Federal Reserve Bulletin, 1990-09

VOLUME 76 • NUMBER 9 • SEPTEMBER 1990 FEDERAL RESERVE BULLETIN BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D.C. PUBLICATIONS COMMITTEE Joseph R. Coyne, Chairman • S. David Frost • Griffith L. Garwood • Donald L. Kohn • J. Virgil Mattingly, Jr. • Michael J. Prell • Edwin M. Truman The Federal Reserve Bulletin is issued monthly under the direction of the staff publications committee. This committee is responsible for opinions expressed except in official statements and signed articles. It is assisted by the Economic Editing Section headed by Mendelle T. Berenson, the Graphic Communications Section under the direction of Peter G. Thomas, and Publications Services supervised by Linda C. Kyles. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Table of Contents 711 MONETAR Y POLICY REPOR T cusses reform of the deposit insurance sys- TO THE CONGRESS tem and expanded activities for banking organizations and says that the potential for On the whole, events in the economy have public cost of the deposit insurance obligabeen broadly in line with the projections for tion and the erosion of the competitiveness 1990 contained in the February monetary of our banking system, both domestically policy report. Inflation has been somewhat and internationally, must be addressed, begreater on average than most members of fore the Senate Committee on Banking, the Federal Open Market Committee and Housing, and Urban Affairs, July 12, 1990. other Reserve Bank presidents expected in February; however, this mainly reflected 738 Chairman Greenspan testifies in connection the influence of transitory factors early in with the semiannual Monetary Policy Rethe year, and price increases recently have port to the Congress and discusses the been more moderate. Meanwhile, the econcurrent and prospective economic condiomy has continued to expand, but appartions and the Federal Reserve's objectives ently rather sluggishly overall since the winfor money and credit growth over the peter. riod ahead, particularly the ongoing restructuring of credit flows in the U.S. economy 726 STAFF STUDIES and the prospects for a significant cut in the federal budget deficit, before the Senate "Banking Markets and the Use of Financial Committee on Banking, Housing, and Ur- Services by Small and Medium-Sized Busban Affairs, July 18, 1990. (Chairman inesses" is the first report of findings from Greenspan presented identical testimony the National Survey of Small Business Fibefore the Subcommittee on Domestic nances. The authors investigate the range of Monetary Policy of the House Committee institutions and distances over which small on Banking, Finance and Urban Affairs, and medium-sized firms obtain financial ser- July 24, 1990.) vices, and they assess the implications of the results for the definition of financial 744 ANNOUNCEMENTS service markets, a key issue in the antitrust analysis of bank mergers and acquisitions. Approval of capital to total assets (leverage) guidelines and transitional capital standards for state member banks and bank holding 728 INDUSTRIAL PRODUCTION AND companies. CAPACITY UTILIZATION Industrial production rose 0.4 percent in Revised List of OTC Margin Stocks now June after an advance of 0.6 percent in available. May; industrial capacity utilization rose 0.2 Interpretation of Regulation T. percentage point in June to 83.5 percent. Proposal to amend Regulation Y; proposal to modify several conditions in the Board's 731 STATEMENTS TO THE CONGRESS orders authorizing limited underwriting and Alan Greenspan, Chairman, Board of Gov- dealing in securities by bank holding comernors of the Federal Reserve System, dis- pany subsidiaries; proposed revisions to Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Regulation K (International Banking Oper- range for the federal funds rate was left ations). unchanged at 6 to 10 percent. New publication, Financial Sectors in Open 753 LEGAL DEVELOPMENTS Economies: Empirical Analysis and Policy Issues, now available. Various bank holding company, bank service corporation, and bank merger orders; Admission of one state bank to membership and pending cases. in the Federal Reserve System. 799 MEMBERSHIP OF THE BOARD OF GOVERNORS OF THE FEDERAL 747 RECORD OF POLICY ACTIONS OF THE RESERVE SYSTEM, 1913-90 FEDERAL OPEN MARKET COMMITTEE List of appointive and ex officio members. At its meeting on May 15, 1990, the Committee adopted a directive that called for Ai FINANCIAL AND BUSINESS STATISTICS maintaining the existing degree of pressure on reserve positions and that did not in- These tables reflect data available as of clude any presumption about the likely di- July 27, 1990. rection of adjustments in policy, if any, A3 Domestic Financial Statistics during the intermeeting period. With regard A46 Domestic Nonfinancial Statistics to the factors that were important in con- A55 International Statistics sidering the need for any intermeeting changes in reserve conditions, the Commit- A71 GUIDE TO TABULAR PRESENTATION, tee continued to give primary weight to STATISTICAL RELEASES, AND SPECIAL those bearing on the inflation outlook. Ac- TABLES cordingly, slightly more or slightly less pressure on reserve positions would be ap- A88 BOARD OF GOVERNORS AND STAFF propriate during the period ahead depending on progress toward price stability, the A90 FEDERAL OPEN MARKET COMMITTEE strength of the business expansion, the be- AND STAFF; ADVISORY COUNCILS havior of the monetary aggregates, and developments in foreign exchange and domes- A92 FEDERAL RESERVE BOARD tic financial markets. The maintenance of PUBLICATIONS steady reserve conditions was expected to be consistent with somewhat slower mone- A94 INDEX TO STATISTICAL TABLES tary expansion in the current quarter than the members had anticipated at the time of A96 FEDERAL RESERVE BANKS, the March meeting, including growth of M2 BRANCHES, AND OFFICES and M3 at annual rates of about 4 and 3 percent respectively over the three-month A97 MAP OF THE FEDERAL RESERVE period ending in June. The intermeeting SYSTEM Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress Report submitted to the Congress on July 18,1990, credit supplies. This implied greater effective pursuant to the Full Employment and Balanced restraint on aggregate demand in the months ahead Growth Act of1978.1 than was thought desirable, and in the past week the System shifted to a slightly more accommodative stance in the provision of reserves to depository MONETARY POLICY AND THE institutions. As a result, the overnight federal funds ECONOMIC OUTLOOK FOR 1990AND 1991 rate, which had fluctuated narrowly around 8 LA percent throughout the first half of the year, has declined The Federal Reserve delivered its initial Humphrey- to about 8 percent, and other market rates of interest Hawkins report of 1990 to the Congress in February, also have eased a bit in recent days. and the period since then has been an especially challenging one for monetary policy decisionmaking. The already difficult task of moving a quite fully employed economy toward price stability without Developments Thus Far in 1990 contractionary mishap has been complicated by a variety of disturbances to business activity and In the early part of 1990, economic activity appeared financial markets—among them developments that to be regaining momentum, a development that distorted some of the basic indicators of the Federal reduced previous concerns about recessionary risks. Reserve's influence on the economic system. At the same time, even discounting weather-related On the whole, events in the economy have been spurts in food and energy prices and an unusual broadly in line with the projections for 1990 bunching of price increases for some other items, contained in the February monetary policy report. there appeared to be no abatement in underlying Inflation has been somewhat greater on average than inflationary pressures. Through the first quarter, M2 most members of the Federal Open Market Commit- remained near the top of the annual range set by the tee (FOMC) and other Reserve Bank presidents FOMC, and although M3 was near the lower bound expected in February; however, this mainly reflected of its range, this weakness appeared consistent with the influence of transitory factors early in the year, the anticipated effects of the restructuring of the and price increases recently have been more moder- thrift industry. ate. Meanwhile, the economy has continued to The Federal Reserve maintained a steady pressure expand, but apparently rather sluggishly overall on reserve positions during the first quarter, rather since the winter. than extending the sequence of easing steps that While these aspects of the economic situation had fostered a drop in the federal funds rate of were important elements in the FOMC's review of V/2 percentage points between June and December its policy plans earlier this month, the Committee 1989. However, in keeping with the tenor of most of also gave careful attention to developments in the economic data released during the quarter, other financial markets. Although market interest rates interest rates generally moved higher, particularly at had changed little on net since February, slow the long end of the yield curve. This shift suggested growth of the monetary stock and other evidence in that market participants had reevaluated the proshand pointed to a small but significant tightening of pects for moderating inflation and a further easing of monetary policy. Early in the year, bond yields in the United States rose along with rates in Japan and 1. The charts for the report are available on request from Western Europe, as developments in Eastern Europe Publications Services, Board of Governors of the Federal suggested a further spur to worldwide economic Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

712 Federal Reserve Bulletin • September 1990 activity, carrying the potential for greater inflation and the Resolution Trust Corporation (RTC) transand heightened pressures on a limited international ferred large volumes of assets to banks and onto its pool of savings. own books in the course of closing failed thrift In the second quarter, some of the weather-related institutions. Meanwhile, concerns about credit increases in food and energy prices that had caused quality and pressures on capital positions led banks inflation to pick up earlier in the year were reversed, to adopt more cautious lending postures and to hold and price increases for many other goods and ser- down asset growth. vices moderated. Inflation trends remained in the The weakness in lending by depositories was range prevailing over the previous three years, reflected dramatically in the behavior of M3; this though price pressures in the industrial sector gave aggregate, encompassing managed liabilities as well signs of some easing. The incoming information as M2 deposits, comprises most of the liabilities pointed to a sluggish pace of economic expansion; used by these institutions to fund credit extensions. most notably, growth in private sector employment With depository credit damped, not only were slackened, consumer spending flattened, and real managed liabilities weak, but banks and thrift estate markets weakened. Moreover, advance indi- institutions did not bid aggressively for retail cators in some sectors—particularly durable goods funds—thereby contributing to reduced growth of orders and construction contracts—gave no evidence M2. In addition, increases in expected returns on of a significant pickup in the second half. With the stocks and bonds may have restrained expansion of economy appearing somewhat less buoyant, over this aggregate, although some portion of the slow- May and June bond yields in the United States down in M2 remains unexplained by changes in retraced some of their earlier increases. Long-term relative yields or income. The weakness in deposirates in Japan and West Germany also declined, but tory credit and the monetary aggregates likely has by much less, with the result that yields in those had, to date, only limited effects on spending: The countries have risen appreciably this year relative to bulk of the credit formerly supplied by depositories those in the United States. has been provided by other lenders, in part through In foreign exchange markets, the dollar has the securities markets, with little change in the terms depreciated somewhat on balance thus far this year, to most borrowers. under the influence of a diverse set of economic, financial, and political developments around the world. The dollar has appreciated slightly in terms Monetary Objectives for 1990 and 1991 of the yen, while depreciating somewhat in terms of the German mark and other currencies of the In reevaluating its ranges for money and credit for European Monetary System exchange rate mecha- 1990 and in establishing tentative ranges for 1991, nism and somewhat more in terms of the Swiss franc the FOMC had to take account of the redirection of and pound sterling. credit flows away from depository institutions and The monetary aggregates flattened out during the the resulting effect on the growth of the financial second quarter, and by midyear M2 was in the lower aggregates relative to spending and prices. In half of its annual range, and M3 had fallen below the February, the Committee expected that the continued lower bound of its annual range. The weakness in shrinkage of the thrift industry would damp growth the monetary aggregates mainly, though not wholly, in M3; to take account of this, it lowered the M3 reflected a rechannelling of credit flows away from range for 1990 to 2Vi to 6x/i percent, 1 percentage depository institutions. Total borrowing by domestic point below the range set tentatively in July 1989. nonfinancial sectors moderated only a little in the However, the contraction of thrift assets has been first half of 1990 from the pace of 1989, and growth faster than anticipated, in part because of the step-up in the aggregate debt of these sectors was in the in RTC activity, and bank credit has expanded less middle of the FOMC's monitoring range. However, rapidly. As a consequence, through June, M3 grew the proportion of lending accounted for by deposito- at an annual rate of only 1 % percent from its ries was down substantially. Much of the decrease fourth-quarter 1989 base. related to the shrinkage of savings and loan associa- Barring a marked slowdown in RTC activity or a tions: Marginal institutions continued to retrench, significant strengthening in bank credit, M3 growth Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 713 is likely to remain sluggish over the balance of the For growth in M2, the Committee tentatively year. As in the first half, the weakness in M3 growth adopted a range of 2Vi to 6Vi percent — Vi percentage is expected to be associated with a further substantial point below the 1990 range. The adjustment is increase in velocity—the ratio of nominal GNP to consistent with the Committee's intention to move money—rather than with substantial restraint on over time toward the low trend rates of monetary overall credit supplies. Recognizing this unusual expansion that would be consistent with price behavior of M3 velocity, the FOMC voted in early stability. At the same time, the range is expected to July to reduce the M3 range for 1990 to 1 to allow for sufficient expansion of money to sustain 5 percent. At the same time, the Committee reaf- moderate growth in the economy. There may be firmed its range of 5 to 9 percent for total growth in some further upward shift in velocity, but the range the debt of domestic nonfinancial sectors. The should be wide enough to accommodate considerable Committee seeks to ensure that credit will remain variation in credit market conditions. available in amounts and at terms compatible with The range for growth of M3 was tentatively set at moderate expansion of the economy, and it will 1 to 5 percent, the same as that now in effect for continue to assess the implications of developments 1990. Growth of this aggregate is especially sensitive at depositories for credit conditions more generally. to the pattern of credit flows. Thus, the continuing As noted above, the contraction of the thrift downsizing of the thrift industry is likely to result in industry and the moderate growth in bank credit also slower growth of M3 than of M2 again next year, as have affected the growth of M2, as potential inflows managed liabilities in the broader aggregate run off. of retail deposits have outpaced the needs of It also is likely to mean a substantial further increase depository institutions for such funds. The velocity in M3 velocity. Given that growth of this aggregate of this aggregate has risen, unexpectedly, but less currently is running along the lower bound of the than that of M3: Growth of M2 from its fourth- new range for 1990, even if the pace of credit flows quarter base through June was at a 3% percent at banks and thrift institutions were to pick up annual rate, within its annual range, though in the somewhat, M3 growth between 1 and 5 percent lower half. M2 velocity is likely to increase further should be consistent with the Committee's basic over the second half of the year; however, a objectives. substantial slowing of M2 could suggest more For debt, the FOMC adopted a tentative monitorrestraint than would be consistent with sustained ing range of 4Vi to 8V2 percent, a half percentage upward momentum of the economy, and thus the point below the range for 1990. The Committee Committee reaffirmed the established range for M2 viewed slower growth of debt, more in line with the growth for 1990. expansion of nominal income, as a healthy develop- In setting tentative ranges for 1991, the Committee ment for the economy. The rapid expansion of debt faced more than the usual uncertainty about the over the past decade, relative to the ability to service growth of money that would foster its objectives of it, occasioned many of the difficulties with asset sustained expansion and a gradual abatement of quality now facing our lending institutions. inflation. Developments in credit markets will be shaped not only by the special factors that have Economic Projections for 1990 and 1991 altered patterns of intermediation thus far this year, but also by the outcome of the current deliberations The members of the FOMC and the Reserve Bank regarding the federal budget. At this point, the presidents not currently serving as members believe forces that recently have diminished the role of that the monetary ranges for 1990 and 1991 are depository credit seem likely to persist for some consistent with achievement of sustainable ecotime, and they may foster further upward shifts in nomic growth and a reduction of inflation over time. monetary velocities, albeit probably smaller ones Most of them expect that the pace of expansion will than now appear in train for 1990. To be sure, be moderate over the remainder of 1990 and through though, subsequent events may dictate adjustments next year, with the central tendency of their forecasts to the ranges next February, when they are reexam- of real GNP growth being IV2 to 2 percent over the ined in light of developments over the second half of four quarters of 1990 and VA tolVi percent over the this year. course of 1991. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

714 Federal Reserve Bulletin • September 1990 1. Ranges for growth sectors as medical care and education will continue for monetary and credit aggregates to experience appreciable growth. Percent change, fourth quarter to fourth quarter The overall growth in economic activity forecast by the Board members and Bank presidents for the 1990 PPrroovviissiioonnaall AAggggrreeggaattee 11998899 rraannggeess period ahead is expected to be consistent with a Adopted in Adopted in ffoorr 11999911 February July slight easing of pressures on resources and a diminution of inflation. With respect to the labor M2 3 to 7 3 to 7 3 to 7 to 6% M3 3 Vi to 7 V2 Vh to 6V2 1 to 5 1 to 5 market, the central tendency of the forecasts for the Debt to 10% 5 to 9 5 to 9 4'/i to 8V£ civilian unemployment rate is 5V2 to 53A percent in the fourth quarter of this year and 5 Vi to 6 percent in Demand from abroad is likely to provide support the final quarter of 1991; the jobless rate has for continued growth in U.S. production and fluctuated narrowly at a little below 5VI percent employment. At current exchange rates, U.S. since late 1988. Moderate growth in demands on producers appear to be in a position to compete industrial capacity should be conducive to an effectively in most international markets, and eco- extension of the recent more favorable trends in nomic activity is growing relatively rapidly on producer prices for intermediate and finished goods, average in other major industrial countries. In time, which were, respectively, virtually unchanged and export demand should be bolstered by the shift up just 3 percent in the past twelve months. toward more open, market-based economic systems Inflation at the retail level also should be damped in Eastern Europe; although the continental Euro- over the remainder of this year by favorable pean nations may be most immediately affected by developments in the energy sector. Despite the very these developments, given the high rates of capacity recent upturn in crude oil prices, gasoline prices are utilization in those economies, the United States is widely expected to decline in coming months, as the likely to benefit both directly and indirectly from the return of refinery output to normal levels alleviates increased demand for consumer and capital goods. the tightness that has characterized the product In the aggregate, demands from sectors outside of market. With inflation for other goods and services exports are unlikely to provide much impetus to expected to remain below the first-quarter pace, the manufacturing activity. Defense procurement is central tendency of the policymakers' forecasts of declining in real terms. And there is little prospect of the overall consumer price index is for an increase a substantial resurgence in motor vehicle production: of between AVi and 5 percent over the four quarters High levels of auto sales in the past several years of 1990—compared with the 5% percent annual appear to have satisfied demands that were pent up rate of increase recorded during the first five months during the deep economic slump of the early 1980s. of the year. The lower trajectory of the consumer Demand for construction materials and equipment price index is projected to be sustained in 1991, with probably also will remain subdued, because building forecasts for the year centering on the 33A to activity will be damped by the current overhang of 4l/2 percent range. vacant residential and commercial space. That The Administration's economic projections, preoverhang, more than any disruption of credit flows, sented in connection with its mid-session update of explains the current weakness in construction, and, the budget, indicate similar expectations about especially in the case of office building, it will take inflation trends but a more favorable oudook for real some time for existing space to be absorbed and to GNR As a result, the Administration's projection of lay the base for a solid upturn in activity. nominal GNP growth is somewhat above the central In sum, the growth of total output projected for tendency of those of the FOMC participants, and 1990 and 1991 probably will involve rather slow might imply the need for faster monetary growth gains for the goods-producing sectors of the econ- than is currently contemplated by the Committee. omy. The service-producing industries are likely to These differences must be regarded as small, howcontinue to be the locus of important increases in ever, relative to the degree of uncertainty that output and, especially, employment. Demands for a attaches to any prediction of the economy—and, in wide range of services have remained robust thus far particular, of the short-run relation between growth this year, and demographic trends suggest that such in GNP and the money stock. More important, the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 715 2. Economic projections for 1990 and 1991 FOMC members and other FRB Presidents IItteemm aanndd yyeeaarr AAddmmiinniissttrraattiioonn Range Central tendency 1990 Percent change, fourth quarter to fourth quarter Nominal GNP 5 to 6Vi 5% to 6 xh 6.8 Real GNP 1 to 2 1 % to 2 2.2 Consumer price index . 4 to 5 4'A to5 4.8' Average level in the fourth quarter, percent Civilian unemployment rate 5'/ito6% 5V4to5M 5.62 1991 Percent change, fourth quarter to fourth quarter Nominal GNP Vh to 7 5V* to6V4 7.2 Real GNP 0to3 1% to2Vi 2.9 Consumer price index 3V£ to 5 3% to 4'A 4.2' Average level in the fourth quarter, percent Civilian unemployment rate 514 to 7 5'A to 6 5.62 1. CPI for urban wage earners and clerical workers (CPI-W). FOMC 2. Percentage of total labor force, including armed forces residing in the forecasts are for CPI for all urban consumers (CPI-U). United States. differences do not signal any basic inconsistency makers in the Federal Reserve—judged that the between the goals of the Federal Reserve and the runup in aggregate price indexes overstated under- Administration, for the Federal Reserve would lying inflation trends. In the event, some of the welcome a more rapid expansion of output that transitory elements of the earlier spurt were reversed occurred in the context of solid progress toward in the spring, and inflation moved down. Despite the price stability. recent slowing, however, the twelve-month change in the CPI as of May, at 4.4 percent, was about the same as that recorded for each of the past three THE PERFORMANCE OF THE ECONOMY years. In part, the persistence of inflation during a DURING THE FIRST HALF OF 1990 period of slower economic growth reflects continued cost pressures from relatively tight labor markets Activity in many sectors of the economy followed an and weak productivity performance. However, there erratic course during the first half of the year, in part have been encouraging signs, particularly at the because of transitory factors, such as last winter's earlier stages of processing, that an easing of unusual weather. On balance, production expanded resource constraints in the manufacturing sector is further during the first half of 1990, but evidently no reducing some of the pressures that had boosted faster than the reduced pace of 1989. The compara- prices from 1987 to early 1989. tively slow rate of growth largely reflected weaker spending by domestic businesses and households, while merchandise exports apparently remained on a fairly strong growth path. Although job creation in The Household Sector the private sector of the economy has slowed this year, the civilian unemployment rate has remained Total personal consumption expenditures were near 5 lA percent, the lowest level in nearly twenty buffeted this winter by large swings in outlays for years. energy items and motor vehicles. Expenditures for Prices rose sharply early in the year, but the home heating declined sharply in the first quarter as increases moderated this spring. In the first quarter, unseasonably warm temperatures in January and there were large weather-related surges in food and February followed a December that had been colder energy prices and a bunching of increases in prices than usual. This influence was largely offset by a rise of some other goods and services. Given the in motor vehicle sales. In late 1989 sales of cars and character of the spurt, most analysts—and policy- light trucks had been depressed by a scaling back of Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

716 Federal Reserve Bulletin • September 1990 incentives and by large price increases for new better maintained, albeit at moderate levels, in the model-year vehicles. Around the turn of the year, North Central and Western regions of the country. enriched incentive programs revived these sales. To Both demand and supply factors have contributed date this year, sales of cars and light trucks have to the recent weakness in housing construction. averaged 14 million units (annual rate)—a pace not Sales of new and existing homes generally have been far below the total for 1989—and seem largely to moving lower for more than a year; in part, demand reflect replacement demand and growth in the may have been restrained by slower growth in driving age population. income and reduced investment motivation for home Abstracting from the swings in outlays on home purchase because of softening house prices. Demand heating and motor vehicles, consumption spending also may have been tempered this spring by some appears to have stagnated this spring after posting a edging up in mortgage rates. Since early May, moderate gain in the first quarter of 1990. The recent however, mortgage rates have moved down about sluggishness in spending reflects declines in outlays V2 percentage point, and there is no evidence that for a wide variety of consumer goods, including access to home loans has been curtailed. furniture and other household durables. In contrast, On the supply side, building is being deterred in spending for services other than energy, especially some parts of the country by an overhang of unsold medical services, continues to outpace real income or unrented housing units. In addition, it appears growth. that a reduction in credit availability for construction Growth of consumption has slowed this year may be playing some role in damping building against a backdrop of somewhat smaller gains in real activity. To a degree, this less favorable credit disposable personal income. But consumption has climate is attributable to the cutback in financing slowed even more than income, and the personal supplied by thrift institutions owing to the closure of saving rate rose above 6 percent in the spring. savings and loans as well as the more stringent Consumers may be spending more cautiously as capital requirements and lending limits mandated by they reassess their income and wealth prospects in the Financial Institutions Reform, Recovery, and light of the slower growth of the economy and a Enforcement Act. At the same time, other institusoftening of residential property values in many tions do not appear to be filling the void completely. parts of the country. These factors probably have In part, the shift in credit availability reflects the been particularly important in the Northeast, where elimination of the imprudently aggressive lending consumer sentiment has deteriorated markedly. that capsized so many thrift institutions. A number However, other indicators, such as delinquency of commercial banks also have recently experienced rates on consumer loans, do not reveal broad reductions in their lending capacity as they have pressure on household finances. Nor are there signs written off, or reserved against, bad loans. But, in that credit availability has been reduced: Federal addition, the number of sound lending opportunities Reserve surveys of bank lending officers suggest no undoubtedly has shrunk as a consequence of ecochange in the willingness to lend to consumers. nomic weakness and soft property values in specific Residential investment spending also was affected locales. by unusual weather patterns this winter. Housing starts were strong in the first two months of the year, as mild temperatures allowed builders to catch up on The Business Sector work delayed by cold weather in late 1989 and to begin projects that normally would have been started The financial position of the business sector deteriolater in the year. Then starts slumped this spring, in rated further during the early part of 1990. Beforepart reflecting a "payback" for the winter activity. tax profits from current operations of nonfinancial Averaging over this period, residential construction corporations edged down in the first quarter after appears to have weakened; in the first five months of falling nearly 18 percent over the four quarters of the year, housing starts totaled 1.36 million units 1989. Profits have been squeezed by a combination (annual rate), somewhat below the pace of activity in of marked increases in wages and benefits during a 1989. By region, housing markets have been very period of weak growth in productivity, competitive weak in the Northeast, while homebuilding has been pressures from both home and abroad that have Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 10 prevented firms from completely passing increases to eliminate an overhang of stocks on dealer lots. In in labor costs through to prices, and higher debt- most other sectors, stocks have been trimmed or servicing costs associated in part with increased have been increased only modestly this year, and leverage. they appear to be in good alignment with sales Shrinking profits, which have reduced the avail- trends. Among the possible exceptions are wholesale ability of internal funds, along with the slower distributors of machinery and nonauto retailers, growth of final sales and easing of capacity pressures where some mild overhangs appear to have develover the past year, have muted the demand for new oped this spring; these could precipitate further plant and equipment. Reflecting these developments, adjustments, probably affecting both domestic and real business fixed investment has decelerated foreign producers. considerably since the first half of 1989. Although total real spending on producers' durable The Government Sector equipment rose at an annual rate of about 7 percent in the first quarter, spending was boosted by a rebound The federal budget deficit over the first eight months in outlays for motor vehicles and a resurgence in of the fiscal year was $152 billion, up from $113 aircraft shipments after the settlement of the strike billion in the year-earlier period. About $15 billion last November at Boeing. Excluding these transitory of this increase resulted from spending by the swings, real equipment spending slowed further in Resolution Trust Corporation, and further RTC the first quarter, and shipments of most types of outlays during June imply that the year-to-year capital goods—especially industrial machinery — increase in the deficit is likely to widen. Most of the remained soft in April and May. One bright spot in RTC spending reflects financial transactions in the equipment picture, however, has been the growth which existing federal insurance obligations to thrift in outlays for computers and other information- depositors are being recognized in the government's processing equipment, after some slowing during budget outlay and public debt accounts. The RTC's the second half of 1989. borrowing and spending thus should have little Nonresidential construction was boosted by effect on real economic activity or interest rates. favorable weather early in the year, but most of the However, several other budget components have gain has since been reversed. The weakness is most contributed to the higher deficit. Spending on evident in office and commercial real estate, for Medicare and other health care programs, and some which vacancy rates are high, and data on contracts discretionary spending for the space and other and permits suggest that the outlook for building programs, has surged. During the same period, remains decidedly negative. In some areas, this revenue growth has lagged as weak corporate profits reflects sluggish growth in the regional economies. have cut into receipts and last year's surprisingly However, activity also may be hindered by the shift large personal income tax collections have not been in the credit climate, as more speculative projects sustained. The latter suggests that some of last year's that previously might have been financed no longer receipts reflected special factors, such as the deferral qualify. An exception to the weakness in business of tax liabilities in response to the phased reduction construction has been in the industrial sector; lead of income tax rates under the Tax Reform Act of times can be quite long for these projects, however, 1986, and the capital gains realized during sharp and much of the continued strength undoubtedly movements in financial markets. reflects in large part decisions made when capacity Federal purchases of goods and services, the part pressures were mounting in 1988 and early 1989. of expenditures that is included directly in GNP, fell Indeed, contracts and permits for new industrial in real terms over 1988 and 1989, owing mainly to construction have been trending down for about a declines in defense spending. Real defense purchases year. continued to move lower in the first quarter of 1990; The emergence of uncomfortably high inventories however, the downtrend in total purchases was in some sectors in late 1989 led to corrective actions interrupted by a pickup in nondefense spending, in the first part of this year. Most prominently, mainly a transitory surge in space expenditures. In manufacturers of motor vehicles cut production the second quarter, compensation for temporary sharply and reinstated widespread sales incentives Census workers added to federal purchases. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

718 Federal Reserve Bulletin • September 1990 Real state and local government purchases in- ciated in terms of the South Korean won and the new creased at an annual rate of 4 lA percent in the first Taiwan dollar. quarter, compared with the 3 to 3V2 percent pace Prices of non-oil imports, which fell at about a recorded over the past three years. Revenue growth 3 percent annual rate between the first and third generally has not kept up with gains in spending, quarters of last year, rose at a similar pace between however, and an increasing number of state and the third quarter of 1989 and the first quarter of local governments face significant budgetary diffi- 1990, partly in response to the drop in the dollar culties; indeed, the overall deficit of the sector between last summer and the early part of this year. (excluding social insurance funds) was about $45 Prices of imported oil surged around the turn of the billion (annual rate) in the first quarter of 1990, year, moving above $20 per barrel in January, but almost $11 billion greater than the deficit recorded since then they have more than retraced this runup. in the 1989 calendar year. These difficulties are On the export side, prices rose at an annual rate of compounded by growing spending requirements in just 13A percent in the first quarter of 1990 after several important areas. An increase in the number recording little change, on balance, over 1989 as a of school-age children has boosted public school whole. In the first quarter, prices for agricultural enrollments, the number of medicaid recipients has exports fell somewhat, but there was an acceleration increased, and prison populations have risen rapidly. in prices for exported consumer and capital goods Meanwhile, legislatures have been reluctant to that appears to have been related to some pickup in increase personal income taxes, and federal grants prices for these items in domestic markets around and increases in state excise taxes have failed to the turn of the year. prevent the widening of the gap between spending Merchandise exports continue to provide an and revenues. important impetus to growth in the domestic economy, although the increases in exports have slowed The External Sector somewhat from the very rapid advances recorded in the latter part of the 1980s. So far this year, exports Movements in the exchange rate have been smaller have been boosted by strong shipments of aircraft than those in 1989, when the dollar appreciated with the rebound in activity at Boeing, as well as by about 12 percent in terms of the other G-10 cur- notable increases in other classes of machinery, rencies over the first half of the year and then agricultural products, industrial supplies, and condepreciated by a similar amount between last sumer goods. Two factors have contributed to summer and this past February. The dollar appreci- further large gains in the quantity of U.S. exports: ated approximately 2 percent between February Many of our major trading partners abroad have and March this year but has since declined about continued to register strong economic growth, and 4 percent, partly in response to publication of weaker the average dollar prices of U.S. exports have data on U.S. economic activity and the associated declined somewhat relative to average prices abroad. washing out of expected increases in interest rates. Movements in nominal exchange rates do not appear While the value of the dollar has not changed to have contributed significantly to either export dramatically on a trade-weighted average basis growth or overall U.S. external adjustment in recent against the other G-10 currencies this year, there quarters; the effects of the large depreciation of the have been some divergences in bilateral exchange dollar through 1987 have waned, and any residual rates. On balance, the dollar has depreciated positive effects probably have been offset by the significantly against sterling and the Swiss franc, average strengthening of the dollar last year. Howand somewhat less against the German mark and ever, the depreciation of the dollar since last summer related currencies. In contrast, the dollar has should lend some stimulus to external adjustment in appreciated against the yen, despite exchange market coming quarters. intervention by the Bank of Japan and other central Meanwhile, slower import growth has accompabanks to support the value of the yen early in the nied the slackening pace of activity in the United year. Against the currencies of our other major States. Total imports were boosted by a surge in oil trading partners in the Pacific Basin, the dollar has imports in the first quarter, but, on balance, non-oil depreciated against the Singapore dollar, but appre- merchandise imports have edged down this year. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 719 The slowdown in imports has been pronounced in Growth in the labor force also has been subdued in automotive products and consumer goods, reflecting recent months. To an extent, this reflects longer-run both weaker domestic final demands and the inven- demographic trends; but it may also reflect a tory adjustments in these sectors of the U.S. tendency for fewer people to seek jobs when the economy. growth of employment opportunities is perceived to Together, the continued growth in exports and the have slackened. Survey data suggest that individuals slowdown in imports narrowed the merchandise have increasingly viewed jobs as harder to find. trade balance to $105 billion at an annual rate in the The slower rates of growth in employment and the first quarter of 1990, its lowest rate since early 1985. labor force have been roughly matching, and the The current account deficit was reduced to $92 civilian unemployment rate has remained near billion at an annual rate. 5lA percent throughout the year. While unemploy- Net private capital inflows, and a large statistical ment rates have risen noticeably in the Northeast and discrepancy, provided the counterpart to the current moved up in some Midwestern states, jobless rates account deficit in the first quarter of 1990, as they did in other regions of the country either have changed for 1989 as a whole. Most of the private capital little or have edged down. inflow in the first quarter came through the banking With labor markets remaining relatively tight by sector. Private foreign investors continued to acquire historical standards, pressures on labor costs have U.S. corporate bonds in the first quarter; however, not abated. Although the rate of increase in straightthey sold a small amount of U.S. Treasury securities, time wages has changed little over the past year and and they continued to sell U.S. corporate stocks as a half, benefit costs, which currently constitute they have since last October. Foreign direct invest- roughly one-fourth of compensation, have picked up ment flows into the United States slowed markedly markedly. In part, this increase reflected the higher in the first quarter to a rate well below that recorded social security taxes that went into effect in January, in recent years. Official capital showed a net outflow but benefits also have been boosted by the continued in the first quarter, as it did throughout most of 1989, rise of health insurance costs and an acceleration of reflecting the net sale of dollars in exchange market lump-sum payments and bonuses. All told, employee intervention. compensation in private nonfarm industry rose 5 lA percent over the twelve months ended in March, Labor Markets a bit above the pace recorded in the year ended last December. Job growth was strong early in the year, but has In addition to gains in hourly compensation, unit softened recently. In January and February, in- labor costs have been boosted by a poor performance creases in nonfarm payroll employment averaged in labor productivity, as output per hour in the more than 350,000, fueled by large increases in nonfarm business sector rose just lA percent between service-producing industries as well as by robust the first quarter of 1989 and the first quarter of 1990. hiring in construction during the warmer than normal While productivity has remained strong in the winter weather. Since March, however, job growth manufacturing sector, rising almost 5 percent at an has averaged about 125,000 per month, despite the annual rate in the first quarter, productivity perfornet addition of about 300,000 temporary workers to mance outside of manufacturing has been quite help carry out the 1990 Census; private payrolls weak. As a consequence, unit labor costs in the first have increased less than 20,000 per month. Manu- quarter of 1990 were 5 percent above their level a facturing employment has continued to shrink this year earlier, about the same increase as recorded year at about the same rate as in the second half of over 1989 as a whole, but well above the rates that 1989, and construction payrolls also have declined prevailed earlier in the expansion. since the winter. Meanwhile, job growth in the service-producing industries has slowed in recent months. Although hiring gains have continued strong Price Developments for health services, growth in jobs in business services has moderated, and there have been only After surging in the first quarter of 1990, price small gains in employment at retail establishments. increases moderated this spring. Food and energy Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

720 Federal Reserve Bulletin • September 1990 prices were boosted early in the year by weather- the first quarter, in part reflecting some bunching of related developments, and prices for a wide range of increases for items whose prices tend to change in other goods and services also picked up sharply. irregular jumps, such as public transportation fares However, by May, the transitory effects of the and auto registration fees. Although inflation in weather on inflation largely had been reversed, and service prices moderated in the spring, there was price increases for many other items slowed little retracing of the earlier increases; indeed, in significantly. May, the CPI for nonenergy services was 5V2 per- Energy prices surged this past winter, as a result cent above its level twelve months earlier, the upper of demand pressures from the unseasonably cold end of the range of increases seen over the past three weather in December and supply disruptions at U. S. and a half years. As in 1989, increases in prices of refineries and in Eastern Europe. The posted price rents and medical services contributed importantly of West Texas Intermediate (WTI) oil, the bench- to the rise in overall service prices so far this year. mark for U.S. crude prices, rose about $3 per barrel However, there also have been widespread pickups to a peak of $22 in January. Since early February, on in prices for a variety of labor-intensive services, balance, the posted price for WTI has moved down and it is likely that, in addition to strong consumer substantially, in large part reflecting the effects on demands, higher labor costs have boosted service crude markets of increased output by OPEC nations. prices. Movements in energy prices at the consumer level The signs of moderating inflation for goods at normally follow developments in crude oil prices. earlier stages of processing, which had surfaced as Gasoline prices, however, remain higher than in capacity utilization rates moved down during 1989, December. In part, pump prices have been boosted appear to have continued into 1990. After rising by the additional costs to refiners of complying with 4% percent in 1989, the producer price index for environmental standards. In addition, inventories of finished goods excluding food and energy has gasoline were relatively low during the first half of increased at an annual rate of about 33A percent the year as a result of a variety of supply disruptions during the first six months of 1990. Producer prices at refineries. for intermediate materials excluding food and Overall, consumer food prices were boosted by energy increased at an annual rate of just % percent sharp increases in prices for fresh fruits and between December and June, roughly the same rate vegetables after the freeze in December, but during of increase as recorded over 1989 as a whole. The the spring these prices retraced most of their earlier moderation of inflation for goods at the producer climb. The prices for other foods for home consump- level is perhaps one indication that earlier moves tion have continued on an upward course. In toward monetary restraint and the slower pace of addition, the prices of foods and beverages pur- economic activity have worked to ease the resource chased at restaurants have risen at a 6 percent annual constraints that had pushed up materials prices rate so far this year, about V/2 percentage points between 1987 and early 1989. above the average rate of increase over the past two years; these prices probably have reflected a dwindling supply of entry-level workers and related increases in labor costs, and perhaps in some regions MONETARY AND FINANCIAL DEVELOPMENTS by the higher federal minimum wage. DURING THE FIRST HALF OF 1990 The CPI excluding food and energy rose about 4% percent over the twelve months ending in May, Shifts in financial intermediation and credit flows, near the upper end of the range experienced during stemming from the continued restructuring of the the current expansion. Price increases for consumer thrift industry and a more cautious attitude of banks goods, particularly apparel, rose sharply early in the toward certain credit extensions, exerted a major year. However, the burst in prices did not carry influence on the monetary aggregates and their through to the second quarter, as prices for commod- relation to economic activity during the first half of ities excluding food and energy changed little in 1990. In anticipation of further contraction in the April and May. thrift industry, and its associated effects on deposi- In the service sector, inflation rose markedly in tory intermediation, the Committee reduced the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 721 annual growth range for M3 by a full percentage real estate loans, loans to highly leveraged borpoint in February. In the event, M3 has slowed even rowers, and loans to small and medium-sized more dramatically than had been anticipated, leaving businesses. To offset tighter credit market condithis aggregate below the lower bound of its reduced tions, which could exert undue restraint on aggregate range. Not only has the thrift industry contracted demand, the Federal Reserve has recently adopted a more rapidly than expected, but commercial banks slightly more accommodative stance with regard to have picked up little of the lending forgone by thrift reserve provision, fostering a small decline in market institutions and, in fact, have curtailed their own interest rates. lending in some sectors, thus further depressing depository credit. With little need to fund asset growth, banks and thrift institutions have pursued The Implementation of Monetary Policy retail deposits less aggressively, leading to the opening of a sizable gap between yields available in The FOMC maintained a steady degree of pressure the open market and those on such deposits. Partly in reserve markets during the first six months of the as a result, M2 also has slowed, moving down into year. Policy had been eased in the second half of the lower portion of its annual growth range. 1989 amid concerns that the economic slowdown The deceleration of the monetary aggregates might cumulate and thereby threaten the expansion. mainly reflects a reduction in the share of credit In the first half of 1990, however, the Committee provided by depositories, rather than a sharp slowing viewed the balance of evidence as suggesting that of income or total credit flows. The velocities of both underlying trends were generally consistent with its M2 and M3 posted sizable increases, particularly in objectives of sustaining economic growth while the second quarter. Total debt of domestic nonfinan- containing and eventually reducing inflationary cial sectors grew at an annual rate of 7 percent over pressures. the first half of the year—down only slightly from its In the opening months of the year, incoming pace in the latter half of 1989 and in the middle of its information on spending and prices caused markets monitoring range. However, growth of total debt to reevaluate the prospects for a near-term reduction was boosted by federal government borrowing to of inflationary pressures and further easing of support thrift resolutions; the debt of nonfederal monetary policy. As a result, market interest rates sectors grew somewhat less rapidly than it did last rose, despite a steady federal funds rate. The rise year. Uncertainty about the effects of the restructur- was most pronounced at the longer end of the ing of credit flows, and about the reasons for the maturity spectrum, and it restored the usual upward extent of the slowdown in money growth, underlined tilt to the yield curve that had been absent much of the need for the FOMC to assess the behavior of the last year. Developments in Eastern Europe, which aggregates in light of information on spending and portended increases in demands on the world's prices and the likely course of monetary velocities. limited pool of savings, also contributed to increases The somewhat more cautious lending posture that in long-term rates in the United States and abroad. commercial banks have recently adopted is mainly a By late April, market participants expected a nearresponse to heightened credit risks caused by the term tightening of U.S. monetary policy. more moderate pace of economic expansion overall In early May, the pendulum of market opinion and a downturn in several sectors. The resulting loan began to swing away from the view that a tightening write-offs and pressures on capital positions may of U.S. monetary policy was in the offing. Beginning also have induced some tightening of standards. with a lackluster employment report on May 4, Growing markets for securitized loans largely have economic data have pointed to a somewhat slower filled the vacuum created by the retrenchment of pace of activity and reduced price pressures. In thrift institutions in the area of mortgage lending, addition, a pronounced slowdown in the monetary with little attendant effect on the cost or availability aggregates began in April, followed by outright of residential mortgage credit to households. Both declines in May. Although both M2 and M3 banks and thrift institutions have cut back on other recovered a little in June, they remained below the types of lending that can less easily be rechannelled, midpoint and the lower bound respectively of their however, including construction and nonresidential annual ranges at midyear. Evidence also suggested Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

