year or less 8 Europe 61,784 59,027 55,909 57,741 58,340 52,437 53,668 9 Canada 5,895 5,680 6,282 5,119 5,693 6,206 5,901 10 Latin America and Caribbean 56,271 56,535 57,991 53,268 50,605 52,010 53,401 11 Asia 29,457 35,919 46,224 45,727 45,303 51,195 57,636 17 Africa 2,882 2,833 3,337 3,610 3,601 3,516 3,265 13 All other3 4,267 4,003 2,891 3,143 3,765 3,735 4,295 Maturity of over 1 year 14 Europe 6,737 6,696 4,666 4,508 4,664 8,856 4,769 15 Canada 1,925 2,661 1,922 2,309 2,592 2,459 2,328 16 Latin America and Caribbean 56,719 53,817 47,547 49,790 50,107 48,627 45,737 17 Asia 4,043 3,830 3,613 3,699 3,823 4,232 4,188 18 Africa 1,539 1,747 2,301 2,292 2,408 2,472 2,677 19 All other3 777 2,381 501 480 472 584 684 1. Reporting banks include all kinds of depository institutions besides commer- 2. Remaining time to maturity. ciaJ banks, as well as some brokers and dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A64 International Statistics • May 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 Dec. Mar. June Sept. Dec. Mar. June Sept. Dec." 1 Total 389.1 386.5 382.4 370.9 351.9 354.0 346.3 345.3 339.2 344.6 339.7 2 G-10 countries and Switzerland 147.0 156.6 159.7 156.3 150.7 148.7 152.7 145.1 144.7 145.7 152.9 3 Belgium-Luxembourg 9.4 8.4 10.0 9.1 9.2 9.5 9.0 8.6 7.8 6.9 6.3 4 France 12.3 13.6 13.7 11.8 10.9 10.3 10.5 11.2 10.8 11.1 11.7 5 Germany 10.5 11.6 12.6 11.8 10.6 9.2 10.3 10.2 10.6 10.4 10.5 6 Italy 9.7 9.0 7.5 7.4 6.3 5.6 6.8 5.2 6.1 6.8 7.4 7 Netherlands 3.8 4.6 4.1 3.3 3.2 2.9 2.7 2.8 2.8 2.4 3.1 8 Sweden 2.8 2.4 2.1 2.1 1.9 1.9 1.8 2.3 1.8 2.0 2.0 9 Switzerland 4.4 5.8 5.6 5.1 5.6 5.2 5.4 5.1 5.4 6.1 7.1 10 United Kingdom 63.3 70.9 68.8 71.7 70.4 67.6 66.2 65.3 64.2 63.3 66.8 11 Canada 6.8 5.2 5.5 4.7 5.3 4.9 5.0 4.0 5.1 5.9 6.1 12 Japan 24.1 25.1 29.8 29.2 27.3 31.6 34.9 30.4 30.1 30.8 31.9 13 Other developed countries 30.3 26.1 26.4 26.4 24.0 23.0 21.0 21.0 21.1 20.9 20.7 14 Austria 1.6 1.7 1.9 1.6 1.6 1.6 1.5 1.4 1.7 1.5 1.7 15 Denmark 2.4 1.7 1.7 1.4 1.1 1.2 1.1 1.1 1.4 1.1 1.1 16 Finland 1.6 1.4 1.2 1.0 1.2 1.3 1.1 1.0 1.0 1.1 1.0 17 Greece 2.6 2.3 2.0 2.3 2.1 2.1 1.8 2.1 2.3 2.3 2.5 18 Norway 2.9 2.4 2.2 1.9 1.9 2.0 1.8 1.6 1.8 1.4 1.4 19 Portugal 1.3 .9 .6 .5 .4 .4 .4 .4 .6 .4 .4 20 Spain 5.8 5.8 8.0 8.9 7.2 6.3 6.2 6.6 6.2 6.9 7.1 21 Turkey 2.0 2.0 2.0 2.0 1.8 1.6 1.5 1.3 1.1 1.1 1.2 22 Other Western Europe 2.0 1.5 1.6 1.9 1.7 1.9 1.3 1.1 1.1 1.0 .7 23 South Africa 3.2 3.0 2.9 2.8 2.8 2.7 2.4 2.2 2.1 2.1 2.0 24 Australia 5.0 3.4 2.4 2.0 2.2 1.8 1.8 2.4 1.9 2.1 1.4 25 OPEC countries3 21.5 19.4 17.4 17.6 17.0 17.9 16.6 16.2 16.0 16.2 17.2 26 Ecuador 2.1 2.2 1.9 1.9 1.8 1.8 1.7 1.6 1.5 1.5 1.3 27 Venezuela 9.0 8.7 8.1 8.1 8.0 7.9 7.9 7.9 7.5 7.3 7.1 28 Indonesia 3.0 2.5 1.9 1.8 1.8 1.8 1.7 1.7 1.9 2.0 2.0 29 Middle East countries 5.4 4.3 3.6 3.9 3.5 4.6 3.4 3.3 3.4 3.5 5.0 30 African countries 2.0 1.8 1.9 1.9 1.9 1.9 1.9 1.7 1.6 1.9 1.8 31 Non-OPEC developing countries 105.0 99.6 97.8 94.4 91.8 87.2 85.3 85.4 83.1 80.8 78.0 Latin America 32 Argentina 8.9 9.5 9.5 9.6 9.5 9.3 9.0 8.4 7.9 7.6 6.4 33 Brazil 25.5 25.3 24.7 23.8 23.7 22.4 22.4 22.7 22.0 20.8 19.1 34 Chile 7.0 7.1 6.9 6.6 6.4 6.3 5.6 5.7 5.1 4.9 4.6 35 Colombia 2.6 2.1 2.0 2.0 2.2 2.1 2.1 1.9 1.7 1.6 1.8 36 Mexico 24.3 24.0 23.5 22.4 21.1 20.4 18.8 18.0 17.5 17.0 17.8 37 Peru 1.8 1.4 1.1 1.1 .9 .8 .8 .7 .6 .6 .6 38 Other Latin America 3.5 3.1 2.8 2.8 2.6 2.5 2.6 2.7 2.6 2.9 2.8 Asia China 39 Mainland .5 . .4 .3 .4 .4 .2 .3 .5 .3 .3 .3 40 Taiwan 4.5 4.9 8.2 6.1 4.9 3.2 3.7 4.9 5.2 5.0 4.5 41 India 1.2 1.2 1.9 2.1 2.3 2.0 2.1 2.6 2.4 2.7 3.1 42 Israel 1.6 1.5 1.0 1.0 1.0 1.0 1.2 .9 .8 .7 .7 43 Korea (South) 9.3 6.7 5.0 5.7 5.9 6.0 6.1 6.1 6.6 6.5 5.9 44 Malaysia 2.4 2.1 1.5 1.5 1.5 1.7 1.6 1.7 1.6 1.7 1.7 45 Philippines 5.7 5.4 5.2 5.1 4.9 4.7 4.5 4.4 4.4 4.0 4.1 46 Thailand 1.4 .9 .7 1.0 1.1 1.2 1.1 1.0 1.0 1.3 1.3 47 Other Asia 1.0 .7 .7 .7 .8 .8 .9 .8 .8 1.0 1.0 Africa 48 Egypt 1.0 .7 .6 .5 .6 .5 .4 .5 .6 .5 .4 49 Morocco .9 .9 .9 .9 .9 .8 .9 .9 .9 .8 .9 50 Zaire .1 .1 .0 .1 .1 .0 .0 .0 .0 .0 .0 51 Other Africa4 1.9 1.6 1.3 1.2 1.2 1.2 1.1 1.1 1.1 1.0 1.0 52 Eastern Europe 4.4 3.5 3.2 3.1 3.3 3.1 3.6 3.5 3.4 3.5 3.5 53 U.S.S.R .1 .1 .3 .3 .4 .4 .7 .7 .6 .8 .7 54 Yugoslavia 2.4 2.0 1.8 1.9 1.9 1.8 1.8 1.7 1.7 1.7 1.5 55 Other 1.9 1.4 1.1 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.2 