722 Federal Reserve Bulletin • September 1990 that restricted credit availability, in part the result of 2 lA percent annual rate from the 6 to 7 percent range tightened credit standards, may have spread beyond seen in the previous three quarters. Retail deposits commercial real estate, construction, and merger- (which include NOW accounts as well as savings, related lending. In response to this firming of credit small time deposits, and similar instruments) had conditions, the Federal Reserve began providing begun to decelerate in the first quarter, slowing to a reserves slightly more generously through open pace of less than 4 percent from the 5 3A percent rate market operations in mid-July. seen in the fourth quarter of 1989. The effects of this Market interest rates, which already had receded slowdown on M2 were partially masked, however, somewhat from their early spring highs, declined by a surge in currency growth—apparently owing in further with the Federal Reserve's recent easing, part to increased demand from overseas—and a though intermediate and long-term rates remained bulge in some of M2's wholesale components, above the levels seen last December. Lower interest mainly overnight RPs and Eurodollars. By the rates also bolstered the stock market, and some second quarter, a steep runoff in retail money market share price indexes reached record highs this month. mutual ftind (MMMF) shares and a sharp decline in Spreads between high-quality private instruments demand deposits reinforced weakness in core deand Treasury issues narrowed slightly over the first posits in damping growth in aggregate M2. half of 1989. This narrowing reflected the continued Increases in the opportunity costs of holding M2 availability of funds for investment-grade borrowing balances—that is, the rise in other interest rates as well as increases in the borrowing needs of the relative to those on M2—retarded growth in this RTC, which are met partly through the Treasury. aggregate during the first half of the year. This was The pickup in Treasury borrowing for the RTC was particularly evident for retail MMMFs. Through necessitated by the faster pace of thrift resolutions, much of 1989, the yield curve was inverted, and which require the government to carry thrift assets MMMFs, whose portfolios typically average about on its own balance sheet pending their disposition. 30 to 40 days in maturity, had historically large yield The market for investment-grade issues continued to advantages relative to longer-term Treasury bills function reasonably well, with stable rate spreads and short-dated Treasury notes. As a result, MMMFs between quality tiers and generally well-maintained expanded briskly. As the yield curve began to flatten issuance volumes. On average, however, the busi- toward year-end, flows into MMMFs ebbed, though ness sector faced somewhat higher borrowing costs, they remained a key element of overall M2 growth. largely as the result of numerous downgradings of With the steepening of the yield curve in the early debt issues. The collapse of Drexel Burnham part of 1990, MMMF growth stopped in March. Lambert had a marginal impact on an already The recent rally in the stock market also may have debilitated market for below-investment-grade depressed MMMFs, as data through May indicate issues, widening spreads somewhat more between strong inflows to equity mutual funds, a substantial yields on such bonds and those on other long-term portion of which may have been transferred from securities. MMMFs. When yield curves have become more steeply Monetary and Credit Flows upward sloping in the past, the effect on M2 of weakness in MMMFs and other liquid balances Growth of the monetary aggregates was sluggish often has been partially offset by strength in retail over the first half of 1990, with M2 and M3 time deposits, as households lengthen the maturity expanding at annual rates of only 3V2 percent and of their assets. This year, however, retail certificate 1 lA percent respectively from the fourth quarter of of deposit (CD) rates were unusually slow to respond 1989 through June. The weakness in money growth to the rise in market rates through April, contributing primarily reflected a redirection of credit extensions to unexpected weakness in M2. The reluctance of away from depository institutions owing to the banks to raise deposit rates in response to rising continued downsizing of the thrift industry and a market rates was particularly evident in the more cautious lending posture of commercial banks. intermediate-term area where, for example, the rise The deceleration of M2 growth did not begin until of 100 basis points in the yield on the three-year the second quarter of 1990, when growth slowed to a Treasury note during the first four months of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 723 3. Growth of money and debt Percent change Debt of domestic Period Ml M2 M3 nonfinancial sectors Fourth quarter to fourth quarter 1980 7.4 8.9 9.5 9.5 1981 5.4 (2.5)1 9.3 12.3 10.2 1982 8.8 9.1 9.9 9.1 1983 10.4 12.2 9.8 11.2 1984 5.4 7.9 10.6 14.2 1985 12.0 8.9 7.8 13.1 1986 15.5 9.3 9.1 13.2 1987 6.3 4.3 5.8 9.9 1988 4.3 5.2 6.3 9.1 1989 .6 4.5 3.3 8.1 Quarterly growth rates (annual rates) 1990:1 4.8 6.0 2.7 6.9 2 3.6 2.3 .4 7.0e Semiannual growth rates (annual rates) 1990: 1 4.2 4.2 1.6 7.0 1. Figure in parentheses is adjusted for shifts to NOW accounts in 1981. e Estimated. year elicited an increase of less than 20 basis points Widening opportunity costs of holding M2 can in rates on bank retail CDs of comparable maturity. explain only some of the moderation in this aggregate Evidence of the rising opportunity cost of holding in the first half of 1990, however. M2 may also have M2 can be seen in the unusually heavy volume of been responding to slower spending, and other noncompetitive tenders in Treasury bill and note factors, some of which may have been associated auctions, which suggest a shift out of M2 balances. with deposit restructuring under the RTC. Brokered The unwillingness of banks to price their deposits deposits formerly attracted to thrift institutions by as aggressively as in the past is partly an indirect relatively high yields may have been particularly result of the contraction of the thrift industry. During sensitive to the recent sluggishness in deposit the first six months of 1990, commercial banks pricing; about $7 billion of brokered deposits were enjoyed $62 billion in retail deposit inflows—about a held at thrift institutions that were resolved in the 10 percent increase at an annual rate—while thrift first six months of the year, and many of these institutions were shedding $28 billion in retail high-rate contracts were subsequently abrogated or deposits—about a 5 percent annual rate of contrac- not rolled over by the acquiring institutions. Evition. Much of this deflection of deposits toward dence also suggests that, in light of large deposit commercial banks was the direct result of RTC inflows from thrift institutions, banks have curtailed resolutions. In the first half of the year, the RTC marketing and promotional activity designed to resolved 170 thrift institutions holding $32 billion of attract retail deposits. Finally, the issuance of shortnonbrokered retail deposits, much of which was term Treasury paper to fund RTC holdings of former immediately assumed by commercial banks. thrift assets has boosted the supply of, and raised the Although deposit transfers do not directly depress rates on, a close M2 substitute just when depositories M2, they may have contributed to the weakness in were becoming less aggressive in seeking retail this aggregate by reducing banks' need to raise their deposits. The rise in opportunity costs and these offering rates to attract additional deposits at a time other factors contributed to an increase in the velocity when growth in bank credit was slow. Through the of M2 in the first half of 1990, though some of this first half of 1990, commercial banks were able to increase remains difficult to explain. fund nearly 80 percent of their total credit growth The link between changes in depository intermewith retail deposits-almost double the proportion diation and M3 is somewhat more direct. This seen in recent years—even though they allowed aggregate encompasses managed liabilities, as well spreads between market rates and their retail offering as deposits and other sources of funds in M2, and is rates to widen substantially. thus a better barometer of the overall funding needs Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

724 Federal Reserve Bulletin • September 1990 of banks and thrift institutions. As has been evident Although the slowdown in real estate lending has since last summer, the contraction of the thrift been especially pronounced in New England, this industry and the failure of banks fully to pick up the type of lending remains sluggish in several other slack have already resulted in a significant slowdown regions as well. Some of the deceleration in in growth of depository credit relative to that of consumer lending represents sales of loans by banks aggregate nonfinancial sector debt and a concomitant attempting to bolster capital-asset ratios. Even increase in M3 velocity. This trend continued into adjusted for these sales, however, growth of conthe first half of 1990, as growth in depository credit sumer loans at banks slowed further in the second all but ceased—though overall debt growth continued quarter from an already reduced first-quarter pace. at a moderate pace—and M3 fell well below the The weakness in consumer borrowing this year is lower bound of its annual growth cone. due primarily to sluggish retail sales, particularly of Although the FOMC foresaw some significant automobiles and other durable goods; banks evidamping effects on M3 growth in 1990 in association dently have remained willing lenders to households, with the continued shrinkage of the thrift industry, and interest rates on consumer loans have changed the actual weakness in M3 so far this year has been little. more pronounced than anticipated. In setting out its Bank lending to businesses also has been deexpectations for M3 in 1990, the Committee recog- pressed this year. Surveys of commercial bank nized that considerable uncertainties surrounded the lending officers through early May suggest that the thrift industry contraction in terms of the pace of slowdown in bank credit largely reflects diminished RTC resolutions, the extent of asset shrinkage at demand for credit and deteriorating conditions in the capital-impaired thrift institutions, and the desire of real estate market, although tighter lending terms commercial banks to step into the breach. To this and more stringent credit standards were frequently point, a faster-than-expected shrinkage of thrift cited for borrowers below investment grade, includassets has been manifested not only in weaker M2 ing many small businesses. Banks seem to have deposit inflows, but also in faster runoffs of large raised lending rates somewhat to small firms, judging time deposits and other M3 managed liabilities at from the slight increase in the spread between rates thrift institutions. In addition, commercial banks on small business loans and on federal funds. apparently have filled less of the void left by thrift Separate surveys in which small businesses were institutions than was originally anticipated. As a queried about general credit availability have pointed result, they too have pared their M3 managed to some recent increases in the difficulty these firms liabilities, further depressing this aggregate. face in obtaining credit, though on balance they Rates on large time deposits, like those on retail found credit availability little changed from middeposits, have remained low relative to yields on 1989. The slowdown in bank business lending this Treasury bills. Facing a substantial deterioration in year has mainly reflected reduced merger activity. the quality of their assets and constraints on capital, Bank retrenchment in this area is consistent with banks apparently have attempted to bolster profit other private credit judgments, as evidenced by the margins and have not aggressively pursued new major slump in the market for bonds below investlending opportunities. Not only have deposit rates ment grade. been held down, but loan rates also appear to have The reduced volume of corporate restructurings, been raised slightly relative to market rates and coupled with a diminished household demand for nonprice terms have tightened for certain types of credit, has slowed the growth of the aggregate debt credits. of domestic nonfinancial sectors to a 7 percent The pullback in credit supplies, together with annual rate from the fourth quarter of 1989 through some leveling out of demands for credit, likely May of this year, compared with the 8 percent contributed to a deceleration of bank asset growth. rate seen last year. Debt growth is currently in the Over the second quarter, growth of bank credit middle of its monitoring range and broadly conslowed to a 5% percent pace from the near 7 percent sistent with growth in nominal GNR With the rate of growth seen over the first quarter of 1990 and increasing leverage and the attendant dramatic the second half of 1989, with much of the decelera- declines in debt velocity witnessed in the 1980s tion centered in real estate and consumer lending. apparently ending, the Committee reduced the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Monetary Policy Report to the Congress 725 1990 monitoring range for debt by IV2 percentage ently continue to recognize the lower relative afterpoints in February. tax cost of mortgage debt since the 1986 tax reform, Debt growth decelerated in the first half of the which phased out the interest deductibility of nonyear despite a spike in U.S. government borrowing, mortgage household indebtedness. The slowdown which owed primarily to the growing working capital in consumer loans on the books of depositories has needs of the RTC. RTC spending, net of capital been even more pronounced, reflecting a marked raised off-budget by the Resolution Funding Corpo- pickup in securitizations. The trend toward securitiration, jumped to $31 billion in the second quarter, zation of consumer loans, which has been evident in up from the $4 billion to $5 billion levels of the the past few years, appears to have accelerated in previous two quarters. This spending is financed 1990, possibly because depositories are making through the Treasury and is therefore included in the efforts to reduce assets in order to meet the new debt aggregate. risk-based capital requirements. The pace of household borrowing slowed consid- Through the first half of the year, the total erably in the first six months of 1990, reflecting borrowing of nonfinancial firms has been maintained decelerations in both mortgage and consumer credit. at about the same pace as in the last half of 1989, The recent slowing of home mortgage borrowing despite a sharp drop in equity retirements. Although appears to be largely the result of reduced demand, business lending by banks has slowed, commercial owing to increases in interest rates earlier in the year paper issuance picked up the slack, particularly in and weakening economic activity in some regions of the first few months of the year. More recently, in the country. Although banks have picked up only light of declines in bond yields, firms have stepped some of the slack for thrift institutions in the area of up their issuance of bonds and slowed their use of mortgage lending, the expanding market for securi- commercial paper. Despite a recent slight narrowing tized mortgages has facilitated an orderly flow of of spreads relative to investment-grade securities, mortgage credit. In fact, spreads of mortgage- issuance of below-investment-grade bonds has backed securities over comparable Treasury issues remained in the doldrums. Spreads between remain low by historical standards and rates on investment-grade paper and Treasury issues are still home loans have not risen noticeably relative to low by historical standards, held down in part by other long-term rates. supply pressures in the Treasury market. Consistent with households' sluggish spending, In the municipal market, the increase in market overall consumer installment credit has risen at a interest rates and the downgradings of a number of 2% percent rate from the fourth quarter of 1989 key issuers during the first half of 1990 combined to through May of this year, well below the 5 V2 percent slow refunding issuance to a crawl. As a result, the clip in 1989. Some of this deceleration reflects total debt of state and local governments expanded at substitution of home equity loans for previously only an annual rate of 3 percent in the second existing consumer indebtedness; households appar- quarter, compared with 4V2 percent in 1989. • Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

726 Staff Studies The staff members of the Board of Governors of the the authors and do not necessarily indicate concur- Federal Reserve System and of the Federal Reserve rence by the Board of Governors, by the Federal Banks undertake studies that cover a wide range of Reserve Banks, or by members of their staffs. economic and financial subjects. From time to time Single copies of the full text of each study are the studies that are of general interest are published available without charge. The titles available are in the Staff Studies series and summarized in the shown under "Staff Studies" in the list of Federal FEDERAL RESERVE BULLETIN. Reserve Board publications at the back of each The analyses and conclusions set forth are those of BULLETIN. STUDY SUMMARY BANKING MARKETS AND THE USE OF FINANCIAL SERVICES BY SMALL AND MEDIUM-SIZED BUSINESSES Gregory E. Elliehausen and John D. Wolken—Staff, Board of Governors Prepared as a staff study in the spring of 1990 The definition of the geographic area and the ser- institutions more thoroughly than any other survey vices that constitute a particular market for financial to date. This paper, the first report of findings from services has been a longstanding and contentious the business survey, uses the data to investigate the issue in the antitrust analysis of proposed bank range of services, institutions, and distances over mergers and acquisitions. The definition has gener- which small and medium-sized firms handle their ally relied on Supreme Court decisions dating from financial affairs and assesses the implications of the the 1960s and early 1970s. Given the deregulation data for the definition of financial service markets. and financial innovations of recent years, however, The current approach to market definition holds the definition derived from those decisions may be that the costs of information and transportation based on outdated perceptions and data. incurred by customers searching for, and using, As part of a review of its approach to market distant or specialized institutions are large, as are the definition in antitrust analysis, the Board of Gover- information costs incurred by a financial institution nors commissioned a survey of businesses to learn in evaluating a nonlocal business seeking credit; more about the use of financial services. This survey, hence, on this view, financial services in the main sponsored jointly with the Small Business Adminis- are offered by, and obtained from, local commercial tration, is the National Survey of Small Business banks. A contrary argument holds that the degree Finances, a nationally representative sample of to which deregulation and advances in telecom- 3,405 firms that encompasses small (0-49 employ- munications in recent years have lowered the ees) and medium-sized (50-499 employees) for- costs of information and of travel has been suffiprofit, nonagricultural, nonfinancial enterprises. cient to widen the range of institutions and dis- The survey sample represents the population of tances over which firms select their financial small and medium-sized firms more accurately and services. covers their use of financial services and financial The study follows primarily a demand approach Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

727 to market definition, the premise of which is that support the Board's current approach of considering current consumption patterns generally delineate thrift competition as specific circumstances warrant market boundaries. The study enhances the demand- in antitrust analysis of bank mergers. side approach by linking consumption data to the Firms rarely consider nondepository institutions characteristics of the businesses' local areas, such as to be their primary financial institution; they tend to the local depository institution structure. The study use them for single, often specialized, financial also uses information from the survey on each firm's products such as financial leases and brokerage search for financial services and information on services. solicitations of small and medium-sized businesses The geographic dispersion of financial institutions by financial institutions. is generally smallest for those products associated This study's analysis of the survey data shows that with high transaction costs. For example, more than financial services markets for small and medium- 75 percent of the institutions providing checking sized businesses are generally limited to local accounts, transaction services, or cash management commercial banks and, to a somewhat lesser extent, services are located within five miles of the firm. to local thrift institutions. For specialized financial Nonlocal suppliers are relatively more important services associated with the financing of vehicles sources for brokerage, leases, motor vehicle loans, and equipment, the economic markets are wider, and equipment loans. The geographic dispersion of both in geographic extent and in the types of leasing institutions used by firms is the widest— the institutions participating. 75th percentile of such institutions is located 260 Overwhelmingly, the single most important finan- miles from the firm. Even for these products, howcial institution for nearly every financialp roduct and ever, the majority of firms that use them obtain them service used by small and medium-sized businesses from local suppliers. is a local commercial bank. Almost all firms consider Businesses are most often induced to find substia local commercial bank to be their primary tutes in nonlocal areas and thereby to incur greater institution and tend to group their purchase of transaction costs when local markets are concenfinancial services there around the checking account; trated and thus presumably have higher prices than on average, firms use 2.29 products from their unconcentrated markets. Otherwise they tend to checking institution but only 1.08 products from obtain financial services locally. The findings institutions supplying services other than checking. regarding the economic markets for long-term leases Local thrift institutions provide traditional bank and motor vehicle and equipment loans suggest that services to some firms; the 6.3 percent of firms that nonbank and nonlocal financial institutions should consider a thrift institution to be their primary be considered when judging the competitive effect of financial institution use it for multiple services, the bank holding company acquisitions of nonbank subway others use commercial banks. These findings sidiaries that offer these specialized services. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

728 Industrial Production and Capacity Utilization Released for publication on July 17 In June, the output of motor vehicles and parts rose substantially, and the extremely hot weather Industrial production increased 0.4 percent in pushed up utility output. Combined, these in- June following an advance of 0.6 percent in May; creases accounted for three-fourths of the June in addition, estimates for March and April were increase. The total index has grown 1.2 percent revised down slightly. Capacity utilization, during the past year to 109.8 percent of its 1987 meanwhile, rose 0.2 percentage point in June to annual average. 83.5 percent. In market groups, as in May, the increase in Industrial production indexes Twelve-month percent change Twelve-month percent change Products 1985 1986 1987 1988 1989 1990 1985 1986 1987 1988 1989 1990 Capacity and industrial production Ratio scale, 1987 production = 100 Ratio scale, 1987 production = 100 — Total industry — 140 — Manufacturing - 140 - Capacity - 120 - Capacity — _ 120 100 - —^ 100 Production 80 y/ Production _ 80 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 Percent of capacity Percent of capacity Total industry Manufacturing 90 — 90 Utilization Utilization 80 — W—V ^ ^^ ~ 80 70 70 J L J L J L 1 1 1 1 1 1 1 1 1 1 1 1 1978 1980 1982 1984 1986 1988 1990 1*978 1980 1982 1984 1986 1988 1990 All series are seasonally adjusted. Latest series, June. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

729 the output of motor vehicles and parts contrib- repairs more than offset the increase in electricity uted significantly to last month's gains in the generation. indexes for durable consumer goods, business In industry groups, manufacturing output rose equipment, and durable goods materials. Produc- 0.5 percent in June, bringing the factory operattion of consumer goods other than autos and ing rate up 0.2 percentage point to 82.9 percent. trucks posted a small increase in June. The most In the second quarter, manufacturing output notable increases occurred in electricity for res- grew almost 3Vz percent at an annual rate; exidential use, appliances, and gasoline; production cluding motor vehicles and parts, production of clothing and food weakened. Output of busi- advanced about 1 percent in the second quarter. ness equipment excluding motor vehicles was up Output rose about Vi of 1 percent in both 0.5 percent in June; for the second quarter as a durable and nondurable manufacturing industries whole, sizable increases were posted for most in June. The growth in durables resulted, in part, major categories of these items. from the gains in motor vehicles and parts, while Output of construction supplies fell sharply the increase for nondurables stemmed from modagain last month and was about 2Vi percent erate advances in many industries. More of the below the February level, which was the series' overall increase in manufacturing output came in most recent high. The production of durable and primary rather than advanced processing indusnondurable materials rose in June, owing, in tries. The operating rate for primary processing part, to gains in chemicals and metals. Output of rose 0.3 percentage point in June on the strength energy materials fell sharply as a decline in coal of gains in petroleum, chemicals, paper, primary mining and a reduction in output of crude oil metals, and textiles. stemming from Alaskan oil field and pipeline Output at mines fell 1.5 percent in June be- 1987 = 100 Percentage change from preceding month Percceennttaaggee change, Industrial production 1990 1990 June 1989 to June Mar/ Apr/ Mayr June*' Mar/ Apr/ May7" June" 1990 Total index 108.9 108.7 109.3 109.8 .4 -.2 .6 .4 1.2 Previous estimates 109.0 109.0 109.7 .5 .0 .6 Major market groups Products, total 110.7 110.2 111.2 112.0 .9 -.4 .9 .7 2.0 Consumer goods 107.5 106.9 107.5 108.2 .5 -.5 .5 .7 1.8 Business equipment 122.2 121.4 123.4 124.6 1.8 -.6 1.6 .9 2.6 Construction supplies 107.3 106.5 106.0 105.5 -.8 -.8 -.5 -.5 .6 Materials 107.1 107.2 107.6 107.8 .0 .1 .3 .2 .2 Major industry groups Manufacturing 109.8 109.3 110.2 110.7 .2 -.4 .8 .5 1.3 Durable 111.9 110.9 112.4 113.0 1.1 -.9 1.3 .5 1.1 Nondurable 107.2 107.3 107.4 107.8 -1.0 .1 .1 .4 1.6 Mining 101.1 103.3 102.6 101.0 .2 2.2 -.7 -1.5 .6 Utilities 106.2 106.2 106.9 109.2 2.2 -.0 .7 2.1 2.7 Percent of capacity CCaappaacciittyy growth, CCaappaacciittyy uuttiilliizzaattiioonn 1989 1990 June 1989 Average, Low, HHiigghh,, to 1967-89 1982 1988-89 JJuunnee 11999900 June Mar. Apr. May Junep Total industry 82.2 71.8 85.0 84.6 83.4 83.0 83.3 83.5 2.6 Manufacturing 81.5 70.0 85.1 84.4 82.9 82.3 82.7 82.9 3.1 Advanced processing 81.1 71.4 83.6 83.2 82.0 81.3 81.9 82.0 3.3 Primary processing 82.3 66.8 89.0 87.0 85.2 84.9 84.9 85.2 2.4 Mining 87.3 80.6 87.2 85.8 87.5 89.6 89.1 87.8 -1.6 Utilities 86.8 76.2 92.3 84.8 84.2 84.1 84.6 86.3 .9 NOTE. Indexes are seasonally adjusted. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

730 Federal Reserve Bulletin • September 1990 cause of reduced output of coal and crude oil, ating rate up 1.7 percentage points to 86.3 while production at utilities rose 2.1 percent in percent. Even so, it remained well below the response to the extremely hot weather. The 92.3 percent rate recorded during the cold snap increase in output at utilities brought its oper- last December. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

731 Statements to the Congress Statement by Alan Greenspan, Chairman, Board cising insufficient discipline through the cost of of Governors of the Federal Reserve System, deposits, the incentive of some banks' owners to before the Committee on Banking, Housing, and control risk-taking has been dulled. Profits asso- Urban Affairs, U.S. Senate, July 12, 1990. ciated with risk-taking accrue to owners, while losses in excess of bank capital that would oth- I am pleased to appear before this committee to erwise fall on depositors are absorbed by the discuss reform of the deposit insurance system Federal Deposit Insurance Corporation (FDIC). and expanded activities for banking organiza- Weak depositor discipline and this moral haztions. Like each of you, my colleagues and I have ard of deposit insurance have two important spent considerable time discussing and debating implications. First, the implicit deposit insurance the issues. We are reminded almost daily of the subsidy has encouraged banks to enhance their potential for public cost of the deposit insurance profitability by increasing their reliance on deobligation, made so painfully apparent by the posits rather than capital to fund their assets. In failures and difficulties of so many thrift institu- effect, the deposit insurance funds have been tions. Similarly, both the Congress and the Board increasingly substituted for private capital as the are reminded repeatedly of the erosion of the cushion between the asset portfolios of insured competitiveness of our banking system both do- institutions and their liabilities to depositors. A mestically and internationally. The time has hundred years ago, the average equity-capital-tocome when these issues must be addressed. asset ratio of U.S. banks was almost 25 percent, The hearings you are conducting, Mr. Chair- approximately four times the current level. Much man, will establish a record preliminary to the of the decline over the past century, no doubt, publication early next year of the Financial Insti- reflects the growing efficiency of our financial tutions Reform, Recovery, and Enforcement Act system. But it is difficult to believe that many of of 1989 (FIRREA)-mandated Treasury study of the banks operating over recent decades would the issues. The Board is participating in this have been able to expand their assets so much, study and has conveyed to the Treasury the with so little additional investment by their ownviews expressed in this statement. By holding ers, were it not for the depositors' perception hearings at this early date, I hope that the Con- that, despite the relatively small capital buffer, gress will be able to focus on the needed legisla- their risks were minimal. Regulatory efforts over tion immediately after the release of the Treasury the past ten to fifteen years have stabilized and study. Basic reforms are required both of the partially reversed the sharp decline in bank eqsafety net and of the range of activities permitted uity capital-asset ratios. This trend has occurred banking organizations. despite the sizable write-off of loans and the The fundamental problems with deposit insur- substantial build-up in loan-loss reserves in the ance that must be addressed are clearly under- past three years or so. But the capital ratios of stood and are, I believe, subject to little debate many banks are still too low. among those with drastically different prescrip- Second, government assurances of the liquidtions for reform. The safety net—deposit insur- ity and availability of deposits have enabled ance, as well as the discount window—has so some banks with declining capital ratios to fund a lowered the risks perceived by depositors as to riskier asset portfolio at a lower cost and on a make them relatively indifferent to the soundness much larger scale, with governmental regulations of the depository recipients of their funds, except and supervision, rather than market processes, in unusual circumstances. With depositors exer- the major constraint on risk-taking. As a result, Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

732 Federal Reserve Bulletin • September 1990 more resources have been allocated to finance ized in the market value of depository institurisky projects than would have been dictated by tions. The associated scale and cost of funding economic efficiency. have been incorporated into a wide variety of In brief, the subsidy implicit in our current bank and thrift decisions, including portfolio deposit insurance system has stimulated the choices, staffing, branch structure, and marketgrowth of banks and thrift institutions. In the ing strategy. Consequently, a return to lower process, the safety net has distorted market deposit insurance coverage—like any tightening signals to depositors and bankers about the eco- of the safety net—would reduce insured deposinomics of the underlying transactions. This dis- tory market values and involve significant trantortion has led depositors to be less cautious in sition costs. It is one thing initially to offer and choosing among institutions and has induced then maintain a smaller degree of insurance covsome owners and their managers to take exces- erage and quite another to reimpose on the sive risk. In turn, the expanded lending to risky existing system a lower level of insurance, with ventures has required increased effort and re- its associated readjustment and unwinding costs. sources by supervisors and regulators to monitor This is why the granting of subsidies by the and modify behavior. Congress should be considered so carefully: They not only distort the allocation of resources But in reviewing the list of deficiencies of the but also are extremely difficult to eliminate, deposit insurance system, we should not lose imposing substantial transition costs on the disight of the contribution that both deposit insurrect and indirect beneficiaries. For such reasons, ance and the discount window have made to the Board has concluded that, should the Conmacroeconomic stability. The existence and use gress decide to lower deposit insurance limits, a of the safety net have shielded the broader finanmeaningful transition period would be needed. cial system and the real economy from instabilities in banking markets. More specifically, they A decision by the Congress to leave the have protected the economy from the risk of $100,000 limit unchanged, however, should not deposit runs, especially the risk of such runs preclude other reforms that would reduce current spreading from bank to bank, disrupting credit inequities in, and abuses of, the deposit insurand payment flows and the level of trade and ance system. Serious study should be devoted to commerce. Confidence in the stability of the the cost and effectiveness of policing the banking and payments system has been the major $100,000 limit so that multiple accounts are not reason why the United States has not suffered a used to obtain more protection for individual financial panic or systemic bank run in the last depositors than the Congress intends. The same half century. study could consider the desirability of limiting There are thus important reasons to take care pass-through deposit insurance—under which up as we modify our deposit insurance system. to $100,000 insurance protection is now explicitly Reform is required. So is caution. The ideal is an extended to each of the multiple beneficiaries of institutional framework that, to the extent possi- some large and otherwise uninsured deposits. ble, induces banks both to hold more capital and Both have been used at times to thwart or abuse to be managed as if there were no safety net, the purpose of deposit insurance protection. while at the same time shielding unsophisticated No matter what the Congress decides on dedepositors and minimizing disruptions to credit posit insurance limits, we must be cautious of our and payment flows. treatment of uninsured depositors. Such deposi- If we were starting from scratch, the Board tors should be expected to assess the quality of believes it would be difficult to make the case their bank deposits just as they are expected to that deposit insurance coverage should be as high evaluate any other financial asset they purchase. as its current $100,000 level. However, whatever Earlier I noted that our goal should be for banks the merits of the 1980 increase in the deposit to operate as much as possible as if there were no insurance level from $40,000 to $100,000, it is safety net. In fact, runs of uninsured deposits clear that the higher level of depositor protection from banks under stress have become commonhas been in place long enough to be fully capital- place. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 733 So far, the pressure transmitted from such ally all households using checking accounts. episodes to other banks whose strength may be Movement from the present structure for delivin doubt has been minimal. Nevertheless, the ery of many bank services would be difficult and clear response pattern of uninsured depositors to costly, placing U.S. banks at a disadvantage protect themselves by withdrawing their deposits internationally. In addition, this approach might from a bank under pressure raises the very real shift and possibly focus systemic risk on larger risk that in a stressful environment the flight to banks. Banking organizations would have to loquality could precipitate wider financial market cate their business and household credit operaand payments distortions. These systemic effects tions in nonbank affiliates funded by uninsured could easily feed back to the real economy, no deposits and borrowings raised in money and matter how open the discount window and how capital markets. Only larger organizations could expansive open market operations. Thus, while fund in this way, and these units, unless financed deposits in excess of insurance limits should not longer term than banks today, would be subject be protected by the safety net at any bank, to the same risks of creditor runs that face reforms designed to rely mainly on increased uninsured banks, with all of the associated sysmarket discipline by uninsured depositors raise temic implications. If this were the case, we serious stability concerns. Public policy, there- might end up with the same set of challenges we fore, should rely on other means as the primary face today, refocused on a different set of instimechanism to induce prudent bank policies. tutions. We at the Board believe that while the notion of a narrow bank to insulate the insurance A promising approach that seeks to simulate fund is intriguing, in our judgment further study market discipline with minimal stability implicaof these systemic and operational implications is tions is the application of risk-based deposit required. insurance premiums. The idea is to make the price of insurance a function of the bank's risk, If, in fact, proposals that rely on uninsured reducing the subsidy to risk-taking and spreading depositor discipline, risk-based premiums, and the cost of insurance more fairly across deposi- structural changes in the delivery of bank sertory institutions. In principle, this approach has vices raise significant difficulties, reform should many attractive characteristics and could be de- then look to other ways to curb banks' risk signed to augment risk-based capital. For exam- appetites, and to limit the likelihood that the ple, banks with high risk-based capital ratios deposit insurance fund, and possibly the taxmight be charged lower insurance premiums. But payer, will be called on to protect depositors. the range of premiums necessary to induce gen- The Board believes that the most promising uine behavioral changes in portfolio management approach is to reform both bank capital and might well be many multiples of the existing supervisory policies. Both policies would be depremium, thereby raising practical concerns signed to reduce the value of the insurance about its application. Risk-based premiums also subsidy. Neither policy would rule out either would have to be designed with some degree of concurrent or subsequent additions to deposit complexity if they are to be fair and if unintended insurance reform, such as the changes discussed incentives are to be avoided. In any event, the previously, other proposals, such as increased potential additional benefits on top of an interna- reliance on subordinated debt, or new aptionally negotiated risk-based capital system, proaches that may emerge in the years ahead. In while positive, require further evaluation. fact, higher capital, by reducing the need for, and Another approach that has induced increasing thereby the value of, deposit insurance would interest is the insured narrow bank. Such an make subsequent reform easier. There would be institution would invest only in high quality, less at stake for the participants in the system. short-maturity, liquid investments, recovering its At the end of this year, the phase-in to the costs for checking accounts and wire transfers International Capital Standards under the Basle from user fees. The narrow bank would thus Accord will begin. This risk-based capital aprequire drastic institutional changes, especially proach provides a framework for incorporating for thousands of our smaller banks and for virtu- portfolio and off-balance-sheet risk into capital Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

734 Federal Reserve Bulletin • September 1990 calculations. Most U.S. banks have already We in the Federal Reserve System are in the made the adjustment required for the fully process of developing more specific capital prophased-in 1992 standard. However, the prospec- posals, including appropriate transition arrangetive increasingly competitive environment sug- ments designed to minimize disruptions. Howgests that the minimum level of capital called for ever, at the outset I would like to anticipate by the 1992 requirements may not be adequate, several criticisms. For many banks, raising sigespecially for institutions that want to take on nificant new capital will be neither easy nor additional activities. As a result of the safety net, cheap. Maintaining return on equity will be more too many banking organizations, in our judg- difficult, and those foreign banks that only adhere ment, have traveled too far down the road of to the Basle minimums may be put in a somewhat operating with modest capital levels. It may well better competitive position relative to some U.S. be necessary to retrace our steps and begin banks. Higher capital requirements also will tend purposefully to move to capital requirements that to accelerate the move toward bank consolidawould, over time, be more consistent with what tion and slow bank asset growth. However, these the market would require if the safety net were concerns must be balanced against the increasing more modest. The argument for more capital is need for reform now, the difficulties with all the strengthened by the necessity to provide banking other options, and both the desire of, and necesorganizations with a wider range of service op- sity for, banking organizations to broaden their tions in an increasingly competitive world. In- scope of activities to operate successfully. deed, projections of the competitive pressures More generally, many of the arguments about only intensify the view that if our financial instithe competitive disadvantages of higher capital tutions are to be among the strongest in the requirements are shortsighted. Well-capitalized world, let alone avoid an extension of the taxbanks are the ones best positioned to be successpayers' obligation to even more institutions, we ful in the establishment of long-term relationmust increase capital requirements. Our internaships, to be the most attractive counterparties for tional agreements under the Basle Accord permit a large number of financial transactions and us to do so. guarantees, and to expand their business activi- There are three objectives of a higher capital ties to meet new opportunities and changing requirement. First, higher capital would circumstances. Indeed, many successful U.S. strengthen the incentives of bank owners and and foreign institutions would today meet submanagers to evaluate more prudently the risks stantially increased risk-based capital standards. and benefits of portfolio choices because more of In addition, the evidence of recent years suggests their money would be at risk. In effect, the moral that U.S. banks can raise sizable equity. The hazard risk of deposit insurance would be re- dollar volume of new stock issues by banking duced. Second, higher capital levels would cre- organizations has grown at a greater rate since ate a larger buffer between the mistakes of bank the late 1970s than the total dollar volume of new owners and managers and the need to draw on issues by all domestic corporate firms. the deposit insurance fund. For too many insti- Higher capital standards should go a long way tutions, that buffer has been too low in recent toward inducing market-like behavior by banks. years. The key to creating incentives to behave However, the Board believes that, so long as a as the market would dictate, and at the same time significant safety net exists, additional inducecreating these buffers or shock absorbers, is to ments will be needed through an intensification require that those who would profit from an of supervisory efforts to deter banks from maininstitution's success have the appropriate taining return on equity by acquiring riskier amount of their own capital at risk. Third, requir- assets. When it is not already the practice, full ing higher capital imposes on bank managers an in-bank supervisory reviews—focusing on asset additional market test. They must convince in- portfolios and off-balance-sheet commitments— vestors that the expected returns justify the should occur at least annually, and the results of commitment of risk capital. Those banks unable such examinations should promptly be shared to do so would not be able to expand. with the board of directors of the bank and used Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 735 to evaluate the adequacy of the bank's capital. current difficulties, and it is one of the objectives The examiner should be convinced, after a rigor- of our proposals to cause depositories to reconous and deliberate review, that the loan-loss sider the economics of such credits. As insured reserves are consistent with the quality of the institutions reevaluate the risk-return tradeoff, portfolio. If they are not, the examiner should they are likely to be more interested in credit insist that additional reserves be created with an extensions to less risky borrowers, increasing the associated reduction in the earnings or equity economic efficiency of our resource allocation. capital of the bank. If the resultant capital is not Despite their tendency to raise the average consistent with minimum capital standards, the level of bank asset quality, higher capital requireboard of directors and the bank's regulators ments and prompt corrective action will not should begin the process of requiring the bank eliminate bank failures. An insurance fund will either to reduce those assets or to rebuild equity still be needed, but we believe that, with a fund capital. of reasonable size, the risk to taxpayers should If credible commitments to raise capital are not be reduced substantially. As I have noted, higher forthcoming, and if those commitments are not capital requirements and prompt corrective acpromptly met, the authorities should explore tion imply greater caution in bank asset choices such responses as lowered dividends, slower and a higher cushion to the FDIC to absorb bank asset growth or perhaps even asset contraction, losses. In addition, an enhanced supervisory restrictions on the use of insured brokered de- approach will not permit deteriorating positions posits, if any, and divestiture of affiliates with the to accumulate. Moreover, the Board believes resources used to recapitalize the bank. What is that forced mergers, divestitures, and, when necimportant is that the supervisory responses occur essary, conservatorships should occur while promptly and firmly and that they be anticipated there is still positive (albeit low) capital in the by the bank. This progressive discipline or bank to limit reorganization or liquidation costs. prompt corrective action of a bank with inade- Existing stockholders should be given adequate quate capital builds on our current bank supervi- time to correct deteriorating positions—including sory procedures and is designed to simulate providing new capital—but the Congress should market pressures from risk-taking—to link ex- specifically provide the bank regulators with the cessive risk-taking more closely with its costs— clear authority, and, therefore, explicit support, without creating market disruptions. Some flex- to act well before technical insolvency to miniibility is certainly required, but the Board has in mize the ultimate resolution costs. mind a set of credible responses in principle and These reforms should be equally applicable to a presumption that these responses will be ap- banks of all sizes. No observer is comfortable plied in the absence of compelling reasons not to with the inequities and adverse incentives of an do so. explicit or implicit program that penalizes depos- Such an approach—higher capital and prompt itors, creditors, and owners of smaller banks corrective action—would increase the cost and more than those of larger ones. The Board bereduce the availability of credit from insured lieves no bank should assume that its scale institutions to riskier borrowers. In effect, our insulates it from market discipline. Nevertheless, proposal would reduce the incentive some banks it is clear that there may be some banks at some currently have to overinvest in risky credits at particular times whose collapse and liquidation loan rates that do not fully reflect the risks would be excessively disruptive to the financial involved. This reduction implies that the organiz- system. But no bank is ever too large or too small ers of speculative and riskier ventures will have to escape the application of the same prompt to restructure their borrowing plans, including corrective action standards applied to other possibly paying more for their credit, or seek banks. Any bank can be required to rebuild its financing from noninsured entities. Some bor- capital to adequate levels and, if it does not, be rowers may find their proposals no longer viable. required to contract its assets, divest affiliates, However, it is just such financing by some in- cut its dividends, change its management, sell or sured institutions that has caused so many of the close offices, and the resultant smaller entity can Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

736 Federal Reserve Bulletin • September 1990 be merged or sold to another institution with the Indeed, authorization to use their expertise resources to recapitalize it. If this is not possible, over a wider range of markets might well be the entity can be placed in conservatorship and limited only to those banking organizations that liquidated. meet a new higher capital standard. Conse- I noted earlier that one response of some banks quently, the Congress might wish to authorize to the more intense competitive environment has bank supervisors to grant certain of these activbeen to draw down their capital buffer. These ities only to those entities that exceed such a banks and other institutions cannot rebuild, standard. Those institutions that consistently exstrengthen, and maintain the appropriate level of ceed the capital standard perhaps could receive capital unless they are able to adapt to the more flexibility in supervisory treatment. For changing competitive and technological environ- example, a notice requirement could be substiment. The ability to adapt is crucially dependent tuted for formal applications for activities permiton broadening the permissible range of activities ted by law and regulation, provided that such for banking organizations. At the same time, we acquisitions leave a banking organization's capishould be sensitive to the implications of the tal in excess of the higher standards. Other potential extension of the safety net—directly or reductions in regulatory burden for highly capiindirectly—under those markets that banking or- talized banking organizations might also be apganizations are authorized to enter. propriate. Such organizations would, however, still be subject to the same thorough annual The Board has for some time held the view that examinations. strong insulating fire walls would both protect banks (and taxpayers) from the risk of new As you know, the Board has long supported activities and limit the extension of the safety net repeal of the provisions of the Glass-Steagall Act subsidy that would place independent competi- that separate commercial and investment banktors at a disadvantage. However, recent events, ing. We still strongly advocate such repeal beincluding the rapid spread of market pressures to cause we believe that technology and globalizaseparately regulated and well-capitalized units of tion have continued to blur the distinctions Drexel when their holding company was unable among credit markets, and have eroded the franto meet its maturing commercial paper obliga- chise value of the classic bank intermediation tions, have raised serious questions about the process. Outdated constraints will only endanger ability of fire walls to insulate one unit of a the profitability of banking organizations and holding company from funding problems of an- their contribution to the American economy. other. Partially as a result, the Board is in the Beyond investment banking, the Board believes process of reevaluating both the efficacy and that highly capitalized banking firms should be desirability of substantial fire walls between a authorized to engage in a wider range of financial bank and some of its affiliates. It is clear that high activities as a part of the modernization of our and thick fire walls reduce synergies and raise financial structure and the maintenance of costs for financial institutions, a significant prob- strong, profitable financial institutions that can lem in increasingly competitive financial mar- compete in world markets. A banking system kets. If they raise costs and may not be effective, that cannot adapt to the changing competitive we must question why we are imposing these and technological environment will no longer be kinds of fire walls at all. Moreover, higher capital able to attract and maintain the higher capital standards and prompt corrective action go a long level that some of our institutions need to operate way to limit the transference of the bank safety without excessive reliance on the safety net. net subsidies to bank affiliates that fire walls are Firms primarily engaged in the financial activdesigned to constrain. And, as such, they should ities authorized to banking organizations should greatly limit the risk of distorted market signals likewise be permitted to operate an insured bank. and excessive risk-taking over an expanded The Congress, of course, will have to give careful range of markets, as well as the unfair competiconsideration to how to handle the activities tion, that might otherwise accompany wider some of these entities are already engaged in that bank activities. would not be permitted to banking organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 737 More generally, as we expand the range of activ- graphically and raises costs for all banking orgaities available to banking organizations, compet- nizations that operate in more than one state, a itive equity suggests the desirability of functional curious requirement as we search for ways to regulation. Under such an approach, each area of make banks more competitive and profitable. activity should be subject to the same regulatory The McFadden Act ought to be amended to constraints as equivalent or very similar func- permit interstate branching by banks. tions at nonbank firms. But independent of reg- In summary, events have made it clear that we ulatory or organizational structure, all of us ought not to permit banks, because of their should understand that the market, the stock- access to the safety net, to take excessive risk holders, and the management will think of the with inadequate capital. Even if we were to bank and any associated units—affiliates or sub- ignore the potential taxpayer costs, we ought not sidiaries—not as a confederation of businesses, to permit a system that is so inconsistent with but as an integrated organization. Recognition of efficient market behavior. In the process of rethis reality suggests that it is perhaps inefficient, form, however, we should be certain that we at best, and under conditions of financial dis- consider carefully the implications for macroecotress, ineffective, to try to make integrated bus- nomic stability. The Board believes that higher inesses behave as if they were a collection of capital and prompt corrective action by superviindependent firms. sors to resolve problems will go a long way to As a result, it may be more realistic, as I eliminate excessive risk-taking by insured instisuggested earlier, to apply more limited fire walls tutions, and would not preclude additional deto the new activities. I have in mind here restric- posit insurance reform, now or later. Moreover, tions such as sections 23 A and 23B of the Federal we believe that with such an approach the Con- Reserve Act, which already limit the financial gress should feel comfortable with authorizing transactions between a bank and its affiliates, banking organizations to expand the scope of requiring collateral, arms-length transactions, their financial activities. Indeed, we believe that and—except when Treasury securities are used permitting wider activities is necessary to ensure as collateral—quantitative limits based on the that such organizations can remain competitive bank's capital. Moreover, recognition of the in- both here and abroad. Increased activities are tegrated nature of the operations of the insured also required to sustain the profitability needed if unit with the rest of the organization raises the banking firms are to attract capital. To limit the question of the implications of a piecemeal reg- risks of safety net transference, some new activulatory structure, with no means for ensuring ities might be made available by banking regulathat the activities of the organization as a whole tors only to banks with impressive capital posido not impose undue risk on either the financial tions. We believe that whatever the regulatory system or the safety net. We believe that some form and structure under which new activities agency should be responsible for oversight of the are permitted, one agency should have oversight entire organization, especially if expanded activ- responsibility for the banking organization as a ities and less rigorous fire walls are adopted. whole. It is also our view that, with these suggested reforms, reliance on stringent fire walls As the Congress considers modernization of would not be necessary. And the McFadden Act our banking structure to meet the needs of the should be amended to permit banks to deliver twenty-first century, it should not only widen the their services at the lowest possible costs and to permissible activities of well-capitalized banking more easily diversify their geographic risks. The organizations, but also eliminate outdated stat- Board has shared its views with the Treasury as utes that only increase costs. The McFadden Act part of our continuing consultations on these forces state member and national banks to dematters, especially in the context of their liver interstate services only through separately FIRREA-mandated study. capitalized bank holding company subsidiaries (when permitted by state law) rather than Finally, in considering all proposals, we should through branches. Such a system reduces the remind ourselves that our objective is a strong ability of many smaller banks to diversify geo- and stable financial system that can deliver the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

738 Federal Reserve Bulletin • September 1990 best services at the lowest cost and compete one with reduced inclinations toward risk. around the world without taxpayer support. However, the Board believes our proposed This requires the modernization of our financial reforms—including the authorization of wider system and the weaning of some institutions activities by banking organizations—will go a from the unintended benefits that accompany long way toward ensuring a safer and more the safety net. Higher capital requirements may efficient financial system and lay the groundwell mean a relatively leaner and more efficient work for other modifications in the safety net in banking system, and they will certainly mean the years ahead. • Statement by Alan Greenspan, Chairman, Board On the distinctly positive side, exports have of Governors of the Federal Reserve System, shown solid gains, buoyed by expanding marbefore the Committee on Banking, Housing, and kets abroad. The impetus from international Urban Affairs, U.S. Senate, July 18, 1990. trade has been important in the pickup in industrial production this year. I am pleased to be here today to testify in In contrast, the news coming from the houseconnection with our semiannual Monetary Policy hold sector in recent months has had a softer cast Report to the Congress.1 In my prepared remarks to it. Consumers appear to have pulled back a this morning I shall discuss, as is customary on bit, as the slower overall pace of expansion and such occasions, current and prospective eco- the more pronounced weakness in certain parts nomic conditions and the Federal Reserve's ob- of the country—especially the Northeast—seem jectives for money and credit growth over the to have taken some toll on confidence in the period ahead. Two areas of particular note at economic outlook. Moreover, having accumupresent, with potential implications for the con- lated large stocks of automobiles and other conduct of monetary policy, are the ongoing restruc- sumer durables earlier in the expansion, consumturing of credit flows in the U.S. economy and ers could be more selective about when to the prospects for a significant cut in the federal purchase replacements. Sales of new homes also budget deficit. I shall pay special attention to have weakened, deterring building activity. these topics in my statement. There are other pluses and minuses, as well, in the economic picture—by sector and by region. Economic and Financial Developments But, on balance, the economy still appears to be Thus Far in 1990 growing, and the likelihood of a near-term recession seems low, in part because businesses have When I came before this committee in Febru- been working hard to keep their inventories in ary, I characterized the economy as poised for line with sales trends. continued moderate expansion in 1990, and, in Although output overall grew rather modestly large measure, developments so far this year over the first half, the unemployment rate reappear to have borne that statement out. Real mained at its lowest level in almost twenty years. gross national product grew at a 2 percent Over the past year, as employment has decelerannual rate in the first quarter, and indicators of ated, so too has the labor force, in part reflecting economic activity for the second quarter sug- a surprising decline in labor force participation gest a further rise, though perhaps at a some- rates for young people. Some flattening in the aggregate participation rate would be consistent what slower rate. Within this whole, however, with evidence that many individuals now perthe various sectors have moved along at difceive job opportunities as less abundant. Differferent paces. ences from past cyclical experiences, however, suggest that other factors also must be at work— if, in fact, the current pattern represents some- 1. See "Monetary Policy Report to the Congress," Fed- thing more than noise in the data. This developeral Reserve Bulletin, vol. 76 (September 1990), pp. 711-25. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 739 ment certainly bears watching, for it may have kets, represents an effort to offset the effects of implications for potential output growth. greater stringency in credit markets. Be that as it may, with hiring proceeding at a Other market interest rates generally rose less rapid pace, the rate of increase in wages early in 1990, as it became apparent that the appears to have leveled out from its earlier economy was not as weak as many had thought. upward trend. The core rate of inflation in con- Long-term yields were most affected, increasing sumer prices, proxied by abstracting from move- a full percentage point by early May. Subsements in food and energy prices, picked up quently, however, signs of a softening of activity sharply in the first quarter, but has moderated in prompted a reversal of much of that runup. Rates recent months. This moderation has been con- on long-term securities remain about Vi percentcentrated in the prices of goods, perhaps re- age point above their year-end levels, but money flecting the ebbing of capacity pressures in sev- market quotes are now little changed on balance. eral industries, while service price inflation has Throughout this period, rates on Treasury bills shown little sign of abating. have remained somewhat higher than usual rela- In 1990, Federal Reserve policy has continued tive to those on private instruments, probably in to be directed at sustaining the economic expan- part reflecting the large amount of bill issuance sion while making progress toward price stabil- necessary to fund working capital for the Resoity. Ultimately, the two go hand in hand: A stable lution Trust Corporation (RTC). price level sets the stage for the economy to The runup in market interest rates early in the operate at its peak efficiency, while high inflation year was one factor behind the sharp slowing in inevitably sows the seeds of recession and money growth over the first half of 1990. M2, wrenching readjustment. In the short run, how- which had been running close to the top of its ever, the risks of inflation, on the one hand, and target range in February, posted no net increase of an economic downturn, on the other, must be between March and June. This weakness, which weighed in the policymaking process. The Fed- moved the aggregate close to the bottom of its eral Reserve saw those risks as about evenly range, was too abrupt to be accounted for fully balanced over the first half of the year and made by the rise in market rates, however. Another of no adjustments in monetary policy. the factors at work was the restructuring of Throughout this period, which has been financial flows. One aspect of this restructuring marked by dramatic changes in the flow of was the closing of insolvent thrift institutions by funds through depository institutions, the Fed- the RTC and the sale of their deposit bases. eral Reserve has been paying particularly close Although the RTC's activities do not directly attention to conditions in credit markets. Evi- affect M2, the availability of huge blocks of dence of a tightening of terms and reduced deposits to the remaining thrift institutions and availability of credit has gradually accumulated, banks lessened their need to raise rates to draw to the point where it became apparent in recent in funds. In combination with the more cautious days that some action by the monetary author- attitude that depositories have exhibited toward ity was warranted. Several indicators have been expanding their balance sheets, the deposit transpointing in this direction, including the behavior fers contributed to an unusual degree of inertia in of the monetary aggregates. Growth in M2, for the pricing of retail deposits. Households reexample, which stalled out in the spring, has sponded to the relatively low returns on deposits failed to strengthen materially, suggesting that by looking elsewhere, as suggested by heavy the degree of financial restraint in train might be flows into stock and bond mutual funds and greater than anticipated or than appropriate to sizable noncompetitive tenders at Treasury aucthe evolving economic situation. This restraint tions. Nevertheless, while the movements in is a function of developments in the credit yield spreads can account for a good share of the markets, independent of monetary policy. The slump in M2 growth, a portion of it still requires recent decline in the federal funds rate to 8 explanation. percent, as a consequence of our action to The cause for the meager growth this year in reduce slightly the pressures in reserve mar- the broader monetary aggregate, M3, is clearer: Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

740 Federal Reserve Bulletin • September 1990 The RTC closed down a very large number of spread, classic crunch, as in the past when savings and loan associations, taking many of deposit rate ceilings or usury ceilings limited the those institutions' assets onto the government's market's ability to adjust and forced cutoffs of balance sheet and thereby effectively reducing credit. But I can well appreciate that my view on the overall funding needs of the depository sys- this topic may be perceived as a semantic nicety tem. In addition, increased loan losses and the by a borrower who today is suddenly unable to phasing-in of tighter capital requirements circum- get a loan on the terms formerly available. To the scribed the expansion of credit at many other borrower, it makes little difference why the thrift institutions and banks. With depository lender is pulling back or how pervasive the credit growth limited, M3—which contains much change in credit conditions is. of the associated funding—essentially stalled. By From a policymaker's perspective, however, it June, M3 growth was well below the 2Vi percent is essential to sort the issues out. This means lower bound of the target range the FOMC had discerning the breadth and depth of the shift in set in February. credit conditions, its causes, its effects, and the That range had itself been reduced a full per- extent to which it may ultimately be a desirable centage point from the target provisionally set development. Clearly, the verdict is not yet in on last July in recognition of the potential effects of the current episode; in economics we are seldom the ongoing contraction of the thrift industry. able to make a definitive diagnosis until well after Lacking historical experience with a financial the fact, but to do our job we must hazard some restructuring like the current one, however, it answers. was unclear exactly how the flows would end up First, what do we observe? The evidence on being redirected through the financial system this score continues to grow; numerous reports and, in particular, how much of the thrift lending indicate that depository institutions and other would be picked up by commercial banks. While lenders have become more selective in extending the economy more broadly is about where we credit. In addition, Federal Reserve surveys of expected it to be, the configuration of the finan- large banks support this sense that terms have cial system is somewhat different, leading to less been tightened in particular parts of the country M3 growth than had been anticipated. and on certain types of loans. Especially hard-hit have been financings for mergers and leverage buyouts, commercial real estate, and construction CREDIT CONDITIONS and development. There also is evidence that small and medium-sized companies, as well as the The weakness in the monetary aggregates, in poorer quality credits among the larger firms, part, signals a change in the behavior of deposi- have faced some tightening of credit availability. tory institutions, with potential for affecting The change in credit conditions has taken various overall credit provision. The conservative pric- forms, including tougher standards for credit aping of retail and wholesale deposits represents proval, higher collateral requirements, and inone aspect of their efforts to widen profit mar- creases in interest rates; and, in some cases, loans gins. In light of concerns about their capital have been simply unavailable. Even investmentpositions, banks and thrift institutions also have grade corporations appear to be facing slightly reined in lending activity and imposed stiffer higher costs in accessing bank credit facilities. At terms on loans. the same time, a huge widening of spreads on The change in credit supply conditions may less-than-investment-grade bonds has effectively have significant implications for borrowing, shut down that market to most new issues. spending, and policy. I would not call this change But on several other types of credit, changes in a "credit crunch," as those words connote a price and nonprice terms appear to have been contraction of lending on a major scale, with relatively minor. For example, the rates on resimany borrowers effectively shut out of credit dential mortgages, consumer loans, and the debt markets, regardless of their qualifications. We of investment-grade corporations have remained are not seeing symptoms of that kind of wide- about in their usual alignment with other market Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 741 interest rates. Because these credits may trade institutions have interacted with large losses on on securities markets and thereby access a broad soured loans and the financial market's distaste range of investors, the interest of banks and thrift for providing additional capital to the institutions institutions in holding the obligations in portfolio taking these losses. This interaction has resulted has little, if any, effect on the cost to borrowers. in strong incentives for depository institutions to These obligations account for a major share of conserve capital. Their efforts to build larger the credit extended in the economy, and hence capital cushions, in turn, have been manifest in a the slowing of depository credit and the sluggish somewhat more cautious approach to lending, as behavior of the monetary aggregates—while in- well as a stepped-up effort to sell off assets by, dicative of some tightening of credit—likely for example, securitizing loans. Partly as a result overstate the impact of the depositories' behav- of tighter credit conditions, the growth of credit, ior on economic activity. as measured by the change in the debt of domes- No doubt a sizable portion of lenders' in- tic nonfinancial sectors, has come down into creased reluctance to commit funds for certain closer alignment with the expansion of nominal purposes reflects a natural and healthy reaction GNP. This process, which reflects a somewhat to a slowdown in growth as the economy moves more cautious approach on the part of borrowers closer to capacity constraints. Prospects for con- as well, is not an aberrant restrictive phase in the tinued strong production and sales increases life of the financial system, but rather a return to fade, and the odds rise that some borrowers will what had been the norm before the 1980s. prove unable to meet their obligations. In other To be sure, when you go from excess credit words, part of the ongoing shift in credit condi- creation to normal, it can feel like a tightening. tions is what amounts to a regular cyclical event. And in that sense credit conditions have tight- But there is more to it than that. Through one ened. Many of the loans made during the 1980s avenue or another, the change in credit standards should not, by historical standards of creditworhas its roots in part in the excesses of the 1980s. thiness, have been made. As standards reverted The weaker credits extended during that decade closer to normal, those weaker borrowers have have come home to roost, and in so doing have been finding it far more difficult to access credit. impinged to varying degrees on the current avail- In addition, however, depository institutions ability of credit. appear more recently to be lending with greater Perhaps the clearest example is the real estate caution in general. As a result, even creditworthy sector and its principal lender, the thrift industry. borrowers may have to look harder for a loan, Those savings and loan associations that were put up more collateral, or pay a somewhat higher the freest with their funds exist no longer, having spread. For the nation as a whole, the tightening been closed by the RTC, and the remaining of credit standards will leave the financial system savings and loan associations face tighter regula- on a sounder footing and contribute to economic tions constraining their lending. The resulting stability in the long run. Nevertheless, in the here void has been filled quite effectively for home and now, the tightening is beginning to have very mortgage borrowers, with highly developed sec- real, unwelcome effects. Diminished credit availondary markets drawing funds in from else- ability can constrain firms' spending, for examwhere. For these borrowers, the shrinkage of the ple, limiting more of them to internally generated thrift industry does not represent a significant funds. It is difficult to discern the dividing line decline in intermediation services. But many between lending standards that are still healthy other clients of thrift institutions, whose debt is and those that are so restrictive as to be inconless easily securitized, have been hard-pressed to sistent with the borrower's status and the best find alternative sources of funds. Moreover, lax interests of the lender in the long run. In recent lending standards by both thrift institutions and weeks, however, we may have slipped over that banks contributed to overbuilding in commercial line. Such developments can, and do, occur real estate, which has added to problems for independently of central bank actions and can lenders to this industry. have important influences on spending and output. Thus the Federal Reserve must remain alert Rising capital requirements for banks and thrift Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

742 Federal Reserve Bulletin • September 1990 to the possibility that an adjustment to its posture consistent with the continuation of measured in reserve markets might be needed to maintain restraint on aggregate demand—a necessity in stable overall financial conditions. the containment, and ultimate elimination, of As best we can judge, the change in credit inflation. Such restraint need not be a barrier to conditions currently is exerting a slight additional sustained growth. Indeed, it is a crucial requiredegree of restraint on the economy. The process ment. As I suggested earlier, one thing that of credit restraint may not have reached comple- surely would jeopardize the current expansion tion, and some of its effects may not yet have would be for inflation to move upward, rather been felt; hence it will require continued scru- than downward, from the recent plateau. tiny. However, the tightening should eventually FOMC members and other Reserve Bank Presunwind as displaced borrowers find alternative idents generally foresee the policy embodied in sources of funds and as the banking system the money ranges as leading to both sustained rebuilds its capital. growth and diminished inflation in the period This restraint has implications for monetary ahead. For 1990, their expectations center on an policy at present, and the ongoing restructuring inflation rate in the AVI percent to 5 percent range, of the financial system has implications for the with real GNP growth of about Wi percent to 2 conduct of policy over the foreseeable future. It percent. But with this year's slow growth helping is clear that the financial restructuring will affect to relieve pressures on resources, expectations the channels through which policy actions are for 1991 incorporate both somewhat lower inflatransmitted ultimately to economic growth and tion and somewhat higher real growth, at a rate inflation; some will be diminished and others closer to that of growth in potential output. augmented. In these circumstances, the Federal The path of M3 consistent with these projec- Reserve has emphasized a flexible approach to tions has been heavily affected by the changes in policymaking, which includes attention to a wide financial intermediation in recent quarters. Taking range of economic and financial indicators. into account the current lending posture of the commercial banks and remaining thrift institutions, we now expect the closures of insolvent RANGES FOR MONEY AND DEBT GROWTH thrift institutions to show through in very subdued IN 1990 AND 1991 growth in M3. Accordingly, the FOMC voted to lower the 1990 range for growth of this aggregate At its meeting earlier this month, the FOMC to 1 percent to 5 percent. This action does not reaffirmed the 1990 range of 3 percent to 7 signal a tighter policy stance, but rather our recpercent that it had set for the growth of M2. With ognition that financial markets have been adjustthe thrift industry likely to continue to shrink at ing to the RTC's activities in a somewhat different a good clip and commercial banks expanding manner than we had anticipated, making the more circumspectly, depository institutions are lower M3 target appropriate. In view of the connot expected to be bidding aggressively for siderable uncertainties about both the scale of funds. As a result, although banks may replace RTC activities next year and the speed with which more of their managed liabilities with retail de- the banking industry will approach a more composits, M2 could well remain in the lower half of fortable capital position, the new 1990 range was its target range through year-end. In view of carried forward unchanged into 1991 on a tentachanging credit flows, a slow rate of expansion in tive basis. M2 seems consistent with continued moderate Overall debt growth during the rest of this year growth in output, but any pronounced weakness is expected to remain around the midpoint of its in the aggregate that drops it below its current reaffirmed 5 percent to 9 percent monitoring range might represent greater monetary restraint range. The nonfederal sectors now appear to be than is desirable this year. increasing their debt about in line with nominal Looking ahead to 1991, the Committee low- income growth, with the rapid pace of mortgage ered the M2 range Vi percentage point on a borrowing in recent years slowing into the single provisional basis. We believe that this range is digits and corporate leveraging activity slacken- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Statements to the Congress 743 ing. Growth of total debt in 1990 is likely to ation of its policy stance. What adjustment might exceed that of nominal GNP, however, as the be necessary, and how it might be timed, cannot federal government's borrowing to fund RTC be spelled out before the fact. The actions required activities is expected to boost the total by will depend on the constellation of other influences roughly 3A percentage point. on the economy, the nature and magnitude of the For 1991, the FOMC has provisionally reduced fiscal policy package, and the likely timing of its the monitoring range for domestic nonfinancial effects. I can only offer the assurance that the sector debt to 4V2 percent to 8V2 percent. Debt Federal Reserve will act, as it has in the past, to growth in this range should be adequate to sup- endeavor to keep the economic expansion on track. port continued economic expansion, while avoid- Concerns that the Federal Reserve would be ing the excessive leveraging that characterized unable to offset undesirable macroeconomic efmuch of the 1980s. fects of a budget pact are, I believe, largely A number of uncertainties come into play in unfounded. It is true that, in general, monetary the process of judging the outlook for the econ- policy cannot be calibrated extremely finely in omy over the next year and a half. Of particular response to economic developments, as we are concern in the context of monetary policy are the all subject to imperfect data and an imperfect likely extent and persistence of the tightening of understanding of the myriad economic interrelacredit terms, the prospective path of potential tionships of the real world. However, some output growth—especially in view of the recent doubts seem to focus on whether the various lags slowing in the labor force—and the outlook for involved permit monetary policy to catch up to a fiscal policy. It is the last of these that is the focus change in the fiscal stance. I am less concerned of the remainder of my comments today. on this point. We can decide that a policy adjustment is appropriate and implement it fully, all in the same morning if need be, and the effects of FISCAL AND MONETARY POLICY the change will show through to interest rates and financial asset prices almost immediately. INTERACTION Granted, the impact on economic growth and The determination displayed by the Congress and inflation will be spread out over several quarters, the Administration in their efforts to come to an but this is true of changes in fiscal policy as well. agreement on cutting the deficit has been enor- In the final analysis, no one can guarantee that mously heartening to all who are concerned about growth in the economy will proceed smoothly, the long-run health of the U.S. economy. As a without a hitch on a quarter-to-quarter basis. nation, we have been saving too little and borrow- Nevertheless, a major cut in the budget is uning too much; significant progress on the federal questionably the right thing to do. Because the deficit would be an important step in rectifying federal government has been borrowing too this situation. As you know, I favor not only much for too long, it is well past time to reduce eliminating the deficit, but also ultimately bringing the government's draw on credit markets and to the government's accounts into surplus over time free up more resources for enhancing investment to compensate for the private sector's tendency to and production by the private sector. In this way, save relatively little. In the long run, the nation's fiscal policy, by augmenting national saving, will saving and investment behavior is crucial in de- be doing its part to promote maximum sustaintermining its productivity and hence its standard able economic growth. With monetary policy of living. similarly keeping sight of its long-run goal of Major, substantive, credible cuts in the budget price stability, the two together will have set a deficit would present the Federal Reserve with a favorable backdrop for vibrant and enduring ecosituation that would call for a careful reconsider- nomic growth. • Chairman Greenspan presented identical testimony before the Subcommittee on Domestic Monetary Policy of the House Committee on Banking, Finance and Urban Affairs, July 24, 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

744 Announcements APPROVAL OF LEVERAGE GUIDELINES first time, seventy, under National Market System (NMS) designation. The Federal Reserve Board announced on Au- • Fifty-seven stocks previously on the list gust 2, 1990, approval in final form of capital to have been removed for substantially failing to total assets (leverage) guidelines and transitional meet the requirements for continued listing. capital standards for state member banks and • Forty-four stocks have been removed for bank holding companies. reasons such as listing on a national securities These final guidelines are essentially the same exchange or involvement in an acquisition. as the proposals the Board issued for public The List of Marginable OTC Stocks is pubcomment late last year. lished by the Board for the information of lenders The Board believes that these guidelines and the general public. It includes all OTC secushould assist state member banks and bank hold- rities designated by the Board pursuant to its ing companies (collectively, "banking organiza- established criteria as well as all OTC stocks tions") in formulating their capital planning pro- designated as NMS securities for which transaccess and in strengthening their capital base. The tion reports are required to be made pursuant to guidelines set forth minimum capital require- an effective transaction reporting plan. Addiments. tional OTC securities may be designated as NMS securities in the interim between the Board's quarterly publications and will be immediately marginable. The next publication of the Board's REVISED LIST OF OTC MARGIN STOCKS list is scheduled for October 1990. Now AVAILABLE Besides NMS-designated securities, the Board will continue to monitor the market activity of The Federal Reserve Board published on July 27, other OTC stocks to determine which stocks 1990, a revised List of Marginable OTC Stocks meet the requirements for inclusion and continfor over-the-counter (OTC) stocks and a List of ued inclusion on the List of Marginable OTC Foreign Margin Stocks for foreign equity securi- Stocks. ties that are subject to the Board's margin regu- Margin regulations generally limit the amount lations, effective August 13, 1990. of credit a person or firm may obtain to buy or The List of Foreign Margin Stocks is a new list carry stock. Stocks on the List of Marginable that indicates those foreign equity securities that OTC Stocks or on the List of Foreign Margin are now eligible for margin treatment at broker- Stocks are subject to the same margin requiredealers. This treatment was made possible by an ments (currently 50 percent) as stocks listed on amendment to Regulation T, effective April 30, national securities exchanges. These require- 1990. Forty-one foreign equity securities have ments mean that a person or firm buying a stock been included for the first time on the List of on credit must make a down payment equal to at Foreign Margin Stocks. least 50 percent of the purchase price of the stock The revised List of Marginable OTC Stocks and may obtain credit for the remaining 50 persupersedes the list that was effective on May 14, cent. These margin requirements are only appli- 1990. The changes that have been made to the cable to credit extended on stocks after they are list, which now includes 2,816 OTC stocks, are placed on the lists and the lists have become as follows: effective or after the stocks are designated as NMS securities. No credit may be extended by • Eighty-six stocks have been included for the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

745 broker-dealers on stocks that are not traded on a requirements under the Change in Bank Control national securities exchange unless they are on Act. Comment is requested by August 8, 1990. the list of Marginable OTC Stocks, the List of The Federal Reserve Board requested on July Foreign Margin Stocks, or in the NMS group. 3, 1990, public comment on a proposal to modify Credit extended by banks and other lenders on several conditions in its orders authorizing lim- OTC stocks not on the List of Marginable OTC ited underwriting and dealing in securities by Stocks or in the NMS group need only conform bank holding company subsidiaries. Comment to the good faith lending limitation contained in should be submitted to the Board by August 8, Regulations G and U. 1990. It is unlawful for any person to cause any The Federal Reserve on August 1, 1990, rerepresentation to be made that inclusion of a quested public comment on proposed revisions stock on the List of Marginable OTC Stocks or to Regulation K (International Banking Operaon the List of Foreign Margin Stocks indicates tions) that will permit U.S. banking organizations that the Board or the Securities and Exchange to expand the scope of their international activi- Commission has in any way passed upon the ties. Comment is requested by September 30, merits of any such stock or transaction therein. 1990. Any references to the Board in connection with these lists or with any stocks thereon in any advertisement or similar communication is unlawful. NEW PUBLICATION: Financial Sectors in Open Economies: Empirical Analysis and Policy Issues REGULATION 77 INTERPRETATION Since the late 1970s, deregulation and innovation The Federal Reserve Board announced on July in the financial markets of major industrial coun- 18, 1990, the adoption of an interpretation of the tries have altered the historical empirical relaapplicability of Regulation T (Credit by Brokers tionships between monetary aggregates and inand Dealers) to unregistered securities sold and terest rates, incomes, and prices. These changes traded pursuant to the Securities and Exchange have profoundly affected the empirical analysis Commission's new Rule 144A. of the demand for money, the role that various The interpretation clarifies that broker-dealers monetary aggregates play in the formulation of may purchase debt securities from an issuer for policy by national monetary authorities, and the resale pursuant to Rule 144A and may make modeling of the domestic and cross-border conmarkets in such securities under the investment sequences of changes in domestic monetary polbanking service exception to the arranging sec- icies. tion in Regulation T. The papers and comments in this volume, The interpretation eliminates any uncertainty which is based on a conference sponsored by the broker-dealers might have that their purchase of Board of Governors of the Federal Reserve Syssecurities in compliance with Rule 144A could tem, are by economists representing the acaresult in a violation of section 7(c) of the Securi- demic, business, and national and international ties Exchange Act of 1934 and Regulation T governmental communities in the major indusadopted under that act. trial countries. The papers assess the current modeling of financial sectors, including specifically the demand for money and deposit pricing, PROPOSED ACTIONS in the United States, Canada, Europe, and Japan. They also examine the empirical evidence The Federal Reserve Board requested on July 2, that can be gleaned from models about financial interactions among major industrial countries 1990, public comment on a proposed amendment and review the ways innovation and deregulation to Regulation Y (Bank Holding Companies and have influenced the implementation of monetary Change in Bank Control) to reduce the filing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

746 Federal Reserve Bulletin • September 1990 policy and its implications for financial sector SYSTEM MEMBERSHIP: ADMISSION OF behavior. STATE BANKS Peter Hooper and others, eds. Financial Sectors in Open Economies: Empirical Analysis and Policy Issues. Washington, D.C., Board of Gov- The following state bank was admitted to memernors of the Federal Reserve System, 1990. bership in the Federal Reserve System, effective 604 pp., $25.00. To obtain copies of this publica- May 15, 1990. tion, write to Publications Services, Stop 138, Board of Governors of the Federal Reserve Sys- Illinois tem, Washington, D.C. 20551. Monticello Marine Bank Monticello Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

747 Record of Policy Actions of the Federal Open Market Committee MEETING HELD ON MAY 15, 1990 and unusual winter weather patterns that had affected the energy output of utilities; neverthe- Domestic Policy Directive less, production in April was about unchanged from the levels of last December and a year The information reviewed at this meeting sug- earlier. Total industrial capacity utilization gested that economic activity was continuing to slipped in April after a small rise in March; expand at a moderate pace. The service- operating rates in manufacturing had trended producing sector remained the mainstay for down over the twelve months ending in April as growth in income and employment; manufac- capacity increased while production remained turing was still sluggish, and construction activ- about unchanged. ity was slipping after the weather-related bulge Real personal consumption expenditures earlier in the year. Some broad measures of edged lower in March, reversing a small net rise prices reflected a partial unwinding of the earlier in the two previous months. Spending for goods surge in prices of food and energy; however, was weak on balance over the three-month peunderlying trends in consumer prices and labor riod, especially for food and apparel items; outcosts suggested no weakening in inflationary lays for services continued to be robust, with pressures. notably strong gains for spending on medical Total nonfarm payroll employment increased care. Retail sales fell in April as a result of more slowly in March and April after sharp reduced purchases of motor vehicles, but upward weather-related advances earlier in the year; job revisions to data for the two previous months growth thus far in 1990 had averaged a little suggested a little more strength in consumption above that in the second half of last year, in part in the first quarter than had been indicated prebecause of the hiring of temporary workers for viously. Housing starts fell sharply in March the census. In the private sector, nonfarm em- after surging earlier in the year. The March ployment fell in both March and April, partly decline likely reflected the effect of higher mortowing to an unwinding of an earlier surge in gage interest rates along with some payback for construction jobs during unseasonably mild win- unusually strong housing construction activity in ter weather. Job losses also were widespread in the two previous months of atypically mild winmanufacturing; and, with the notable exception ter weather. of health services, hiring in the services indus- Business capital spending strengthened in the tries weakened considerably from the strong first quarter of 1990 from a temporarily depressed pace of 1989 and early 1990. In April, the civilian fourth-quarter level. Outlays for nondefense capunemployment rate edged up to 5.4 percent. ital goods rose sharply, partly as a result of a Industrial production declined in April, re- rebound in shipments of aircraft to domestic flecting a cutback in the manufacture of motor firms after a strike late in the fourth quarter. vehicles that was intended to bring inventories of Spending for information-processing equipment, new cars into better balance with sales. Indus- notably computers, also increased while acquisitrial activity had been buffeted by a variety of tions of industrial equipment continued to lantransitory influences in previous months, includ- guish. New orders for business equipment other ing strike activity in the aircraft industry, inven- than aircraft advanced at a slower pace in the tory adjustments in the motor vehicle industry, first quarter. Favorable weather aided nonresi- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

748 Federal Reserve Bulletin • September 1990 dential construction activity in January and Feb- earlier period; wage increases remained fairly ruary; however, the pace of construction activity stable, but the cost of benefits jumped, only fell off in March, and construction permits and partly because of the January hike in social contracts continued to trend down. Manufac- security taxes. Average hourly earnings inturing inventories were reduced considerably in creased a little more slowly in April, partly February and March as factory shipments re- reflecting a sharp drop in employment in the bounded; declines were widespread among pro- relatively high-wage construction industry. ducers of durable goods, primary metals, fabri- At its meeting on March 27, 1990, the Commitcated metal products, nonelectrical machinery, tee adopted a directive that called for maintaining and motor vehicles. For most industries, the the existing degree of pressure on reserve posiinventory-to-shipments ratio was lower in March tions and that did not include any presumption than at year-end. At the retail level, many types regarding the likely direction of any intermeeting of establishments, including auto dealers, retail adjustments in policy. The Committee agreed apparel, and general merchandise stores had that some firming or easing in reserve conditions trimmed their inventories substantially. would be appropriate during the intermeeting The nominal U.S. merchandise trade deficit period depending on progress toward price stanarrowed in February as imports declined bility, the strength of the business expansion, the sharply and exports were little changed from behavior of the monetary aggregates, and devel- January levels. For the January-February pe- opments in foreign exchange and domestic finanriod, exports were moderately higher than in the cial markets. With unchanged reserve condifourth quarter, led by a rebound in shipments of tions, M2 and M3 were expected to grow at aircraft. Over the same time period, the value of annual rates of about 6 and 4 percent respectively imports fell; a sizable decline in non-oil imports over the period from March through June. that was widespread across commodity catego- Open market operations in the interval since ries outweighed higher imports of oil associated the March 27 meeting had been directed at keepwith the rebuilding of stocks depleted during the ing reserve conditions essentially unchanged. unusually cold weather in December. Indicators Adjustment plus seasonal borrowing levels of economic activity in the major foreign indus- moved up to about $300 million by the end of the trial nations suggested a continuation of moder- intermeeting period from the $150 million range ate growth in real economic activity in most prevailing initially, reflecting a normal rise in major West European countries and Japan. De- seasonal borrowing. The federal funds rate reclines in industrial production in the United mained in the vicinity of 8!/4 percent over the Kingdom and Canada appeared to be signaling period, although funds generally had traded a some slowing of economic growth in these coun- little below this level since late April as shortfalls tries. in federal tax receipts tended to keep nonbor- Producer prices for finished goods dropped rowed reserves at higher-than-expected levels. somewhat further in April, reflecting additional Responding to shifting sentiment regarding the unwinding of the earlier surge in prices of food strength of the economy, inflation prospects, and and energy. Producer prices for items other than the likelihood of a near-term tightening of monfood and energy had increased through April at a etary policy, other market interest rates initially slower rate than in 1989. By contrast, consumer rose in the intermeeting period and then fell prices continued to rise in March at a faster pace sharply. Short-term rates declined a little on than in 1989. Weather-related jumps in prices of balance over the period while rates in long-term food and energy accounted for much of the debt markets were somewhat higher. pickup in consumer price inflation in the first In foreign exchange markets, the tradequarter, but prices for a wide range of other weighted value of the dollar in terms of the other goods and services also increased more rapidly. G-10 currencies declined considerably over the Labor compensation, as measured by the em- intermeeting period. Much of the decline ocployment cost index, rose at a faster rate over the curred following the release in early May of twelve months ended in March than in the year- weaker-than-expected U.S. employment data for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 749 April and the related drop in U.S. interest rates. government. Price inflation was expected to ease Foreign interest rates showed mixed movements substantially in the months ahead, following the over the intermeeting period; the Japanese stock bulge earlier in the year; but little improvement market rebounded substantially from its low in was anticipated in the underlying trend of inflaearly April. The dollar was weak against the tion over the next several quarters, and reduc- German mark, which strengthened against most tions in price pressures might ultimately involve currencies as developments appeared to relieve some additional pressures in financial markets. some concerns about the outlook for inflation in In the Committee's discussion of the economic Germany. Very late in the intermeeting period situation and outlook, members generally agreed the dollar weakened against the yen as well. that the current information on business condi- Growth of M2 slowed further in April; the tions pointed on balance to relatively moderate expansion of this aggregate was damped by the but sustained economic expansion. Final desizable opportunity costs of holding retail depos- mands appeared to be expanding further, though its as interest rates offered on these accounts not rapidly, and available information suggested continued to lag behind earlier increases in mar- that business inventories were quite lean. Fiscal ket rates. At thrift institutions, conservative rate- policy was an important source of uncertainty in setting reflected the ongoing contraction of their the outlook, though there was some basis for funding needs during a period of asset reduction. optimism in light of the discussions on deficit Banks also held down their deposit rates, as reductions that were just getting under way beinflows of retail deposits were proving sufficient tween the Administration and the Congress. to fund credit expansion. The apparently steeper Credit conditions constituted another major area contraction of thrift assets, along with slow of uncertainty; there were reports of tighter credit expansion at banks, held down overall lending constraints, but the evidence was fragneeds for funds at depository institutions and mentary and difficult to assess and on balance resulted in relatively weak M3 growth in April. seemed to indicate that the effect on the overall Expansion of M2 and M3 through April was a economy remained quite limited. Under circumlittle above the midpoint and around the lower stances in which the economy seemed likely to end respectively of the ranges established by the retain appreciable forward momentum, many Committee for 1990. members were concerned about the outlook for The staff projection prepared for this meeting inflation, given currently high levels of resource suggested that the economy was likely to expand utilization and information on cost and price at a moderate pace over the balance of the year. developments earlier in the year. Recent data Consumer demand, especially for services, was suggested some relief from the bulge in prices in expected to be a major source of support for the first quarter; whether underlying inflationary continued growth of the economy. Business cap- pressures had intensified was debatable, but the ital spending was projected to increase further in members generally agreed that the prospects for 1990, but the extent of the rise could be limited significant reductions in inflation pressures dursomewhat by low profit margins associated with ing the quarters immediately ahead were not relatively slow growth in final demands and promising. lower levels of capacity utilization. Nonresiden- With regard to developments in specific sectial construction activity was expected to be held tors of the economy, members expected growth down by the overbuilt condition of many com- in consumer spending, notably for services, to mercial real estate markets around the country continue to provide the principal momentum for along with greater caution on the part of lenders. the expansion. Exports also might expand, given Homebuilding was projected to be damped by the outlook for continuing growth in other industhe somewhat higher mortgage rates now in trial countries, the prospects for increasing, if place. Net exports of goods and services were still limited, demands from Eastern Europe, and expected to increase only modestly in real terms more generally the lagged effects of the sizable over the rest of the year. The projection assumed decline in the exchange value of the dollar from moderate restraint on expenditures at all levels of its 1989 high. The outlook for business invest- Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

750 Federal Reserve Bulletin • September 1990 ment expenditures was less clear; recent indica- tions in labor markets continued tight in many tors such as new orders for capital equipment parts of the country. Prices of many services, and surveys of business investment plans sug- notably for health care, were still increasing very gested continuing expansion—and possibly some rapidly. Commodity prices had been under spoquickening over the near term—in spending for radic upward pressure and remained substanplant and equipment. However, the outlook for tially above earlier levels. The decline in the office and other commercial building activity value of the dollar to its lowest level since late appeared less favorable in light of the overbuild- 1988 on a weighted-average basis, if sustained, ing in many areas and indications of tighter could reverse the favorable effects of earlier constraints on the availability of credit to build- dollar appreciation. Other members acknowlers. The prospects for housing construction also edged the potential for a persisting high rate of were adversely affected by these factors as well inflation, but they continued to anticipate some as the effects of higher mortgage rates. Members progress toward a lower core rate of inflation commented that outside the commercial building over time if their expectations of relatively modand real estate sectors and apart from lending to erate growth in economic activity were realized. finance equity retirements, there was little evi- In support of this view, it was noted that compedence of more than a mild, if any, curtailment of tition remained strong in many markets for credit to business firms in most parts of the goods, including competition from imports, and country. To a considerable extent, the retrench- ongoing additions to capacity in some key indusment in business lending appeared to reflect tries experiencing strong demand would help to desirable reassessments of credit risks or re- hold down inflationary cost pressures. In addiduced demand for financing. Nonetheless, the tion, the expansion of M2 at a relatively subdued possibility that lenders might restrict credit fur- pace over an extended period suggested that ther and to a wider range of borrowers remained monetary conditions were consistent with proga potential constraint on aggregate economic ress toward reducing inflation. activity. Currently low levels of business inven- Turning to the conduct of monetary policy in tories could be viewed as an element of strength the intermeeting period ahead, nearly all of the in the outlook, but limited inventories also immembers supported a proposal to maintain unplied that, if aggregate demands were to changed conditions of reserve availability at least strengthen materially, production could accelerinitially following today's meeting. The members ate considerably and add to pressures on producgenerally agreed that unchanged reserve conditive resources, especially given high levels of tions could reasonably be expected to be associresource utilization in the United States and ated with continued moderate expansion in busapparently in many other industrial nations. iness activity. At the same time, they remained With regard to the outlook for prices and concerned about the lack of progress against wages, the most recently available data on eco- inflation, and some commented that the need to nomic activity and prices had tended to ease contain and ultimately to reduce inflation might concerns that inflationary pressures might be well require a firming of policy at some point. intensifying. Producer prices for finished goods Price stability, it was emphasized, was a vital had edged lower in recent months, and other key objective of monetary policy and was essential to measures of inflation were expected to show the achievement of overall objectives for the reduced increases over the months ahead as economy. However, recent data on the economy sharp earlier advances in food and energy prices and prices provided some comfort that inflation continued to unwind. Nonetheless, there was pressures were not building, and there were some risk that the core rate of inflation, exclud- some downside risks to the economic outlook ing swings in food and energy prices, might edge stemming from conditions in financial markets. higher at current levels of resource utilization. In Growth of the monetary aggregates had slowed this regard, some members commented that in- appreciably and, while there was considerable creases in labor compensation costs had tended uncertainty, credit conditions also could be tightto accelerate in recent quarters and that condi- ening with potential effects on spending. Partly in Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Record of Policy Actions of the Federal Open Market Committee 751 light of these developments, some members indications of greater inflationary pressures and stressed that it was too soon to conclude that their judgment that in the current inflationary current monetary policy would not have desired environment the next policy move was likely to anti-inflationary effects. Under these circum- be in the tightening direction. Some of these stances, all but one member favored the reten- members commented that such a bias in the tion of unchanged reserve conditions, pending directive would tend, as it became known, to additional information that might tilt the risks enhance the credibility of the System's antitoward greater price pressures or a weaker econ- inflationary policy and help to make that policy omy. more effective over time. However, given the In the course of this discussion, members risks to the economy and the uncertainties in the referred to a staff analysis that concluded that, on outlook, these members also could accept a the assumption of an unchanged degree of re- symmetric directive with regard to intermeeting serve pressure, growth of both M2 and M3 was adjustments. likely to accelerate somewhat from the recent At the conclusion of the Committee's discuspace, with the cumulative expansion of M3 mov- sion, all except one member indicated that they ing that aggregate more comfortably within the preferred or could accept a directive that called Committee's range for the year. Several mem- for maintaining the existing degree of pressure on bers observed that while the slower growth of M2 reserve positions and that did not include any and M3 might be explained at least in part by presumption about the likely direction of adjusttemporary developments, notably the sluggish ments in policy, if any, during the intermeeting adjustment of deposit interest rates to earlier period. With regard to the factors that were increases in short-term market rates and perhaps important in considering the need for any interthe effects of large swings in deposit balances meeting changes in reserve conditions, the Comassociated with April tax payments, a failure of mittee continued to give primary weight to those such growth to pick up could be a matter of bearing on the inflation outlook. Accordingly, increasing concern; in particular, persisting slug- slightly more or slightly less pressure on reserve gishness in monetary growth might reflect a positions would be appropriate during the period combination of underlying weakness in the de- ahead depending on progress toward price stabilmand for loans in a softening economy and ity, the strength of the business expansion, the growing constraints on the availability of credit behavior of the monetary aggregates, and develto potential borrowers. However, given the vol- opments in foreign exchange and domestic finanatility of monetary growth rates, members be- cial markets. The maintenance of steady reserve lieved it was premature to reach a firm conclu- conditions was expected to be consistent with sion on this issue. Moreover, despite its slowing somewhat slower monetary expansion in the in recent months, growth of M2 for the year to current quarter than the members had anticidate was close to the midpoint of the Commit- pated at the time of the March meeting, including tee's range, reflecting relatively robust expansion growth of M2 and M3 at annual rates of about 4 in late 1989 and early 1990. and 3 percent respectively over the three-month With respect to possible adjustments in the period ending in June. The intermeeting range for degree of reserve pressure during the period the federal funds rate, which provides one mechbefore the next Committee meeting in early July, anism for initiating consultation of the Commita majority of the members expressed a prefer- tee when its boundaries are persistently exence for a directive that did not bias prospective ceeded, was left unchanged at 6 to 10 percent. operations toward tightening or easing but made At the conclusion of the meeting, the following an intermeeting adjustment, if any, equally likely domestic policy directive was issued to the Fedin either direction, depending on economic and eral Reserve Bank of New York: financial developments and the behavior of the monetary aggregates. Other members preferred a The information reviewed at this meeting suggests directive that was tilted toward possible tightenthat economic activity is continuing to expand modering, given their desire to respond promptly to any ately. Total nonfarm payroll employment increased Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

752 Federal Reserve Bulletin • September 1990 more slowly in March and April after sharp advances of progress toward price level stability, movements earlier in the year; its average growth thus far this year in their velocities, and developments in the economy has been above that in the second half of 1989, in part and financial markets. because of the hiring of temporary workers for the In the implementation of policy for the immediate census. In April, the civilian unemployment rate future, the Committee seeks to maintain the existing moved up to 5.4 percent. Industrial production de- degree of pressure on reserve positions. Taking acclined in April, reflecting what appears to be a tempo- count of progress toward price stability, the strength rary cutback in the manufacture of motor vehicles. of the business expansion, the behavior of the mone- Consumer spending has been sluggish on balance in tary aggregates, and developments in foreign exchange recent months; outlays for goods have been weak and domestic financial markets, slightly greater rewhile expenditures for services have remained strong. serve restraint or slightly lesser reserve restraint Business spending for equipment has been rising, but would be acceptable in the intermeeting period. The construction activity, both residential and nonresiden- contemplated reserve conditions are expected to be tial, appears to have weakened after a temporary boost consistent with growth of M2 and M3 over the period early in the year. The nominal U.S. merchandise trade from March through June at annual rates of about 4 deficit narrowed somewhat in January and February and 3 percent respectively. The Chairman may call for from its average rate in the fourth quarter. Consumer Committee consultation if it appears to the Manager prices continued to rise at a faster pace in March than for Domestic Operations that reserve conditions durin 1989; producer prices were down somewhat further ing the period before the next meeting are likely to be in April, reflecting additional unwinding of the earlier associated with a federal funds rate persistently outsurge in prices of food and energy. The latest data on side a range of 6 to 10 percent. employment costs suggest some deterioration in underlying trends. Votes for this action: Messrs. Greenspan, Cor- Short-term interest rates have declined a little on rigan, Angell, Boehne, Boykin, Johnson, Kelley, balance since the Committee meeting on March 27, LaWare, Ms. Seger, and Mr. Stern. Vote against while rates in long-term debt markets have risen this action: Mr. Hoskins. slightly over the period. In foreign exchange markets, Mr. Hoskins dissented because he preferred a the trade-weighted value of the dollar in terms of the other G-10 currencies declined considerably over the tightening of reserve conditions to help assure intermeeting period. that progress would be made toward a reduced Growth of M2 slowed in April and that of M3 rate of inflation and the Committee's ultimate remained relatively weak. Through April, expansion objective of price stability. Although price presof M2 and M3 was a little above the midpoint and sures appeared to be receding from the pace of around the lower end, respectively, of the ranges early in the year, inflation remained too high. He established by the Committee for 1990. The Federal Open Market Committee seeks mon- recognized that M2 growth had slowed and there etary and financial conditions that will foster price were potential financial developments that might stability, promote growth in output on a sustainable have adverse consequences for the expansion, basis, and contribute to an improved pattern of but he believed that growth of M2 in the bottom international transactions. In furtherance of these half of the 1990 target range would be desirable in objectives, the Committee at its meeting in February established ranges for growth of M2 and M3 of 3 to 7 order to achieve a gradual reduction in inflation percent and 2xh to 6I/2 percent respectively, mea- in 1991 and thereafter. Moreover, a timely move sured from the fourth quarter of 1989 to the fourth toward greater monetary restraint would enquarter of 1990. The monitoring range for growth of hance the credibility and effectiveness of monetotal domestic nonfinancial debt was set at 5 to 9 tary policy in countering the persisting strength percent for the year. The behavior of the monetary aggregates will continue to be evaluated in the light of inflationary pressures. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