56 Offshore banking centers 64.0 61.5 54.5 51.5 43.0 47.3 44.2 48.5 43.1 48.7 37.2 57 Bahamas 21.5 22.4 17.3 15.9 8.9 12.9 11.0 15.8 11.0 11.2 5.7 58 Bermuda .7 .6 .6 .8 1.0 .9 .9 1.1 .7 1.3 1.7 59 Cayman Islands and other British West Indies 12.2 12.3 13.5 11.6 10.3 11.9 12.9 12.0 10.8 15.1 9.4 60 Netherlands Antilles 2.2 1.8 1.2 1.3 1.2 1.2 1.0 .9 .9 1.0 2.2 61 Panama5 6.0 4.0 3.7 3.2 3.0 2.6 2.5 2.2 1.9 1.5 1.4 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 11.5 11.1 11.2 11.3 11.6 10.5 9.6 9.6 10.4 10.7 9.6 64 Singapore 9.8 9.2 7.0 7.4 6.9 7.0 6.1 6.8 7.3 7.8 7.0 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 16.9 19.8 23.2 21.5 22.2 26.7 22.6 25.1 27.4 28.4 30.1 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 35,035' 2 Payable in dollars 24,296 21,749 22,785 24,852 27,176 28,037 31,649 31,894 30,197' 3 Payable in foreign currencies 3,529 3,838 5,517 5,302 5,229 5,586 5,790 5,073 4,838' 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 12,200' 6 Payable in foreign currencies 2,343 2,524 3,781 3,660 3,594 3,868 4,080 3,860 3,829' 7 Commercial liabilities 14,225 13,454 15,878 16,220 17,325 18,506 19,908 20,047 19,006' 8 Trade payables 6,685 6,450 7,305 6,768 6,480 6,454 7,009 6,339 6,416' 9 Advance receipts and other liabilities .. 7,540 7,004 8,573 9,452 10,845 12,052 12,899 13,708 12,59c 10 Payable in dollars 13,039 12,140 14,142 14,578 15,691 16,788 18,197 18,834 17,997' 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 861 542 866 862 996 879 933 834 853 17 Switzerland 610 646 558 638 687 1,163 954 936 839 18 United Kingdom 4,305 5,140 5,557 6,201 7,243 6,418 9,121 7,799 6,859 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 11,,339988 2,042 2,331 2,435 2,563 2,950 3,082 3,130 29 Middle East oil-exporting countries2 . 82 88 8 11 4 3 1 12 2 30 Africa 12 1 4 2 3 1 5 3 4 0 1 1 1 1 0 3 2 2 31 Oil-exporting countries3 50 67 100 74 3 2 2 97 97 32 All other4 Commercial liabilities 4,074 4,446 5,516 5,755 6,688 7,348 7,944 7,865 7,985 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 1,1% 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 7,018' 49 Japan 1,799 2,042 2,578 2,659 2,763 3,091 3,059 2,712 2,649' 50 Middle East oil-exporting countries2,5 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 • May 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 31,920' 2 Payable in dollars 26,574 33,867 28,502 35,828 35,967 31,252 29,371 31,727 29,708r 3 Payable in foreign currencies 2,302 2,399 2,462 2,097 2,498 2,323 2,296 2,106 2,212r By type 4 Financial claims 18,891 26,273 20,363 26,537 27,341 21,638 19,743 21,774 19,393' 5 Deposits 15,526 19,916 14,903 19,750 19,383 15,906 14,838 17,043 12,958' 6 Payable in dollars 14,911 19,331 13,775 18,964 18,370 14,820 13,942 16,131 12,093 1 Payable in foreign currencies 615 585 1,128 786 1,013 1,086 896 911 865' 8 Other financial claims 3,364 6,357 5,460 6,787 7,958 5,732 4,905 4,731 6,435' 9 Payable in dollars 2,330 5,005 4,646 5,892 7,016 5,001 4,012 4,016 5,571' 10 Payable in foreign currencies 1,035 1,352 814 895 942 731 893 716 864' 11 Commercial claims 9,986 9,992 10,600 11,387 11,123 11,937 11,924 12,059 12,528' 12 Trade receivables 8,696 8,783 9,535 10,347 10,124 10,858 10,660 10,857 11,344' 13 Advance payments and other claims 1,290 1,209 1,065 1,040 1,000 1,079 1,265 1,202 1,184' 14 Payable in dollars 9,333 9,530 10,081 10,971 10,581 11,432 11,417 11,581 12,045' 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 7,754' 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 6,557' 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 44,,006699 1,857 2,172 1,880 1,707 26 Bermuda 6 6 7 87 118888 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 175 133 178 158 172 177 201 201 212' 39 France 426 431 650 687 544 673 760 775 817 40 Germany 346 444 562 774 615 612 646 642 670' 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 3,264' 53 Japan 1,016 881 1,158 1,169 967 934 1,038 990 1,166' 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 1990 1989 1990 Transactions, and area or country 1988 1989 Jan.