753 Legal Developments AMENDMENT TO REGULATION T (b) SEC Rule 144A provides a safe harbor exemption from the registration requirements of the Securities The Board of Governors is amending 12 C.F.R. Part Act of 1933 for resales of restricted securities to 220, its Regulation T, to clarify that broker-dealers "qualified institutional buyers," as defined in the may purchase debt securities from an issuer for resale rule. In general, a "qualified institutions buyer" is an pursuant to Securities and Exchange Commission institutional investor that in the aggregate owns and Rule 144A and may make markets in such securities invests on a discretionary basis at least $100 million under the investment banking service exception to the in securities of issuers that are not affiliated with the arranging section in Regulation T. The interpretation is buyer. Registered broker-dealers need only own and necessary to avoid frustrating the goals of the SEC in invest on a discretionary basis at least $10 million of adopting Rule 144A. It will eliminate the uncertainty securities in order to purchase as principal under the broker-dealers might have that compliance with the rule. Section 4(2) of the Securities Act of 1933 procedures laid out in Rule 144A could result in a provides an exemption from the registration requireviolation of section 7(c) of the Securities Exchange ments for "transactions by an issuer not involving Act of 1934 and Regulation T adopted thereunder. any public offering." Securities acquired in a trans- Effective July 16, 1990, 12 C.F.R. Part 220 is action under Section 4(2) cannot be resold without amended as follows: registration under the Act or an exemption therefrom. Rule 144A provides a safe harbor exemption Part 220—Credit by Brokers and Dealers for resales of such securities. Accordingly, brokerdealers that previously acted only as agents in inter- 1. The authority citation for Part 220 continues to read mediating between issuers and purchasers of privatelyas follows: placed securities, due to the lack of such a safe harbor, now may purchase privately-placed securities from Authority: Sections 3,1, 8, 17, and 23 of the Securities issuers as principal and resell such securities to "qual- Exchange Act of 1934, as amended (15 U.S.C. 78c, ified institutional buyers" under Rule 144A. 78g, 78h, 78q, and 78w). (c) The Board has consistently treated the purchase 2. Section 220.131 is added to read as follows: of a privately-placed debt security as an extension of credit subject to the margin regulations. If the issuer uses the proceeds to buy securities, the purchase of Section 220.131—Application of the arranging the privately-placed debt security by a creditor repsection to broker-dealer activities under SEC resents an extension of "purpose credit" to the Rule 144 A issuer. Section 7(c) of the Securities Exchange Act of 1934 prohibits the extension of purchase credit by a (a) The Board has been asked whether the purchase creditor if the credit is unsecured, secured by collatby a broker-dealer of debt securities for resale in eral other than securities, or secured by any security reliance on Rule 144 A of the Securities and Exchange (other than an exempted security) in contravention of Commission (17 C.F.R. 230.144A)1 may be consid- Federal Reserve regulations. If a debt security sold ered an arranging of credit permitted as an "invest- pursuant to Rule 144A represents purpose credit and ment banking service" under section 220.13(a) of is not properly collateralized by securities, the stat- Regulation T. ute and Regulation T can be viewed as preventing the broker-dealer from taking the security into inventory in spite of the fact that the broker-dealer intends to immediately resell the debt security. (d) Under section 220.13 of Regulation T, a creditor 1. Rule 144A, 17 C.F.R. 230.144A, was originally published in the Federal Register at 55 Federal Register 17,933 (April 30, 1990). may arrange credit it cannot itself extend if the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

754 Federal Reserve Bulletin • September 1990 arrangement is an "investment banking service" and Authority: Sec. ll(k), 38 Stat. 261 and 80 Stat. 1314; 12 the credit does not violate Regulations G and U. U.S.C. 248(k). Investment banking services are defined to include, but not be limited to, "underwritings, private place- 2. Section 265.2 is amended by revising paragraph ments, and advice and other services in connection (c)(18) to read as follows: with exchange offers, mergers, or acquisitions, except for underwritings that involve the public distri- Section 265.2—Specific functions delegated to bution of an equity security with installment or other Board employees and to Federal Reserve Banks deferred-payment provisions." To comply with Regulations G and U where the proceeds of debt securities sold under Rule 144A may be used to purchase or carry margin stock and the debt securities are secured in whole or in part, directly or indirectly by margin stock (see 12 C.F.R. 207.2(f), 207.112, and (18) Under the provisions of sections 207.6(d), 221.2(g)), the margin requirements of the regulations 220.17(f), and 221.7(d) of this chapter (Regulations G, must be met. T, and U, respectively) to approve issuance of the lists of OTC margin stocks and foreign margin stocks and (e) The SEC's objective in adopting Rule 144A is to to add, omit, or remove any stock in circumstances achieve "a more liquid and efficient institutional indicating that such change is necessary or appropriate resale market for unregistered securities." To further in the public interest. this objective, the Board believes it is appropriate for Regulation T purposes to characterize the participa- Orders Issued Under Section 3 of the Bank tion of broker-dealers in this unique and limited Holding Company Act market as an "investment banking service." The Board is therefore of the view that the purchase by a Capital InterAmerica Bancorp creditor of debt securities for resale pursuant to SEC New York, New York Rule 144A may be considered an investment banking service under the arranging section of Regulation T. Order Approving Formation of a Bank Holding The market-making activities of broker-dealers who Company hold themselves out to other institutions as willing to buy and sell Rule 144A securities on a regular and Capital InterAmerica Bancorp ("Capital"), New continuous basis may also be considered an arrang- York, New York, has applied for the Board's approval ing of credit permissible under section 220.13(a) of pursuant to section 3(a)(1) of the Bank Holding Com- Regulation T. pany Act ("BHC Act") (12 U.S.C. § 1841), to become a bank holding company by acquiring 100 percent of the voting shares of New York Capital Bank N.A. AMENDMENT TO RULES REGARDING ("Bank"), New York, New York. DELEGATION OF AUTHORITY Bank was formed to purchase certain assets and assume substantially all of the deposits of Capital The Board of Governors is amending 12 C.F.R. Part National Bank ("CNB"), New York, New York. 265, its Rules Regarding Delegation of Authority, to CNB has been declared insolvent by the Office of the delegate to the Staff Director of the Division of Bank- Comptroller of the Currency. In view of this situation ing Supervision and Regulation the authority to ap- and the need for immediate action to prevent the prove issuance of the list of foreign margin stocks and disruption of service to CNB's depositors, the Board to conform the reference in paragraph (18) to the has determined, pursuant to section 3(b) of the BHC recent revision of Regulation T (12 C.F.R. Part 220). Act (12 U.S.C. § 1842(b)), section 225.14(h) of Reg- Effective July 18, 1990, 12 C.F.R. Part 265 is ulation Y (12 C.F.R. 225.14(h)), and section 262.3(1) amended as follows: of the Board's Rules of Procedure (12 C.F.R. 262.3(1)), to dispense with the notice provisions of Part 265—Rules Regarding Delegation of the BHC Act and to act immediately on the applica- Authority tion. Capital is a non-operating company formed for the purpose of acquiring Bank. Bank is one of the smaller 1. The authority citation for Part 265 continues to read commercial banking organizations in New York, as follows: controlling deposits of $145.8 million, representing Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 755 less than 1 percent of total deposits in commercial Cho Hung Bank banking organizations in the State.1 Consummation of Seoul, Korea the proposal would not result in any significantly adverse effects on the concentration of banking resources in Order Approving Formation of a Bank Holding New York. Company Bank competes in the Metropolitan New York- New Jersey banking market,2 and its deposits repre- Cho Hung Bank, Seoul, Korea ("Applicant"), has sent less than 1 percent of the total deposits in applied for the Board's approval under section 3(a)(1) commercial banking organizations in the market. of the Bank Holding Company Act of 1956, as Principals of Capital and Bank are not associated amended (12 U.S.C. § 1842(a)(1)) ("BHC Act"), to with any other banking organization in the market. become a bank holding company by acquiring all of the Based on the facts of record, consummation of this outstanding voting shares of Cho Hung Bank of New proposal would not result in any adverse effects York, New York, New York ("Bank"). upon competition or increase the concentration of Notice of the application, affording an opportunity banking resources in any relevant market. Accord- for interested persons to submit comments, has been ingly, the Board concludes that competitive consid- given in accordance with section 3(b) of the BHC Act erations are consistent with approval of this applica- (55 Federal Register 11,652 (1990)). The time for filing tion. comments has expired, and the Board has considered In light of the capital that the principal sharehold- the application and all comments received in light of ers of Capital propose to provide to Bank and other the factors set forth in section 3(c) of the BHC Act commitments, the financial and managerial resources (12 U.S.C. § 1842(c)). and future prospects of Capital and Bank are consis- Applicant, with total banking assets of approxitent with approval. Considerations relating to the mately $16.5 billion, is the sixth largest banking insticonvenience and needs of the communities to be tution in Korea and the 224th largest commercial bank served also are consistent with approval. in the world.1 Applicant has 239 offices in Korea and Based on the foregoing and other facts of record, operates nine overseas offices, including a branch in the Board's General Counsel and the Acting Staff New York, an agency in San Francisco, and a limited Director of the Division of Banking Supervision and branch in Chicago. Regulation, acting pursuant to authority delegated to Bank, a de novo state-chartered institution, would them by the Board, have determined that the appli- provide banking services to small and medium-size cation should be, and hereby is, approved. The businesses and retail customers in the Metropolitan transaction may be consummated immediately but in New York-New Jersey banking market.2 In view of no event later than three months after the effective the de novo status of Bank and based upon the facts in date of this Order unless such period is extended for the record, the Board concludes that the proposed good cause by the Board or by the Federal Reserve transaction will have no adverse effect on existing or Bank of New York acting pursuant to delegated probable future competition, nor will it increase the authority. concentration of resources in any relevant market. By order of the General Counsel and the Acting Section 3(c) of the BHC Act requires in every case Staff Director of the Division of Banking Supervision that the Board consider the financial resources of the and Regulation, effective July 6, 1990. applicant and the banking organization to be acquired. In this case, the Board notes that the stated primary JENNIFER J. JOHNSON capital ratio of Applicant is in conformance with the Associate Secretary of the Board capital guidelines established by the Board for bank holding companies. Further, Applicant's capital meets the 1990 interim risk-based guidelines, and exceeds the 1992 minimum standard adopted by the Basle Commit- 1. Asset data are as of December 31, 1989, and ranking data are as of December 31, 1988. 1. Banking data are as of March 30, 1990. Market data are as of 2. The Metropolitan New York-New Jersey banking market in- June 30, 1988. cludes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, 2. The Metropolitan New York-New Jersey banking market in- Sullivan, and Westchester Counties in New York; Bergen, Essex, cludes New York City; Nassau; Orange, Putnam, Rockland, Suffolk, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Sullivan, and Westchester Counties in New York; Bergen, Essex, Somerset, Sussex, Union, and Warren Counties in New Jersey; and Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, parts of Fairfield County in Connecticut. Under the revised Depart- Somerset, Sussex, Union, and Warren Counties in New Jersey; and ment of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), parts of Fairfield County in Connecticut. this market is considered unconcentrated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

756 Federal Reserve Bulletin • September 1990 tee on Banking Regulation and Supervisory Prac- ("Company"),1 to engage to a limited extent in tices. In view of these and other facts of record, the underwriting and dealing in: Board has determined that financial factors are con- (1) municipal revenue bonds, including certain insistent with approval of the application. dustrial development bonds; The managerial resources and future prospects of (2) 1-4 family mortgage-related securities; Applicant are consistent with approval. The Board (3) commercial paper; and has also determined that considerations relating to (4) consumer-receivable-related securities ("CRRs") the convenience and needs of the community to be (collectively "ineligible securities"). served are consistent with approval. Based on the foregoing and other facts of record, Banc One has also applied for Company to: the Board has determined that consummation of the (1) offer futures commission merchant services, proposed transaction would be consistent with the pursuant to sections 225.25(b)(18) and (b)(19) of the public interest. Accordingly, the Board has deter- Board's Regulation Y (12 C.F.R. 225.25(b)(18) and mined that the application should be, and hereby is, (b)(19»; approved. The acquisition of Bank shall not be (2) provide advice in connection with mergers, acconsummated before the thirtieth calendar day fol- quisitions, divestitures, recapitalizations, and filowing the effective date of this Order, or later than nancing transactions; perform valuation services; three months after the effective date of this Order, render fairness opinions in connection with mergers, and Bank shall be opened for business within six acquisitions, and similar transactions; and offer admonths after the effective date of this Order, unless vice in connection with the structuring and arrangsuch periods are extended for good cause by the ing for loan syndications, interest rate swaps, inter- Board or by the Federal Reserve Bank of New York, est rate caps, and similar transactions (collectively, acting pursuant to delegated authority. "financial advisory services"); and By order of the Board of Governors, effective (3) underwrite and deal in securities that state mem- July 30, 1990. ber banks are permitted to underwrite and deal in under section 16 of the Banking Act of 1933 (the Voting for this action: Chairman Greenspan and Governors "Glass-Steagall Act") (12 U.S.C. §§ 24 (Seventh) Seger, Angell, Kelley, and Mullins. Absent and not voting: and 335) (hereinafter "bank-eligible securities"), as Governors Johnson and La Ware. permitted by section 225.25(b)(16) of the Board's Regulation Y (12 C.F.R. 225.25(b)(16)). Banc One JENNIFER J. JOHNSON also proposes that Company provide investment Associate Secretary of the Board advisory and brokerage activities separately and on a combined basis subject to conditions established by the Board.2 Orders Issued Under Section 4 of the Bank Holding Company Act Banc One, with approximately $40.6 billion in assets, is the second largest commercial banking organization in Ohio.3 It operates 54 subsidiary banks and Banc One Corporation engages directly and through subsidiaries in a broad Columbus, Ohio range of permissible nonbanking activities in the United States. Notice of the application, affording interested per- Order Approving Application to Engage in sons an opportunity to submit comments on the pro- Underwriting and Dealing in Certain Securities to a posal, has been published (55 Federal Register 10,827 Limited Extent and in Other Securities Related (1990)). The time for filing comments has expired, and Activities the Board has considered the application and all Banc One Corporation, Columbus, Ohio ("Banc One"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), 1. Banc One would commence these activities through its acquisihas applied for the Board's approval under section tion of Meuse, Rinker, Chapman, Endres & Brooks, Columbus, Ohio ("Meuse, Rinker"), a full service broker-dealer. 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and 2. See 12 C.F.R. 225.25(b)(4) and (15); Bank of New England section 225.23 of the Board's Regulation Y Corporation, 74 Federal Reserve Bulletin 700 (1988); and PNC Finan- (12 C.F.R. 225.23) for its wholly owned subsidiary, cial Corp, 75 Federal Reserve Bulletin 396 (1989). 3. Asset data are as of March 31, 1990. Ranking, based on deposits, Banc One Capital Corporation, Columbus, Ohio is as of December 31, 1989. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 757 comments received in light of the public interest Full-Service Brokerage Activities factors set forth in section 4(c)(8) of the BHC Act. The Board has previously determined that providing Underwriting and Dealing in Ineligible Securities full-service securities brokerage services to both institutional and retail customers is closely related to The Board has previously determined by order that the banking, and a proper incident to banking under conduct of the proposed ineligible securities under- section 4(c)(8) of the BHC Act, and does not violate writing and dealing activity is consistent with section the Glass-Steagall Act.6 20 of the Glass-Steagall Act (12 U.S.C. § 377), pro- Under this proposal, Company would provide fullvided the underwriting subsidiary derives no more service brokerage services to institutional and retail than 10 percent of its total gross revenue from under- customers with respect to ineligible securities that writing and dealing in the approved securities over any Company may hold as principal in connection with its two-year period.4 The Board further found that, sub- authorized underwriting and dealing activities. In conject to the prudential framework of limitations estab- nection with this activity, Banc One has made comlished in those cases to address the potential for mitments regarding disclosure that have been apconflicts of interest, unsound banking practices or proved by the Board in previous Orders.7 other adverse effects, the proposed underwriting and Specifically, Banc One has committed to provide dealing activities are so closely related to banking as to full and appropriate disclosure of its interest in any be a proper incident thereto within the meaning of transaction, as required by securities laws and fidusection 4(c)(8) of the BHC Act. Banc One has com- ciary principles. Company will inform each brokerage/ mitted to conduct its ineligible underwriting and deal- advisory customer at the commencement of the cusing activities subject to the 10 percent revenue test and tomer relationship that, as a general matter, Company the prudential limitations established by the Board in might be a principal, or might be engaged in an its previous Orders.5 underwriting, with respect to, or might purchase from an affiliate, those securities for which brokerage/advisory services are being provided. At the time a broker- 4. Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust age order is being taken, the customer will be informed New York Corporation, 73 Federal Reserve Bulletin 473 (1987) {"Citwhether Company is acting as agent or as principal icorp/Morgan/Bankers Trust"), (iff d sub nom., Securities Industry Association v. Board of Governors of the Federal Reserve System, 839 with respect to the security. Confirmations sent to F.2d 47 (2d Cir. 1988), cert, denied, 108 S. Ct. 2830 (1988) ("SM v. customers also will state whether Company is acting Board")', and Chemical New York Corporation, The Chase Manhatas agent or principal. tan Corporation, Bankers Trust New York Corporation, Citicorp, Manufacturers Hanover Corporation and Security Pacific Corpora- Moreover, Company will conduct its brokerage and tion, 73 Federal Reserve Bulletin 731 (1987) ("Chemical"); as modiadvisory activities within the same framework apfied by Order Approving Modifications to Section 20 Orders, 75 Federal Reserve Bulletin 751 (1989) ("Modification Order"). proved by the Board in Bank of New England Corpo- 5. The industrial development bonds approved for Banc One in this ration. Thus, Banc One has committed that, before case are only those tax-exempt bonds in which the governmental providing any brokerage or advisory services to cusissuer, or the governmental unit on behalf of which the bonds are issued, is the owner for federal income tax purposes of the financed tomers, Company will prominently disclose in writing facility (such as airports, mass commuting facilities, and water pollu- to each such customer that Company is not a bank and tion control facilities). Without further approval from the Board, Company may underwrite and deal in only these types of industrial is separate from any affiliated bank, and that the development bonds, except as permitted by this Order. securities sold, offered, or recommended by Company Company may also provide services that are necessary incidents to are not deposits, are not insured by the Federal these approved activities. Any activity conducted as a necessary incident to the ineligible securities activity must be treated as part of Deposit Insurance Corporation, are not guaranteed by the ineligible securities activity unless Company has received specific approval under section 4(c)(8) of the BHC Act to conduct the activity independently. Until such approval is obtained, any revenues from the incidental activity must be counted as ineligible revenue subject to the 10 percent gross revenue limit set forth in Citicorp/Morgan/Bankers two years of operation, revenues from ineligible securities underwrit- Trust and Modification Order. This 10 percent gross revenue limit ing and dealing activities for that quarter, when added to the gross should be calculated in accordance with the method stated in J.P. revenues from ineligible securities activities for the previous seven Morgan & Company, Incorporated, The Chase Manhattan Corpora- quarters, may not exceed 10 percent of total gross revenues of the tion, Bankers Trust New York Corporation, Citicorp, and Security subsidiary for that quarter and the previous seven quarters. Gross Pacific Corporation, 75 Federal Reserve Bulletin 192 (1989). Thus, to revenues for the period would be calculated under generally accepted determine compliance with this limitation during the first two-year accounting principles. period in which the underwriting subsidiary engages in ineligible 6. Bank of New England Corporation, 74 Federal Reserve Bulletin securities underwriting and dealing activities, revenues from these 700 (1988); Bankers Trust New York Corporation, 74 Federal Reserve ineligible securities activities for each quarter during this two-year Bulletin 695 (1988); and PNC Financial Corp, 75 Federal Reserve period, when added to the revenues from ineligible activities for each Bulletin 396 (1989). previous quarter during the period, may not exceed 10 percent of the 7. PNC Financial Corp, 75 Federal Reserve Bulletin at 397-398; subsidiary's total gross revenues for that quarter and all previous Bankers Trust New York Corporation, 74 Federal Reserve Bulletin at quarters during the two-year period. For each quarter after the first 696-698. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

758 Federal Reserve Bulletin • September 1990 an affiliated bank, and are not otherwise an obligation tial framework to permit interlocks with affiliated of an affiliated bank, unless such is in fact the case.8 banks so long as a majority of the board is not comprised of bank officers or directors. Banc One has Financial Advisory Services agreed to abide by the results of the Board's review. Accordingly, the Board finds that these limited inter- Applicant has applied to provide financial advisory locks should be permitted, since it appears that Comservices previously approved by the Board in Signet pany would be operationally distinct from its affiliated Banking Corporation, 73 Federal Reserve Bulletin 59 banks. The Board expects that Banc One will ensure (1987). Applicant would conduct its financial advisory that the framework established pursuant to Citicorp/ activities in compliance with the conditions required Morgan/Bankers Trust will be maintained in all other by the Board in its prior Orders. See Canadian Impe- respects.11 rial Bank of Commerce, 74 Federal Reserve Bulletin 571 (1988). Applicant proposes to offer these services Nonconforming Activities to financial and nonfinancial institutions and individuals whose net worth (or joint net worth with a spouse) Banc One's acquisition of Meuse, Rinker represents exceeds one million dollars. The Board believes that the first acquisition of a securities firm by a bank the provision of financial advisory services to high net holding company as a means to begin the bankworth individuals would not result in significant ad- ineligible securities underwriting activity. The fact that verse effects since these customers would be finan- Meuse, Rinker is a broker-dealer engaged in activities cially sophisticated and thus unlikely to place undue that would not be permissible for bank holding comreliance on advice received.9 Accordingly, Company panies raises the question about nonconforming activmay oflfer these services to high net worth individuals ities. Upon consummation of this transaction, Meuse, and financial and nonfinancial institutions. Rinker will have ceased all activities and divested all impermissible assets, with two exceptions, other than Director Interlocks those that Banc One has applied in this application to conduct. Banc One has requested that the Board permit director Banc One has requested that the Board permit its interlocks between its section 20 subsidiary and its section 20 subsidiary one year to fulfill existing obliaffiliated banks. Banc One proposes that two directors gations to underwrite and deal in private purpose of its subsidiary banks be permitted to serve on the industrial development bonds, and six months to fulfill section 20 subsidiary's board of directors, which existing obligations to provide private placement serwould be composed of five directors. These directors vices to existing clients. The Board believes that, on are not officers of the affiliated banks, nor do they have the basis of the facts of this case and commitments authority to conduct the day-to-day business of the made by Banc One concerning these activities, it is banks or handle individual bank transactions. No reasonable to permit Company these limited time officers of the section 20 subsidiary would be em- periods to complete these transactions and divest ployed by the banks. Banc One maintains that these impermissible assets in order to fulfill Meuse, Rinker's director interlocks would permit appropriate oversight obligations.12 and supervision of its subsidiaries. The Board has previously permitted interlocks be- Financial Factors, Managerial Resources and Other tween a banking organization and its affiliated sec- Considerations tion 20 company.10 In addition, the Board has requested comment on modifying the section 20 pruden- Consummation of the proposal would provide added convenience to Banc One's customers and would not 8. Moreover, Company proposes to exercise discretionary portfolio management for institutional customers only, subject to the same 11. The Board's approval of the proposed underwriting and dealing limitations contained in the Board's J.P. Morgan & Co. Inc. Order, activities extends only to Company. The activities may not be 73 Federal Reserve Bulletin 810 (1987). Investment advice would be conducted by Banc One in any other subsidiary without prior Board provided on an integrated basis, i.e., Company would not charge an review. Pursuant to Regulation Y, no corporate reorganization of explicit fee for the investment advice and would receive fees only for Company, such as the establishment of subsidiaries of Company to transactions executed for customers. conduct the activities, may be consummated without prior Board 9. See, e.g., Manufacturers Hanover Corporation, 73 Federal approval. Reserve Bulletin 930 (1987). 12. The revenue derived from these activities would constitute a 10. Canadian Imperial Bank of Commerce, The Royal Bank of small portion of Company's overall revenue. Revenues that Company Canada, Barclays PLC, and Barclays Bank PLC, 76 Federal Reserve derives from underwriting and dealing in private purpose industrial Bulletin 158 (1990) ("Canadian Imperial"). As the Board noted in this development bonds and private placements would be counted as Order, various proposals to amend the Glass-Steagall Act would not revenues from underwriting and dealing in ineligible securities during have required a complete prohibition on interlocks. the divestiture periods. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 759 significantly decrease competition. With regard to of the BHC Act (12 U.S.C. § 1843(c)(8)) and section each of the proposed activities, Banc One has commit- 225.23 of the Board's Regulation Y (12 C.F.R. 225.23), ted to adhere to limitations the Board previously has to acquire FirstFed America, Inc., Honolulu, Hawaii found adequate to address the possibility of adverse ("FirstFed"), a savings and loan holding company, effects arising from such activities, and the record and, pursuant to section 225.25(b)(9) of the Board's does not indicate that the proposal would result in Regulation Y (12 C.F.R. 225.25(b)(9)), thereby engage undue concentration of resources, decreased or unfair in operating savings associations through FirstFed's competition, conflicts of interest, unsound banking subsidiaries, First Federal Savings & Loan Associapractices, or other adverse effects. Accordingly, based tion of America, Honolulu, Hawaii ("FirstFed-Haupon the facts of record and the commitments made by waii"), First Savings and Loan Association of Amer- Banc One regarding the conduct of these activities, the ica, Dededo, Guam ("FirstFed-Guam"), and FirstFed Board has determined that the performance of the America Bank, F.S.B., Logan, Utah ("FirstFedproposed activities by Banc One can reasonably be Utah"). expected to produce public benefits which would Notice of the application, affording interested peroutweigh adverse effects under the proper incident to sons an opportunity to submit comments, has been banking standard of section 4(c)(8) of the BHC Act. published (55 Federal Register 7565 (1990)). The time Based on the foregoing, the Board has determined for filing comments has expired, and the Board has to, and hereby does, approve the application subject to considered the application and all comments received all the terms and conditions established in this Order in light of the public interest factors set forth in secand the above-mentioned regulations and orders, ex- tion 4(c)(8) of the BHC Act. cept the market share limitation. Section 601 of the Financial Institutions Reform, The Board's determination is subject to all of the Recovery, and Enforcement Act of 1989, Pub. L. conditions set forth in the Board's Regulation Y, No. 101-73, § 601, 101 Stat. 183, 408 (1989) (as codiincluding those in sections 225.4(d) and 225.23(b), and fied at 12 U.S.C. § 1843(i)) ("FIRREA"), permits the to the Board's authority to require modification or Board to approve an application by a bank holding termination of the activities of a bank holding com- company to acquire a savings association under secpany or any of its subsidiaries as the Board finds tion 4(c)(8) of the BHC Act. Pursuant to this authority, necessary to assure compliance with, and to prevent the Board has determined that the operation of a evasion of, the provisions of the BHC Act and the savings association is closely related and a proper Board's regulations and orders issued thereunder. incident to banking and is permissible for bank holding This transaction shall not be consummated later companies. 12 C.F.R. 225.25(b)(9).1 than three months after the effective date of this Bancorp, which operates two banking subsidiaries, Order, unless such period is extended for good cause has total consolidated assets of $8.3 billion and is the by the Board or by the Federal Reserve Bank of largest commercial banking organization in Hawaii.2 Cleveland, pursuant to delegated authority. Bancorp also engages through several subsidiaries in By order of the Board of Governors, effective permissible nonbanking activities. July 16, 1990. FirstFed, a savings and loan holding company, controls total assets of $906.6 million. FirstFed oper- Voting for this action: Chairman Greenspan and Governors ates one savings association subsidiary in each of Angell, Kelley, La Ware, and Mullins. Absent and not voting: Hawaii and Utah and one subsidiary with branches in Governors Johnson and Seger. Guam and Saipan. FirstFed-Hawaii controls total assets of $802.2 million. FirstFed-Utah controls total JENNIFER J. JOHNSON assets of $38.0 million. FirstFed-Guam controls total Associate Secretary of the Board assets of $66.4 million in Guam and Saipan. Bancorp Hawaii, Inc. Honolulu, Hawaii 1. In making this determination, the Board required that savings associations acquired by bank holding companies conform their direct Order Approving the Acquisition of Savings and indirect activities to those activities permissible for bank holding Associations companies under section 4 of the BHC Act. Bancorp proposes to conform all of the direct and indirect activities of FirstFed and FirstFed's subsidiaries to the requirements of section 4 of the BHC Bancorp Hawaii, Inc., Honolulu, Hawaii ("Bancorp"), Act upon consummation. a bank holding company within the meaning of the 2. Asset data are as of December 31, 1989. All other data are as of June 30, 1989, except market specific thrift deposits in Hawaii and Bank Holding Company Act (the "BHC Act"), has market specific banking deposits in Guam and Saipan, which are as of applied for the Board's approval under section 4(c)(8) June 30, 1988. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

760 Federal Reserve Bulletin • September 1990 In order to approve these applications, the Board is senting 2.4 percent of the market deposits. Upon required to determine that the performance of the consummation of this proposal, Bancorp would conproposed activities by Bancorp "can reasonably be trol 39.8 percent of the market deposits. The Honolulu expected to produce benefits to the public . . . that banking market is considered to be highly concenoutweigh possible adverse effects, such as undue trated. Upon consummation of the proposal, the Herconcentration of resources, decreased or unfair com- findahl-Hirschman Index ("HHI") would increase by petition, couiicts of interests, or unsound banking 249 points to 2411.6 practices." 12 U.S.C. § 1843(c)(8). Bancorp and FirstFed-Hawaii also compete directly The financial and managerial resources and future in the Maui banking market.7 Bancorp is the largest of prospects of Bancorp, its bank subsidiaries, FirstFed, sixteen depository institutions in the market, controland its savings association subsidiaries are consistent ling deposits of $370.0 million, representing 38.2 perwith approval. The Board believes that bank holding cent of the market deposits. FirstFed-Hawaii is the companies must maintain adequate capital at savings sixth largest depository institution in the market, conassociations they propose to acquire. In this case, all trolling deposits of $18.0 million, representing 1.8 of the savings association subsidiaries of FirstFed percent of the market deposits. Upon consummation meet or exceed the requisite capital levels. Upon of the proposal, Bancorp would control 41.1 percent of consummation, the Tier 1 capital of each savings the market deposits. The Maui banking market is association subsidiary of FirstFed, exclusive of all considered to be highly concentrated. Upon consumintangible assets, will be equivalent to at least three mation of the proposal, the HHI would increase by 187 percent of its total assets. In addition, Bancorp has points to 2837. committed that each of FirstFed's savings association Although consummation of the proposal would resubsidiaries will meet all present and future minimum sult in the elimination of a competitor in both the capital ratios adopted for savings associations by the Honolulu and Maui banking markets, the Board be- Office of Thrift Supervision or the Federal Deposit lieves that several factors mitigate the potential anti- Insurance Corporation. competitive effects of this proposal with respect to Upon consummation of the proposed acquisition, both markets. The Board notes that, following con- Bancorp would control $9.2 billion in deposits in summation of the proposal, eighteen commercial Hawaii, representing approximately 39.8 percent of banks and five savings associations would remain in the total deposits in depository institutions in Hawaii. the Honolulu market and eleven commercial banks In the Board's view, consummation of this proposal and four savings associations would remain in the would not have a significantly adverse effect upon the Maui market, including the state's larger commercial concentration of banking organizations in Hawaii, banking organizations and savings associations. The Guam, or Saipan. Board also has considered the presence of savings Bancorp and FirstFed-Hawaii compete directly in associations in its analysis of the proposal. The Board all five banking markets in Hawaii,3 as well as in the previously has indicated that savings associations Guam and Saipan banking markets. In the Honolulu have become, or have the potential to become, major market,4 Bancorp is the largest depository institution, competitors of commercial banks.8 In addition, the controlling deposits of $4.1 billion, representing Board also has considered the strong presence of 35.9 percent of the market deposits.5 FirstFed-Hawaii is the seventh largest depository institution in the market, controlling deposits of $281.5 million, repre- 6. Under the revised Department of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), a market in which the post-merger HHI is above 1800 is considered highly concentrated. In such mar- 3. The following are the banking markets in Hawaii: Honolulu; kets, the Department of Justice is likely to challenge a merger that Maui; East Hawaii Island; West Hawaii Island; and Kauai. The Board increases the HHI by more than 50 points. The Department of Justice currently has under review the definitions of the banking markets in has informed the Board that a bank merger or acquisition generally Hawaii in connection with another proposal. That review does not will not be challenged (in the absence of other factors indicating affect the Board's decision on this application. anticompetitive effects) unless the post-merger HHI is at least 1800 4. The Honolulu, Hawaii, banking market is approximated by and the merger increases the HHI by 200 points. The Justice Depart- Honolulu County, Hawaii, which is coextensive with the Island of ment has stated that the higher than normal HHI thresholds for Oahu. screening bank mergers for anticompetitive effects implicitly recog- 5. The pre-consummation market deposit statistics are based on nize the competitive effect of limited-purpose lenders and other calculations in which the deposits of FirstFed's savings association non-depository financial entities. subsidiaries and all other savings associations are included at 7. The Maui banking market is approximated by Maui County, 50 percent. Upon consummation of the proposal, FirstFed would be Hawaii, which is coextensive with Island of Maui. affiliated with a commercial banking organization. Therefore, on a pro 8. Midwest Financial Group, 75 Federal Reserve Bulletin 386 forma basis, the deposits of FirstFed's savings association subsidiar- (1989); CB&T Bancshares, Inc., 75 Federal Reserve Bulletin 381 ies are included at 100 percent, while the deposits of other savings (1989); National City Corporation, 70 Federal Reserve Bulletin 743 associations continue to be included at 50 percent. (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 761 credit unions in both the Honolulu and Maui markets.9 BHC Act is favorable and consistent with approval of Moreover, FirstFed-Hawaii does not at present en- Bancorp's application to acquire FirstFed. gage in commercial lending activities. Consequently, Accordingly, based on all facts of record, the Board the proposed acquisition would not eliminate a com- has determined that the application should be, and petitor for the provision of commercial loans. hereby is, approved. This determination is also subject In light of the facts of record, including the number to all of the conditions established in the Board's and types of competitors remaining in the market, the Regulation Y, including sections 225.4(d) and 225.23 role of credit unions in the market, and other mitigat- (12 C.F.R. 225.4(d) and 225.23), and to the Board's ing facts of record, the Board has concluded that authority to require such modifications or termination consummation of the proposal would not have a of the activities of a bank holding company or any of significantly adverse effect on competition in either the its subsidiaries as the Board finds necessary to assure Honolulu or Maui banking markets. compliance with, or to prevent evasion of, the provi- The Board also has examined the effects of the sions and purposes of the BHC Act and the Board's proposal in the other five banking markets in which regulations and orders issued thereunder. The trans- Bancorp and FirstFed compete. Although each market action shall be made not later than three months after is considered to be highly concentrated, the increase in the effective date of this Order, unless such period is the HHI in each market upon consummation of the extended for good cause by the Board or by the proposal, after including 50 percent of the deposits Federal Reserve Bank of San Francisco, pursuant to held by savings associations in the calculation of delegated authority. market data, would not exceed the limits provided in By order of the Board of Governors, effective the revised Department of Justice Merger Guidelines. July 23, 1990. In addition, numerous banks and savings associations would remain in most of the markets following con- Voting for this action: Chairman Greenspan and Governors summation of the proposal.10 Seger, Angell, Kelley, LaWare, and Mullins. Absent and not voting: Governor Johnson. In light of the facts of record, including the number and types of competitors remaining in the markets, the JENNIFER J. JOHNSON role of credit unions in the markets, and other mitigat- Associate Secretary of the Board ing facts of record, the Board has concluded that consummation of the proposal is not likely to result in a significantly adverse effect on competition in these Creditanstalt-B ankverein markets. Vienna, Austria Consummation of this proposal is not likely to result in any significantly adverse effects, such as undue Order Approving Application to Provide Brokerage concentration of resources, decreased or unfair com- Services on a Separate Basis, Investment Advisory petition, conflicts of interest, or unsound banking and Brokerage Services on a Combined Basis, To practices. Accordingly, based upon consideration of Buy and Sell Securities on the Order of Investors As all the relevant facts, the Board has determined that "Riskless Principal," and to Provide Certain the balance of the public interest factors that the Board Corporate Financial Advisory Services is required to consider under section 4(c)(8) of the Creditanstalt-B ankverein, Vienna, Austria ("Creditanstalt"), a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"), 9. The number of credit unions per capita and the amount of credit union deposits per capita in Hawaii exceed those of all other states has applied for the Board's approval under section except Alaska. 4(c)(8) of the BHC Act (12 U.S.C. § 1843(c)(8)) and 10. The following data indicate the changes in the market share and section 225.23(a)(2) of the Board's Regulation Y HHI upon consummation of the proposal: In the Guam banking market, Bancorp would control 25.7 percent (12 C.F.R. 225.23(a)(2)) for its wholly owned subsidof the market deposits. The HHI would increase by 108 to 2116. iary, Creditanstalt International Advisers, Inc., New In the Eastern Hawaii banking market, Bancorp would control 40.9 York, New York ("Advisers"), to provide investment percent of the market deposits. The HHI would increase by 78 points to 2633. advisory and securities brokerage services on a com- In the Western Hawaii banking market, Bancorp would control 38.9 bined basis ("full-service brokerage"), to engage in percent of the market deposits. The HHI would increase by 131 points brokerage services separately, to buy and sell all types to 3068. In the Kauai banking market, Bancorp would control 40.0 percent of securities on the order of investors as a "riskless of the market deposits. The HHI would increase by 68 points to 3057. principal," and to provide corporate financial advisory In the Saipan banking market, Bancorp would control 22.4 percent services. of the market deposits. The HHI would increase by 19 points to 3545. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

762 Federal Reserve Bulletin • September 1990 Notice of the application, affording interested per- Bank of Canada, Barclays PLC, Barclays Bank PLC, sons an opportunity to submit comments, has been 76 Federal Reserve Bulletin 158 (1990). duly published (55 Federal Register 25,173 (1990)). Creditanstalt also proposes that Advisers make The time for filing comments has expired, and the available its full-service brokerage services to certain Board has considered the application and all com- retail customers.4 Creditanstalt has committed to ments received in light of the public interest factors conduct this activity in accordance with the Board's set forth in section 4(c)(8) of the BHC Act. orders approving the combination of investment ad- Creditanstalt, with consolidated assets equivalent visory and securities brokerage services for retail to approximately $49.6 billion, is the largest banking customers. See, e.g., PNC; Bank of New England organization in Austria.1 In the United States, Cred- Corporation, 74 Federal Reserve Bulletin 700 (1988); itanstalt operates a branch office in New York, a Bankers Trust.5 subsidiary providing investment advisory services in In addition, Advisers will provide discretionary California, and a subsidiary providing advisory and investment management for institutional customers portfolio management activities, pursuant to the only, under the same terms and conditions as previ- Board's Regulation K, from offices in New York. ously approved by the Board. See J.P. Morgan and Company, Inc., 73 Federal Reserve Bulletin Brokerage Activities 810 (1987). Such discretionary investment management services will not be provided for retail custom- Applicant proposes to provide full-service brokerage ers. services, as well as brokerage services separately. The Board has previously determined by regulation Financial Advisory Services that provision of brokerage services separately is a permissible nonbanking activity for bank holding Creditanstalt has applied to engage, through Adviscompanies under section 4(c)(8) of the BHC Act.2 ers, in the following corporate financial advisory The Board has previously determined by order that activities: full-service brokerage is a permissible nonbanking (1) furnishing general economic information and activity for bank holding companies under section advice, general economic statistical forecasting ser- 4(c)(8) of the BHC Act. The Bank of Tokyo, Ltd., 76 vices and industry studies; Federal Reserve Bulletin 654 (1990) {"Bank of To- (2) providing financial advice to state and local kyo"); PNC Financial Corporation, 75 Federal Re- governments, such as with respect to the issuance of serve Bulletin 396 (1989)('7WC"); Bankers Trust their securities; New York Corporation, 74 Federal Reserve Bulletin (3) providing advice regarding the structuring of and 695 (1988) ("Bankers Trust"). Creditanstalt pro- arranging for loan syndications, interest rate poses to engage in full-service brokerage in accord- "swaps," interest rate "caps," and similar transacance with all of the conditions set forth in these tions; orders. (4) providing advice in connection with financing Creditanstalt also proposes that officers of Credi- transactions; tanstalt be permitted to serve as directors of Advis- (5) providing valuation services; ers and that one officer of a U.S. branch or agency of (6) providing advice in connection with mergers, Creditanstalt be permitted to serve as a director of acquisitions and divestitures; Advisers.3 The individual from the U.S. branch or (7) rendering fairness opinions in connection with agency will not represent Advisers in its dealings with mergers, acquisitions, and similar transactions; and customers, but the interlock would permit Creditanstalt (8) conducting feasibility studies. to supervise effectively the operations of Advisers. In light of these facts, Creditanstalt's proposal in this The Board has previously determined by regulation respect is consistent with previous Board orders. See that the first two proposed financial advisory activities Bank of Tokyo; The Bank of Nova Scotia, 74 Federal are closely related to banking under section 4(c)(8) of Reserve Bulletin 249 (1988); National Westminster Bank PLC, 72 Federal Reserve Bulletin 584 (1986). See also Canadian Imperial Bank of Commerce, The Royal 4. These retail customers include Advisers' employees, employees of affiliates, under limited circumstances relatives of employees and employees of affiliates, and individuals with whom Advisers or Creditanstalt has an existing business relationship and who express an 1. Data are as of December 31, 1989. interest in such services. 2. Section 225.25(b)(15) of Regulation Y, 12 C.F.R. 225.25(b)(15). 5. Because neither Advisers nor its affiliates will take a position as 3. Deposits in the U.S. branch and agencies of Creditanstalt are not principal, except as a riskless principal, certain of these disclosure insured by the FDIC. commitments do not apply. See Bankers Trust. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 763 the BHC Act.6 The Board has previously determined Financial Factors, Managerial Resources and Other by order that the remaining proposed financial advis- Considerations ory activities are closely related to banking under section 4(c)(8) of the BHC Act.7 Advisers would In order to approve this application, the Board is conduct the financial advisory activities in accordance required to determine that the performance of the with the regulation and prior Board orders.8 proposed activities by Creditanstalt "can reasonably be expected to produce benefits to the public . . . that Riskless Principal Activities outweigh possible adverse effects, such as undue concentration of resources, decreased or unfair com- The Board has found that, subject to the prudential petition, conflicts of interests, or unsound banking limitations established in previous cases to address the practices." 12 U.S.C. § 1843(c)(8). potential for conflicts of interests, unsound banking In evaluating these factors under section 4 of the practices or other adverse effects, the proposed risk- BHC Act, the Board considers the financial condition less principal activities are so closely related to bank- and resources of Creditanstalt and its subsidiaries and ing as to be a proper incident thereto within the the effect of the proposal on these resources.10 In this meaning of section 4(c)(8) of the BHC Act.9 case, the Board notes that the stated primary capital Creditanstalt has committed that Advisers will con- ratio of Creditanstalt meets the minimum capital duct its riskless principal activities using the same guidelines for United States multinational bank holdmethods and procedures and subject to the prudential ing companies. Further, Creditanstalt meets the 1990 limitations established by the Board in the Bankers interim risk-based guidelines, and its core capital Trust II and J.P. Morgan Orders. In this regard, exceeds the 1992 minimum standard adopted by the Advisers will maintain specific records that will clearly Basle Committee. In view of these and other facts of identify all riskless principal transactions, and Advis- record, the Board has determined that financial factors ers would not engage in any riskless principal transac- are consistent with approval of the application. tions for any securities carried in its inventory. When Consummation of the proposal would provide added acting as a riskless principal, Advisers would only convenience to Creditanstalt's customers. In addition, engage in transactions in the secondary market and not the Board expects that the de novo entry of Creditanat the order of a customer that is the issuer of the stalt into the market for these services in the United securities to be sold, and would not hold itself out as States would increase the level of competition among making a market in the securities that it buys and sells providers of these services. Under the framework as riskless principal. Moreover, Advisers would not established in this and prior decisions, consummation engage in riskless principal transactions with Creditan- of this proposal is not likely to result in any significant stalt or any of Creditanstalt's affiliates, including for- undue concentration of resources, decreased or unfair eign affiliates that engage in securities dealing activi- competition, conflicts of interests, unsound banking ties overseas. practices, or other adverse effects. Accordingly, the Board has determined that the performance of the proposed activities by Creditanstalt can reasonably be 6. Sections 225.25(b)(4)(iv) and (v) of Regulation Y, 12 C.F.R. expected to produce public benefits which would 225.25(b)(4)(iv) and (v). 7. Scandinavian Bank Group pic, 75 Federal Reserve Bulletin 311 outweigh adverse effects under the proper incident to (1989)(" Scandinavian Bank Group pic"); SunTrust Banks, Inc., 74 banking standard of section 4(c)(8) of the BHC Act. Federal Reserve Bulletin 256 (1988); Signet Banking Corporation, 73 Federal Reserve Bulletin 59 (1987)(" Signet"). Based on the above, the Board has determined to, 8. See Scandinavian Bank Group pic; Signet. In addition to com- and hereby does, approve the application subject to all mitting to comply with the regulation, Creditanstalt has committed of the terms and conditions set forth in this order, and that: (1) Advisers' financial advisory services will not encompass the in the above-noted Board orders that relate to these performance of routine tasks or operations for a customer on a daily activities. The Board's determination is also subject to or continuous basis. all of the conditions set forth in the Board's Regula- (2) Disclosure will be made to each potential customer of each company that Advisers is an affiliate of Creditanstalt. tion Y, including those in sections 225.4(d) and (3) Advice rendered by Advisers on an explicit fee basis will be 225.23(b), and to the Board's authority to require without regard to correspondent balances maintained by a customer modification or termination of the activities of a bank at any depository institution subsidiary of the holding company. (4) Except as authorized by the respective client, no confidential holding company or any of its subsidiaries as the information received from the client will be made available to the Board finds necessary to assure compliance with, and holding company or any of its subsidiaries. 9. Amsterdam-Rotterdam Bank N.V., 76 Federal Reserve Bulletin 682 (1990) ("Amsterdam-Rotterdam"); J-P• Morgan & Company Incorporated, 76 Federal Reserve Bulletin 26 (1990)("7./>. Morgan"); 10. 12 C.F.R. 225.24; The Fuji Bank Limited, 75 Federal Reserve Bankers Trust New York Corporation, 15 Federal Reserve Bulletin 829, Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve (1989X"Bankers Trust //"). Bulletin 155, 156 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

764 Federal Reserve Bulletin • September 1990 to prevent evasion of, the provisions of the BHC Act In addition, First Eastern proposes to act as agent and the Board's regulations and orders issued there- for issuers in the private placement of all types of under. securities. This transaction shall not be consummated later Notice of the application, affording interested perthan three months after the effective date of this order, sons an opportunity to submit comments on the unless such period is extended for good cause by the proposal, has been duly published (55 Federal Reg- Board or by the Federal Reserve Bank of New York, ister 10,496 (1990)). The time for filing comments has pursuant to delegated authority. expired, and the Board has considered the applica- By order of the Board of Governors, effective tion and all comments received in light of the public July 23, 1990. interest factors set forth in section 4(c)(8) of the BHC Act. Voting for this action: Chairman Greenspan and Governors First Eastern, with total consolidated assets equiv- Seger, Angell, LaWare, and Mullins. Absent and not voting: alent to approximately $2.6 billion, is the ninth Governor Johnson. largest commercial banking organization in Pennsylvania.1 It operates two bank subsidiaries and JENNIFER J. JOHNSON engages in various activities in the United States Associate Secretary of the Board under section 4(c)(8) of the BHC Act and the Board's Regulation Y, including engaging through Company First Eastern Corporation in securities brokerage and underwriting and dealing Wilkes-Barre, Pennsylvania in government obligations and money market instruments as permitted by section 4(c)(8) of the BHC Order Approving Application to Provide Certain Act and sections 225.25(b)(15) and (16) of Regu- Financial Advisory Services and To Act As Agent in lation Y. the Private Placement of All Types of Securities The Board has previously determined by order that the proposed financial advisory activities are closely First Eastern Corporation, Wilkes-Barre, Pennsylva- related to banking and permissible for bank holding nia ("First Eastern"), a bank holding company companies within the meaning of section 4(c)(8) of within the meaning of the Bank Holding Company the BHC Act, and the Board reaffirms its deter- Act ("BHC Act"), has applied for the Board's minations regarding these activities.2 First Eastern approval under section 4(c)(8) of the BHC Act has committed that Company will conduct its finan- (12 U.S.C. § 1843(c)(8)) and section 225.23 of the cial advisory activities subject to the conditions Board's Regulation Y (12 C.F.R. 225.23) for its sub- relied upon by the Board in previous orders.3 Acsidiary, First Eastern Merchant Banking Group, cordingly, the Board concludes that the proposed Inc., Doylestown, Pennsylvania ("Company"), to financial advisory activities are closely related to provide certain financial advisory services and to act banking. as agent for issuers in the private placement of all Similarly, the Board has previously determined by types of securities. order that acting as agent for the issuer in the private First Eastern proposes to offer, through Company, placement of all types of securities is closely related the following services to institutional customers: to banking and permissible for bank holding compa- (1) Acting as financial adviser, either on a retainer nies within the meaning of section 4(c)(8) of the BHC or success fee basis, to provide corporate finance Act,4 and the Board reaffirms its determination readvisory services, including advice with respect to garding these activities. First Eastern has committed structuring, financing, and negotiating domestic that Company will conduct its private placement and international mergers, acquisitions, joint ven- activities in a manner consistent with, and subject to, tures, divestitures, leveraged buyouts, capital raising vehicles, and other corporate transactions, and providing ancillary services or functions incidental to the foregoing activities; 1. All data are as of December 31, 1989. 2. See, e.g., The Fuji Bank, Limited, 75 Federal Reserve Bulletin (2) Performing feasibility studies, principally in the 577 (1989); The Nippon Credit Bank, Ltd., 75 Federal Reserve Bulletin context of determining the financial attractiveness 308 (1989); Sovran Financial Corporation, 73 Federal Reserve Bulleand feasibility of particular corporate transactions; tin 744 (1987). 3. See, e.g., The Fuji Bank, Limited, 75 Federal Reserve Bulletin (3) Providing valuation services in connection with 577 (1989). the foregoing; and 4. See, e.g., First Union Corporation, 76 Federal Reserve Bulletin 174 (1990); J.P. Morgan & Company Incorporated, 76 Federal (4) Providing fairness opinions in connection with Reserve Bulletin 26 (1990); Bankers Trust New York Corporation, 75 the foregoing. Federal Reserve Bulletin 829 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 765 the prudential limitations relied upon by the Board in separate from any other office of First Eastern or its approving this activity.5 subsidiaries. First Eastern has requested one modification of the Due to First Eastern's relatively small size, its Bankers Trust commitments that would allow Com- executive and management staff is significantly smaller pany to have three of seven directors in common with than that of larger institutions, and the boards of First Eastern's subsidiary banks.6 The prohibition directors of First Eastern and its lead bank are identiagainst interlocks was originally intended to preclude a cal. First Eastern seeks the director interlocks in order member bank from engaging in impermissible securi- to oversee Company and provide continuity among ties activities, to prevent common control of the First Eastern's subsidiaries. Under these circumdecision-making process within a bank and its securi- stances, the Board believes that a prohibition against ties affiliate, and to protect investors against potential director interlocks is not required by law, and the conflicts of interest where one individual is required to three requested director interlocks between First Eastadvance the differing objectives of a bank and its ern bank subsidiaries and Company would be approsecurities affiliate. priate. These concerns do not appear to be significant in In acting on applications under section 4 of the BHC this application. First, the applicant is not seeking Act, the Board is required to determine whether the authority to engage in securities underwriting or deal- performance of the proposed activities by an applicant ing. The Board has ruled that private placement activ- "can reasonably be expected to produce benefits to ities conducted directly by a bank do not constitute the public, such as greater convenience, increased "underwriting" or "dealing" in securities because competition, or gains in efficiency that outweigh posthese activities do not involve a "public offering" of sible adverse effects, such as undue concentration of the securities and are conducted solely as agent.7 All resources, decreased or unfair competition, conflicts of the proposed activities could be performed directly of interests, or unsound banking practices." by First Eastern's subsidiary banks. Consequently, in (12 U.S.C. § 1843(c)(8)). this instance a management interlock is not prohibited In every case involving a nonbanking acquisition by by the Glass-Steagall Act. Second, the Board has a bank holding company under section 4 of the BHC noted that concerns regarding common control of a Act, the Board considers the financial condition and bank and a securities affiliate are less significant resources of the applicant and its subsidiaries and the where, as here, the securities affiliate is engaged in effect of the transaction on these resources.9 In this agency activities and where no substantial capital is case, the Board concludes that the financial considerput at risk. See Bankers Trust New York Corporation.8 ations are consistent with approval of the application. Third, because Company has no salesman's stake in Consummation of First Eastern's proposal would the securities it recommends, the potential for conprovide increased convenience to Company's customflicts of interest is substantially mitigated. Moreover, it ers and gains in efficiency. In addition, the Board is unlikely that investors would confuse Company with expects that the de novo entry of First Eastern into the First Eastern's subsidiary banks, because the custommarket for these services would increase the level of ers of Company will be sophisticated "accredited competition among providers of these services. Acinvestors" and Company's office will be completely cordingly, the Board has determined that the performance of the proposed activities by Company can reasonably be expected to produce benefits to the public. 5. See Bankers Trust New York Corporation, 73 Federal Reserve For these reasons, and in reliance on the commit- Bulletin 138, 152-53 (mi)(" Bankers Trust"). The Bankers Trust ments offered in this case, the Board believes that commitments were modified in the Board's orders in The Bank of Montreal, 74 Federal Reserve Bulletin 500 (1988)(quantitative limita- consummation of this proposal is not likely to result in tions unnecessary), Bankers Trust New York Corporation, 75 Federal any significant adverse effects, such as undue concen- Reserve Bulletin 829 (1989)(placement with "accredited investors" as tration of resources, decreased or unfair competition, this term is defined in the Securities Act of 1933), and The Chase Manhattan Corporation, 76 Federal Reserve Bulletin 658 (1990) conflicts of interest, or unsound banking practices. (placement of minimum denominations of $100,000). Based on the foregoing and other facts of record, and 6. Of the three directors who will serve on the boards of both the subject to the commitments made by First Eastern and banks and Company, two also will serve as officers or employees of First Eastern's subsidiary banks. None will serve as officers or Company, the Board has determined that the balance employees of Company. of the public interest factors that the Board is required 7. Statement Concerning Applicability of the Glass-Steagall Act to the Commercial Paper Placement Activities of Bankers Trust Company (June 4, 1985), ajfd, Securities Industry Association v. Board of Governors, 807 F.2d 1052 (D.C. Cir. 1986), cert, denied, 483 U.S. 1005 9. 12 C.F.R. 225.24; The Fuji Bank, Limited, 75 Federal Reserve (1987). Bulletin 94 (1989); Bayerische Vereinsbank AG, 73 Federal Reserve 8. 74 Federal Reserve Bulletin 695 (1988). Bulletin 155, 156 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

766 Federal Reserve Bulletin • September 1990 to consider under section 4(c)(8) of the BHC Act is (4) evaluations of tender offers; favorable. Accordingly, the application is hereby ap- (5) fairness opinions in connection with mergers, proved. This determination is subject to all of the acquisitions, and similar financial transactions; conditions set forth in the Board's Regulation Y, (6) advice for management on the viability and including those in sections 225.4(d) and 225.23(b) capital adequacy of financially troubled companies; (12 C.F.R. 225.4(d) and 225.23(b)), and to the Board's (7) valuation opinions on transactions involving pubauthority to require modification or termination of the licly held securities; and activities of the holding company or any of its subsid- (8) advice regarding the structuring of, and arranging iaries as the Board finds necessary to assure compli- for, loan syndications. ance with the provisions and purposes of the BHC Act and the Board's regulations and orders issued there- In addition, First Regional proposes to act as agent under, or to prevent evasion thereof. for issuers in the private placement of all types of This transaction shall not be consummated later securities. than three months after the effective date of this order, Notice of the application, affording interested perunless such period is extended for good cause by the sons an opportunity to submit comments, has been Board or by the Federal Reserve Bank of Philadelphia, duly published (55 Federal Register 24,640 (1990)). pursuant to delegated authority. The time for filing comments has expired, and the By order of the Board of Governors, effective Board has considered the application and all com- July 23, 1990. ments received in light of the public interest factors set forth in section 4(c)(8) of the BHC Act.1 Voting for this action: Chairman Greenspan and Governors First Regional, with total consolidated assets of Seger, Angell, La Ware, and Mullins. Absent and not voting: approximately $108.2 million, is the 90th largest com- Governor Johnson. mercial banking organization in Connecticut.2 It operates one bank subsidiary. JENNIFER J. JOHNSON The Board has previously determined by Order that Associate Secretary of the Board the proposed financial advisory activities are closely related to banking and permissible for bank holding First Regional Corporation companies within the meaning of section 4(c)(8) of the Hartford, Connecticut BHC Act, and the Board reaffirms its determinations regarding these activities.3 First Regional has commit- Order Approving Application to Provide Certain ted that Company will conduct its financial advisory Financial Advisory Services and To Act As Agent in activities in accordance with the Board's previous the Private Placement of All Types of Securities Orders regarding these activities.4 Accordingly, the Board concludes that the proposed financial advisory First Regional Corporation, Hartford, Connecticut activities are closely related to banking. ("First Regional"), a bank holding company within Similarly, the Board has previously determined by the meaning of the Bank Holding Company Act Order that acting as agent for the issuer in the private ("BHC Act"), has applied for the Board's approval placement of all types of securities is closely related to under section 4(c)(8) of the BHC Act (12 U.S.C. banking and permissible for bank holding companies § 1843(c)(8)) and section 225.23 of the Board's Regu- within the meaning of section 4(c)(8) of the BHC Act.5 lation Y (12 C.F.R. 225.23) for its subsidiary, First First Regional has committed that Company will con- Regional Investcorp, Hartford, Connecticut ("Compa- duct its private placement activities in accordance ny"), to provide certain financial advisory services and to act as agent for issuers in the private placement of all types of securities. 1. The Investment Company Institute has objected to First Regional's proposal to the extent that it could be construed to seek approval First Regional proposes to offer, through Company, for Company to privately place securities of investment companies the following services (collectively, "financial advis- that are sponsored or advised by Company or First Regional. First ory activities") to financial and nonfinancial institu- Regional has not requested approval to place such securities. 2. Asset data are as of March 31, 1990. Ranking is as of June 30, tions, and individuals who qualify as institutional 1990. customers: 3. See, e.g., Security Pacific Corporation, 71 Federal Reserve (1) advice in connection with mergers, acquisitions, Bulletin 118 (1985); and Signet Banking Corporation, 73 Federal Reserve Bulletin 59 (1987). divestitures, reorganizations, recapitalizations, and 4. See Banc One Corporation, 76 Federal Reserve Bulletin 756 similar transactions; (1990). 5. See, e.g., Bankers Trust New York Corporation, 75 Federal (2) business valuations; Reserve Bulletin 829 (1989); and J.P. Morgan & Company Incorpo- (3) financial feasibility studies; rated, 76 Federal Reserve Bulletin 26 (1990). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 767 with the Board's previous Orders approving this sidiaries. Under these circumstances, the Board beactivity.6 lieves that a prohibition against director interlocks is First Regional has requested that the Board allow not required by law, and that the proposed director Company to have two of seven directors in common interlocks between First Regional bank subsidiary with First Regional's subsidiary bank.7 The Board's and Company would be appropriate. original prohibition against interlocks was intended Consummation of the proposal within the frameto preclude a member bank from engaging in imper- work established by this and previous Board orders missible securities activities, to prevent common is not likely to result in significantly adverse effects, control of the decision-making process within a bank such as undue concentration of resources, decreased and its securities affiliate, and to protect investors or unfair competition, conflicts of interests, or unagainst potential conflicts of interest where one indi- sound banking practices. (12 U.S.C. § 1843(c)(8)). In vidual is required to advance the differing objectives addition, the financial considerations are consistent of a bank and its securities affiliate. with approval of the application. These concerns do not appear to be significant in Consummation of First Regional's proposal would this application. First, First Regional is not seeking provide increased convenience to Company's cusauthority to engage in securities underwriting or tomers and gains in efficiency. In addition, the Board dealing. The Board has ruled that private placement expects that the de novo entry of First Regional into activities conducted directly by a bank do not con- the market for these services would increase the stitute "underwriting" or "dealing" in securities level of competition among providers of these serbecause these activities do not involve a "public vices. Accordingly, the Board has determined that offering" of the securities and are conducted solely the performance of the proposed activities by Comas agent.8 All of the proposed activities could be pany can reasonably be expected to produce benefits performed directly by First Regional's subsidiary to the public that outweigh potential adverse effects. bank. Consequently, in this instance a management Based on the foregoing and other facts of record, interlock is not prohibited by the Glass-Steagall Act. and subject to the commitments made by First Re- Second, the Board has noted that concerns regarding gional and Company and the conditions set forth in common control of a bank and a securities affiliate this and the above-noted orders, the Board has are less significant where, as here, the securities determined that the balance of the public interest affiliate is engaged in agency activities and where no factors it is required to consider under section 4(c)(8) substantial capital is put at risk. See Bankers Trust of the BHC Act is favorable. Accordingly, the appli- New York Corporation, 74 Federal Reserve Bulletin cation is hereby approved. This determination is 695 (1988). Third, because Company has no salessubject to all of the conditions set forth in the man's stake in the securities it recommends, the Board's Regulation Y, including those in sections potential for conflicts of interest is substantially 225.4(d) and 225.23(b) (12 C.F.R. 225.4(d) and mitigated. Moreover, it is unlikely that investors 225.23(b)), and to the Board's authority to require would confuse Company with First Regional's submodification or termination of the activities of the sidiary banks, because the customers of Company holding company or any of its subsidiaries as the will be sophisticated "accredited investors." Board finds necessary to assure compliance with, Due to First Regional's relatively small size, its and to prevent evasion of, the provisions and purexecutive and management staff is significantly poses of the BHC Act and the Board's regulations smaller than that of larger institutions, and the and orders issued thereunder. boards of directors of First Regional and its lead This transaction shall not be consummated later bank are substantially identical. First Regional seeks than three months after the effective date of this the director interlocks in order to oversee Company Order, unless such period is extended for good cause and provide continuity among First Regional's sub- by the Board or by the Federal Reserve Bank of Boston, pursuant to delegated authority. By order of the Board of Governors, effective 6. First Eastern Corporation, 76 Federal Reserve Bulletin 764 July 30, 1990. (1990). 7. Two directors who will serve on the board of directors of Company currently serve as officers or directors of First Regional's Voting for this action: Chairman Greenspan and Governors subsidiary bank. Neither will serve as an officer or employee of Seger, Angell, Kelley, and Mullins. Absent and not voting: Company. Governors Johnson and La Ware. 8. Statement Concerning Applicability of the Glass-Steagall Act to the Commercial Paper Placement Activities of Bankers Trust Company (June 4, 1985), ajfd, Securities Industry Association v. Board of JENNIFER J. JOHNSON Governors, 807 F.2d 1052 (D.C. Cir. 1986), cert, denied, 483 U.S. 1005 (1987). Associate Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

768 Federal Reserve Bulletin • September 1990 The Fuji Bank, Limited financial adviser, pursuant to section 225.25(b)(4) of Tokyo,Japan the Board's Regulation Y (12 C.F.R. 225.25(b)(4)), and leasing personal or real property, pursuant to Order Approving Application to Act as a Dealer, section 225.25(b)(5) of the Board's Regulation Y Broker, and Advisor With Respect to Interest Rate (12 C.F.R. 225.25(b)(5)). and Currency Swaps and Related Transactions The Board has previously determined by Order that the proposed activities are closely related to banking The Fuji Bank, Limited, Tokyo, Japan ("Applicant"), and permissible for bank holding companies within the a registered bank holding company, has applied for the meaning of section 4(c)(8) of the BHC Act.2 The Board Board's approval under section 4(c)(8) of the Bank must also find that the proposed activities "can rea- Holding Company Act ("BHC Act"), 12 U.S.C. sonably be expected to produce benefits to the public § 1843(c)(8), and section 225.23(a)(3) of the Board's . . . that outweigh possible adverse effects, such as Regulation Y, 12 C.F.R. 225.23(a)(3), for its wholly undue concentration of resources, decreased or unfair owned subsidiary, Fuji Capital Markets Corporation, competition, conflicts of interests, or unsound banking New York, New York ("Fuji Capital Markets"), to practices." 12 U.S.C. § 1843(c)(8). engage de novo in the following activities: Consummation of the proposal may reasonably be (1) Intermediating in the international swap markets expected to result in public benefits in the form of by acting as an originator and principal in interest increased competition in the swap market and gains in rate swap and currency swap transactions; efficiency and innovation in the provision of these (2) Acting as an originator and principal with respect services. The addition of Applicant, through Fuji to certain risk-management products such as caps, Capital Markets, will facilitate swap transactions floors and collars, as well as options on swaps, caps, among counterparties that are not equipped to evalufloors and collars ("swap derivative products"); ate the credit of potential counterparties and hence (3) Acting as a broker or agent with respect to the will increase the accessibility of swap transactions to foregoing transactions and instruments; and additional end-users.3 (4) Acting as an advisor to institutional customers Fuji Capital Markets appears to be capable of manregarding financial strategies involving interest rate aging the risks associated with the proposed activities. and currency swaps and swap derivative products. Applicant, which has extensive experience in lending and financing services worldwide, has undertaken to Notice of the application, affording interested per- provide credit screening for all potential counterparsons an opportunity to submit comments on the pro- ties of Fuji Capital Markets through its credit desk posal, has been duly published (55 Federal Register services in Tokyo. In appropriate cases, Fuji Capital 26,505 (1990)). The time for filing comments has ex- Markets will obtain a letter of credit on behalf of, or pired, and the Board has considered the application collateral from, a counterparty.4 In addition, Fuji and all comments received in light of the public Capital Markets will establish separate credit risk interest factors set forth in section 4(c)(8) of the BHC exposure limits for each swap counterparty. Fuji Cap- Act. ital Markets will monitor this exposure on an ongoing Fuji Bank, with total consolidated assets equivalent basis, in the aggregate and with respect to each counto approximately U.S. $403 billion, is the third largest terparty. Senior management will be periodically inbanking organization in the world.1 Applicant owns a formed of the potential risk to which Fuji Capital bank subsidiary in New York, New York, and oper- Markets is exposed. ates branches in New York, New York, and Chicago, In order to manage the risk associated with adverse Illinois; agencies in Los Angeles, California, Houston, changes in interest rates ("price risk"), Fuji Capital Texas, San Francisco, California, and Atlanta, Geor- Markets will match all the swaps and related instrugia; and representative offices in Seattle, Washington, ments in which it is a principal and will hedge any and Atlanta, Georgia. Applicant engages in various unmatched positions pending a suitable match. Fuji activities in the United States under section 4(c)(8) of the BHC Act. Fuji Capital Markets is currently engaged in making and servicing loans, pursuant to 2. The Sumitomo Bank, Limited, 75 Federal Reserve Bulletin 582 section 225.25(b)(1) of the Board's Regulation Y (1989) ("Sumitomo Bank"). (12 C.F.R. 225.25(b)(1)), acting as an investment and 3. Applicant has proposed that Fuji Capital Markets perform swap services on behalf of affiliates. This activity is permissible under section 4(c)(1)(c) of the BHC Act (12 U.S.C. § 1843(c)(1)(c)). These services would be designed to assist affiliates in hedging their portfolios. 1. Asset data are as of March 31, 1990. Ranking is as of 4. Applicant has indicated that it may be the provider of the letter of December 31, 1988. credit. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 769 Capital Markets will not enter into unmatched or absent certain limitations, may be associated with fiunhedged swaps for speculative purposes. Fuji Capital nancial advisory activities. In order to address these Markets's management will set absolute limits on the potential adverse effects, Applicant has committed level of risk to which its swap portfolio may be that: exposed. Fuji Capital Markets's exposure to price risk (i) Fuji Capital Markets's financial advisory activwill be monitored by both business management and ities will not encompass the performance of rouinternal auditing personnel to guarantee compliance tine tasks or operations for a client on a daily or with the risk limitations imposed by management. continuous basis; Auditing personnel will report directly to senior man- (ii) Disclosure will be made to each potential agement to ensure that any violations of portfolio risk client of Fuji Capital Markets that Fuji Capital limitations are reported and corrected. Markets is an affiliate of Applicant; With respect to the risk associated with the potential (iii) Fuji Capital Markets will not make available for differences between the floating rate indices on two to Applicant or any of Applicant's subsidiaries matched or hedged swaps ("basis risk"), Fuji Capital confidential information received from Fuji Capi- Markets's management will impose absolute limits on tal Markets's clients, except with the client's the aggregate basis risk to which Fuji Capital Mar- consent; and kets's swaps portfolio may be exposed. If the level of (iv) Advice rendered by Fuji Capital Markets on risk threatens to exceed the limits at any time, Fuji an explicit fee basis will be without regard to Capital Markets will actively seek to enter into match- correspondent balances maintained by a client of ing transactions for its unmatched positions. Fuji Fuji Capital Markets at Applicant or any of Ap- Capital Markets's internal auditing staff, together with plicant's depository subsidiaries. management, will monitor compliance with the management-imposed basis risk limits.5 In every case involving a nonbanking acquisition by a In addition, Fuji Capital Markets intends to minimize bank holding company under section 4 of the BHC Act, operations risk through the recruitment and training of the Board considers the financial condition and rean experienced back-office support staff and the use of sources of the applicant and its subsidiaries and the a separate operational and data processing structure for effect of the transaction on these resources. In accordprocessing swap and hedging transactions. ance with the principles of national treatment and In order to minimize any possible conflicts of inter- competitive equity, the Board has previously stated est between Fuji Capital Markets's role as a principal that it expects foreign banks to meet the same general or broker in swap transactions and its role as advisor standards of strength, experience, and reputation as to potential counterparties, Fuji Capital Markets will domestic banking organizations, and to be able to serve disclose to each customer the fact that Fuji Capital as a source of strength to their banking operations in the Markets may have an interest as a counterparty prin- United States.7 In this case, the primary capital of cipal or broker in the course of action ultimately Applicant, as publicly reported, is below the minimum chosen by the customer. Also, in any case in which level specified in the Board's Capital Adequacy Guide- Fuji Capital Markets has an interest in a specific lines. After making adjustments to reflect Japanese transaction as an intermediary or principal, Fuji Cap- banking and accounting practices, however, including ital Markets will advise its customer of that fact before consideration of a portion of the unrealized appreciarecommending participation in that transaction.6 In tion in Applicant's portfolio of equity securities consisaddition, Fuji Capital Markets's advisory services will tent with the principles in the Basle capital framework,8 be offered only to sophisticated customers who would Applicant's capital ratio meets United States standards. be unlikely to place undue reliance on investment The Board also has considered several additional advice received and better able to detect investment factors that mitigate its concern in this case. The advice motivated by self-interest. Board notes that Applicant is in compliance with the The Board has expressed its concerns regarding capital and other financial requirements of Japanese conflicts of interest and related adverse effects that, banking organizations. In addition, the Board notes that the capital of Applicant currently accords with the 5. In addition to rate and basis risk, the value of a swap option is subject to market expectations of the future direction and rate of 7. See, e.g., The Dai-Ichi Kangyo Bank, Limited 76 Federal change in interest rates, or volatility risk. Fuji Capital Markets's Reserve Bulletin 75 (1990); Toyo Trust and Banking Co., Ltd., 74 management will impose absolute limits on the level of volatility risk Federal Reserve Bulletin 623 (1988); The Mitsubishi Bank, Limited, 70 to which Fuji Capital Markets's swap portfolio may be exposed. Federal Reserve Bulletin 518 (1984); See also Policy Statement on 6. In any transaction in which Fuji Capital Markets arranges a swap Supervision and Regulation of Foreign-Based Holding Companies, transaction between an affiliate and a third party, the third party will Federal Reserve Regulatory Service K 4-835 (1979). be informed that Fuji Capital Markets is acting on behalf of an affiliate. 8. 54 Federal Register 4186 (1989). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

770 Federal Reserve Bulletin • September 1990 minimum requirements established by the Basle Com- Netherlands (collectively "Applicant"), have applied, mittee's capital framework for year-end 1992. The pursuant to section 4(c)(8) of the Bank Holding Com- Board also notes that the application involves non- pany Act ("BHC Act") (12 U.S.C. § 1843(c)(8)), and banking activities that require a small commitment of section 225.23(a) of the Board's Regulation Y capital. (12 C.F.R. 225.23(a)), to engage, through James Capel Based on the foregoing and other facts of record, Incorporated, New York, New York ("JCI"), a and subject to the commitments made by Applicant, wholly owned subsidiary of Applicant, in: the Board has determined that the public benefits (1) providing investment advisory and securities associated with this proposal can reasonably be ex- brokerage activities separately and on a combined pected to outweigh possible adverse effects, and that basis to institutional customers; the balance of the public interest factors that the Board (2) providing futures commission merchant services; is required to consider under section 4(c)(8) of the and BHC Act is favorable. Accordingly, the application is (3) offering investment and financial advisory serhereby approved. This determination is further subject vices. to all of the conditions set forth in the Board's Regulation Y, including those in sections 225.4(d) and Applicant also has applied, pursuant to section 4(c)(8) 225.23(b), and to the Board's authority to require of the BHC Act and section 225.23(a) of the Board's modification or termination of the activities of the Regulation Y (12 C.F.R. 225.23(a)), to engage through holding company or any of its subsidiaries as the Wardley Incorporated, New York, New York Board finds necessary to assure compliance with, or to ("Wardley"), in providing investment and financial prevent evasion of, the provisions and purposes of the advisory services. BHC Act and the Board's regulations and orders Applicant, with approximately $132.9 billion in asissued thereunder. sets, is the 30th largest banking organization in the This transaction shall not be consummated later world.1 It operates one subsidiary bank in the United than three months after the effective date of this States and engages directly and through subsidiaries in Order, unless such period is extended for good cause a broad range of nonbanking activities in the United by the Board or by the Federal Reserve Bank of New States. York, pursuant to delegated authority. Notice of the application, affording interested per- By order of the Board of Governors, effective sons an opportunity to submit comments on the pro- July 30, 1990. posal, has been published (54 Federal Register 29,942 (1989)). The time for filing comments has expired, and Voting for this action: Chairman Greenspan and Governors the Board has considered the application and all Seger, Angell, Kelley, and Mullins. Absent and not voting: comments received in light of the public interest Governors Johnson and LaWare. factors set forth in section 4(c)(8) of the BHC Act.2 JENNIFER J. JOHNSON Associate Secretary of the Board 1. Asset data are as of December 31, 1989. Ranking is as of December 31, 1988. The Hongkong and Shanghai 2. The Investment Company Institute ("ICI") has protested this application to the extent that it would permit Applicant to broker or Banking Corporation advise customers regarding securities issued by investment companies Hong Kong sponsored or advised by Applicant or any of its bank or nonbank affiliates. Applicant has committed that JCI's brokerage activities will comply with the commitments approved by the Board in Norwest Kellett, N.V. Corporation, 76 Federal Reserve Bulletin 79 (1990) ("Norwest"). Curacao, Netherlands Antilles Thus, Applicant would not provide investment advice to its brokerage customers regarding shares of investment companies that are advised or sponsored by Applicant or any of its affiliates. Applicant would not HSBC Holdings, B.V. provide brokerage services to its customers regarding shares of Amsterdam, The Netherlands investment companies that are sponsored or advised by Applicant or any of its nonbank affiliates. Applicant has proposed, however, that JCI broker shares of investment companies sponsored or advised by Order Approving Application to Engage in Financial Applicant's bank affiliates in accordance with all of the conditions set and Investment Advisory Services, Securities forth in Norwest. As the Board noted in Norwest, the prohibitions Brokerage, and Futures Commission Merchant contained in the Board's interpretive rule on investment advisor activities (12 C.F.R. 225.125) would not prevent a bank holding Activities company subsidiary from brokering shares of investment companies that are advised by a bank affiliate of the brokerage subsidiary and not by the parent bank holding company or any of its direct or indirect The Hongkong and Shanghai Banking Corporation, nonbank subsidiaries. For the reasons set forth in Norwest, the Board Hong Kong; Kellett, N.V., Curacao, Netherlands does not believe that the comments submitted by the ICI warrant Antilles; and HSBC Holdings, B.V., Amsterdam, The denial of this proposal. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 771 Investment Advice and Securities Brokerage on a (d) providing advice in connection with merg- Combined Basis ers, acquisitions, and divestitures; (e) rendering fairness opinions in connection Applicant has proposed that JCI offer investment with mergers, acquisitions, and similar transacadvisory and securities brokerage activities sepa- tions; and rately and on a combined basis to institutional (f) conducting feasibility studies (collectively, customers.3 The Board previously has determined "financial advisory activities"). that the combined offering of investment advice with securities brokerage services to institutional custom- The Board has previously determined by order that ers is a permissible nonbanking activity and does not these financial advisory activities are closely related violate the Glass-Steagall Act.4 Applicant has com- to banking under section 4(c)(8) of the BHC Act.7 mitted to conduct these brokerage and advisory Applicant has proposed that JCI and Wardley offer activities in accordance with the limitations ap- financial advisory services to financial and nonfinanproved by the Board in its prior cases.5 cial institutions and individuals that are "Institutional Customers" as defined in Manufacturers Hanover Cor- Investment and Financial Advisory Services poration, 73 Federal Reserve Bulletin 930 (1987) ("Manufacturers Hanover"). As the Board noted in Manufac- Applicant has applied to offer, through JCI and Ward- turers Hanover, such customers would have sufficient ley, investment advice by: financial sophistication so that they would not place (a) furnishing general economic information and undue reliance on financial advice received, and would advice, general economic statistical forecasting be better able to detect investment advice motivated by services, and industry studies; and self-interest. The Board believes that this proposal is (b) providing financial advice to state and local consistent with the reasoning of its prior orders and governments, such as with respect to the issu- does not alter the underlying rationale of its decision in ance of their securities. Signet that the activity is closely related to banking. JCI and Wardley would conduct the financial advisory The Board has previously determined by regulation activities in accordance with prior Board Orders.8 that these investment advisory activities are closely related to banking.6 Applicant has also applied to Futures Commission Merchant Services offer, through JCI and Wardley, financial advice by: (a) providing advice regarding the structuring of Applicant has applied to act as a futures commission and arranging for loan syndications, interest merchant ("FCM") and commodity trading advisor rate swaps, interest rate caps, and similar trans- ("CTA") through the provision of execution, clearactions; ance, and investment advisory services with re- (b) providing advice in connection with financ- spect to futures contracts, pursuant to sections ing transactions; 225.25(b)(18) and (b)(19) of the Board's Regulation Y (c) providing valuation services; (12 C.F.R. 225.25(b)(18) and (b)(19)).^ Applicant also 7. SunTrust Banks, Inc., 74 Federal Reserve Bulletin 256 (1988); and Signet Banking Corporation, 73 Federal Reserve Bulletin 59 (1987) 3. The Board has previously determined by regulation that the ("Signet"). separate provision of securities brokerage services and of investment 8. See Signet. Thus, Applicant has committed that: advisory services is closely related to banking for purposes of the (1) JCI and Wardley's financial advisory activities will not encom- BHC Act. 12 C.F.R. 225.25(b)(4) and (b)(15). pass the performance of routine tasks or operations for a client on 4. See, e.g., National Westminster Bank PLC, 72 Federal Reserve a daily or continuous basis; Bulletin 584 (1986); Canadian Imperial Bank of Commerce, 74 Federal (2) Disclosure will be made to each potential client of JCI and Reserve Bulletin 571 (1988). Wardley that each is an affiliate of Applicant; 5. Under this proposal, JCI will not act as principal or take a (3) Advice rendered by JCI or Wardley on an explicit fee basis will position in any securities it brokers or recommends, except bank- be without regard to correspondent balances maintained by a client eligible securities that it invests as excess funds. JCI would not of JCI or Wardley at Applicant or any of Applicant's depository underwrite or deal in these bank-eligible securities. In the event that subsidiaries; and, JCI engages in transactions with its customers with respect to these (4) JCI and Wardley will not make available to Applicant or any of securities, it would comply with the disclosure procedures established Applicant's subsidiaries confidential information received from in PNC Financial Corp, 75 Federal Reserve Bulletin 396 (1989). Since their clients, except with the client's consent. affiliates of JCI have authority to underwrite and deal in securities, 9. An affiliate of JCI has authority to purchase futures contracts and both in the United States and abroad, JCI would comply with the options on futures contracts for foreign exchange. The Hongkong and disclosure requirements of prior Board Orders. See Bankers Trust Shanghai Banking Corporation, Kellett, K.V., HSBC Holdings, B.V., New York Corporation, 74 Federal Reserve Bulletin 695 (1988) and Marine Midland Banks, Inc., 75 Federal Reserve Bulletin 217 ("Bankers Trust"). (1989). Applicant has committed that in any transaction in which JCI 6. 12 C.F.R. 225.25(b)(4)(iv) and (b)(4)(v). purchases futures contracts or options on futures contracts from an Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

772 Federal Reserve Bulletin • September 1990 proposes to engage in these activities for the futures expected to produce benefits to the public . . . that and options contracts listed in the Appendix to this outweigh possible adverse effects, such as undue Order. concentration of resources, decreased or unfair com- The Board previously has authorized FCM subsid- petition, conflicts of interests, or unsound banking iaries of bank holding companies to execute, clear, practices." 12 U.S.C. § 1843(c)(8). and provide advisory services on many of the futures Applicant proposes to cross-market services and options contracts listed in the Appendix under among JCI, Wardley, and their affiliates so that section 4(c)(8) of the BHC Act. In addition, the affiliates may introduce services to institutional cus- Board has permitted bank holding companies to tomers. The Board has previously approved proposexecute and clear the balance of the above futures als involving the introduction by bank affiliates of contracts pursuant to Regulation K (12 C.F.R. Part their institutional customers to the services available 211). These contracts have essentially the same from their affiliates.10 Applicant acknowledges that terms and serve the same functions as the futures its securities underwriting affiliate cannot engage in contracts for which execution and clearance have such activities in a manner inconsistent with the been previously approved under section 4(c)(8) of the cross-marketing restrictions in the Board's section 20 BHC Act. Applicant has committed to limit its in- Order.11 In addition, as required by section 23B of vestment advisory services so as to be consistent the Federal Reserve Act (12 U.S.C. § 371c-l), no with the limits in Regulation Y that are placed on the affiliated bank may engage in advertising for these provision of similar advisory services. subsidiaries stating or suggesting that an affiliated The Board believes that the skills necessary to bank is responsible for the subsidiaries' obligations, engage in providing execution, clearance, and invest- or enter into any agreement so stating or suggesting. ment advisory services on the above futures are The Board also notes that section 106 of the Bank virtually indistinguishable from the execution, clear- Holding Company Act Amendments of 1970 ance, and advisory activities approved by the Board (12 U.S.C. § 1972) precludes banks from tying either in its previous orders and in sections 225.25(b)(18) the availability of, or consideration for, a product or and (b)(19) of the Board's Regulation Y (12 C.F.R. service to the condition that a customer also obtain a 225.25(b)(18) and (b)(19)). Therefore, the Board has product or service from an affiliated bank holding determined that the execution, clearance, and provi- company or any of its affiliate banks. Finally, in sion of investment advice on options and futures order to ensure customers receive unbiased investcontracts on these additional indexes are closely ment advice, research personnel of JCI and Wardley related to banking under section 4(c)(8) of the BHC would not be provided with position reports regard- Act. The Board has taken into account and has relied ing the securities or futures contracts its affiliates upon the commitments made by Applicant, and the may hold in inventory. In light of these factors, the regulatory framework established pursuant to law by Board concludes that the proposed cross marketing the Commodity Futures Trading Commission for the of services of affiliates to institutional customers trading of futures, as well as the conditions set forth (consistent with the terms of the Section 20 Order) in sections 225.25(b)(18) and 225.25(b)(19) with re- would not result in significant adverse effects. The spect to the execution, clearance, and provision of Board expects that the de novo entry of JCI and investment advice as a FCM or CTA as to futures Wardley into the market for these services would contracts or options thereon. increase the level of competition among providers of these services already in operation and provide Financial Factors, Managerial Resources, and Other greater convenience to Applicant's customers. Ac- Considerations cordingly, the Board concludes that the performance of the proposed activities by Applicant can reason- In order to approve this application, the Board is ably be expected to provide benefits to the public. required to determine that the performance of the The Board also has considered the potential for proposed activities by Applicant "can reasonably be adverse effects that may be associated with this proposal. In light of the framework established in the Board's regulations, this order, and previous orders affiliate, JCI will make prior disclosure of that fact to the customer and obtain the customer's consent. This disclosure will occur both at the beginning of the relationship with the customer and upon confirmation 10. Bankers Trust. As in Bankers Trust, there will be no flow of of each order. The Board has previously found that these disclosure confidential customer information without the customer's consent. procedures are adequate to address potential adverse effects. See 11. Marine Midland Banks, Incorporated, 73 Federal Reserve Bankers Trust. Bulletin 738 (1987). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 773 regulating the conduct of the proposed activities, 2. Major Market Index futures contract, Bond consummation of this proposal is not likely to result Buyer Municipal Bond Index futures contract, Opin any significant undue concentration of resources, tions on the Bond Buyer Municipal Bond Index fudecreased or unfair competition, conflicts of interest, tures contract, Major Market Index Maxi Stock Index unsound banking practices, or other adverse effects. futures contract, Major Market Index Mini Stock The financial and managerial resources of Applicant Index futures contract, GNMA Cash Settled futures are considered consistent with approval. Based on contract, NASD Financial Index futures contract, consideration of all the relevant facts, the Board Long-Term Municipal Bond Index futures contract, concludes that the balance of the public interest fac- which are currently traded on the Chicago Board of tors that it is required to consider under section 4(c)(8) Trade; is favorable. Accordingly, based on all the facts of 3. New York Stock Exchange Composite Index record, and subject to the conditions of this Order, the futures contract, and Options on the New York Stock Board has determined that the proposed application Exchange Composite Index futures contract, which should be, and hereby is, approved. are traded on the New York Futures Exchange; The Board's determination is subject to all of the 4. Value Line Futures (Maxi) Index futures conconditions set forth in the Board's Regulation Y, tract, Value Line Futures (Mini) Index contract, and including those in sections 225.4(d) and 225.23(b), and Value Line Average Stock Index futures contract, to the Board's authority to require modification or which are traded on the Kansas City Board of Trade; termination of the activities of a bank holding com- 5. National Over-the-Counter Index futures conpany or any of its subsidiaries as the Board finds tract, which is traded on the Philadelphia Board of necessary to assure compliance with, as to prevent Trade; and evasion of, the provisions of the BHC Act and the 6. Nikkei 225 futures contract, which is traded on Board's regulations and orders issued thereunder. the Singapore International Monetary Exchange. This transaction shall not be consummated later than three months after the effective date of this Order, B. Futures and Options Contracts Approved under the unless such period is extended for good cause by the Board's Regulation K.2 Board or by the Federal Reserve Bank of New York, pursuant to delegated authority. 1. Tokyo Stock Price Index futures contracts and By order of the Board of Governors, effective Japanese Government bond futures contracts, which July 11, 1990. are traded on the Tokyo Stock Exchange; 2. Dutch Government Bond Index futures con- Voting for this action: Chairman Greenspan, and Gover- tracts, which are traded on the Financiele Termijnnors Angell, Kelley, and Mullins. Absent and not voting: markt Amsterdam NV; Governors Johnson, Seger, and La Ware. 3. French Government Bond Index futures contracts, which are traded on the Marche a Terme JENNIFER J. JOHNSON d'lnstruments Financiers; Associate Secretary of the Board 4. Hang Seng Stock Index futures contracts, which are traded on the Hong Kong Futures Exchange Appendix Limited; 5. FT-SE 100 futures contracts and options, options A. Futures and Options Contracts Approved under Section 4(c)(8) of the BHC Act. 1 on foreign exchange, and UK bond futures contracts, Eurodollar and Sterling deposit interest rate futures, all of which are traded on the London International 1. Standard & Poor's 100 Stock Price Index futures Financial Futures Exchange; and contract, Standard & Poor's 500 Stock Price Index 6. All Ordinaries Share Index Futures contracts, futures contract, Options on the Standard & Poor's and Australian Government bond futures contracts, 500 Stock Price Index futures, Standard & Poor's which are traded on the Sydney Futures Exchange. Over-the-Counter 250 Stock Index futures contracts, which are currently traded on the Index and Option Division of the Chicago Mercantile Exchange; 2. See, Board letters, dated September 29, 1982; August 6, 1984; 1. See, Chemical Banking Corporation, 76 Federal Reserve Bulletin August 29, 1984; January 27, 1986; February 3, 1986; June 24, 1985; 660 (1990); Northern Trust Corporation, 74 Federal Reserve Bulletin April 14, 1986; June 20, 1986; October 27, 1986; November 18, 1986; 333 (1988); and The Long-Term Credit Bank of Japan, Limited, 74 August 16, 1988; and September 20, 1988; and Citicorp Overseas Federal Reserve Bulletin 573 (1989). Investment Corporation, 68 Federal Reserve Bulletin 671 (1982). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