- July Aug. Sept. Oct. Nov. Dec/ Jan." Jan. U.S. corporate securities STOCKS 1 Foreign purchases 181,185 212,977'' 13,741 17,122 22,112 19,595 22,350 13,83c 15,410 13,741 2 Foreign sales 183,185 203,387r 14,127 15,087 20,942 17,047 20,988 14,947 16,868 14,127 3 Net purchases, or sales (-) -2,000 9,591' -385 2,035 1,171 2,548 1,363 -1,117' -1,458 -385 4 Foreign countries -1,825 9,835' -354 2,052 1,154 2,599 1,340 -1,116 -1,411 -354 5 Europe -3,350 248' -183 779 -98 1,461 -107 -1,655 -281 -183 6 France -281 -700 -155 75 -251 -5 -265 -2% -255 -155 7 Germany 218 -865 41 -79 -238 -65 -117 -119 -41 41 8 Netherlands -535 168 -18 12 -63 37 226 -34 -9 -18 9 Switzerland -2,243 -3,470 -240 -23 -333 64 -244 -509 -442 -240 10 United Kingdom -954 3,727' -275 546 773 894 -34 -718 391 -275 11 Canada 1,087 -864 -141 8 14 -265 -140 -137 -459 -141 12 Latin America and Caribbean 1,238 3,102' -111 109 250 602 149 -24 -478 -111 13 Middle East' -2,474 3,530 -27 456 554 110 112 303 69 -27 14 Other Asia 1,365 3,414 231 729 423 631 1,138 342 -124 231 15 Japan 1,922 3,348 166 626 424 611 975 310 -53 166 16 Africa 188 131 2 2 22 24 -6 19 9 2 17 Other countries 121 274 -125 -30 -11 38 193 37 -147 -125 18 Nonmonetary international and regional organizations -176 -245 -31 -17 17 -52 23 -1 -48 -31 BONDS2 19 Foreign purchases 86,381 120,346 9,463 10,045 10,944 8,603 10,930 11,133 13,587 9,463 20 Foreign sales 58,417 86,264' 7,404 7,552 9,361 6,857 6,772 6,656 9,310 7,404 21 Net purchases, or sales (-) 27,964 34,082' 2,059 2,494 1,583 1,746 4,158 4,476 4,277 2,059 22 Foreign countries 28,506 33,737' 2,054 2,516 1,607 1,740 4,106 4,464 4,224 2,054 23 Europe 17,239 19,780' 1,135 1,976 -138 1,400 1,986 2,712 1,317 1,135 24 France 143 372 118 121 -35 78 -41 -14 6 118 25 Germany 1,344 -239 -114 -53 -121 -33 113 -117 -33 -114 26 Netherlands 1,514 850 -43 -22 % 28 30 143 41 -43 27 Switzerland 505 -165 157 81 -201 -27 74 54 -277 157 28 United Kingdom 13,084 18,395' 1,132 1,937 -9 1,311 1,711 2,328 1,842 1,132 29 Canada 711 1,112 178 79 76 155 175 -86 204 178 30 Latin America and Caribbean 1,931 3,682 493 300 63 233 247 539 492 493 31 Middle East' -178 -171 87 19 44 20 140 -57 242 87 32 Other Asia 8,900 9,060 152 35 1,574 -108 1,553 1,343 1,954 152 33 Japan 7,686 6,331 170 -44 1,167 -179 1,263 1,045 1,728 170 34 Africa -8 56 3 3 5 -3 0 8 27 3 35 Other countries -89 218 5 103 -17 42 4 4 -11 5 36 Nonmonetary international and regional organizations -542 345 5 -22 -24 6 53 12 52 5 Foreign securities 37 Stocks, net purchases, or sales (-)3 -1,959 -13,690' 345 -808 -1,706 -648 -1,341 -927' -2,008 345 38 Foreign purchases 75,356 103,068' 12,438 7,640 9,489 8,473 10,309 9,426' 9,643 12,438 39 Foreign sales 77,315 116,758' 12,093 8,448 11,195 9,121 11,650 10,354' 11,651 12,093 40 Bonds, net purchases, or sales (-) -7,434 -5,750' 567 -1,406 1,005 -1,845 -615 478' -270 567 41 Foreign purchases 218,521 234,029' 18,452 20,222 24,106 18,325 21,266 20,463' 18,543 18,452 42 Foreign sales 225,955 239,779' 17,885 21,628 23,101 20,170 21,881 19,986' 18,812 17,885 43 Net purchases, or sales (-), of stocks and bonds -9,393 -19,440' 913 -2,214 -701 -2,493 -1,956 -449' -2,278 913 44 Foreign countries -9,873 -19,415' 805 -2,366 -887 -1,926 -1,618 -527' -2,286 805 45 Europe -7,864 -18,621' 1,013 -2,534 -860 -2,099 -2,487 -193' -762 1,013 46 Canada -3,747 -4,066 -58 -697 -250 -201 924 -325 -967 -58 47 Latin America and Caribbean 1,384 435 33 -75 314 -61 187 -102 -269 33 48 Asia 979 2,956' 78 921 327 412 -232 -2' -512 78 49 Africa -54 93 -14 12 -4 -3 12 13 56 -14 50 Other countries -571 -212' -248 8 -414 26 -21 83' 168 -248 51 Nonmonetary international and regional organizations 480 -25 108 152 186 -568 -338 77 8 108 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 • May 1990 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1990 1989 1990 Country or area 1988 1989 J J a a n n . . - July Aug. Sept. Oct. Nov. Dec. Jan.p Transactions, net purchases or sales (-) during period1 1 Estimated total2 48,832 54,690R 730 -1,317 21,979 4,616 -2,050 8,195' 1,149 730 2 Foreign countries2 48,170 52,713r 1,192 -761 22,409 5,698 -3,304 8,311' -362 1,192 3 Europe2 14,319 36,034' 1,238 4,357 15,191 2,494 -2,137 4,259' 2,434 1,238 4 Belgium-Luxembourg 923 1,053 144 82 413 216 90 210 -85 144 5 Germany -5,268 7,922 -216 2,622 2,503 510 137 1,666 1,735 -216 6 Netherlands -356 -1,137 -330 100 1,304 302 -1,200 54 -386 -330 7 Sweden -323 889 -71 110 241 -50 140 -232 29 -71 8 Switzerland2 -1,074 1,097 -284 -361 -748 374 -187 -780 -355 -284 9 United Kingdom 9,640 20,250' 