774 Federal Reserve Bulletin • September 1990 Manufacturers Hanover Corporation (iii) options on U.S. government securities traded New York, New York on securities exchanges;3 and (iv) options on stock and bond indices traded on Order Approving Application to Engage in securities exchanges. Brokerage and Investment Advisory Activities For Certain Futures and Options Contracts Traded on The contracts and exchanges involved in this proposal Major Commodities and Securities Exchanges are described in the appendix. Futures & Options would also provide general research and advice on Manufacturers Hanover Corporation, New York, market conditions and trading strategies regarding the New York ("MHC"), a bank holding company within use of the above contracts. the meaning of the Bank Holding Company Act The Board has approved the FCM activities pro- ("BHC Act"), has applied pursuant to section 4(c)(8) posed in paragraph (i) by regulation (section of the BHC Act (12 U.S.C. § 1843(c)(8)) and section 225.25(b)(18) of Regulation Y)4 and the brokerage 225.23(a)(3) of the Board's Regulation Y (12 C.F.R. activities proposed in paragraphs (ii) and (iii) by 225.23(a)(3)), to engage in brokerage and investment Order.5 The brokerage activities described in paraadvisory activities involving certain futures and op- graph (iv) are generally permitted under the limitations tions contracts through Manufacturers Hanover Fu- governing securities brokerage in section 225.25(b)(15) tures & Options, Inc., New York, New York ("Fu- of Regulation Y.6 The proposed options traded on tures & Options").1 securities exchanges are options directly on the under- Notice of the application, affording interested per- lying instruments and brokers of these options are sons an opportunity to submit comments has been regulated under securities laws by the SEC.7 duly published (55 Federal Register 21,245 (1990)). Futures & Options also proposes to give investment The time for filing comments has expired, and the advice in conjunction with these brokerage activities.8 Board has considered the application and all comments received in light of the public interest factors set forth in section 4(c)(8) of the BHC Act. 3. Futures & Options also proposes to execute and clear options on MHC, with total consolidated assets of $59.7 billion, short- and long-term interest rate contracts traded on the Chicago Board Options Exchange. These are cash-settled options that are is the eighth largest commercial banking organization based on the annualized yield to maturity (or the annualized discount, in the nation.2 It operates two banking subsidiaries in in the case of U.S. Treasury bills) of U.S. Treasury securities. The underlying instrument for a short-term option is the 13-week U.S. New York and Delaware and engages directly and Treasury bill, which is auctioned weekly. The underlying instrument through other subsidiaries in a broad range of non- for a long-term option is a portfolio of six government securities — the banking activities. two most recently auctioned 7-, 10- and 30-year U.S. Treasury issues, auctioned quarterly. In addition to existing activities, Futures and Op- 4. Section 225.25(b)(18) restricts membership in exchanges that tions proposes to engage in the following execution require the parent company to become a member, limits trading for the and clearance activities: subsidiary's own account except for hedging purposes, requires time stamping of customer orders, restricts extensions of credit for pur- (i) futures contracts on gold bullion and options on poses of meeting margin requirements, and requires maintenance of such contracts traded on major commodity ex- adequate capital. 5. See The Hongkong and Shanghai Banking Corporation, 72 changes; Federal Reserve Bulletin 345 (1986) (currency options); and Sovran (ii) foreign currency options traded on securities Financial Corporation, 72 Federal Reserve Bulletin 146 (1986) (U.S. exchanges; government securities options). The Board also has permitted the combination of FCM activities with the brokerage of SEC-regulated options contracts. See, e.g., The Hongkong and Shanghai Banking Corporation, supra; Citicorp, 70 Federal Reserve Bulletin 591 (1984); and Security Pacific Corporation, 70 Federal Reserve Bulletin 238 (1984). 6. Under this section, securities brokerage activities are limited to 1. MHC proposes to acquire through Futures & Options all of the buying and selling securities solely as agent for the account of outstanding shares of Manufacturers Hanover Financial Options customers and do not include securities and underwriting or dealing or Group, Inc. ("MHFOG"), a wholly owned subsidiary of Manufactur- investment advice or research. ers Hanover Bank (Delaware). Upon acquisition, MHFOG will be 7. Pursuant to an accord between the SEC and the CFTC, these merged into Futures & Options. MHFOG currently executes and options are considered securities and are regulated by the SEC. The clears foreign currency options for customers on the Philadelphia substance of this accord was subsequently adopted by Congress, Pub. Stock Exchange, provides related investment advice, and clears L. No. 97-444, 96 Stat. 2294 (codified as amended at 7 U.S.C. § 77(b) certain options on stock and bond indices. Futures & Options cur- (October 13, 1982)). Thus, Futures & Options is required to register as rently engages in futures brokerage and advisory services as a futures a broker/dealer in connection with brokering these options. commission merchant ("FCM") under sections 225.25(b)(18) and (19) 8. The Board has approved combining investment advisory activifor major commodity exchanges and stock and municipal bond ties with brokerage services for futures contracts on gold bullion and indices. See Manufacturers Hanover Corporation, 70 Federal Re- options thereon on major commodities exchanges under the limitaserve Bulletin 369 (1984) and Manufacturers Hanover Corporation, 72 tions in section 225.25(b)(19) of Regulation Y. These limitations Federal Reserve Bulletin 144 (1986). prohibit trading for the company's own account except for the 2. Banking data are as of March 31, 1990. purpose of hedging a cash position in the related market and restrict Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 775 The Board has noted that combining brokerage ser- since it offers the investor a means to hedge portfolio vices and investment advice for securities ("full-ser- risk.12 Options on futures traded on commodities vice brokerage") could lead to conflicts of interests exchanges, as well as options traded on securities and unsound banking practices. Accordingly, the exchanges, may be used for buying or selling the Board has imposed certain limitations when these underlying instrument at a specific price at a specific activities are conducted on a combined basis, begin- time in the future.13 In addition, the prices of both ning with National Westminster Bank, to address types of options are also determined largely from the these concerns.9 Futures & Options maintains that prices of the underlying instrument. full-service brokerage limitations should not apply to Additional aspects of the Futures & Options prothe proposed activities because options traded on posal make the full-service brokerage limitations less securities exchanges are the functional equivalent of appropriate in this context. Unlike equity and corpofutures and options on futures on the same financial rate debt obligations, there is no single corporate instruments traded on commodities exchanges.10 Ac- issuer of the types of options proposed.14 Accordingly, cordingly, Futures & Options proposes to conduct its concerns that a bank may make unsound loans to broker/investment advisory activities for options companies in whose stock the securities brokerage traded on securities exchanges under the same limita- affiliate has invested is not present in this proposal. tions imposed by sections 225.25(b)(18) and (b)(19) of Futures & Options has committed to disclose in writ- Regulation Y for FCM and advisory activities for ing its dual role in providing advisory and brokerage futures and options on futures traded on commodities services and that its bank affiliates are not responsible exchanges.11 for its obligations prior to the provision of any broker- In approving the execution and clearance of certain age service.15 Futures & Options has also committed options traded on securities exchanges, the Board has that all of its notices, advice, confirmations, correrecognized that, although an option traded on a secu- spondence and other documentation will clearly indicate its separate identity in order to avoid any confurities exchange differs somewhat from a future or an sion between Futures & Options and its bank affiliates. option on a future traded on a commodities exchange, In addition, all the proposed activities must be conan option traded on a securities exchange appears to ducted within the regulatory framework established by serve the same function as these other instruments the SEC (for securities exchanges) and the CFTC (for commodities exchanges). Under these circumstances, and in light of the types of options involved in this investment advice to financial institutions and other financially sophis- application, the Board believes that the limitations ticated customers that have significant dealings or holdings in the underlying instruments. proposed by Futures & Options are sufficient to pre- 9. 72 Federal Reserve Bulletin 584 (1986). See also Bank of New England Corporation, 74 Federal Reserve Bulletin 700 (1988). 10. The following full-service brokerage limitations would not in any case be applicable to MHC's proposal: (i) providing notice to customers that a bank affiliate may be a lender to an issuer of securities; 12. See, e.g., Security Pacific Corporation, supra (options on (ii) not acting with regard to any security underwritten by an affiliate securities issued or guaranteed by the U.S. government or its agenor one in which an affiliate makes a market; cies; options on U.S. foreign money market instruments). The Board (iii) disclosing any interest of an affiliate as underwriter or market has also approved brokerage of futures contracts and options thereon maker in the securities being purchased or recommended; and on stock and bond indices. See, e.g., Chemical Banking Corporation, (iv) not providing advice with regard to the shares of an investment 76 Federal Reserve Bulletin 660 (1990); Long-Term Credit Bank of company for which an affiliate serves as sponsor or investment Japan, Limited, 74 Federal Reserve Bulletin 573 (1988); Manufacturadvisor. ers Hanover Corporation, 72 Federal Reserve Bulletin 144 (1986). 11. These proposed limitations differ from the full-service brokerage 13. Both types of options are traded in auction markets where limitations primarily in the following respects: premium prices, established through open competition, reflect the (i) eligible customers will qualify under the "financially sophisticat- market's expectation of future price movements and are traded in ed" standard in section 225.25(b)(19) without regard to high net-worth standardized form, with similar standardized expiration dates. In guidelines for individuals; and addition, both types of options settle and clear through centralized (ii) advisory and brokerage activities may be conducted from shared clearing houses that act as intermediaries between buyers and sellers, premises with nonbank affiliates and nondeposit-taking representative guaranteeing that there is a buyer for every seller and vice versa. offices of bank affiliates, although Futures & Options will hold itself 14. The Options Clearing Corporation ("OCC") is the nominal out as a separate and distinct corporation with its own properties, issuer of all options traded on securities exchanges. Ownership of the assets, liabilities, capital, books, and records. Two officers of MHC's OCC lies with the participating exchanges, not the purchasers of the lead bank would serve as directors and officers of Futures & Options options. Consequently, options on stock and bond indices are confor the purpose of providing technical support but not participating in tractual obligations of the OCC—an exchange clearing house—and the day-to-day operations of Futures & Options. Futures & Options not of a single corporate issuer. will not exercise discretion with respect to any customer account and 15. Futures & Options has represented that it does not expect will not execute any transaction in which an affiliate exercises individual professional traders to represent more than one percent of discretion without customer authorization. In addition, Futures & the volume of all accounts and has also committed to notify the New Options and its affiliates will not exchange confidential information York Reserve Bank prior to or as soon as practicable thereafter of a obtained from customers other than mailing lists for solicitation and material change in its customer base for the purpose of monitoring any advertising purposes. changes in the entity's credit risk profile. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

776 Federal Reserve Bulletin • September 1990 vent conflicts of interests and other unsound banking such period is extended for good cause by the Board or practices. by the Federal Reserve Bank of New York, pursuant In order to approve this application, the Board is to delegated authority. also required to determine that the performance of the By order of the Board of Governors, effective proposed activities by MHC "can reasonably be ex- July 16, 1990. pected to produce benefits to the public . . . that outweigh possible adverse effects, such as undue Voting for this action: Chairman Greenspan and Governors concentration of resources, decreased or unfair com- Angell, Kelley, La Ware, and Mullins. Absent and not voting: Governors Johnson and Seger. petition, conflicts of interests, or unsound banking practices." 12 U.S.C. § 1843(c)(8). JENNIFER J. JOHNSON The Board expects that the de novo entry of MHC Associate Secretary of the Board into the market for at least some of these services would increase the level of competition among provid- Appendix ers of these services already in operation and provide greater convenience to MHC's customers. MHC's Exchanges and Contracts prior experience in providing services for futures and options thereon demonstrates that Futures and Op- Philadelphia Stock Exchange tions would have the expertise to provide the proposed Australian dollar option * services. Accordingly, the Board concludes that the British pound option * performance of the proposed activities by MHC can Canadian dollar option * reasonably be expected to provide benefits to the Deutschemark option * public. French franc option * The Board also has considered the potential for Japanese yen option * adverse effects that may be associated with this pro- Swiss franc option * posal. There is no evidence in the record that consum- Value Line Average Index option * * mation of this proposal is likely to result in any significant adverse effects, such as undue concentra- American Stock Exchange tion of resources, decreased or unfair competition, Major Market Index option* conflicts of interests, or unsound banking practices. As discussed above, the Board has also relied on the Chicago Board Options Exchange existing regulatory framework for the trading of op- S&P 100 Stock Index option** tions and futures on securities and commodity ex- S&P 500 Stock Index option** changes as well as MHC's commitments and represen- U.S. Treasury bond and note options** tations. The financial and managerial resources and Short-term and Long-term Interest Rate options** future prospects of MHC are considered consistent with approval. Chicago Mercantile Exchange Based on consideration of all the relevant facts, the Gold bullion futures and options on futures** Board concludes that the balance of the public interest * Activities currently conducted factors that it is required to consider under section ** Activities proposed to be conducted 4(c)(8) is favorable. Accordingly, based on all the facts of record, and subject to the conditions in this Order, Societe Generale the Board has determined that the proposed applica- Paris, France tion should be, and hereby is, approved. This determination is subject to all of the conditions set forth in Regulation Y, including sections 225.4(d) Order Approving Application to Act as a Registered and 225.23(b)(3) (12 C.F.R. 225.4(d) and 225.23(b)(3)), Options Trader on Foreign Exchange Options and to the Board's authority to require such modification or termination of the activities of a bank holding Societe Generale, Paris, France, a foreign bank subcompany or any of its subsidiaries as the Board finds ject to the Bank Holding Company Act ("BHC Act"), necessary to assure compliance with, or to prevent has applied under section 4(c)(8) of the BHC Act, evasion of, the provisions and purposes of the BHC 12 U.S.C. § 1843(c)(8), and section 225.23(a)(3) of the Act and the Board's regulations and orders thereun- Board's Regulation Y, 12 C.F.R. 225.23(a)(3), for apder. proval for its wholly owned subsidiary, Societe Gen- The transaction shall be made not later than three erale Options-North America, Inc., Philadelphia, months after the effective date of this Order, unless Pennsylvania ("Company"), to deal as a Registered Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 70 Options Trader ("Trader") in options on the Deutsche A Trader deals for its own account in order to mark traded on the Philadelphia Stock Exchange (the maintain a "fair and orderly" market in certain op- "Exchange") during the Exchange's evening trading tions when a lack of price continuity or temporary session. Applicant has also applied for approval for disparity in supply or demand exists on options for Company to deal, as a Trader, in options on the which the Trader makes a market. Company would be Japanese yen, Swiss franc, British pound, Canadian obliged to make a market in the proposed foreign dollar, Australian dollar, and European Currency currency options, or bid and offer, for all traders who Unit. Applicant proposes that Company conduct its approach it on the Exchange, but would not be obliged activities as a Trader in these foreign currency options in any way as to the price and quantity it bids and during the Exchange's day and evening trading ses- offers. sions. As a Trader, Company would act as dealer and A Trader is permitted to "leave the floor," i.e., not market maker in such options to assist in the mainte- trade, provided the Trader meets minimum trading nance of a fair and orderly market on the Exchange. levels each quarter. Societe Generale has not pro- Notice of the application, affording interested per- posed that Company act as a broker of foreign cursons an opportunity to submit comments on the pro- rency options. posal, has been duly published (53 Federal Register The Board has previously recognized that foreign 27,685 (1990)). The time for filing comments has ex- exchange activities have traditionally been conducted pired, and the Board has considered the application in by banks and are permissible activities under the BHC light of the public interest factors set forth in section Act. 3 4(c)(8) of the BHC Act. The Board notes that the Office of the Comptroller Applicant, with total consolidated assets equivalent of the Currency has authorized national banks to deal to approximately U.S. $174.3 billion, is the 26th larg- in foreign currency options as a Trader on a securities est banking organization in the world.1 In the United exchange.4 Banks are major participants in all aspects States, Societe Generale operates three branches and of the foreign exchange markets and also act as one agency. market-makers in various currencies. Their activities In order to approve an application submitted pursu- include trading for their own account as well as for ant to section 4(c)(8) of the BHC Act, the Board is customers in virtually all foreign exchange markets required to determine that the proposed activity is "so and instruments, including trading foreign currency closely related to banking as to be a proper incident options on regulated exchanges as proposed here.5 thereto." 12 U.S.C. § 1843(c)(8). In considering The Board also notes that banks act as marketwhether a proposed activity would be a proper inci- makers in the interbank market, continually offering dent to banking, the Board is required to determine both bid and offer prices on the currencies and conthat the performance of the proposed activity can tracts they trade. Through their participation in the reasonably be expected to produce benefits to the interbank market for foreign currency options, banks public that outweigh possible adverse effects. Id. have developed experience in dealing, market-making and risk management, which are essential elements of A. Closely Related to Banking Analysis the proposed activities. Based on guidelines established in the National Courier case, a particular activity may be found to be activity to banking. 49 Federal Register 794, 806 (1984); Securities "closely related to banking" for purposes of section Industry Ass'n v. Board of Governors, 104 S. Ct. 3003, 3005-06 n.5 4(c)(8) of the BHC Act if: banks generally do in fact (1984). conduct the proposed activity; banks generally pro- 3. See Hongkong and Shanghai Banking Corporation, 75 Federal Reserve Bulletin 217 (1989) (trading foreign exchange forwards, fuvide services that are operationally or functionally so tures, options, and options on futures for its own account for other similar to the proposed activity as to equip them than hedging purposes to a limited extent); and The Nippon Credit Bank, Ltd., 75 Federal Reserve Bulletin 308 (1989) (engaging in foreign particularly well to provide the proposed activity; or exchange spot transactions). banks generally provide services that are so integrally In addition, in 1989, the Board approved the application of Societe related to the proposed activity as to require their Generale to engage de novo in acting as the specialist in Deutsche provision in a specialized form.2 mark options traded on the Exchange during the Exchange's day session. Societe Generale, 75 Federal Reserve Bulletin 580 (1989) ("Societe Generale"). In Societe Generale, the Board determined that these activities would be permissible for a bank holding company since the activity was functionally and operationally similar to dealing 1. Asset data are as of December 31, 1989. Ranking is as of in foreign currency. December 31, 1988. 4. Letter dated June 3, 1988, from J. Michael Shepherd, Senior 2. Nat'l Courier Ass'n v. Board of Governors, 516 F.2d 1229, 1237 Deputy Comptroller for Corporate and Economic Programs, to Re- (D.C. Cir. 1975). The Board may also consider any other factor that public National Bank of New York. demonstrates a reasonable or close connection or relationship of the 5. See Societe Generale. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

778 Federal Reserve Bulletin • September 1990 For these reasons, and based on the facts of record, Rather, Traders generate profits from the spread bethe Board finds that the activity of engaging as a tween their bid and offer quotations. Societe Generale Trader in foreign currency options on the Exchange is states that Company will be carefully hedged at all closely related to banking for purposes of section times and will operate pursuant to trading limits that 4(c)(8) of the BHC Act. will reduce its exposure to a minimum.7 Company will not write foreign currency options on an unhedged B. Balance of Public Benefits and Adverse Effects basis, and has committed that it will not utilize its Trader role to trade in a broader array of options than In order to approve this application, the Board is those which are the subject of this application. required to determine that the performance of the Third, the record also shows that Societe Generale proposed activities by Societe Generale "can reason- has developed extensive experience in trading foreign ably be expected to produce benefits to the public, such currency options on the over-the-counter market and as greater convenience, increased competition, or gains on exchanges, and that Societe Generale has develin efficiency, that outweigh possible adverse effects, oped substantial experience with hedging from its such as undue concentration of resources, decreased or existing foreign currency and options business. In this unfair competition, conflicts of interests, or unsound regard, Company will institute a computerized options banking practices." 12 U.S.C. § 1843(c)(8). risk-management system that will include an ongoing Consummation of the proposal can reasonably be analysis of risk exposure and hedges; "what if" studexpected to result in public benefits that outweigh ies for different market scenarios; continuous review possible adverse effects. The proposed activities of Company's compliance with its own internal limits; would facilitate the development of the foreign ex- and back-office surveillance of the firm's floor trading change options market by providing increased market activities. The Board also notes that Company will be liquidity and enhanced opportunities for financial in- a registered broker-dealer with the Securities and stitutions to hedge foreign exchange risk. In addition, Exchange Commission and hence subject to the net the Board expects that the entry of Company into the capital requirements applicable to registered brokermarket for these services would increase the level of dealers. In this regard, the Board expects that Comcompetition among Traders. pany will maintain at all times capital adequate to With regard to the adverse effects that might stem support its activity and cover reasonably expected from the proposal, the Board notes that acting as a expenses and losses. Trader involves the financial risk of adverse rate In reaching its conclusions in this case, the Board fluctuations. In this case, the Board believes that has considered its decision in Compagnie Financiere financial risk is sufficiently minimized by several con- de Suez and Banque Indosuez8 denying a proposal to siderations. First, the rules of the Exchange permit the act as a specialist in French franc options on the Trader to set the price and quantity that it will buy and Exchange. The Board believes that the facts and sell in order to minimize its risk in an adverse or circumstances in this case are different in several volatile market. The Trader is required to deal for its significant respects from the situation presented in own account as necessary to maintain a "fair and Banque Indosuez. In particular, this proposal does not orderly market." Under the rules of the Exchange, raise the issues relating to potential conflicts of interest however, a Trader is permitted to leave the trading and risk raised in Banque Indosuez. Company appears floor, provided it has met the minimum trading re- to possess adequate management and expertise to quirements for each quarter. Therefore, unlike the supervise the activities. Moreover, the market for Specialist, who is expected to trade at all times, a foreign currency options has broadened significantly, Trader may refrain from dealing when potential profits particularly on the Exchange, and the involvement of do not appear likely. commercial banks in that market has become more Second, Societe Generale states that the proposed widespread. activities are not speculative and that Exchange Rules The record does not indicate that the proposal is are intended to prohibit a Trader from speculating.6 likely to result in significantly adverse effects, such as 7. Societe Generale has not proposed to engage in pit arbitrage activities. See Citicorp, 68 Federal Reserve Bulletin 776 (1982). 6. Exchange R4ule 1014 provides that a Trader should not enter into Company would purchase and sell foreign exchange options as a transactions for its own account unless those transactions "are market maker, and seek to profit from a disparity between bid and reasonably calculated to contribute to the maintenance of a fair and offer prices. Company would hedge these positions. Company would orderly market." In addition, Rule 1015 states that no member of the not purchase options in anticipation of future price movements. Exchange should enter into a transaction which is "excessive in view 8. Compagnie Financiere de Suez and Banque Indosuez, 72 Federal of his financial resources or in view of the market for such security." Reserve Bulletin 141 (1986) ("Banque Indosuez"). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 779 undue concentration of resources, decreased or unfair Holding Company Act (12 U.S.C. § 1842) ("BHC competition, conflicts of interests, or unsound banking Act") to become a bank holding company by acquiring practices. Based upon the foregoing and other consid- The Citizens and Southern Corporation, Atlanta, erations reflected in the record, and subject to the Georgia ("C&S"), and Sovran Financial Corporation, commitments made by Societe Generale, the Board Norfolk, Virginia ("Sovran"), both bank holding comhas determined that the public benefits associated with panies within the meaning of the BHC Act, and this proposal can reasonably be expected to outweigh thereby to acquire the subsidiary banks of both C&S possible adverse effects, and that the balance of the and Sovran listed in Appendix A to this Order. Avanpublic interest factors that the Board is required to tor has also applied under section 4(c)(8) of the BHC consider under section 4(c)(8) of the BHC Act is Act (12 U.S.C. § 1843(c)(8)) to acquire the nonbanking favorable. subsidiaries of C&S and Sovran listed in Appendix B For the reasons stated in this order, and subject to to this Order. Each of these activities has been previall of the commitments made by Societe Generale and ously approved by the Board, and Avantor has com- Company, the Board has determined that the applica- mitted to conduct these activities subject to all of the tion should be, and hereby is, approved. This deter- limitations, commitments, and conditions contained in mination is further subject to all of the conditions set the relevant regulations and in the orders approving forth in the Board's Regulation Y, including those in these activities for Sovran and C&S. Avantor has also sections 225.4(d) and 225.23(b), and to the Board's applied to acquire Sovran Trading Company Central/ authority to require modification or termination of the South pursuant to section 4(c)(14) of the BHC Act, and activities of the holding company or any of its subsid- to acquire indirectly the shares of Citizens and Southiaries as the Board finds necessary to assure compli- ern International Bank and Citizens and Southern ance with, or to prevent evasion of, the provisions and International Bank of Atlanta, which are corporations purposes of the BHC Act and the Board's regulations chartered pursuant to section 25(a) of the Federal and orders issued thereunder. Reserve Act (12 U.S.C. § 611 et seq.) (the "Edge Act").1 This transaction shall not be consummated later than three months after the effective date of this Notice of the applications, affording interested per- Order, unless such period is extended for good cause sons an opportunity to submit comments, has been by the Board or by the Federal Reserve Bank of New published (54 Federal Register 53,185 (1989)). The York, pursuant to delegated authority. time for filing comments has expired, and the Board By order of the Board of Governors, effective has considered the applications and all comments July 30, 1990. received in light of the factors set forth in sections 3(c) and 4 of the BHC Act. Voting for this action: Chairman Greenspan and Governors Sovran, with approximately $25.5 billion in total Seger, Angell, Kelley, and Mullins. Absent and not voting: consolidated assets, owns eight banking subsidiaries in Governors Johnson and LaWare. Virginia, Delaware, Kentucky, Maryland, the District of Columbia, and Tennessee, controlling approxi- JENNIFER J. JOHNSON mately $18.7 billion in total consolidated deposits.2 Associate Secretary of the Board Orders Issued Under Sections 3 and 4 of the 1. Subsequent to the proposed acquisition, C&S and Sovran will Bank Holding Company Act continue to operate as second tier bank holding company subsidiaries of Avantor. In connection with the transaction, C&S and Sovran have granted C&S/Sovran Corporation to each other an option to purchase up to 16.6 percent of the Norfolk, Virginia outstanding common stock of their respective organizations. Applicant has also applied for approval to exercise its option if any of several preconditions occur. Avantor Financial Corporation 2. Sovran is the largest commercial banking organization in Virginia, controlling deposits of approximately $10.2 billion, representing Norfolk, Virginia approximately 19.9 percent of the total deposits in commercial banks in Virginia. Sovran is the fourth largest commercial banking organization in Tennessee, controlling deposits of approximately $4.1 bil- Order Approving the Formation of a Bank Holding lion, representing approximately 10.7 percent of the total deposits in Company Through the Acquisition of Two Bank commercial banks in Tennessee. In Maryland, Sovran is the fourth largest commercial banking organization, controlling deposits of ap- Holding Companies and Their Banking and proximately $3.3 billion, representing approximately 8.5 percent of Nonbanking Subsidiaries the total deposits in commercial banks in Maryland. In the District of Columbia, Sovran is the fifth largest commercial banking organization, controlling approximately $842.9 million in deposits, represent- Avantor Financial Corporation, Norfolk, Virginia ing approximately 6.4 percent of the total deposits in commercial ("Avantor"), has applied under section 3 of the Bank banks in the District of Columbia. Sovran controls less than one Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

780 Federal Reserve Bulletin • September 1990 C&S, with approximately $23.3 billion in total consol- expressly authorize the acquisition of a banking instiidated assets, owns five banking subsidiaries and three tution in South Carolina by a bank holding company trust companies in the states of Georgia, Florida and located in a state in a defined region, which includes South Carolina, controlling approximately $18.1 bil- Virginia, if that other state authorizes the acquisition lion in total consolidated deposits.3 Upon consumma- of a financial institution in that state on a reciprocal tion of this proposal, Avantor would be the tenth basis by a South Carolina bank holding company.7 largest commercial banking organization in the United Virginia law expressly authorizes the acquisition of a States based on total consolidated deposits ($36.8 banking organization in Virginia by a South Carolina billion), and the twelfth largest commercial banking bank holding company on a reciprocal basis.8 Thereorganization in the country based on total consolidated fore, Avantor's acquisition of banks located in South assets ($48.8 billion).4 Carolina is permitted under the laws of that state.9 In light of the foregoing, the Board has determined that Douglas Amendment its approval of the proposal is not prohibited by the Douglas Amendment. Section 3(d) of the BHC Act (12 U.S.C. § 1842(d)), the Douglas Amendment, prohibits the Board from ap- Competitive, Financial and Managerial Factors proving an application by a bank holding company to acquire control of any bank located outside of the The bank subsidiaries of Sovran and C&S do not holding company's home state, unless such acquisition compete directly in any relevant banking market. is "specifically authorized by the statute laws of the Accordingly, the Board has determined that consum- State in which [the] bank is located, by language to that mation of this proposal would not have a significantly effect and not merely by implication." Upon consum- adverse effect on the concentration of commercial mation of the proposal, Avantor's home state will be banking resources or on existing competition in any Virginia.5 The Board has previously determined that relevant banking market. The Board also has considthe interstate banking statutes of Georgia, Florida, ered the effects of the proposal on probable future Kentucky, Maryland, Tennessee and the District of competition in the relevant markets. In light of the Columbia and the banking law of the State of Delaware market concentration and the number of probable expressly authorize a Virginia bank holding company, future entrants into those markets, the Board consuch as Avantor, to acquire banking organizations in cludes that consummation of this proposal would not those states.6 The statute laws of South Carolina have a significantly adverse effect on probable future competition in any relevant market. In evaluating these applications, the Board has considered the financial and managerial resources of percent of the total deposits in commercial banks in Kentucky and Delaware. Avantor, Sovran, and C&S, and their bank subsidiar- 3. C&S is the largest commercial banking organization in Georgia, ies, and the effect of the proposed acquisition on the controlling deposits of approximately $9.3 billion, representing approximately 18.9 percent of the total deposits in commercial banks in resources and future prospects of these companies. Georgia. In South Carolina, C&S is the third largest commercial Avantor proposes to accomplish the merger through banking organization, controlling approximately $3.2 billion in depos- an exchange of shares with both Sovran and C&S,10 its, representing approximately 18.2 percent of the total deposits in commercial banks in South Carolina. In Florida, C&S is the seventh and no debt would be incurred by any organization in largest commercial banking organization, controlling deposits of ap- the transaction. Following consummation of the proproximately $5.6 billion, representing approximately 5.1 percent of the total deposits in commercial banks in Florida. posal, Avantor will have capital ratios above the 4. Deposit and asset data are as of December 31, 1989. minimum levels specified in the Board's Capital Ade- 5. A bank holding Company's home state is that state in which the quacy Guidelines. Based on these and all of the other 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. The operations of a bank holding company are considered principally conducted in that state in which the total deposits of all such banking 7. S.C. Code Ann. § 34-24-50 (1987). South Carolina law also subsidiaries are largest on the date the holding company became a requires that the applicant must have in excess of 80 percent of its total bank holding company. Consummation of the proposed acquisition of deposits in bank subsidiaries in the southern region. S.C. Code Ann. Sovran and C&S by Avantor will result in Avantor initially having the § 34-24-20(14) (1987). Avantor will satisfy this requirement. largest concentration of deposits of its subsidiary banks in Virginia. 8. Va. Code § 6.1-399 (1988). 6. Bank of Virginia, 72 Federal Reserve Bulletin 65 (1986) (Mary- 9. Approval of this proposal is conditioned upon Avantor receiving land); Sovran Financial Corporation, 72 Federal Reserve Bulletin 276 all required state regulatory approvals, including approval by the (Delaware); Sovran Financial Corporation, 72 Federal Reserve Bul- Commissioner of Banking of South Carolina of Avantor's acquisition letin 282 (District of Columbia); Credit and Commerce American of C&S's subsidiary banks in that state. Holdings, 73 Federal Reserve Bulletin 755 (1987) (Georgia); Sovran 10. Avantor proposes to exchange 1.23 of its shares for each share Financial Corporation, 73 Federal Reserve Bulletin 939 (Kentucky of Sovran. Avantor will use its shell subsidiary, C&S Merger Subsidand Tennessee); Credit and Commerce American Holdings, 75 Fed- iary, Inc., to acquire C&S through a phantom merger by exchanging eral Reserve Bulletin 302 (1989) (Florida). shares on a one-for-one basis. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 781 facts of record, the Board concludes that financial and response to the comments made by Protestants.13 managerial considerations, and considerations relating General comments were also received from Conto the effects of the proposed transaction on the cerned Citizens for Justice, Chattanooga, Tennesresources and future prospects of these companies, see, critical of the CRA performance of C&S and of are consistent with approval of this application. Sovran Bank of Chattanooga, Chattanooga, Tennessee ("Tennessee Bank").14 Convenience and Needs Factors The Board has carefully reviewed the CRA perfor- In considering the convenience and needs of the mance record of Sovran, C&S, and their bank subsidcommunities to be served, the Board has taken into iaries, including Atlanta Bank and Tennessee Bank, as account the record of the subsidiary banks of both well as the comments of all of the commenters and Sovran and C&S under the Community Reinvestment Avantor's response to those comments, in light of the Act (12 U.S.C. § 2901 et seq.) ("CRA"). The CRA CRA, the Board's regulations and the Statement of the requires the federal financial supervisory agencies to Federal Financial Supervisory Agencies Regarding the encourage financial institutions to help meet the credit Community Reinvestment Act ("Agency CRA needs of the local communities in which they operate Statement").15 The Agency CRA Statement provides consistent with the safe and sound operation of such guidance regarding the types of policies and proceinstitutions. To accomplish this end, the CRA requires dures that the supervisory agencies believe financial the appropriate federal supervisory authority to "as- institutions should have in place in order to fulfill their sess an institution's record of meeting the credit needs responsibilities under the CRA on an ongoing basis, of its entire community, including low- and moderate- and the procedures that the supervisory agencies will income neighborhoods, consistent with the safe and use during the applications process to review an sound operation of the institution," and to take this institution's CRA compliance and performance. The record into account in its evaluation of bank holding Agency CRA Statement also suggests that decisions company applications.11 by agencies to allow financial institutions to expand will be made pursuant to an analysis of the overall In this regard, the Board has received comments CRA performance of the institution.16 from various organizations in Atlanta, Georgia ("Protestants"),12 critical of the CRA performance of Initially, the Board notes in this case that all of the C&S's lead bank, Citizens and Southern National subsidiary banks of both Sovran and C&S — including Bank, N.A., Atlanta, Georgia ("Atlanta Bank"). The Atlanta Bank and Tennessee Bank—have received Protestants allege that Atlanta Bank: satisfactory ratings from their primary regulators in (1) does not adequately determine the community the most recent examinations of their CRA perforcredit needs of low- and moderate-income and mi- mance. The Board notes that the Protestants' comnority residents and that Atlanta Bank's board of ments were part of the CRA examination record of directors does not review the Bank's CRA perfor- Atlanta Bank, and the Office of the Comptroller of the mance; Currency ("OCC") reviewed these comments in con- (2) has very few minorities occupying decision- ducting its examination of Atlanta Bank. The Agency making positions at the bank; CRA Statement provides that, although CRA exami- (3) is failing to provide convenient banking services nation reports do not provide conclusive evidence of to low- and moderate-income and minority neigh- an institution's CRA record, these reports will be borhoods; given great weight in the applications process.17 (4) is not sufficiently facilitating the development of In addition, Sovran, C&S and their subsidiary banks multi-family housing for low- and moderate-income have in place the types of policies outlined in the individuals; and Agency CRA Statement that contribute to an effective (5) fails to meet the credit and banking needs of low-income and minority families and minorityowned businesses. C&S has submitted a detailed 13. Atlanta Bank has met privately with some of the Protestants in an effort to clarify the issues presented under the CRA. Although the parties were unable to resolve all of their differences, Atlanta Bank has offered to continue to work with Protestants to address their concerns. 11. 12 U.S.C. § 2903. 14. On April 9, 1990, subsequent to receipt by the Board of the 12. Comments were received from Atlanta Legal Aid, Atlanta, comments critical of Tennessee Bank, Tennessee Bank was merged Georgia; Georgia Housing Coalition, Atlanta, Georgia; Interfaith, into and became a branch of Sovran Bank-Central South, Nashville, Inc., Atlanta, Georgia; and Southern Christian Leadership Confer- Tennessee. ence, Atlanta, Georgia. The Empire Real Estate Board, Atlanta, 15. 54 Federal Register 13,742 (1989). Georgia ("Empire") also submitted comments in support of the 16. Id. protest after the close of the public comment period. 17. 54 Federal Register at 13,745. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

782 Federal Reserve Bulletin • September 1990 CRA program. C&S has established a program for credit it offers, describe its methods for performing reviewing and supervising the CRA programs of its community credit needs, and list the types of commusubsidiary banks. This program includes an annual nity projects that the bank has funded and the monereview of each bank's CRA statement, a self-assess- tary amounts provided.19 ment of the bank's CRA performance, and an evalua- Atlanta Bank ascertains community credit needs tion of these self-assessments to determine whether through various means, including through the colleceach bank is addressing its responsibilities to the tion and evaluation of data regarding community incommunity under the CRA. C&S has devised written come characteristics and related credit needs. Atlanta procedures that explain how the assessment is to be Bank also uses direct forms of community contact to completed and how it will be analyzed. The self- ascertain credit needs. The bank's officer call program assessment requires each bank to: is used extensively to gather information on the credit (1) establish annual CRA goals, needs of low- to moderate-income individuals in the (2) conduct quarterly evaluations of bank activities community. Atlanta Bank's Government Banking dein each city and county in the bank's delineated partment works closely with county and municipal service area and evaluate annually the bank's CRA governments and school boards to help understand goals, and their credit needs and to evaluate community devel- (3) conduct an annual geographic analysis of credit opment programs. Bank officers and employees are applications, denials and approvals. C&S also pro- encouraged to learn more about community credit vides information to subsidiary banks regarding needs by participating in community and civic organievolving areas of emphasis under the CRA, and zations. To promote involvement in these types of suggests guidelines to assure that subsidiary banks organizations, Atlanta Bank offers Community Inare meeting their responsibilities to their communi- volvement Awards, whereby monetary donations are ties under the CRA. made to a community or civic group in the name of the bank employee involved in the organization. Atlanta As part of its CRA program, Atlanta Bank has Bank has also recently formed an internal task force to established a CRA Committee, comprised of individ- develop strategies to communicate more effectively uals representing all areas of the bank's operations, to with community groups, and to train bank employees monitor the bank's efforts to address community to ensure sensitivity in dealing with low-income cuscredit needs. The CRA Committee meets quarterly to tomers. review the information, opinions, and requests that it The record shows that Atlanta Bank markets its receives regarding the bank's products and services, products and services through both general circulation and considers new bank products and services to and several minority-oriented media. Atlanta Bank respond to identified community credit needs. Atlanta also participates in a series of seminars and presenta- Bank's CRA activities are coordinated by the CRA tions to educate low-income individuals about how to officer, who also reviews and evaluates bank self- buy and obtain mortgage financing for a home, as well assessments and CRA goals. The CRA officer's eval- as to market its mortgage products to this segment of uations are provided to the bank's Affirmative Action the community. Committee, a committee of Atlanta Bank's board of Atlanta Bank has taken the lead in developing the directors established to review the bank's CRA activ- recently created Atlanta Equity Fund. Modeled after ities and its employment practices, and to advise the the Chicago Equity Fund, the Atlanta Equity Fund is bank's board of directors on these matters. Both the a program whereby the City of Atlanta, major financial CRA Committee and the Affirmative Action Commit- institutions, and private corporations contribute eqtee report on CRA matters directly to the board of uity to low-income multi-family housing projects. Atdirectors of Atlanta Bank, which regularly reviews the lanta Bank has consistently provided banking services bank's CRA performance.18 Atlanta Bank has ex- and credit to low-income individuals in its community, panded its CRA Statement to include the types of capturing between 20 and 25 percent of Atlanta's low-income deposit market for checking, savings, ATM, direct deposit and credit card services. 18. The Board notes that while the CRA does not require financial institutions to maintain a particular racial composition in structuring the institution's decision-making process, the record does not warrant a finding that Atlanta Bank has excluded minorities from decisionmaking positions or otherwise engaged in discriminatory hiring prac- 19. In this regard, one of the Protestants has asserted that Atlanta tices. The Bank's Affirmative Action Committee has been active in Bank's CRA Statement lists no surveys, studies or reports that assuring that Atlanta Bank has not engaged in discriminatory hiring or document the needs of the low- to moderate-income and minority promoting practices. Atlanta Bank has several minorities in manage- communities. The Board notes that Atlanta Bank's CRA Statement rial positions, and the bank's Advisory Committee includes minority contains the information required by the regulations of the OCC, representatives from the local business community. which is the primary regulator of Atlanta Bank. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 783 Atlanta Bank has been an active mortgage lender to Atlanta Bank markets its loan products to minorilow-income persons, and participates in various pro- ty-owned businesses primarily through its officer call grams established to address the mortgage credit program. Additionally, branch managers and bank needs of Atlanta's low- to moderate-income officials are active in various organizations that procommunities.20 During the 15-month period from June mote minority-owned businesses, including the Ren- 1988 through September 1989, Atlanta Bank made aissance Capital Corporation and the Atlanta Small over $12 million in housing-related loans in low-in- Business Project. Atlanta Bank is also an investor in come census tracts in the Atlanta metropolitan area. the Renaissance Capital Corporation, which provides This includes a $7.6 million participation in loans made funding to minority businesses that do not meet by the Atlanta Mortgage Consortium, which is a standard commercial bank loan underwriting criteria. program whereby participating lenders provide re- Atlanta Bank also provides educational resources to duced rate mortgage financing to low- and moderate- the NAACP's Business Owners' Program, the Moreincome persons who would not otherwise qualify for house College Business Fellows' Seminar, and the conventional loans. This amount also includes over Alonzo Crim High School Enterprise Business Pro- $2.5 million loaned under the bank's Special Mortgage gram. Loan Program, and over $700,000 loaned under the Atlanta Bank offers two low-cost checking acbank's Special Home Improvement Loan Program. counts designed to address the checking needs of Both of these programs, operated solely by Atlanta both students and low- and moderate-income per- Bank, provide below market rate financing for families sons, and both checking accounts have been very earning less than $35,000 annually. Atlanta Bank has popular in the Atlanta metropolitan area. Atlanta recently committed another $15 million to the Special Bank has branches located throughout the Atlanta Home Improvement Loan Program, $10 million to the metropolitan area that provide Saturday banking Special Mortgage Loan Program, and $2.7 million to services. Almost one-third of these branches are the Atlanta Mortgage Consortium. During 1989, At- located in, or immediately adjacent to, low-income lanta Bank also made 48 Georgia Residential Finance census tracts. The bank's ATMs, and those of affil- Authority (GFRA) loans totaling $2.5 million for first- iated systems, are located throughout the metropoltime low-income home buyers.21 In addition, Atlanta itan area. Bank has made several construction and rehabilitation Sovran has also established a program for reviewloans on multi-family properties in low-income census ing and supervising the CRA programs of its subsidtracts throughout Atlanta.22 iary banks. Sovran has a corporate CRA officer who works closely with the Community Affairs Committee of Sovran's lead bank, Sovran Bank, N.A., Richmond, Virginia ("Sovran Bank") to coordinate 20. The Protestants cite a series of articles that appeared in the Atlanta Journal Constitution—based on studies conducted in Atlanta Sovran's corporate CRA program. The Community in 1986—which asserted that Atlanta Bank and other commercial Affairs Committee of Sovran Bank, a committee of banks in Atlanta were making few home mortgage loans to low- and moderate-income minorities in the Atlanta area. In the "Report on Sovran Bank's board of directors, reports to Loan Discrimination" submitted to Congress by the Board on Octo- Sovran's board of directors on the CRA program of ber 13, 1989, pursuant to section 1220 of the Financial Institutions all subsidiary banks and suggests new bank products Reform, Recovery, and Enforcement Act of 1989 (the "Report"), the Board generally reviewed various public studies of mortgage lending and services to help meet community credit needs. in Atlanta, Cleveland, Detroit and Boston. The Report noted that, Each subsidiary bank in the Sovran system, includwhile these studies appeared to indicate that disparities existed in home mortgage lending between minority and non-minority areas, ing Tennessee Bank, has a CRA committee and a they did not draw definitive conclusions about the existence or extent CRA officer to implement and monitor each bank's of racial discrimination in mortgage lending and did not account for CRA programs and initiatives. certain factors other than discrimination in lending that might account for these disparities—including differences in demand for mortgage Tennessee Bank ascertains and meets its commuloans, differences in the types of mortgage products offered by nity's credit needs through a coordinated approach depository and nondepository institutions, and the tendency of nonthat involves both bank management and members of depository lenders to dominate the minority mortgage loan market. In its most recent CRA examination of Atlanta Bank, the OCC found no evidence of illegal discrimination in Atlanta Bank's lending practices. 21. In January 1990, South Atlanta Land Trust, a local nonprofit institutions having long-term sources of funding, and that commercial developer, presented Atlanta Bank with its 1990 Corporate Awareness banks such as Atlanta Bank usually concentrate on construction and Award in recognition of Atlanta Bank's assistance to the south Atlanta rehabilitation financing. In this regard, the Board notes that the CRA community. Additionally, Atlanta Bank's commitment to affordable does not require the use of specific bank lending products or services housing initiatives was recently recognized by the Mortgage Bankers' to meet the credit needs of a community. Rather, the Board has, in the Association. past, recognized the importance of allowing banks to focus their 22. While Protestants contend that Atlanta Bank has made few lending efforts on particular community needs in meeting their responinvestments in permanent financing for low-income multi-family hous- sibilities under the CRA. See Dominion Bankshares Corporation, 72 ing projects throughout Atlanta, Atlanta Bank contends that perma- Federal Reserve Bulletin 787 (1986); Commerce Bancshares, Inc., 64 nent financing is usually provided by insurance companies and other Federal Reserve Bulletin 576 (1978). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

784 Federal Reserve Bulletin • September 1990 the community. Tennessee Bank's CRA Committee, In considering Avantor's acquisition of the nonbankconsisting of members of the bank's senior manage- ing subsidiaries of both Sovran and C&S, the Board ment, works closely with Chattanooga Neighborhood notes that certain of these subsidiaries compete in Enterprises, Chattanooga, Tennessee, a community geographic markets that are regional or national in organization that advises the CRA Committee on Ten- scope. These markets are served by numerous competnessee Bank's CRA program. Together, these two itors, and neither Sovran nor C&S has a significant groups develop initiatives regarding bank products and market share. Accordingly, the Board concludes that services that they believe will address community Avantor's acquisition of the nonbank subsidiaries of credit needs, and present these plans to the bank's Sovran and C&S would not significantly affect compeboard of directors for consideration. tition in any relevant market. Furthermore, there is no For the foregoing reasons, and based upon all of the evidence in the record to indicate that approval of this facts of record, the Board concludes that the records proposal would result in undue concentration of reof performance under the CRA of C&S, Sovran, and sources, unfair competition, conflicts of interest, unsound their subsidiary banks, are consistent with approval of banking practices, or other adverse effects on the public these applications. Accordingly, the Board concludes interest. Accordingly, the Board has determined that the that convenience and needs considerations are consis- balance of the public interest factors it must consider tent with approval of these applications.23 under section 4(c)(8) of the BHC Act is favorable and consistent with approval of these applications. Acquisition of Nonbanking Companies The Board has also considered Avantor's proposal to acquire Sovran Trading Company Central/South pursuant As noted above, the nonbanking activities that Avan- to section 4(c)(14) of the BHC Act, and to acquire Citizens tor proposes to conduct have previously been found and Southern International Bank and Citizens and Southby the Board, either by order or regulation, to be ern International Bank of Atlanta under the Edge Act. closely related to banking for purposes of section Based on all of the facts of record, the Board has deter- 4(c)(8) of the BHC Act. Avantor proposes to conduct mined that disapproval of this proposed investment is not these activities within all of the limits and conditions warranted. imposed by those orders and regulations.24 Based on the foregoing and other facts of record, the Board has determined that the applications should be, and hereby are, approved. The transactions shall not be consummated before the thirtieth calendar day following the effective date of this Order, or later than three 23. Protestants also have requested that the Board hold a public hearing or meeting to assess further facts surrounding Atlanta Bank's months after the effective date of this Order, unless CRA performance. Generally under the Board's rules, the Board may, such period is extended for good cause by the Board or in its discretion, hold a public hearing or meeting on an application to clarify factual issues related to the application and to provide an by the Federal Reserve Bank of Atlanta, acting pursuopportunity for testimony, if appropriate. 12 U.S.C. §§ 262.3(e) and ant to delegated authority. The determination as to the 262.25 (d). nonbanking activities approved in this case are subject The Board has carefully considered the Protestants' request for a public meeting or hearing in this case. In the Board's view, the parties to all of the conditions contained in Regulation Y, have had ample opportunity to present submissions, and have submit- including those in sections 225.4(d) and 225.23(b)(3) ted substantial written comments that have been considered by the (12 C.F.R. 225.4(d) and 225.23(b)(3)), and to the Board's Board. In light of these facts, the Board has determined that a public meeting or hearing is not necessary to clarify the factual record in authority to require such notification or termination of these applications, or otherwise warranted in this case. Accordingly, the activities of a holding company or any of its Protestants' request for a public meeting or hearing on this application is hereby denied. subsidiaries as the Board finds necessary to assure 24. A number of insurance trade associations have submitted compliance with, or to prevent evasion of, the provicomments objecting to Board approval of the acquisition by Avantor sions and purposes of the BHC Act and the Board's of certain insurance subsidiaries of Sovran and C&S. These protestants contend that certain insurance subsidiaries of Sovran and C&S regulations and orders issued thereunder. do not qualify for exemption under sections 4(c)(8)(D) or 4(c)(8)(G) of By order of the Board of Governors, effective the BHC Act, and that certain other subsidiaries conduct credit- July 24, 1990. related insurance activities beyond the scope permitted under section 4(c)(8)(A) of the BHC Act or relevant state law. In order to afford Avantor an opportunity to more fully address these comments, the Voting for this action: Chairman Greenspan and Governors Board has deferred action on these applications. In this regard, the Seger, Angell, Kelley, LaWare, and Mullins. Absent and not insurance activities conducted by Sovran Credit Corporation, Sovran voting: Governor Johnson. Equity Mortgage Corporation, Sovran Mortgage Corporation and C&S Family Credit, Inc., are not approved by this Order, but will be considered in conjunction with Avantor's applications to acquire the JENNIFER J. JOHNSON insurance subsidiaries of C&S and Sovran. Associate Secretary of the Board Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 785 Appendix A gaged in providing investment banking, securities brokerage, investment and financial advice, and, to a Bank Subsidiaries to be Acquired limited extent, underwriting and dealing in bank-ineligible securities. (1) The Citizens and Southern National Bank, Sa- (6) Sovran Leasing Corporation, which is engaged vannah, Georgia. in commercial financing, in making, acquiring, and (2) The Citizens and Southern National Bank of servicing, for its own account or the account of Florida, Fort Lauderdale, Florida. others, loans and leases of real and personal prop- (3) The Citizens and Southern National Bank of erty, and in arranging, financing, structuring and S.C., Columbia, South Carolina. analyzing equipment leasing. (4) Citizens and Southern Trust Company (Georgia), (7) Sovran Mortgage Corporation, which is engaged N.A., Atlanta, Georgia. in making, acquiring or servicing, for its own account (5) Citizens and Southern Trust Company (Florida), or the account of others, loans secured primarily by N.A., Fort Myers, Florida. mortgages on real property. (6) Citizens and Southern Trust Company (South (8) Sovran Realty Services Corporation, which is Carolina), N.A., Columbia, South Carolina. engaged in originating, brokering, and selling com- (7) The Citizens and Southern Bank of Duval mercial mortgage loans primarily for properties lo- County, Neptune Beach, Florida. cated in the middle region of Tennessee. (8) The Citizens and Southern Bank of Monroe (9) Suburban Service Corporation, which is en- County, Marathon, Florida. gaged in the installation of and provision of support (9) Sovran Bank, N.A., Richmond, Virginia. services to automated teller machines and the man- (10) Sovran Bank/Maryland, Bethesda, Maryland. agement of electronic funds transfers switches. (11) Sovran Bank/DC National, Washington, D.C. (10) VNB Capital Corporation, which is engaged in (12) Sovran Bank/Delaware, Dover, Delaware. making or acquiring new loans or other extensions of (13) Sovran Bank/Central South, Nashville, Tennes- credit involving construction financing and mortgage see. lending on residential, multifamily and commercial (14) Sovran Bank/Greenville, Greenville, Tennes- real estate. see. (11) Citizens and Southern Mortgage Corporation, (15) Sovran Bank/Tri-Cities, Johnson City, Tennes- which is engaged in making, acquiring, or servicing, see. for its own account or the account of others, loans or (16) Sovran Bank/Kentucky, Hopkinsville, Ken- other extensions of credit secured primarily by first tucky. mortgages on real property. (12) C&S Capital Corporation, which is engaged in commercial equipment leasing. Appendix B (13) C&S Family Credit, Inc., which is engaged through its offices and the offices of its subsidiaries, Nonbanking Subsidiaries to be Acquired C&S Family Credit of Alabama, Inc., C&S Family Credit of Florida, Inc., C&S Family Credit of North (1) Cash Flow, Inc., which is engaged in providing Carolina, Inc., and C&S Family Credit of Tennessee, electronic funds transfer services. Inc., in the making of consumer and commercial (2) Sovran Capital Management Corporation, which loans secured primarily by personal property and by is engaged in investment management and advisory first and second mortgages on real property. services to institutional investors. (14) Citizens and Southern Investment Advisors, (3) Sovran Credit Corporation, which is engaged in Inc., which is engaged in performing portfolio manconsumer lending activities, making, acquiring and agement services to affiliated and nonaffiliated parservicing for its own account or the account of others, ties, and is a registered commodities trading advisor. loans secured primarily by first mortgages on real (15) C&S Financial Services, Inc., which is engaged property. in equipment leasing activities. (4) Sovran Equity Mortgage Corporation, which is (16) Florida Interchange Group, Inc., which is enengaged in making, acquiring and servicing for its own gaged in providing electronic funds transfer services. account or the account of others, loans secured pri- (17) Georgia Interchange Network, Inc., which is marily by second mortgages on real property. engaged in providing electronic funds transfer ser- (5) Sovran Investment Corporation, which is en- vices. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

786 Federal Reserve Bulletin • September 1990 STICHTING PRIORITEIT ABN AMRO acquire both of these banks. The agreement has been HOLDING approved by the Central Bank of The Netherlands. An Amsterdam, The Netherlands application is required under the BHC Act because Algemene and Amro each own banks in the United Stichting Administratiekantoor ABN AMRO States. Algemene owns ten banks in Illinois and Amro HOLDING owns one bank in New York.2 Amsterdam, The Netherlands Section 3(d) of the BHC Act, the Douglas Amendment, prohibits the Board from approving an applica- ABN AMRO Holding N.V. tion by a bank holding company to acquire control of Amsterdam, The Netherlands any bank located outside of the bank holding company's home state, unless such acquisition is "specif- Order Approving Acquisition of Two Bank Holding ically authorized by the statute laws of the State in Companies which [the] bank is located, by language to that effect and not merely by implication."3 For purposes of the STICHTING PRIORITEIT ABN AMRO HOLDING, Douglas Amendment, ABN Holdings's principal state Stichting Administratiekantoor ABN AMRO HOLD- of operation will be Illinois, where all of Algemene's ING, and their subsidiary, ABN AMRO Holding N.V. subsidiary banks are located.4 Amro is a bank holding (collectively, "ABN Holdings"), all of Amsterdam, company located in New York. The Netherlands, foreign banking organizations sub- New York interstate banking law expressly provides ject to the Bank Holding Company Act ("BHC Act"), that out-of-state bank holding companies may acquire have applied for the Board's approval under section banks located in New York upon the prior approval of 3(a)(1) of the BHC Act (12 U.S.C. § 1842(a)(1)) to the New York superintendent of banks.5 The New become bank holding companies by acquiring 100 York superintendent of banks has reviewed this propercent of the voting shares of Algemene Bank Ned- posal and determined to approve it. In granting aperland N.V. ("Algemene") and Amsterdam Rotter- proval of an interstate acquisition of a New York dam Bank N.V. ("Amro"), both of Amsterdam, The bank, the superintendent is generally required to find Netherlands, both of which are bank holding compa- that the laws of the state where the out-of-state holding nies with respect to U.S. banks. company is located permit the acquisition of banks in ABN Holdings has also applied for the Board's that state by New York bank holding companies on a approval under section 4(c)(8) of the BHC Act reciprocal basis.6 Illinois will permit interstate acqui- (12 U.S.C. § 1843(c)(8)) to acquire certain nonbanking sitions on a nationwide basis effective December 1, subsidiaries of Algemene and Amro.1 ABN Holdings 1990.7 has also provided notice of its intention to acquire While the Illinois nationwide reciprocal banking indirectly EAB Finance N.V., The Netherlands, under statute is not yet effective, the New York state banksection 4(c)(13) (12 U.S.C. § 1843(c)(13)) of the BHC Act. In addition, ABN Holdings has applied to acquire ABN Bank International USA Inc., Chicago, Illinois, 2. Upon consummation of the proposed transaction, Applicants will acquire the following bank holding companies and bank subsidiaries of a corporation chartered pursuant to section 25(a) of Amro and Algemene: ABN/LaSalle North America, Inc., Chicago, the Federal Reserve Act (the "Edge Act") (12 U.S.C. Illinois; and LaSalle National Corporation, Chicago, Illinois, and §§ 611-613). thereby indirectly acquire LaSalle Bank Lake View, Chicago, Illinois; LaSalle Bank of Lisle, Lisle, Illinois; LaSalle National Bank, Chi- Notice of the applications, affording interested per- cago, Illinois; LaSalle Bank Northbrook, Northbrook, Illinois; Lasons an opportunity to submit comments, has been Salle Northwest National Bank, Chicago, Illinois; LaSalle Bank Westmont, Westmont, Illinois; and Exchange Bancorp, Inc., Chiduly published (55 Federal Register 25,882 (1990)). cago, Illinois, and thereby indirectly acquire Exchange National Bank The time for filing comments has expired, and the of Chicago, Chicago, Illinois; Exchange Bank of DuPage, Oak Brook, Board has considered the applications and all com- Illinois; Exchange Bank of River Oaks, Calumet City, Illinois; Exchange Bank of Lake County, Vernon Hills, Illinois; and European ments received in light of the factors set forth in American Bancorp, New York, New York, and thereby indirectly section 3(c) of the BHC Act, the considerations set acquire European American Bank, New York, New York. specified in section 4(c) of the BHC Act, and the 3. 12 U.S.C. § 1842(d). 4. A bank holding company's principal state of operation for purposes of the Edge Act. purposes of the Douglas Amendment is that state in which the Algemene and Amro, both large Dutch banks, have operations of the bank holding company's banking subsidiaries were principally conducted (based on deposits) on July 1, 1966, or the date entered into an agreement to form ABN Holdings to on which the company became a bank holding company, whichever is later. 5. N.Y. Banking Law, § 142-b.l. (McKinney 1990). 1. A list of the nonbanking subsidiaries that ABN Holdings has 6. Id. proposed to acquire pursuant to section 4(c)(8) of the BHC Act is set 1. 111. Rev. Stat. ch. 17, para. 2510.01 (Smith-Hurd Supp. 1989), forth in the Appendix. effective December 1, 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 787 ing code provides that the New York banking board 25(a) of the Federal Reserve Act (12 U.S.C. § 611 may waive or vary any requirement of New York et seq.).10 banking law if the board finds that such variation is The subsidiary banks of Algemene and Amro do not "necessary because of the existence of unusual and currently compete directly in any state or in any extraordinary circumstances."8 In this case, the New banking market. The New York branch of Algemene, York banking board has determined to waive the however, currently competes in the Metropolitan New reciprocity finding that the superintendent ordinarily York-New Jersey banking market11 with Amro's submust make to approve the transaction. In determining sidiary bank holding company, European American to waive this finding, the New York banking board Bancorp, Uniondale, New York ("EAB"), and its considered the predominately foreign nature of the subsidiary bank, European American Bank, as well as proposed transaction; the fact that Illinois has enacted Amro's New York branch. a law providing for reciprocal banking acquisitions Algemene's New York branch controls less than with New York that will become effective in Decem- one percent of the total deposits in commercial bankber of this year; and the potential adverse effects on ing organizations in the Metropolitan New York-New Algemene and Amro of delaying until December con- Jersey banking market. Amro's New York branch summation of the proposed transaction. controls less than one percent of the total deposits in Because the statute laws of New York authorize the commercial banking organizations in the market, and interstate acquisition of New York banks in any case EAB controls less than two percent of the total deposin which the New York superintendent's approval has its in commercial banking organizations in the market. been given and the New York superintendent has Upon consummation of the proposed transaction, given that approval in this case after the New York ABN Holdings would control less than four percent of banking board lawfully waived the requirement that the total deposits in commercial banking organizations the New York superintendent make a finding regarding in the market and the market would remain unconcenthe reciprocity of the Illinois statute, the Board con- trated. On the basis of the facts of record, the Board cludes that the proposed transaction is "specifically authorized" under New York law. Accordingly, the Board's approval of this proposal is not barred by the 10. ABN Holdings has indicated that it intends to designate Illinois Douglas Amendment. as its home state for purposes of the International Banking Act Algemene, with consolidated assets equivalent to ("IBA") (12 U.S.C. § 3101 et seq.). Illinois is currently the home state of Algemene. Section 5 of the IBA generally provides that no foreign approximately $90.7 billion, is the 47th largest banking bank may establish a state branch outside of its home state unless the organization in the world and the third largest banking establishment of such branch is specifically authorized by state law organization in The Netherlands.9 In the United and the foreign bank agrees to limit the deposit-taking activities of such branch to those permissible for an Edge corporation. Foreign States, Algemene maintains, in addition to its ten banks may also retain branches established before July 27, 1978. subsidiary banks, branches in Chicago, New York and The Board has previously determined that in an acquisition or Pittsburgh; limited branches in Boston and Seattle; merger of foreign banking organizations, only the surviving organization may retain its out-of-home state branches as full-service agencies in Atlanta, Houston, Miami, Los Angeles and branches. Lloyds Bank Pic, 72 Federal Reserve Bulletin 841 (1986); San Francisco; and an Edge corporation, ABN Bank The Mitsui Bank, Limited, 76 Federal Reserve Bulletin 381 (1990). In fact, the proposed transaction has the same effect in the United States International USA Inc., Chicago, Illinois, with a as a merger in which Algemene is the surviving company since branch in Houston. Algemene has a larger presence in the United States than Amro in Amro, with consolidated assets equivalent to ap- terms of controlled U.S. deposits, and ABN Holdings has indicated that it will for purposes of the IBA retain Illinois, Algemene's current proximately $94.1 billion, is the 48th largest banking home state, as ABN Holdings's home state following consummation organization in the world and the second largest bank- of the proposed transaction. ABN Holdings has also represented that ing organization in The Netherlands. In the United Algemene and Amro will merge sometime in the near future. ABN Holdings's retention of Algemene's grandfathered branches will not States, Amro maintains, in addition to European increase the number of foreign banks possessing grandfather rights American Bank, Uniondale, New York, a branch in nor will it increase the number of Algemene's grandfathered branches. Accordingly, the Board has determined that ABN Holdings may New York, and representative offices in Chicago, succeed to Algemene's grandfathered branches. Since Amro's branch Houston, and Los Angeles. ABN Holdings will con- is located outside of ABN Holdings's home state, ABN Holdings has form the deposit-taking activities of Amro's New York agreed to conform within six months the deposit-taking activities of Amro's New York branch to those of an Edge corporation, consistent branch to those of an Edge corporation under section with previous Board decisions. 11. The Metropolitan New York-New Jersey banking market includes New York City; Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan, and Westchester Counties in New York; Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union, and Warren Counties in New Jersey; and 8. N.Y. Banking Law § 14.1.(p) (McKinney 1990). parts of Fairfield County in Connecticut. Under the revised Depart- 9. Banking data are as of December 31,1989. Worldwide ranking is ment of Justice Merger Guidelines, 49 Federal Register 26,823 (1984), as of December 31, 1988. this market is considered unconcentrated. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

788 Federal Reserve Bulletin • September 1990 concludes that consummation of this proposal would Holdings are consistent with approval of its indirect not have a significantly adverse effect on competition acquisition of ABN Bank International USA Inc. The in the Metropolitan New York-New Jersey banking acquisition would result in the continuation of the market. international services currently provided, and would Section 3(c) of the BHC Act requires in every case be in the public interest. Accordingly, the Board finds that the Board consider the financial resources of the that the continued operation of ABN Bank Internaapplicant organization. In this case, the Board notes tional USA Inc. upon acquisition by ABN Holdings is that the primary capital of ABN Holdings, after mak- consistent with the purposes of the Edge Act. ing certain adjustments to reflect differences in ac- Based on the foregoing and other facts of record, the counting practice, would be approximately at the Board has determined that consummation of the prominimum capital level for U.S. multinational bank posed transaction would be consistent with the public holding companies set forth in the Board's Capital interest. Accordingly, the Board has determined that Adequacy Guidelines. The Board has also considered the applications under sections 3 and 4 of the BHC Act that the pro forma risk-based capital ratios of ABN and under the Edge Act should be, and hereby are, Holdings exceed the 1992 minimum standards adopted approved. The bank acquisitions shall not be consumby the Basle Committee. In addition, this proposal mated before the thirtieth calendar day following the represents a consolidation of two foreign banking effective date of this Order, and the proposed bank and organizations and does not result in the expansion of nonbank acquisitions shall not be consummated later banking or nonbanking activities in the United States. than three months after the effective date of this In view of these and other facts of record, the Board Order, unless such period is extended for good cause has determined that financial factors are consistent by the Board or by the Federal Reserve Bank of with approval of the applications. Chicago, acting pursuant to delegated authority. The The managerial resources and future prospects of determinations as to the nonbanking activities are ABN Holdings is consistent with approval. The Board subject to all of the conditions contained in the has also determined that considerations relating to the Board's Regulation Y, including those in sections convenience and needs of the community to be served 225.4(d) and 225.23(b)(3) (12 C.F.R. 225.4(d) and are consistent with approval. 225.23(b)(3)), and to the Board's authority to require ABN Holdings has also applied, pursuant to section such modification or termination of the activities of a 4(c)(8) of the BHC Act, to acquire certain nonbanking holding company or any of its subsidiaries as the subsidiaries of Algemene and Amro. The Board has Board finds necessary to assure compliance with, or determined by regulation or order that each of these prevent evasions of, the provisions and purposes of activities is permissible for bank holding companies the BHC Act and the Board's regulations and orders under section 4(c)(8) of the BHC Act, and ABN issued thereunder. Holdings proposes to conduct these activities in ac- By order of the Board of Governors, effective cordance with the Board's regulations and orders. The July 23, 1990. nonbanking activities in which both Algemene and Amro compete are conducted in geographic markets Voting for this action: Chairman Greenspan and Governors that are regional or national in scope. These markets Seger, Angell, Kelley, La Ware, and Mullins. Absent and not voting: Governor Johnson. are served by numerous competitors, and neither Algemene nor Amro has a significant market share. JENNIFER J. JOHNSON Accordingly, the Board concludes that consummation Associate Secretary of the Board of this proposal would not have any significantly adverse effect on competition in the provision of these WM Bancorp services in any relevant market. Furthermore, there is Cumberland, Maryland no evidence in the record to indicate that consummation of this proposal will result in undue concentration of resources, decreased or unfair competition, con- Order Approving the Merger of Bank Holding flicts of interests, unsound banking practices, or any Companies other significantly adverse effects. Accordingly, the Board has determined that the balance of public inter- WM Bancorp, Cumberland, Maryland ("WM"), a est factors it must consider under section 4(c)(8) of the bank holding company within the meaning of the Bank BHC Act is favorable and consistent with approval of Holding Company Act of 1956, as amended ("BHC ABN Holdings' application to acquire the nonbanking Act"), has applied for the Board's approval under subsidiaries of Algemene and Amro. section 3(a)(5) of the BHC Act (12 U.S.C. § 1842(a)(5)) The financial and managerial resources of ABN to merge with Potomac Bancorp, Inc., Keyser, West Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 789 Virginia ("Potomac"), and thereby to acquire its sub- determined that the proposed acquisition is specifisidiary bank, The National Bank of Keyser, Keyser, cally authorized by the statute laws of West Virginia, West Virginia. and that Board approval of the proposal is not prohib- WM has also applied under section 4(c)(8) of the ited by the Douglas Amendment. BHC Act (12 U.S.C. § 1843(c)(8)) to acquire Poto- WM and Potomac compete directly in the Cumbermac's nonbanking subsidiary, Eastern Servicecenter, land, Maryland banking market.4 WM is the second Inc., Keyser, West Virginia, and thereby engage in largest of seven commercial banking organizations in data processing activities. These activities are autho- the market, representing 29.0 percent of the total rized for bank holding companies pursuant to the deposits in commercial banking organizations in the Board's Regulation Y, 12 C.F.R. 225.25(b)(7). market ("market deposits"). Potomac is the sixth Notice of the applications, affording interested per- largest commercial banking organization in the Cumsons an opportunity to submit comments, has been berland market, controlling 6.1 percent of market published (55 Federal Register 8989 (1990)). The time deposits. Upon consummation of this proposal, WM for filing comments has expired, and the Board has would become the largest commercial banking organiconsidered the applications and all comments received zation in the market, controlling 35.1 percent of marin light of the factors set forth in sections 3(c) and 4 of ket deposits. The Cumberland banking market is conthe BHC Act. sidered highly concentrated. The Herfindahl- WM controls two banking subsidiaries located in Hirschman Index ("HHI") would increase by 353 Maryland. WM is the 20th largest commercial banking points to 2800.5 organization in Maryland, controlling deposits of Although consummation of this proposal would $265.1 million, representing less than one percent of eliminate some existing competition in the Cumberthe total deposits in commercial banks in Maryland.1 land banking market, several factors mitigate the po- Potomac operates one banking subsidiary in West tential anticompetitive effects of this proposal. The Virginia. Potomac is the 60th largest commercial bank- Board has considered the presence of thrift institutions ing organization in West Virginia, controlling deposits in the Cumberland market in its analysis of the proof $55.6 million, representing less than one percent of posal. The Board previously has indicated that thrift the total deposits in commercial banks in West Vir- institutions have become, or have the potential to ginia. Consummation of this proposal would not have become, major competitors of commercial banks.6 a significantly adverse effect upon the concentration of Two thrift institutions operate in the Cumberland commercial banking resources in either state. market and control over 25 percent of the total depos- Section 3(d) of the BHC Act (12 U.S.C. § 1842(d)), its in the market. The second largest depository instithe Douglas Amendment, prohibits the Board from tution in the market is a thrift institution and both thrift approving an application by a bank holding company institutions exert a considerable competitive influence to acquire control of any bank located outside of the in the market as especially strong providers of transholding company's home state, unless such acquisition action accounts and consumer loans. Based on the is "specifically authorized by the statute laws of the size, market share, and activities of the thrift institu- State in which [the] bank is located, by language to that tions in the Cumberland banking market, and other effect and not merely by implication." WM's home facts of record, the Board has concluded that thrift state is Maryland.2 The statute laws of West Virginia expressly authorize the acquisition of a banking institution in West Virginia by a bank holding company that controls a bank located in specified states, includ- 4. The Cumberland banking market consists of Allegany and Garrett ing Maryland. The Board has determined previously Counties in Maryland, and Mineral County in West Virginia. 5. Under the revised Department of Justice Merger Guidelines, 49 that a Maryland bank holding company may acquire a Federal Register 26,823 (June 29, 1984), a market in which the bank holding company in West Virginia,3 and the West post-merger HHI is above 1800 is considered highly concentrated. In Virginia Board of Banking and Financial Institutions such markets, the Justice Department is likely to challenge a merger that increases the HHI by more than 50 points. The Justice Departhas specifically authorized this acquisition. Based on ment has informed the Board that a bank merger or acquisition the foregoing and other facts of record, the Board has generally will not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the merger increases the HHI by at least 200 points. The Justice Department has stated that the higher than normal HHI threshold for screening bank mergers for anticompetitive effects 1. State and market deposit data are as of June 30, 1989. implicitly recognizes the competitive effect of limited-purpose lenders 2. A bank holding company's home state is that state in which the and other non-depository financial entities. operations of the bank holding company's banking subsidiaries were 6. Midwest Financial Group, 75 Federal Reserve Bulletin 386 principally conducted on July 1, 1966, or the date on which the (1989); CB&T Bancshares, Inc., 75 Federal Reserve Bulletin 381 company became a bank holding company, whichever is later. (1989); National City Corporation, 70 Federal Reserve Bulletin 743 3. First United Corporation, 14 Federal Reserve Bulletin 275 (1988). (1984). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

790 Federal Reserve Bulletin • September 1990 institutions exert a competitive influence that mitigates ity to require such modification or termination of the the anticompetitive effects of this proposal.7 activities of a holding company or any of its subsidiar- In addition, the Board gives substantial weight to ies as the Board finds necessary to assure compliance the fact that six banks and two thrift institutions would with, or to prevent evasion of, the provisions and remain as competitors in the market upon consumma- purposes of the BHC Act and the Board's regulations tion of this proposal, as well as numerous credit unions and orders issued thereunder. and other providers of financial services. For these By order of the Board of Governors, effective reasons and based on all the facts of record in this My 16, 1990. case, the Board believes that consummation of this proposal would not have a significantly adverse effect Voting for this action: Chairman Greenspan and Governors on competition in the Cumberland banking market. Angell, Kelley, LaWare, and Mullins. Absent and not voting: Governors Johnson and Seger. The financial and managerial resources of WM and Potomac are consistent with approval. Considerations relating to the convenience and needs of the commu- JENNIFER J. JOHNSON nities to be served also are consistent with approval of Associate Secretary of the Board this application. WM also has applied, pursuant to section 4(c)(8) of the BHC Act, to acquire Eastern Servicecenter, a Orders Issued Under the Financial Institutions subsidiary of Potomac that engages in data processing Reform, Recovery, and Enforcement Act activities. WM operates a data processing subsidiary that competes with Potomac's subsidiary in this mar- July 6, 1990 ket. The market share controlled by each of these subsidiaries is small, and there are numerous compet- William B. Naryka itors for these services. Accordingly, consummation Chief Financial Officer of this proposal would have a de minimis effect on Bremer Financial Corporation competition for data processing services, aqd the Suite 700 Board concludes that consummation of this proposal is 55 East Fifth Street not likely to result in any other significantly adverse St. Paul, Minnesota 55101 effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interests, Dear Mr. Naryka: or unsound banking practices. Accordingly, the Board has determined that the balance of public interest The Otto Bremer Foundation, St. Paul, Minnesota, factors it must consider under section 4(c)(8) of the and Bremer Financial Corporation, St. Paul, Minne- BHC Act is favorable and consistent with approval of sota ("Bremer"), proposes that its bank subsidiary, the application to acquire the nonbanking subsidiary of Drovers First American Bank of South St. Paul, South Potomac. St. Paul, Minnesota, purchase the assets and assume Based on the foregoing and other facts of record, the the liabilities of First American Savings and Loan of Board has determined that the applications under South St. Paul, Roseville, Minnesota ("First Amerisections 3 and 4 of the BHC Act should be, and hereby can"), its savings association subsidiary. Bremer has are, approved. The transaction shall not be consum- requested Board approval of this transaction pursuant mated before the thirtieth calendar day following the to section 5(d)(3) of the Federal Deposit Insurance Act effective date of this Order, or later than three months ("FDI Act") as amended by the Financial Institutions after the effective date of this Order, unless such Reform, Recovery, and Enforcement Act of 1989 period is extended for good cause by the Board or by (Pub. L. No. 101-73, § 206, 103 Stat. 183, 199 (1989)). the Federal Reserve Bank of Richmond, acting pursu- First American has been established to acquire certain ant to delegated authority. The determinations as to assets and assume deposit liabilities of United Savings the nonbanking activities are subject to all of the Bank, f.s.b., Windom, Minnesota ("United"). conditions contained in Regulation Y, including those The record in this case shows that: in sections 225.4(d) and 225.23(b)(3) (12 C.F.R. (1) The aggregate amount of the total assets of all 225.4(d) and 225.23(b)(3)), and to the Board's author- depository institution subsidiaries of Bremer is $1.9 billion, an amount which is not less than 200 percent of the total assets of First American, which cur- 7. If 50 percent of the deposits held by thrifts were included in rently has $66 million in total assets; calculation of market concentration, WM would control 24.8 percent (2) Bremer and all of its bank subsidiaries currently of market deposits and Potomac would control 5.2 percent. The HHI would increase by 258 points to 2231. meet all applicable capital standards and, upon Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 791 consummation of the proposed transaction, will requested Board approval of this transaction pursuant continue to meet all applicable capital standards; to section 5(d)(3) of the Federal Deposit Insurance Act (3) The transaction is not in substance the acquisi- ("FDI Act") as amended by the Financial Institutions tion of a Bank Insurance Fund member bank by a Reform, Recovery, and Enforcement Act of 1989 (Pub. Savings Association Insurance Fund member; L. No. 101-73, § 206, 103 Stat. 183, 199 (1989)). (4) United, the predecessor to First American, had Windom Interim has been established to acquire certain tangible capital of less than 4 percent during the assets and assume deposit liabilities of United Savings quarter preceding its acquisition by Bremer; Bank, f.s.b., Windom, Minnesota ("United"). (5) The transaction, which involves the purchase of The record in this case shows that: assets and assumption of liabilities of First Ameri- (1) The aggregate amount of the total assets of all can, a savings association located in Minnesota, by depository institution subsidiaries of Community a bank subsidiary of Bremer, a bank holding com- First is $542 million, an amount which is not less pany whose banking subsidiaries' operations are than 200 percent of the total assets of Windom principally conducted in Minnesota, would comply Interim, which currently has $60 million in total with the requirements of section 3(d) of the Bank assets; Holding Company Act if First American were a (2) Community First and all of its bank subsidiaries state bank which Bremer was applying to acquire. currently meet all applicable capital standards and, upon consummation of the proposed transaction, Based on the foregoing and all of the other facts of will continue to meet all applicable capital stanrecord, the Staff Director of the Division of Banking dards; Supervision and Regulation and the General Counsel (3) The transaction is not in substance the acquisiof the Board, acting pursuant to authority delegated by tion of a Bank Insurance Fund member bank by a the Board of Governors, hereby approve your request Savings Association Insurance Fund member; to engage in the proposed transaction under section (4) United, the predecessor to Windom Interim, had 5(d)(3) of the FDI Act. This approval is subject to tangible capital of less than 4 percent during the Bremer obtaining the required approval of the appro- quarter preceding its acquisition by Community priate Federal banking agency for the proposed merger First; under the Bank Merger Act. (5) The transaction, which involves the purchase of assets and assumption of liabilities of Windom In- Very truly yours, terim, a savings association located in Minnesota, by a bank subsidiary of Community First, a bank William W. Wiles holding company whose banking subsidiaries' oper- Secretary of the Board ations are principally conducted in South Dakota, would comply with the requirements of section 3(d) cc: Federal Reserve Bank of Minneapolis of the Bank Holding Company Act if Windom Interim were a state bank which Community First July 6, 1990 was applying to acquire. Mark A. Anderson Based on the foregoing and all of the other facts of Executive Vice President and record, the Staff Director of the Division of Banking Chief Financial Officer Supervision and Regulation and the General Counsel Community First Bankshares, Inc. of the Board, acting pursuant to authority delegated by 16 Broadway, Suite 304 the Board of Governors, hereby approve your request P.O. Box 6022 to engage in the proposed transaction under section Fargo, North Dakota 58108 5(d)(3) of the FDI Act. This approval is subject to Community First obtaining the required approval of Dear Mr. Anderson: the appropriate Federal banking agency for the proposed merger under the Bank Merger Act. Community First Bankshares, Inc., Fargo, North Dakota ("Community First"), proposes that its bank Very truly yours, subsidiary, Community First National Bank of Windom, Windom, Minnesota, purchase the assets and William W. Wiles assume the liabilities of Windom Interim Savings, Secretary of the Board f.s.b., Windom, Minnesota ("Windom Interim"), its savings association subsidiary. Community First has cc: Federal Reserve Bank of Minneapolis Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

792 Federal Reserve Bulletin • September 1990 July 27, 1990 Dakota, into a bank subsidiary of Norwest, a bank holding company whose banking subsidiaries' oper- Bruce Moland ations are principally conducted in Minnesota, Vice President and Assistant General Counsel would comply with the requirements of section 3(d) Norwest Corporation of the Bank Holding Company Act if Yankton were Norwest Center a state bank which Norwest was applying to ac- Sixth Street and Marquette Avenue quire. Minneapolis, Minnesota 55479-1026 Based on the foregoing and all of the other facts of Dear Mr. Moland: record, the Staff Director of the Division of Banking Supervision and Regulation and the General Counsel Norwest Corporation, Minneapolis, Minnesota, of the Board, acting pursuant to authority delegated by ("Norwest"), proposes that its bank subsidiary, Nor- the Board of Governors, hereby approve your request west Bank South Dakota, N.A., Sioux Falls, South to engage in the proposed transaction under section Dakota ("Bank"), merge with its savings association 5(d)(3) of the FDI Act. This approval is subject to subsidiary, Yankton Savings and Loan Association, Norwest obtaining the required approval of the appro- Yankton, South Dakota ("Yankton"). Norwest has priate Federal banking agency for the proposed merger requested Board approval of this transaction pursuant under the Bank Merger Act. to section 5(d)(3) of the Federal Deposit Insurance Act ("FDI Act") as amended by the Financial Institutions Very truly yours, Reform, Recovery, and Enforcement Act of 1989 (Pub. L. No. 101-73, § 206, 103 Stat. 183, 199(1989)).! William W. Wiles The record in this case shows that: Secretary of the Board (1) The aggregate amount of the total assets of all depository institution subsidiaries of Norwest is cc: Federal Reserve Bank of Minneapolis $20.2 billion, an amount which is not less than 200 percent of the total assets of Yankton, which cur- July 31, 1990 rently has $35.4 million in total assets; (2) Norwest and all of its bank subsidiaries currently Robert D. Geddes meet all applicable capital standards and, upon Corporate Counsel consummation of the proposed transaction, will U. S. Bancorp continue to meet all applicable capital standards; 111 S.W. Fifth Avenue (3) The transaction is not in substance the acquisi- Portland, Oregon 97204 tion of a Bank Insurance Fund member bank by a Savings Association Insurance Fund member; Dear Mr. Geddes: (4) Yankton had tangible capital of less than 4 percent during the quarter preceding its acquisition U. S. Bancorp, Portland, Oregon ("Bancorp"), proby Norwest; poses that its indirect savings association subsidiary, (5) The transaction, which involves the merger of Mother Lode Savings Bank, Sacramento, California Yankton, a savings association located in South ("Mother Lode"), merge into Bancorp's bank subsidiary, U. S. Bank of California, Eureka, California ("Bank"). Bancorp has requested Board approval of this transaction pursuant to section 5(d)(3) of the 1. 12 U.S.C. § 1815(d)(3). Section 5(d)(3) of the FDI Act ("the Federal Deposit Insurance Act ("FDI Act") as Oakar Amendment") permits the merger of a savings association owned by a bank holding company into a subsidiary bank owned by amended by the Financial Institutions Reform, Recovthe same bank holding company under certain circumstances. In this ery, and Enforcement Act of 1989 (Pub. L. No. case, the merger of Yankton, which is a state-chartered mutual savings and loan association, into Bank will be facilitated by the 101-73, § 206, 103 Stat. 183, 199 (1989)). The merger intermediate conversion of Yankton into a federally-chartered stock transaction would be facilitated by the prior merger of savings bank and then into a national banking association ("the a merger corporation subsidiary of Bank, USBC interim bank"). The interim bank is chartered solely to accommodate the requirements of the appropriate merger statutes and will cease to Merger Corporation, San Francisco, California exist immediately upon consummation of the underlying transaction ("USBC Merger"), into Mother Lode. USBC Merger without ever having conducted any banking business. Under the circumstances, the structure of the proposal does not appear to cause is not a savings association. an otherwise qualifying transaction to fall outside of the bounds of the The record in this case shows that: Oakar Amendment. See, e.g., Baltimore Bancorp, 76 Federal Reserve (1) The aggregate amount of the total assets of all Bulletin 689 (1990); Marshall & lis ley Corporation, 76 Federal Reserve Bulletin 556 (1990). depository institution subsidiaries of Bancorp is Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 793 $16.1 billion, an amount which is not less than 200 Company Act if USBC were a state bank which percent of the total assets of USBC, which currently Bancorp was applying to acquire. has $111.3 million in total assets; (2) Bancorp and all of its bank subsidiaries currently Based on the foregoing and all of the other facts of meet all applicable capital standards and, upon record, the Staff Director of the Division of Banking consummation of the proposed transaction, will Supervision and Regulation and the General Counsel continue to meet all applicable capital standards; of the Board, acting pursuant to authority delegated by (3) The transaction is not in substance the acquisi- the Board of Governors, hereby approve your request tion of a Bank Insurance Fund member bank by a to engage in the proposed transaction under section Savings Association Insurance Fund member; 5(d)(3) of the FDI Act. This approval is subject to (4) Mother Lode, the predecessor to USBC, had Bancorp obtaining the required approval of the approtangible capital of less than 4 percent during the priate Federal banking agency for the proposed merger quarter preceding its acquisition by Bancorp; under the Bank Merger Act. (5) The transaction, which involves the purchase of assets and assumption of liabilities of USBC, a Very truly yours, savings association located in California, by a bank subsidiary of Bancorp, a bank holding company William W. Wiles whose banking subsidiaries' operations are princi- Secretary of the Board pally conducted in Oregon, would comply with the requirements of section 3(d) of the Bank Holding cc: Federal Reserve Bank of San Francisco APPLICATIONS APPROVED UNDER BANK HOLDING COMPANY ACT By the Secretary of the Board Recent applications have been approved by the Secretary of the Board as listed below. Copies are available upon request to the Freedom of Information Office, Office of the Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Section 4 Effective Applicant(s) Bank(s) date First Chicago Corporation, Lincoln-Way Federal Savings Bank, July 20, 1990 Chicago, Illinois New Lenox, Illinois Security Pacific Corporation, Gibraltar Federal Interim Savings and June 29, 1990 Los Angeles, California Loan Association, Los Angeles, California Gibraltar Interim Savings Bank, Los Angeles, California U.S. Bancorp, Mother Lode Savings Bank, July 31, 1990 Portland, Oregon Sacramento, California Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