150 1,024 9,863 339 -919 3,823' 1,286' 150 10 Other Western Europe 10,786 5,982 1,845 786 1,614 802 -199 -481 209 1,845 11 Eastern Europe -10 -21' 0 -5 0 0 0 0' 0' 0 12 Canada 3,761 621 -543 -533 1,028 -373 150 375 164 -543 13 Latin America and Caribbean 713 494 -333 839 -280 23 -1,439 1,372 -886 -333 14 Venezuela -109 311 -107 71 120 29 72 163 -36 -107 15 Other Latin America and Caribbean 1,130 -292 262 104 217 -506 34 576 -610 262 16 Netherlands Antilles -308 475 -488 665 -617 500 -1,545 634 -240 -488 17 Asia 27,603 14,008 549 -4,941 7,121 2,857 -131 1,646 -2,669 549 18 Japan 21,750 2,393 839 -5,360 3,009 2,402 1,330 1,085 -1,036 839 19 Africa -13 116 9 -5 -48 0 13 9 39 9 20 All other 1,786 1,439 273 -478 -602 697 240 649' 555 273 21 Nonmonetary international and regional organizations 661 1,978 -462 -557 -431 -1,082 1,254 -116 1,511 -462 22 International 1,106 1,473 -551 -546 -576 -719 1,158 -143 1,335 -551 23 Latin America regional -31 231 38 3 75 -228 160 0 0 38 Memo 24 Foreign countries2 48,170 52,713' 1,192 -761 22,409 5,698 -3,304 8,311' -362 1,192 25 Official institutions 26,624 26,952' 427 2,819 9,957 799 -1,020 1,686 1,305' 427 26 Other foreign2 21,546 25,761' 765 -3,580 12,452 4,900 -2,284 6,626' -1,667' 765 Oil-exporting countries 27 Middle East5 1,963 8,146 1,016 435 3,681 695 -2,183 -26 -640 1,016 28 Africa4 1 -1 -1 0 0 0 0 -1 0 -1 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria. notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Interest and Exchange Rates A69 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on Mar. 31, 1990 Rate on Mar. 31, 1990 Rate on Mar. 31, 1990 Country Country Month Month Month effective effective effective 6.0 June 1989 France 10.0 Dec. 1989 Norway 8.0 June 1983 10.25 Oct. 1989 Germany, Fed. Rep. of. 6.0 Oct. 1989 Switzerland ...., 6.0 Oct. 1989 49.0 Mar. 1981 Italy 13.5 Mar. 1989 United Kingdom 13.51 Mar. 1990 Japan 5.25 Mar. 1990 Venezuela Oct. 1985 10.5 Oct. 1989 Netherlands 7.0 Oct. 1989 1. As of the end of February 1981, the rate is that at which the Bank of France or makes advances against eligible commercial paper and/or government comdiscounts Treasury bills for 7 to 10 days. mercial banks or brokers. For countries with more than one rate applicable to 2. Minimum lending rate suspended as of Aug. 20, 1981. such discounts or advances, the rate shown is the one at which it is understood the NOTE. Rates shown are mainly those at which the central bank either discounts central bank transacts the largest proportion of its credit operations. 3.27 FOREIGN SHORT-TERM INTEREST RATES Percent per year, averages of daily figures 1989 1990 Country, or type 11998877 11998888 11998899 Sept. Oct. Nov. Dec. Jan. Feb. Mar. 7.07 7.85 9.16 8.85 8.67 8.42 8.39 8.22 8.24 8.37 9.65 10.28 13.87 13.99 15.03 15.07 15.07 15.13 15.07 15.23 8.38 9.63 12.20 12.32 12.29 12.35 12.34 12.24 12.96 13.35 3.97 4.28 7.04 7.37 8.08 8.22 8.06 8.22 8.27 8.42 3.67 2.94 6.83 7.42 7.63 7.68 8.14 9.35 9.31 8.88 5.24 4.72 7.28 7.53 8.08 8.40 8.47 8.82 8.93 8.70 8.14 7.80 9.27 9.20 9.89 10.41 10.71 11.19 10.93 10.56 8 Italy 11.15 11.04 12.44 12.40 12.63 12.67 12.83 12.88 13.22 13.03 7.01 6.69 8.65 8.66 9.51 9.81 10.03 10.48 10.54 10.39 3.87 3.96 4.73 4.88 5.25 5.71 5.80 6.02 6.22 6.33 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
A70 International Statistics • May 1990 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1989 1990 Country/currency 11998877 11998888 11998899 Oct. Nov. Dec. Jan. Feb. Mar. 1 Australia/dollar^ 70.137 78.409 79.186 77.421 78.295 78.586 78.111 75.932 75.562 2 Austria/schilling 12.649 12.357 13.236 13.140 12.860 12.241 11.904 11.803 11.514 3 Belgium/franc 37.358 36.785 39.409 39.197 38.403 36.544 35.451 34.998 35.398 4 Canada/dollar 1.3259 1.2306 1.1842 1.1749 1.1697 1.1613 1.1720 1.1965 1.1800 5 China, P.R./yuan 3.7314 3.7314 3.7673 3.7314 3.7314 4.1825 4.7339 4.7339 4.7339 6 Denmark/krone 6.8478 6.7412 7.3210 7.2781 7.1138 6.7610 6.5620 6.4729 6.5349 7 Finland/markka 4.4037 4.1933 4.2963 4.2817 4.2619 4.1231 4.0080 3.9642 4.0276 8 France/franc 6.0122 5.9595 6.3802 6.3339 6.2225 5.9391 5.7568 5.6897 5.7555 9 Germany/deutsche mark 1.7981 1.7570 1.8808 1.8662 1.8300 1.7378 1.6914 1.6758 1.7053 10 Greece/drachma 135.47 142.00 162.60 165.88 164.97 160.32 157.68 158.04 162.44 11 Hong Kong/dollar 7.7986 7.8072 7.8008 7.8081 7.8140 7.8102 7.8116 7.8103 7.8129 12 India/rupee 12.943 13.900 16.213 16.819 16.925 16.932 16.963 16.990 17.116 13 Ireland/punt2 148.79 152.49 141.80 142.50 144.73 151.65 156.31 158.28 156.26 14 Italy/lira ,297.03 1,302.39 1,372.28 1,369.24 1,343.83 1,291.93 1,261.87 1,243.68 1,257.67 15 Japan/yen 144.60 128.17 138.07 142.21 143.53 143.69 144.98 145.69 153.31 16 Malaysia/ringgit 2.5186 2.6190 2.7079 2.6945 2.7028 2.7032 2.7041 2.7137 2.7170 17 Netherlands/guilder 2.0264 1.9778 2.1219 2.1072 2.0652 1.9619 1.9073 1.8892 1.9204 18 New Zealand/dollar2 ... 59.328 65.560 59.354 55.937 56.301 59.458 60.220 59.156 58.471 19 Norway/krone 6.7409 6.5243 6.9131 6.9502 6.9010 6.7021 6.5462 6.4760 6.5972 20 Portugal/escudo 141.20 144.27 157.53 159.08 157.65 152.34 149.17 147.71 150.59 21 Singapore/dollar 2.1059 2.0133 1.9511 1.9622 1.9588 1.9183 1.8873 1.8641 1.8777 22 South Africa/rand 2.0385 2.2773 2.6215 2.6403 2.6295 2.5679 2.5532 2.5449 2.6158 23 South Korea/won 825.94 734.52 674.29 673.86 674.94 677.66 686.18 692.47r 700.50 24 Spain/peseta 123.54 116.53 118.44 118.77 116.58 112.24 109.71 108.27 109.37 25 Sri Lanka/rupee 29.472 31.820 35.947 40.018 40.017 40.018 40.018 40.018 40.018 26 Sweden/krona 6.3469 6.1370 6.4559 6.4580 6.4306 6.2920 6.1776 6.1250 6.1683 27 Switzerland/franc 1.4918 1.4643 1.6369 1.6302 1.6189 1.5686 1.5175 1.4879 1.5133 28 Taiwan/dollar 31.753 28.636 26.407 25.739 26.029 26.139 26.081 26.118 26.361 29 Thailand/baht 25.775 25.312 25.725 25.868 25.877 25.778 25.745 25.733 25.926 30 United Kingdom/pound2 163.98 178.13 163.82 158.74 157.26 159.65 165.12 169.61 162.45 MEMO 31 United States/dollar3... 96.94 92.72 98.60 98.92 97.99 94.88 93.00 92.25 94.11 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
71 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) . . . Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other po- "U.S. government securities" may include guaranteed litical subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables, details do not add to totals because also include not fully guaranteed issues) as well as direct of rounding. STATISTICAL RELEASES—List Published Semiannually, with Latest BULLETIN Reference Issue Page Anticipated schedule of release dates for periodic releases 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 All June 30, 1989 January 1990 All 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 All 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
72 Federal Reserve Board of Governors ALAN GREENSPAN, Chairman MARTHA R. SEGER MANUEL H. JOHNSON, Vice Chairman WAYNE D. ANGELL OFFICE OF BOARD MEMBERS DIVISION OF INTERNATIONAL FINANCE JOSEPH R. COYNE, Assistant to the Board EDWIN M. TRUMAN, Staff Director DONALD J. WINN, Assistant to the Board LARRY J. PROMISEL, Senior Associate Director BOB STAHLY MOORE, Special Assistant to the Board CHARLES J. SIEGMAN, Senior Associate Director DAVID H. HOWARD, Deputy Associate Director ROBERT F. GEMMILL, Staff Adviser LEGAL DIVISION DONALD B. ADAMS, Assistant Director PETER HOOPER III, Assistant Director KAREN H. JOHNSON, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel RALPH W. SMITH, JR., Assistant Director RICHARD M. ASHTON, Associate General Counsel OLIVER IRELAND, Associate General Counsel RICKI R. TIGERT, Associate General Counsel DIVISION OF RESEARCH AND STATISTICS SCOTT G. ALVAREZ, Assistant General Counsel MARYELLEN A. BROWN, Assistant to the General Counsel MICHAEL J. PRELL, Director EDWARD C. ETTIN, Deputy Director THOMAS D. SIMPSON, Associate Director OFFICE OF THE SECRETARY LAWRENCE SLIFMAN, Associate Director DAVID J. STOCKTON, Associate Director WILLIAM W. WILES, Secretary MARTHA BETHEA, Deputy Associate Director JENNIFER J. JOHNSON, Associate Secretary PETER A. TINSLEY, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary MYRON L. KWAST, Assistant Director PATRICK M. PARKINSON, Assistant Director MARTHA S. SCANLON, Assistant Director DIVISION OF CONSUMER JOYCE K. ZICKLER, Assistant Director AND COMMUNITY AFFAIRS LEVON H. GARABEDIAN, Assistant Director (Administration) GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director DIVISION OF MONETARY AFFAIRS ELLEN MALAND, Assistant Director DOLORES S. SMITH, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director BRIAN F. MADIGAN, Assistant Director DIVISION OF BANKING RICHARD D. PORTER, Assistant Director SUPERVISION AND REGULATION NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM TAYLOR, Staff Director DON E. KLINE, Associate Director OFFICE OF THE INSPECTOR GENERAL FREDERICK M. STRUBLE, Associate Director WILLIAM A. RYBACK, Deputy Associate Director BRENT L. BOWEN, Inspector General STEPHEN C. SCHEMERING, Deputy Associate Director BARRY R. SNYDER, Assistant Inspector General RICHARD SPILLENKOTHEN, Deputy Associate Director HERBERT A. BIERN, Assistant Director JOE M. CLEAVER, Assistant Director ROGER T. COLE, Assistant Director JAMES I. GARNER, Assistant Director JAMES D. GOETZINGER, Assistant Director MICHAEL G. MARTINSON, Assistant Director ROBERT S. PLOTKIN, Assistant Director SIDNEY M. SUSSAN, Assistant Director LAURA M. HOMER, Securities Credit Officer Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
73 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 EDWARD T. MULRENIN, Assistant Staff Director THEODORE E. ALLISON, Staff Director WILLIAM SCHNEIDER, Special Assignment: Project Director, National Information Center DIVISION OF FEDERAL RESERVE PORTIA W. THOMPSON, Equal Employment Opportunity Programs Officer BANK OPERATIONS DIVISION OF HUMAN RESOURCES CLYDE H. FARNSWORTH, JR., Director MANAGEMENT DAVID L. ROBINSON, Associate Director C. WILLIAM SCHLEICHER, JR., Associate Director DAVID L. SHANNON, Director BRUCE J. SUMMERS, Associate Director JOHN R. WEIS, Associate Director CHARLES W. BENNETT, Assistant Director ANTHONY V. DIGIOIA, Assistant Director JACK DENNIS, JR., Assistant Director JOSEPH H. HAYES, JR., Assistant Director EARL G. HAMILTON, Assistant Director FRED HOROWITZ, Assistant Director JOHN H. PARRISH, Assistant Director LOUISE L. ROSEMAN, Assistant Director OFFICE OF THE CONTROLLER FLORENCE M. YOUNG, Assistant Director GEORGE E. LIVINGSTON, Controller STEPHEN J. CLARK, Assistant Controller (Programs and Budgets) DARRELL R. PAULEY, Assistant Controller (Finance) DIVISION OF SUPPORT SERVICES ROBERT E. FRAZIER, Director GEORGE M. LOPEZ, Assistant Director DAVID L. WILLIAMS, Assistant Director OFFICE OF THE EXECUTIVE DIRECTOR FOR INFORMATION RESOURCES MANAGEMENT ALLEN E. BEUTEL, Executive Director STEPHEN R. MALPHRUS, Deputy Executive Director 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 • May 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. LA WARE 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
75 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, Worthington, 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 GARMAN, 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
76 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 $75.00 per year. Reserve 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 Most of the articles reprinted do not exceed 12 pages. may be sent to Publications Services. Staff Studies 114-145 are out of print. Limit of 10 copies 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF Foreign Experience with Targets for Money Growth. 10/83. BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by Intervention in Foreign Exchange Markets: A Summary of Thomas F. Brady. November 1985. 25 pp. Ten Staff Studies. 11/83. 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- A Financial Perspective on Agriculture. 1/84. DEXES OF THE MONETARY AGGREGATES, by Helen T. Survey of Consumer Finances, 1983. 9/84. Farr and Deborah Johnson. December 1985. 42 pp. Bank Lending to Developing Countries. 10/84. 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE Survey of Consumer Finances, 1983: A Second Report. ECONOMIC RECOVERY TAX ACT: SOME SIMULATION 12/84. RESULTS, by Flint Brayton and Peter B. Clark. Decem- Union Settlements and Aggregate Wage Behavior in the ber 1985. 17 pp. 1980s. 12/84. 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN The Thrift Industry in Transition. 3/85. BANKING BEFORE AND AFTER ACQUISITION, by Stephen A Revision of the Index of Industrial Production. 7/85. A. Rhoades. April 1986. 32 pp. Financial Innovation and Deregulation in Foreign Industrial 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: Countries. 10/85. A REEXAMINATION AND AN APPLICATION, by John T. Recent Developments in the Bankers Acceptance Market. Rose and John D. Wolken. May 1986. 13 pp. 1/86. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRIC- The Use of Cash and Transaction Accounts by American ING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Families. 2/86. Alice P. White, Paul F. O'Brien, and Mary M. Financial Characteristics of High-Income Families. 3/86. McLaughlin. January 1987. 30 pp. Prices, Profit Margins, and Exchange Rates. 6/86. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Agricultural Banks under Stress. 7/86. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Foreign Lending by Banks: A Guide to International and April 1987. 18 pp. U.S. Statistics. 10/86. 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and Recent Developments in Corporate Finance. 11/86. Alice P. White. September 1987. 14 pp. Measuring the Foreign-Exchange Value of the Dollar. 6/87. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF PRO- Changes in Consumer Installment Debt: Evidence from the POSED CEILINGS ON CREDIT CARD INTEREST RATES, by 1983 and 1986 Surveys of Consumer Finances. 10/87. Glenn B. Canner and James T. Fergus. October 1987. Home Equity Lines of Credit. 6/88. 26 pp. U.S. International Transactions in 1988. 5/89. 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
78 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 Business activity, nonfinancial, 46 FARM mortgage loans, 38 Business expenditures on new plant and equipment, 35 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business loans (See Commercial and industrial loans) Federal credit agencies, 33 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 Customer credit, stock market, 25 Foreign banks, assets and liabilities of U.S. branches and 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
79 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 Reserve requirements, 8 HOUSING, new and existing units, 51 Reserves Commercial banks, 18 INCOME, personal and national, 46, 53 , 54 Depository institutions, 3, 4, 5, 12 Industrial production, 46, 49 Federal Reserve Banks, 10 Installment loans, 39, 40 U.S. reserve assets, 56 Insurance companies, 26, 30, 38 Residential mortgage loans, 37 Interest rates Retail credit and retail sales, 39, 40, 46 Bonds, 24 Consumer installment credit, 40 SAVING Federal Reserve Banks, 7 Flow of funds, 41, 43, 44, 45 Foreign central banks and foreign countries, 69 National income accounts, 53 Money and capital markets, 24 Savings and loan associations, 26, 38, 39, 41. (See also Mortgages, 37 Thrift institutions) Prime rate, 23 Savings banks, 26, 38, 39 International capital transactions of United States, 55-69 Savings deposits (See Time and savings deposits) International organizations, 59, 60, 62, 65, 66 Securities (See also specific types) Inventories, 53 Federal and federally sponsored credit agencies, 33 Investment companies, issues and assets, 35 Foreign transactions, 67 Investments (See also specific types) New issues, 34 Banks, by classes, 18, 19, 20, 21, 26 Prices, 25 Commercial banks, 3, 16, 18-20, 38 Special drawing rights, 4, 10, 55, 56 Federal Reserve Banks, 10, 11 State and local governments Financial institutions, 26, 38 Deposits, 19, 20 Holdings of U.S. government securities, 30 New security issues, 34 LABOR force, 47 Ownership of securities issued by, 19, 20, 26 Life insurance companies (See Insurance companies) Rates on securities, 24 Loans (See also specific types) Stock market, selected statistics, 25 Banks, by classes, 18—20 Stocks (See also Securities) Commercial banks, 3, 16, 18-20 New issues, 34 Federal Reserve Banks, 4, 5, 7, 10, 11 Prices, 25 Financial institutions, 26, 38 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 Outstanding, by type and holder, 26, 30 OPEN market transactions, 9 Rates, 24 U.S. international transactions, 55-69 PERSONAL income, 54 Utilities, production, 50 Prices Consumer and producer, 46, 52 VETERANS Administration, 37, 38 Stock market, 25 Prime rate, 23 WEEKLY reporting banks, 19-21 Producer prices, 46, 52 Wholesale (producer) prices, 46, 52 Production, 46, 49 Profits, corporate, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
80 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 Kate Ireland Charles A. Cerino1 Pittsburgh 15230 Robert P. Bozzone Harold J. Swart1 RICHMOND* 23219 Hanne M. Merriman Robert P. Black Anne Marie Whittemore Jimmie R. Monhollon Baltimore 21203 John R. Hardesty, Jr. Robert D. McTeer, Jr.' 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 Andre M. Rubenstein Robert J. Musso CHICAGO* 60690 Marcus Alexis Silas Keehn Charles S. McNeer Daniel M. Doyle Detroit 48231 Phyllis E. Peters Roby L. Sloan1 ST. LOUIS 63166 H. Edwin Trusheim Thomas C. Melzer Robert H. Quenon James R. Bowen Little Rock 72203 L. Dickson Flake John F. Breen1 Louisville 40232 Raymond M. Burse Howard Wells Memphis 38101 Katherine H. Smythe Ray Laurence MINNEAPOLIS 55480 Michael W. Wright Gary H. Stern Delbert W. Johnson Thomas E. Gainor Helena 59601 J. Frank Gardner John D. Johnson KANSAS CITY 64198 Fred W. Lyons, Jr. Roger Guffey Burton A. Dole, Jr. Henry R. Czerwinski Denver 80217 Barbara B. Grogan Kent M. Scott Oklahoma City 73125 John F. Snodgrass David J. France Omaha 68102 Herman Cain Harold L. Shewmaker DALLAS 75222 Bobby R. Inman Robert H. Boykin Hugh G. Robinson William H.Wallace Tony J. Salvaggio1 El Paso 79999 Donald G. Stevens Sammie C. Clay Houston 77252 Andrew L. Jefferson, Jr. Robert Smith, III1 San Antonio 78295 Roger R. 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
81 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories HH M WH { • • H MB BBHBBBBraBM ^ W':i" ; wKtKKRKm H 0 WSsSSmBKaSmB^ —i I^H^Hilllllllilil LEGEND —— Boundaries of Federal Reserve Districts ® Federal Reserve Bank Cities Boundaries of Federal Reserve Branch * Federal Reserve Branch Cities Territories Federal Reserve Bank Facility Q Board of Governors of the Federal Reserve System Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Publications of Interest NEW HANDBOOK AVAILABLE FROM THE containing all Board regulations and related statutes, REGULATORY SERVICE interpretations, policy statements, rulings, and staff opinions. For those with a more specialized interest in The Federal Reserve Board has announced publica- the Board's regulations, parts of this service are pubtion of The Payment System Handbook. The new lished separately as handbooks pertaining to monetary handbook, which is part of the Federal Reserve Reg- policy, securities credit, consumer affairs, and, availulatory Service, deals with expedited funds availabil- able for the first time in September 1988, The Payment ity, check collection, wire transfers, and risk-reduc- System Handbook. tion policy. It includes Regulation CC (Availability of For domestic subscribers, the annual rate for The Funds and Collection of Checks), Regulation J (Col- Payment System Handbook is $75. For subscribers lection of Checks and Other Items and Wire Transfers outside the United States, the price, including addiof Funds by Federal Reserve Banks), the Expedited tional air mail costs, is $90. For the Federal Reserve Funds Availability Act and related statutes, official Regulatory Service, not including handbooks, the an- Board commentary on Regulation CC, and policy nual rate is $200 for domestic subscribers and $250 for statements on risk reduction in the payment system. In subscribers outside the United States. All subscription addition, it contains detailed subject and citation in- requests must be accompanied by a check payable to dexes. It is published in loose-leaf binder form and is "Board of Governors of the Federal Reserve updated monthly. System." Orders should be addressed to Publications To promote public understanding of its regulatory Services, Mail Stop 138, Board of Governors of the functions, the Board publishes the Federal Reserve Federal Reserve System, Washington, D.C. 20551. Regulatory Service, a three-volume loose-leaf service Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Publications of Interest FEDERAL RESERVE CONSUMER CREDIT Three booklets on the mortgage process are also PUBLICATIONS available: A Consumer's Guide to Mortgage 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's Guide to Mortgage Lock-Ins Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Cite this document
Federal Reserve (1990, April 30). Federal Reserve Bulletin, 1990-05. Bulletin, Federal Reserve. https://whenthefedspeaks.com/doc/bulletin_199005
@misc{wtfs_bulletin_199005,
author = {Federal Reserve},
title = {Federal Reserve Bulletin, 1990-05},
year = {1990},
month = {Apr},
howpublished = {Bulletin, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/bulletin_199005},
note = {Retrieved via When the Fed Speaks corpus}
}