794 Federal Reserve Bulletin • September 1990 By Federal Reserve Banks Recent applications have been approved by the Federal Reserve Banks as listed below. Copies are available upon request to the Reserve Banks. Section 3 Reserve Effective Applicant(s) Bank(s) Bank date American Capital Corporation, Guaranty Bond State Bank of Dallas July 2, 1990 Centerville, Texas Waller, Waller, Texas Amsterdam-Rotterdam Bank European American New York June 29, 1990 N.V., Bancorp, Amsterdam, The Netherlands Uniondale, New York Stichting Amro, Amsterdam, The Netherlands Barclays PLC, Barclays de Zoete Wedd, New York July 24, 1990 London, England Incorporated, Barclays Bank PLC, New York, New York London, England Barrett Holding Company, Watonga Bancshares, Inc., Kansas City July 10, 1990 Watonga, Oklahoma Watonga, Oklahoma Capitol Bancorp, Ltd., Ann Arbor Commerce Bank, Chicago July 13, 1990 Lansing, Michigan Ann Arbor, Michigan C.B. Bancshares, Inc., Century Bank, St. Louis July 17, 1990 Des Peres, Missouri Des Peres, Missouri Citizens Bancorp of Winfield, The Citizens Bank of Winfield, Atlanta July 18, 1990 Inc., Winfield, Alabama Winfield, Alabama Country Bank Shares, Inc., Home State Bank, Kansas City July 3, 1990 Milford, Nebraska Beaver Crossing, Nebraska Farmers State Bank, Souglas, Nebraska Bank of Palmyra, Palmyra, Nebraska Eastern Bank Corporation, Family Bancorp, Boston July 2, 1990 Lynn, Massachusetts Haverhill, Massachusetts First Banks, Inc., Havana Bancshares, Inc., St. Louis July 24, 1990 St. Louis, Missouri Springfield, Illinois First Camden Bancshares, Inc., The Camden National Bank, Atlanta June 28, 1990 Camden, Alabama Camden, Alabama First Gwinnett Bancshares, Inc., First Gwinnett Bank, Atlanta July 12, 1990 Norcross, Georgia Norcross, Georgia First Midwest Corporation of Midwest Bank and Trust Chicago July 2, 1990 Delaware, Company of DePage County, Elmwood Park, Illinois East St. Louis, Illinois Hampton Family Partnership, Todd Bancshares, Inc., St. Louis July 13, 1990 Trenton, Kentucky Trenton, Kentucky Highlands Bankshares, Inc., The Stockmans Bank of Harman, Richmond June 27, 1990 Petersburg, West Virginia Harman, West Virginia Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 795 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank date INB Financial Corporation, Peoples Mid-Illinois Corporation, Chicago July 20, 1990 Indianapolis, Indiana Bloomington, Illinois La Plata Bancshares, Inc., La Plata State Bank, St. Louis July 12, 1990 La Plata, Missouri La Plata, Missouri Logan Bancorporation, Inc., The First National Bank of Chicago July 8, 1990 Logan, Iowa Logan, Logan, Iowa Manufacturers National State Bank of Lake Zurich, Chicago June 28, 1990 Corporation, Lake Zurich, Illinois Detroit, Michigan Marshall & Ilsley Corporation, M&I Bank of Oconomowoc, Chicago July 5, 1990 Milwaukee, Wisconsin Oconomowoc, Wisconsin Minden Exchange Company, Minden Exchange Bank and Kansas City July 13, 1990 Minden, Nebraska Trust Company, Minden, Nebraska Montfort Bancorporation, Inc., The Bloomington State Bank, Chicago July 5, 1990 Platteville, Wisconsin Bloomington, Wisconsin Clare Bancorporation, Inc., Platte ville, Wisconsin North Cascades Bancshares, North Cascades National Bank, San Francisco June 27, 1990 Inc., Chelan, Washington Chelan, Washington Old York Road Bancorp, Inc., Bank and Trust Company of Old Philadelphia June 28, 1990 Willow Grove, Pennsylvania York Road, Willow Grove, Pennsylvania Oxford Financial Corporation, Hampton Park Corporation, Chicago July 5, 1990 Addison, Illinois Romeoville, Illinois Palmer Bancorp, Inc., The Citizens State Bank, Chicago July 11, 1990 Danville, Illinois Williamsport, Indiana Peoples Bancorp, Inc. of Bullitt The Peoples Bank of Bullitt St. Louis July 9, 1990 County, County, Shepherds ville, Kentucky Shepherds ville, Kentucky Prairie Farm Bank Shares, Inc., The First State Bank of Prairie Minneapolis June 27, 1990 Prairie Farm, Wisconsin Farm, Prairie Farm, Wisconsin Principal National Bancorp, Inc. The Pontiac National Bank, Chicago June 28, 1990 Pontiac, Illinois Pontiac, Illinois San Diego Bancshares, Inc., First State Bank of San Diego, Dallas July 13, 1990 San Diego, Texas San Diego, Texas The Savannah Bancorp, Inc., The Savannah Bank, N.A., Atlanta July 20, 1990 Savannah, Georgia Savannah, Georgia Sierra Tahoe Bancorp, Sierra Bank of Nevada, San Francisco July 5, 1990 Truckee, California Reno, Nevada Stamford Bank Corp, The National Bank of Stamford, New York June 22, 1990 Stamford, New York Stamford, New York Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

796 Federal Reserve Bulletin • September 1990 Section 3—Continued Reserve Effective Applicant(s) Bank(s) Bank date TeamBanc, Inc., Iola Bancshares, Inc., Kansas City June 27, 1990 Paola, Kansas Iola, Kansas TeamBanc, Inc. Employees' Stock Ownership Plan, Paola, Kansas TwinCo, Inc., Bank of Sheridan, Minneapolis June 29, 1990 Twin Bridges, Montana Sheridan, Montana UNC Holding, Inc., United National Corporation, Minneapolis July 6, 1990 Sioux Falls, South Dakota Sioux Falls, South Dakota UniBanc Corp., Thuman Corporation, Kansas City June 29, 1990 Trenton, Nebraska May wood, Nebraska Treleco, Inc., Trenton, Nebraska UniBanc Corp. Employee Stock UniBanc Corp., Kansas City June 29, 1990 Ownership Plan, Trenton, Nebraska Trenton, Nebraska U.S.B. Corporation, Martinco Financial Corp., St. Louis July 20, 1990 Washington, Indiana Shoals, Indiana Valley Bancorporation, Valley Bank Milwaukee, Chicago July 13, 1990 Appleton, Wisconsin Greenfield, Wisconsin Wilber Co., Hallam Bancorp, Inc., Kansas City June 28, 1990 Wilber, Nebraska Hallam, Nebraska Section 4 Nonbanking Reserve Effective Applicant(s) Activity/Company Bank date BB&T Financial Corporation, Carolina Bancorp, Inc., Richmond July 16, 1990 Wilson, North Carolina High Point, North Carolina FB&T Corporation, Monumental Savings Bank, Philadelphia June 22, 1990 Hanover, Pennsylvania Baltimore, Maryland First Bancorporation of Ohio, Peoples Federal Savings Bank, Cleveland July 3, 1990 Akron, Ohio Ashtabula, Ohio First of America Bank Pension and Group Services, Chicago June 29, 1990 Corporation, Inc., Kalamazoo, Michigan Kalamazoo, Michigan First of America Bank Shelby Federal Savings Bank, Chicago July 16, 1990 Corporation, Indianapolis, Indiana Kalamazoo, Michigan Norwest Corporation, American Credit Associates, Minneapolis July 11, 1990 Minneapolis, Minnesota Inc., Norwest Financial Services, Inc., City of Commerce, California Des Moines, Iowa Norwest Financial Inc., Des Moines, Iowa F.N.B. Corporation, Dollar Savings Association, Cleveland July 23, 1990 Hermitage, Pennsylvania New Castle, Pennsylvania Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Legal Developments 797 Section 4—Continued Nonbanking Reserve Effective Applicant(s) Activity/ Company Bank date Societe Generale, LAS Investments, Inc., New York June 29, 1990 Paris, France Chicago, Illinois West Suburban Bancorp, Inc., Aurora Federal Savings Bank, Chicago July 13, 1990 Lombard, Illinois F.S.B., Aurora, Illinois 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 Albemarle Bank and Trust Peoples Bank of Central Virginia, Richmond July 18, 1990 Company d/b/a F&M Bank - Lovingston, Virginia Charlottesville, Charlottesville, Virginia Citizens Trust and Savings Bank, Fidelity Federal Savings and Chicago June 28, 1990 South Haven, Michigan Loan Association, Kalamazoo, Michigan First of America Bank-Northern First of America Bank-Lewiston, Chicago July 19, 1990 Michigan, Lewiston, Michigan Traverse City, Michigan Signet Bank/Virginia, Perpetual Savings Bank, F.S.B., Richmond July 20, 1990 Richmond, Virginia McLean, Virginia Valley Bank of Nevada, Comstock Bank, San Francisco July 2, 1990 Las Vegas, Nevada Carson City, Nevada PENDING CASES INVOLVING THE BOARD OF May v. Board of Governors, No. 90-1316 (D. D.C., GOVERNORS filed June 5, 1990). Action under Freedom of Information and Privacy Acts. The Board's motion to dismiss was granted on July 17, 1990. Plaintiff's This list of pending cases does not include suits notice of appeal was filed July 27, 1990. against the Federal Reserve Banks in which the Board California Association of Life Underwriters v. Board of Governors is not named a party. of Governors, No. 90-70123 (9th Circuit, filed March 15, 1990). Petition for review of Board order approving acquisition of bank subsidiary to engage Laufman v. State of California, et a/.,No. CIVS-89- in insurance activities pursuant to state law. Peti- 1755 EJM-EM (E.D. California, filed April 2, 1990). tioner's motion to dismiss the petition granted on Action to require bank regulatory agencies to exam- June 29, 1990. ine or bring enforcement action against bank. The Burke v. Board of Governors, No. 90-9509 (10th Board's answer was filed on June 13, 1990. Circuit, filed February 27, 1990). Petition for review Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

798 Federal Reserve Bulletin • September 1990 of Board orders assessing civil money penalties and bank holding company's national bank subsidiary issuing orders of prohibition. from Alabama to Georgia. Oral argument scheduled BancTEXAS Group, Inc. v. Board of Governors, No. for October 11, 1990. CA 3-90-0236-R (N.D. Texas, filed February 2, MCorp v. Board of Governors, No. 89-2816 (5th Cir., 1990). Suit for preliminary injunction enjoining the filed May 2, 1989). Appeal of preliminary injunction Board from enforcing a temporary order to cease against the Board enjoining pending and future and desist requiring injection of capital into plain- enforcement actions against a bank holding comtiffs subsidiary banks under the Board's source of pany now in bankruptcy. On May 15, 1990, the Fifth strength doctrine. District court granted preliminary Circuit vacated the district court's order enjoining injunction on June 5, 1990, in light of 5th Circuit's the Board from proceeding with enforcement acdecision in MCorp v. Board of Governors. tions based on section 23A of the Federal Reserve Rutledge v. Board of Governors, No. CV90-L-0137S Act, but upheld the district court's order enjoining (N.D. Alabama, filed January 27, 1990). Tort suit such actions based on the Board's source-ofchallenging Board and Reserve Bank supervisory strength doctrine. Board's petition for rehearing actions. The Board's motion to dismiss or for sum- filed on June 27, 1990. mary judgment was granted on July 31, 1990. Independent Insurance Agents of America v. Board of Woodard v. Board of Governors, No. 90-3031 (11th Governors, No. 89-4030 (2d Cir., filed March 9, Cir., filed January 16, 1990); Kaimowitz v. Board of 1989). Petition for review of Board order ruling that Governors, No. 90-3067 (11th Cir., filed January 23, the non-banking restrictions of section 4 of the Bank 1990). Petitions for review of Board order dated Holding Company Act apply only to non-bank sub- December 22, 1989, approving application by First sidiaries of bank holding companies. The Board's Union Corporation to acquire Florida National order was upheld on November 29, 1989. Petition Banks. Petitioners object to approval on Commu- for certiorari filed on April 18, 1990; the Board's nity Reinvestment Act grounds. The Board's motion opposition to certiorari was filed on July 13, 1990. to dismiss the Woodard case was granted June 26, Securities Industry Association v. Board of Gover- 1990. nors, No. 89-1127 (D.C. Cir., filed February 16, Securities Industry Association v. Board of Gover- 1989). Petition for review of Board order permitting nors, No. 89-1730 (D.C. Cir., filed November 29, five bank holding companies to engage to a limited 1989). Petition for review of Board order approving extent in additional securities underwriting and dealapplication under section 4(c)(8) to engage in private ing activities. Board's order upheld on April 10, placement and riskless principal activities. Joint 1990. stipulation of dismissal filed on July 19, 1990. MCorp v. Board of Governors, No. CA3-88-2693 Babcock and Brown Holdings, Inc. v. Board of Gov- (N.D. Tex., filed October 10, 1988). Application for ernors, No. 89-70518 (9th Cir., filed November 22, injunction to set aside temporary cease and desist 1989). Petition for review of Board determination orders. Stayed pending outcome of MCorp v. Board that a company would control a proposed insured of Governors in Fifth Circuit. bank for purposes of the Bank Holding Company White v. Board of Governors, No. CU-S-88-623-RDF Act. Awaiting scheduling of oral argument. (D. Nev., filed July 29, 1988). Age discrimination Consumers Union of U.S., Inc. v. Board of Gover- complaint. Board's motion to dismiss or for sumnors, No. 89-3008 (D.D.C., filed November 1, mary judgment pending. 1989). Challenge to various aspects of amendments Cohen v. Board of Governors, No. 88-1061 (D.N.J., to Regulation Z implementing the Home Equity filed March 7, 1988). Action seeking disclosure of Loan Consumer Protection Act. On May 2, 1990, documents under the Freedom of Information Act. the court upheld the Board's regulatory action. On Lewis v. Board of Governors, Nos. 87-3455, 87-3545 June 27, Consumers Union filed a notice of appeal in (11th Cir., filed June 25, August 3, 1987). Petitions the D.C. Circuit. for review of Board orders approving applications of Synovus Financial Corp. v. Board of Governors, No. non-Florida bank holding companies to expand ac- 89-1394 (D.C. Cir., filed June 21, 1989). Petition for tivities of Florida trust company subsidiaries. Joint review of Board order permitting relocation of a motion to dismiss granted on July 3, 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

799 Membership of the Board of Governors of the Federal Reserve System, 1913-90 APPOINTIVE MEMBERS1 Federal Reserve Date of initial Other dates and information relating District oath of office to membership2 Charles S. Hamlin .Boston AAuugg.. 1100,, 11991144 Reappointed in 1916 and 1926. Served until Feb. 3, 1936.3 Paul M. Warburg .New York do Term expired Aug. 9, 1918. Frederic A. Delano .Chicago do Resigned July 21, 1918. W.P.G. Harding .Atlanta do Term expired Aug. 9, 1922. Adolph C. Miller .San Francisco .... do Reappointed in 1924. Reappointed in 1934 from the Richmond District. Served until Feb. 3, 1936.3 Albert Strauss .New York ..Oct. 26, 1918 Resigned Mar. 15, 1920. Henry A. Moehlenpah.... .Chicago ..Nov. 10, 1919 Term expired Aug. 9, 1920. Edmund Piatt .New York ..June 8, 1920 Reappointed in 1928. Resigned Sept. 14, 1930. David C. Wills Cleveland Sept. 29, 1920 Term expired Mar. 4, 1921. John R. Mitchell Minneapolis May 12, 1921 Resigned May 12, 1923. Milo D. Campbell Chicago Mar. 14, 1923 Died Mar. 22, 1923. Daniel R. Crissinger Cleveland May 1, 1923 Resigned Sept. 15, 1927. George R. James St. Louis May 14, 1923 Reappointed in 1931. Served until Feb. 3, 1936.4 Edward H. Cunningham...Chicago do Died Nov. 28, 1930. Roy A. Young Minneapolis Oct. 4, 1927 Resigned Aug. 31, 1930. Eugene Meyer New York Sept. 16, 1930 Resigned May 10, 1933. Wayland W. Magee Kansas City May 18, 1931 Term expired Jan. 24, 1933. Eugene R. Black Atlanta May 19, 1933 Resigned Aug. 15, 1934. M.S. Symczak Chicago June 14, 1933 Reappointed in 1936 and 1948. Resigned May 31, 1961. J.J. Thomas Kansas City do Served until Feb. 10, 1936.3 Marriner S. Eccles San Francisco Nov. 15, 1934 Reappointed in 1936, 1940, and 1944. Resigned July 14, 1951. Joseph A. Broderick New York Feb. 3, 1936 Resigned Sept. 30, 1937. John K. McKee Cleveland .do Served until Apr. 4, 1946.3 Ronald Ransom Atlanta .do Reappointed in 1942. Died Dec. 2, 1947. Ralph W. Morrison Dallas Feb. 10, 1936 Resigned July 9, 1936. Chester C. Davis Richmond June 25, 1936 Reappointed in 1940. Resigned Apr. 15, 1941. Ernest G. Draper New York Mar. 30, 1938 Served until Sept. 1, 1950.3 Rudolph M. Evans Richmond Mar. 14, 1942 Served until Aug. 13, 1954.3 James K. Vardaman, Jr. ..St. Louis Apr. 4, 1946 Resigned Nov. 30, 1958. Lawrence Clayton Boston Feb. 14, 1947 Died Dec. 4, 1949. Thomas B. McCabe Philadelphia Apr. 15, 1948 Resigned Mar. 31, 1951. Edward L. Norton Atlanta Sept. 1, 1950 Resigned Jan. 31, 1952. Oliver S. Powell Minneapolis . do Resigned June 30, 1952. Wm. McC. Martin, Jr New York April 2, 1951 Reappointed in 1956. Term expired Jan. 31, 1970. A.L. Mills, Jr San Francisco Feb. 18, 1952 Reappointed in 1958. Resigned Feb. 28, 1965. J.L. Robertson Kansas City do Reappointed in 1964. Resigned Apr. 30, 1973. C. Canby Balderston Philadelphia Aug. 12, 1954 Served through Feb. 28, 1966. Paul E. Miller Minneapolis Aug. 13, 1954 Died Oct. 21, 1954. Chas. N. Shepardson Dallas Mar. 17, 1955 Retired Apr. 30, 1967. G.H. King, Jr Atlanta Mar. 25, 1959 Reappointed in 1960. Resigned Sept. 18, 1963. George W. Mitchell Chicago Aug. 31, 1961 Reappointed in 1962. Served until Feb. 13, 1976.3 2 J. Dewey Daane Richmond Nov. 29, 1963 Served until Mar. 8, 1974.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

800 Federal Reserve Bulletin • September 1990 Federal Reserve Date of initial Other dates and information relating Name District oath of office to membership2 Sherman J. Maisel.... .San Francisco Apr. 30, 1965 Served through May 31, 1972. Andrew F. Brimmer. .Philadelphia Mar. 9, 1966 Resigned Aug. 31, 1974. William W. Sherrill .. .Dallas May 1, 1967 Reappointed in 1968. Resigned Nov. 15, 1971. Arthur F. Burns .New York Jan. 1, 1970 Term began Feb. 1, 1970. Resigned Mar. 31, 1978. John E. Sheehan .St. Louis Jan. 4, 1972 Resigned June 1, 1975. Jeffrey M. Bucher .San Francisco June 5, 1972 Resigned Jan. 2, 1976. Robert C. Holland .Kansas City June 11, 1973 Resigned May 15, 1976. Henry C. Wallich .Boston Mar. 8, 1974 Resigned Dec. 15, 1986. Philip E. Cold well .Dallas Oct. 29, 1974 Served through Feb. 29, 1980. Philip C. Jackson, Jr... .Atlanta July 14, 1975 Resigned Nov. 17, 1978. J. Charles Partee .Richmond Jan. 5, 1976 Served until Feb. 7, 1986.3 Stephen S. Gardner.... .Philadelphia Feb. 13, 1976 Died Nov. 19, 1978. David M. Lilly .Minneapolis June 1, 1976 Resigned Feb. 24, 1978. G. William Miller .San Francisco Mar. 8, 1978 Resigned Aug. 6, 1979. Nancy H. Teeters .Chicago Sept. 18, 1978 Served through June 27, 1984. Emmett J. Rice .New York June 20, 1979 Resigned Dec. 31, 1986. Frederick H. Schultz.. .Atlanta July 27, 1979 Served through Feb. 11, 1982. Paul A. Volcker .Philadelphia Aug. 6, 1979 Resigned August 11, 1987. Lyle E. Gramley .Kansas City May 28, 1980 Resigned Sept. 1, 1985. Preston Martin .San Francisco Mar. 31, 1982 Resigned April 30, 1986. Martha R. Seger .Chicago July 2, 1984 Wayne D. Angell .Kansas City Feb. 7, 1986 Manuel H. Johnson.... .Richmond Feb. 7, 1986 Resigned August 3, 1990. H. Robert Heller .San Francisco Aug. 19, 1986 Resigned July 31, 1989. Edward W. Kelley, Jr. .Dallas May 26, 1987 Reappointed in 1990. Alan Greenspan .New York Aug. 11, 1987 John P. LaWare .Boston Aug. 15, 1988 David W. Mullins, Jr.... .St. Louis May 21, 1990 Chairmen4 Vice Chairmen4 Charles S. Hamlin .Aug. 10, 1914-Aug. 9, 1916 Frederic A. Delano Aug. 10, 1914-Aug. 9, 1916 W.P.G. Harding .Aug. 10, 1916-Aug. 9, 1922 Paul M. Warburg Aug. 10, 1916-Aug. 9, 1918 Daniel R. Crissinger... .May 1, 1923-Sept. 15, 1927 Albert Strauss Oct. 26, 1918-Mar. 15, 1920 Roy A. Young .Oct. 4, 1927-Aug. 31, 1930 Edmund Piatt July 23, 1920-Sept. 14, 1930 Eugene Meyer .Sept. 16, 1930-May 10, 1933 J J. Thomas Aug 21, 1934-Feb. 10, 1936 Eugene R. Black .May 19, 1933-Aug. 15, 1934 Ronald Ransom Aug. 6, 1956-Dec. 2, 1947 Marriner S. Eccles .... .Nov. 15, 1934—Jan. 31, 1948 C. Canby Balderston Mar. 11, 1955-Feb. 28, 1966 Thomas B. McCabe... .Apr. 15, 1948-Mar. 31, 1951 J.L. Robertson Mar. 1, 1966-Apr. 30, 1973 Wm. McC. Martin, Jr. .Apr. 2, 1951-Jan. 31, 1970 George W. Mitchell May 1, 1973-Feb. 13, 1976 Arthur F. Burns .Feb. 1, 1970-Jan. 31, 1978 Stephen S. Gardner Feb. 13, 1976-Nov. 19, 1978 G. William Miller .Mar. 8, 1978-Aug. 6, 1979 Frederick H. Schultz ....July 27, 1979-Feb. 11, 1982 Paul A. Volcker .Aug. 6, 1979-Aug. 11, 1987 Preston Martin Mar. 31, 1982-Mar. 31, 1986 Alan Greenspan .Aug. 11, 1987- Manuel H. Johnson Aug. 4, 1986-Aug. 3, 1990 EX-OFFICIO MEMBERS1 Secretaries of the Treasury Comptrollers of the Currency W.G. McAdoo Dec. 23, 1913-Dec. 15, 1918 John Skelton Williams...Feb. 2, 1914-Mar. 2, 1921 Carter Glass Dec. 16, 1918-Feb. 1, 1920 Daniel R. Crissinger Mar. 17, 1921-Apr. 30, 1923 David F. Houston Feb. 2, 1920-Mar. 3, 1921 Henry M. Dawes May 1, 1923-Dec. 17, 1924 Andrew W. Mellon Mar. 4, 1921-Feb. 12, 1932 Joseph W. Mcintosh Dec. 20, 1924-Nov. 20, 1928 Ogden L. Mills Feb. 12, 1932-Mar. 4, 1933 J.W. Pole Nov. 21, 1928-Sept. 20, 1932 William H. Woodin Mar. 4, 1933-Dec. 31, 1933 J.F.T. O'Connor May 11, 1933-Feb. 1, 1936 Henry Morgenthau Jr. ...Jan. 1, 1934-Feb. 1, 1936 1. Under the provisions of the original Federal Reserve Act, the composed of seven appointive members; that the Secretary of the Federal Reserve Board was composed of seven members, including Treasury and the Comptroller of the Currency should continue to five appointive members, the Secretary of the Treasury, who was serve as members until Feb. 1, 1936, or until their successors were ex-officio chairman of the Board, and the Comptroller of the Cur- appointed and had qualified; and that thereafter the terms of members rency. The original term of office was ten years, and the five original should be fourteen years and that the designation of Chairman and appointive members had terms of two, four, six, eight, and ten years Vice Chairman of the Board should be for a term of four years. respectively. In 1922 the number of appointive members was in- 2. Date after words "Resigned" and "Retired" denotes final day of creased to six, and in 1933 the term of office was increased to twelve service. years. The Banking Act of 1935, approved Aug. 23, 1935, changed the 3. Successor took office on this date. name of the Federal Reserve Board to the Board of Governors of the 4. Chairman and Vice Chairman were designated Governor and Federal Reserve System and provided that the Board should be Vice Governor before Aug. 23, 1935. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

1 Financial and Business Statistics NOTE. The following tables may have some 3.11, 3.15-3.20, 3.22-3.25, 3.27, 3.28, and 4.30. discontinuities in historical data for some series For a more detailed explanation of the changes, beginning with the December 1989 issue: 1.12, see the announcement on page 16 of the January 1.33, 1.44, 1.52, 1.57-1.60, 2.10, 2.12, 2.13, 3.10, 1990 BULLETIN. CONTENTS COMMERCIAL BANKING INSTITUTIONS A17 Major nondeposit funds Domestic Financial Statistics A18 Assets and liabilities, last-Wednesday-of-month series MONEY STOCK AND BANK CREDIT A3 Reserves, money stock, liquid assets, and debt WEEKLY REPORTING COMMERCIAL BANKS measures Assets and liabilities A4 Reserves of depository institutions, Reserve A19 All reporting banks Bank credit A20 Banks in New York City A5 Reserves and borrowings—Depository A21 Branches and agencies of foreign banks institutions A22 Gross demand deposits—individuals, A6 Selected borrowings in immediately available partnerships, and corporations funds—Large member banks FINANCIAL MARKETS A23 Commercial paper and bankers dollar POLICY INSTRUMENTS acceptances outstanding A7 Federal Reserve Bank interest rates A23 Prime rate charged by banks on short-term A8 Reserve requirements of depository institutions business loans A9 Federal Reserve open market transactions A24 Interest rates—money and capital markets A25 Stock market—Selected statistics A26 Selected financial institutions—Selected assets and liabilities FEDERAL RESERVE BANKS A10 Condition and Federal Reserve note statements FEDERAL FINANCE All Maturity distribution of loan and security 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 and ownership MONETARY AND CREDIT AGGREGATES 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 • September 1990 SECURITIES MARKETS AND A57 Foreign branches of U.S. banks—Balance CORPORATE FINANCE sheet data A59 Selected U.S. liabilities to foreign official A34 New security issues—State and local institutions governments and corporations A35 Open-end investment companies—Net sales and asset position A35 Corporate profits and their distribution REPORTED BY BANKS A35 Total nonfarm business expenditures on new IN THE UNITED STATES plant and equipment A59 Liabilities to and claims on foreigners A36 Domestic finance companies—Assets and A60 Liabilities to foreigners liabilities and business credit A62 Banks' own claims on foreigners A63 Banks' own and domestic customers' claims on REAL ESTATE foreigners A63 Banks' own claims on unaffiliated foreigners A37 Mortgage markets A64 Claims on foreign countries—Combined A38 Mortgage debt outstanding domestic offices and foreign branches CONSUMER INSTALLMENT CREDIT A39 Total outstanding and net change REPORTED BY NONBANKING BUSINESS A40 Terms ENTERPRISES IN THE UNITED STATES A65 Liabilities to unaffiliated foreigners FLOW OF FUNDS A66 Claims on unaffiliated foreigners A41 Funds raised in U.S. credit markets A43 Direct and indirect sources of funds to credit markets SECURITIES HOLDINGS AND TRANSACTIONS A44 Summary of credit market debt outstanding A67 Foreign transactions in securities A45 Summary of credit market claims, by holder A68 Marketable U.S. Treasury bonds and notes—Foreign transactions Domestic Nonfinancial Statistics SELECTED MEASURES INTEREST AND EXCHANGE RATES A46 Nonfinancial business activity—Selected A69 Discount rates of foreign central banks measures A69 Foreign short-term interest rates A47 Labor force, employment, and unemployment A70 Foreign exchange rates A48 Output, capacity, and capacity utilization A49 Industrial production—Indexes and gross value A71 Guide to Tabular Presentation, A51 Housing and construction Statistical Releases, and Special A52 Consumer and producer prices Tables A53 Gross national product and income A54 Personal income and saving SPECIAL TABLES International Statistics A73 Terms of lending at commercial banks, February 1990 SUMMARY STATISTICS A78 Assets and liabilities of U.S. branches and A55 U.S. international transactions—Summary agencies of foreign banks, December 31, 1989, A56 U.S. foreign trade and March 31, 1990 A56 U.S. reserve assets A86 Pro forma balance sheet and income A56 Foreign official assets held at Federal Reserve statements for priced service operations, Banks March 31, 1990 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 1990 1990 MMoonneettaarryy aanndd ccrreeddiitt aaggggrreeggaatteess Q3 Q4 Ql Q2 Feb. Mar. Apr. May June Reserves of depository institutions2 1 Total .6 5.1 2.4 -1.4 6.4 1.6 -.4 -9.8 -1.0 2 Required .5 5.0 2.5 -.9 7.1 4.2 -1.2 -11.3 2.8 3 Nonborrowed 8.6 7.2 -3.9 -1.0 -13.9 -12.1 9.8 -4.1 8.3 4 Monetary base3 3.2 4.0 8.5 7.0 9.2 8.7 7.1 3.5 7.6 Concepts of money, liquid assets, and debt4 5 Ml 1.8 5.1 4.8 3.6 10.0 5.1 3.9 -2.8 6.1 6 M2 6.9 7.0 6.0 2.4 8.6 5.1 2.1 -2.6 1.9 7 M3 3.9 1.9 2.6 .4 4.2 .9 1.1 -2.8 -.2 8 L 4.4 3.1 2.8 n.a. 2.3 4.4 2.3 -7.0 n.a. 9 Debt 7.3 8.2 6.9 7.0 7.8 7.7 6.3 6.2 n.a. Nontransaction components 10 In M25 8.7 7.7 6.4 2.0 8.1 5.1 1.5 -2.6 .6 11 In M3 only6 -6.8 -17.0 -10.9 -7.8 -13.4 -16.2 -3.2 -3.0 -9.3 Time and savings deposits Commercial banks 12 Savings .4 7.2 9.5 5.1 12.6 10.0 2.5 -1.9 9.3 13 MMDAs 5.2 12.3 9.1 10.7 12.3 10.4 10.7 10.3 9.5 14 Small-denomination time 11.9 11.3 7.8 12.1 7.5 5.6 9.4 20.8 18.7 15 Large-denomination time • 2.9 2.7 -1.6 -3.0 -5.4 -9.3 -5.1 5.5 1.5 Thrift institutions 16 Savings -5.2 .2 1.3 .7 7.6 -3.2 4.3 -2.2 -3.8 17 MMDAs -6.2 4.7 5.7 2.7 8.2 21.6 7.1 -16.7 -14.3 18 Small-denomination time 8.7 -2.5 -4.3 -9.5 -9.0 .2 -7.7 -16.5 -21.0 19 Large-denomination time -10.7 -28.6 -24.7 -30.6 -21.2 -23.2 -35.0 -40.3 -29.5 Money market mutual funds 20 General purpose and broker-dealer 37.6 29.1 18.8 -1.0 24.1 1.8 -.7 -20.0 6.0 21 Institution-only 36.6 3.3 10.2 11.7 5.8 19.7 15.9 5.6 .0 Debt components4 22 Federal 4.7 9.5 8.1 10.2 11.3 14.9 7.7 6.6 n.a. 23 Nonfederal 8.1 7.8 6.6 6.0 6.8 5.5 5.9 6.2 n.a. 1. Unless otherwise noted, rates of change are calculated from average lars held by U.S. residents at foreign branches of U.S. banks worldwide and at all amounts outstanding in preceding month or quarter. banking offices in the United Kingdom and Canada, and balances in both taxable 2. Figures incorporate adjustments for discontinuities associated with the and tax-exempt, institution-only money market mutual funds. Excludes amounts implementation of the Monetary Control Act and other regulatory changes to held by depository institutions, the U.S. government, money market funds, and reserve requirements. (See also table 1.20.) foreign banks and official institutions. Also subtracted is the estimated amount of 3. Seasonally adjusted, break-adjusted monetary base consists of seasonally overnight RPs and Eurodollars held by institution-only money market mutual adjusted, break-adjusted total reserves (line 1), plus the seasonally adjusted funds. currency component of the money stock, plus (for all quarterly reporters on the L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all Treasury securities, commercial paper and bankers acceptances, net of money those weekly reporters whose vault cash exceeds their required reserves) the market mutual fund holdings of these assets. seasonally adjusted, break adjusted difference between current vault cash and the Debt: Debt of domestic nonfinancial sectors consists of outstanding credit amount applied to satisfy current reserve requirements. market debt of the U.S. government, state and local governments, and private 4. Composition of the money stock measures and debt is as follows: nonfinancial sectors. Private debt consists of corporate bonds, mortgages, con- Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults sumer credit (including bank loans), other bank loans, commercial paper, bankers of depository institutions; (2) travelers checks of nonbank issuers; (3) demand acceptances, and other debt instruments. Data are derived from the Federal deposits at all commercial banks other than those due to depository institutions, Reserve Board's flow of funds accounts. Data on debt of domestic nonfinancial the U.S. government, and foreign banks and official institutions less cash items in sectors are monthly averages, derived by averaging adjacent month-end levels. the process of collection and Federal Reserve float; and (4) other checkable Growth rates for debt reflect adjustments for discontinuities over time in the levels deposits (OCD) consisting of negotiable order of withdrawal (NOW) and auto- of debt presented in other tables. matic transfer service (ATS) accounts at depository institutions, credit union 5. Sum of overnight RPs and Eurodollars, money market fund balances share draft accounts, and demand deposits at thrift institutions. (general purpose and broker-dealer), MMDAs, and savings and small time M2: Ml plus overnight (and continuing contract) repurchase agreements deposits. (RPs) issued by all depository institutions and overnight Eurodollars issued to 6. Sum of large time deposits, term RPs, term Eurodollars of U.S. residents, U.S. residents by foreign branches of U.S. banks worldwide, Money Market and money market fund balances (institution-only), less a consolidation adjust- Deposit Accounts (MMDAs), savings and small-denomination time deposits ment that represents the estimated amount of overnight RPs and Eurodollars held (time deposits—including retail RPs—in amounts of less than $100,000), and by institution-only money market mutual funds. balances in both taxable and tax-exempt general purpose and broker-dealer 7. Small-denomination time deposits—including retail RPs—are those issued money market mutual funds. Excludes individual retirement accounts (IRA) in amounts of less than $100,000. All IRA and Keogh accounts at commercial and Keogh balances at depository institutions and money market funds. Also banks and thrifts are subtracted from small time deposits. excludes all balances held by U.S. commercial banks, money market funds 8. Large-denomination time deposits are those issued in amounts of $100,000 (general purpose and broker-dealer), foreign governments and commercial or more, excluding those booked at international banking facilities. banks, and the U.S. government. 9. Large-denomination time deposits at commercial banks less those held by M3: M2 plus large-denomination time deposits and term RP liabilities (in money market mutual funds, depository institutions, and foreign banks and amounts of $100,000 or more) issued by all depository institutions, term Eurodol- official institutions. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A4 Domestic Financial Statistics • September 1990 1.11 RESERVES OF DEPOSITORY INSTITUTIONS AND RESERVE BANK CREDIT Millions of dollars Monthly averages of daily figures Weekly averages of daily figures for week ending 1990 1990 Apr. May June May 16 May 23 May 30 June 6 June 13 June 20 June 27 SUPPLYING RESERVE FUNDS 1 Reserve Bank credit 272,853 273,073 278,190 274,097 271,336 273,318 277,000 280,152 276,801 277,894 U.S. government securities1, 2 2 Bought outright-system account 223,445 224,344 228,752 224,357 223,075 224,942 227,394 227,798 228,982 229,576 3 Held under repurchase agreements 361 185 930 819 0 0 1,434 2,550 0 0 Federal agency obligations 4 Bought outright 6,504 6,446 6,446 6,446 6,446 6,446 6,446 6,446 6,446 6,446 5 Held under repurchase agreements 156 156 294 691 0 0 352 907 0 0 6 Acceptances . 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions 7 Adjustment credit 111 205 237 98 62 634 160 740 34 74 8 Seasonal credit 119 248 313 221 265 290 282 281 164 345 9 Extended credit 1,424 852 339 763 1,036 1,159 602 516 312 202 10 Float 659 720 486 601 1,237 432 299 579 494 542 11 Other Federal Reserve assets 40,073 39,917 40,394 40,099 39,214 39,416 40,031 40,334 40,369 40,707 12 Gold stock 11,060 11,063 11,065 11,061 11,065 11,065 11,065 11,065 11,065 11,065 13 Special drawing rights certificate account.. 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 14 Treasury currency outstanding 19,878 19,949 20,016 19,943 19,957 19,971 19,991 20,005 20,019 20,033 ABSORBING RESERVE FUNDS 15 Currency in circulation 260,024 262,394 265,776 262,218 262,427 263,790 265,326 265,907 265,822 265,474 16 Treasury cash holdings 549 572 582 570 572 577 582 586 582 578 Deposits, other than reserve balances, with Federal Reserve Banks 17 Treasury 4,351 5,054 5,078 5,037 5,274 4,562 5,185 4,574 5,003 5,364 18 Foreign 230 214 250 220 213 215 268 217 233 266 19 Service-related balances and adjustments 1,905 2,038 2,010 2,018 2,031 1,992 2,242 1,910 2,037 1,956 20 Other 316 334 289 264 269 575 282 230 302 328 21 Other Federal Reserve liabilities and capital 9,033 9,468 9,788 9,497 9,327 9,386 10,010 10,231 9,553 9,625 22 Reserve balances with Federal Reserve Banks 35,903 32,529 34,016 33,794 30,764 31,774 32,679 36,084 32,870 33,918 End-of-month figures Wednesday figures 1990 1990 Apr. May June May 16 May 23 May 30 June 6 June 13 June 20 June 27 SUPPLYING RESERVE FUNDS 23 Reserve Bank credit 273,008 275,183 279,372 275,253 271,714 272,240 278,796 283,457 276,723 279,926 U.S. government securities1, 2 24 Bought outright-system account 224,468 227,455 231,383 223,872 224,092 224,463 227,329 227,857 229,101 230,978 25 Held under repurchase agreements 0 0 0 3,013 0 0 2,308 1,032 0 0 Federal agency obligations" 26 Bought outright 6,446 6,446 6,446 6,446 6,446 6,446 6,446 6,446 6,446 6,446 27 Held under repurchase agreements 0 0 0 2,077 0 0 702 1,053 0 0 28 Acceptances 0 0 0 0 0 0 0 0 0 0 Loans to depository institutions2 29 Adjustment credit 97 94 49 36 64 75 16 5,080 48 84 30 Seasonal credit 183 289 374 230 900 291 277 295 171 356 31 Extended credit 732 717 163 716 274 1,009 302 272 332 168 32 Float 277 316 575 953 662 441 1,130 685 189 1,052 33 Other Federal Reserve assets 40,805 39,866 40,382 37,908 39,277 39,514 40,285 40,736 40,436 40,842 34 Gold stock 11,060 11,065 11,065 11,062 11,065 11,065 11,065 11,065 11,065 11,065 35 Special drawing rights certificate account.. 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 36 Treasury currency outstanding 19,915 19,985 20,047 19,943 19,957 19,971 19,991 20,005 20,019 20,033 ABSORBING RESERVE FUNDS 37 Currency in circulation 259,890 265,336 266,979 262,573 262,855 264,828 265,544 266,135 265,737 266,080 38 Treasury cash holdings 561 579 580 572 575 581 586 583 578 580 Deposits, other than reserve balances, with Federal Reserve Banks 39 Treasury 5,205 4,426 5,470 3,817 5,740 4,420 4,780 5,291 5,944 5,915 40 Foreign 402 309 368 215 200 207 223 224 223 189 41 Service-related balances and adjustments 2,344 2,242 1,847 2,018 2,031 1,992 2,242 1,910 2,037 1,956 42 Other 352 303 255 318 214 377 241 224 242 314 43 Other Federal Reserve liabilities and capital 9,866 9,928 9,012 9,203 9,209 9,206 9,827 9,652 9,365 9,409 44 Reserve balances with Federal Reserve Banks3 33,881 31,628 34,490 36,059 30,430 30,183 34,926 39,027 32,198 35,099 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 averages9 RReesseerrvvee ccllaassssiiffiiccaattiioonn 1987 1988 1989 1989 1990 Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May June 1 Reserve balances with Reserve Banks2 37,691 37,837 35,436 35,436 34,090 30,929 33,407 35,409 32,77lr 33,878 2 Total vault cash 26,675 28,204 29,812 29,812 31,301 32,489 29,581 29,281 29,812' 29,632 3 Applied vault cash 24,449 25,909 27,374 27,374 28,841 29,693 27,251 27,103 27,461 27,318 4 Surplus vault cash 2,226 2,295 2,439 2,439 2,461 2,795 2,330 2,178 2,351' 2,314 5 Total reserves6 62,141 63,746 62,810 62,810 62,931 60,623 60,658 62,512 60,232'' 61,196 6 Required reserves 61,094 62,699 61,888 61,888 61,914 59,634 59,797 61,615 59,269 60,422 7 Excess reserve balances at Reserve Banks 1,046 1,047 922 922 1,016 989 861 897 962 774 8 Total borrowings at Reserve Banks 777 1,716 265 265 440 1,448 2,124 1,628 1,335 881 9 Seasonal borrowings at Reserve Banks 93 130 84 84 47 51 78 122 244 311 10 Extended credit at Reserve Banks 483 1,244 20 20 26 535 1,950 1,403 875 346 Biweekly averages of daily figures for weeks ending 1990 Mar. 7 Mar. 21 Apr. 4 Apr. 18 May 2 May 16 May 30 June 13' June 27 July 11 11 Reserve balances with Reserve Banks2 32,724 33,730 33,433 36,421 34,887 33,855 31,269 34,385 33,390 33,955 12 Total vault cash 30,220 29,259 29,585 28,931 29,589' 28,863' 30,852' 28,986 30,097 30,264 13 Applied vault cash 27,706 27,004 27,278 26,920 27,259 26,730 28,268 26,803 27,676 27,885 14 Surplus vault cash 2,514 2,255 2,307 2,011 2,331' 2,133' 2,584' 2,184 2,421 2,380 15 Total reserves6 60,430 60,734 60,711 63,341 62,145 60,584 59,537 61,188 61,066 61,839 16 Required reserves 59,633 59,997 59,633 62,675 61,040 59,657 58,526 60,709 60,046 60,938 17 Excess reserve balances at Reserve Banks 797 737 1,078 665 1,105 927 1,011 479 1,020 901 18 Total borrowings at Reserve Banks 1,967 2,179 2,157 1,882 1,155 976 1,723 1,291 566 581 19 Seasonal borrowings at Reserve Banks 60 75 96 100 158 221 278 282 329 359 20 Extended credit at Reserve Banks 1,841 1,995 1,965 1,676 899 673 1,098 559 183 182 1. These data also appear in the Board's H.3 (502) release. For address, see in- reserves) to satisfy current reserve requirements. side front cover. 5. Total vault cash (line 2) less applied vault cash (line 3). 2. Excludes required clearing balances and adjustments to compensate for float 6. Reserve balances with Federal Reserve Banks (line 1) plus applied vault cash and includes other off-balance sheet "as-of' adjustments. (line 3). 3. Total "lagged" vault cash held by those depository institutions currently 7. Total reserves (line 5) less required reserves (line 6). subject to reserve requirements. Dates refer to the maintenance periods in which 8. Extended credit consists of borrowing at the discount window under the the vault cash can be used to satisfy reserve requirements. Under contempora- terms and conditions established for the extended credit program to help neous reserve requirements, maintenance periods end 30 days after the lagged depository institutions deal with sustained liquidity pressures. Because there is computation periods in which the balances are held. not the same need to repay such borrowing promptly as there is with traditional 4. Equal to all vault cash held during the lagged computation period by short-term adjustment credit, the money market impact of extended credit is "bound" institutions (institutions whose required reserves exceed their vault similar to that of nonborrowed reserves. cash) plus the amount of vault cash applied during the maintenance period by 9. Data are prorated monthly averages of biweekly averages. "nonbound" institutions (institutions whose vault cash exceeds their required Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A6 Domestic Financial Statistics • September 1990 1.13 SELECTED BORROWINGS IN IMMEDIATELY AVAILABLE FUNDS Large Banks1 Averages of daily figures, in millions of dollars 1990 week ending Monday2 MMaattuurriittyy aanndd ssoouurrccee May 14 May 21 May 28 June 4 June 11 June 18 June 25 July 2 July 9 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 79,570 79,518 77,536 85,413 88,698 89,848 82,754 82,140 90,826 2 For all other maturities 19,456 19,360 19,784 18,706 19,734 21,135 20,214 19,294 19,261 From other depository institutions, foreign banks and foreign official institutions, and U.S. government agencies 3 For one day or under continuing contract 37,113 37,650 38,536 37,418 40,495 40,424 3399,,775599 37,304 41,114 4 For all other maturities 19,029 18,536 18,494 18,065 17,758 17,495 17,562 17,631 18,030 Repurchase agreements on U.S. government and federal agency securities in immediately available funds Brokers and nonbank dealers in securities 5 For one day or under continuing contract 15,722 16,796 13,950 13,898 13,874 13,354 13,068 11,064 11,700 6 For all other maturities 19,812 19,758 19,978 20,438 20,695 20,503 20,437 19,408 19,155 All other customers 7 For one day or under continuing contract 31,489 32,431 32,122 33,987 32,321 32,506 33,987 32,210 33,925 8 For all other maturities 12,668 12,583 13,421 13,263 14,130 13,964 14,211 13,902 13,691 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 45,068 45,328 44,999 49,490 44,708 61,783 49,258 51,135 47,908 10 To all other specified customers3 13,537 13,661 12,317 15,168 13,419 14,314 14,251 13,132 12,916 1. Banks with assets of $1 billion or more as of Dec. 31, 1977. Division of Applications Development and Statistical Services, Financial State- These data also appear in the Board's H.5 (507) release. For address, see inside ment Reports Section, (202) 452-3349. front cover. 3. Brokers and nonbank dealers in securities; other depository institutions; 2. Beginning with the August Bulletin data appearing are the most current foreign banks and official institutions; and United States government agencies. available. To obtain data from May 1, 1989, through April 16, 1990, contact the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Policy Instruments A7 1.14 FEDERAL RESERVE BANK INTEREST RATES Percent per year Current and previous levels Extended credit2 AAddjjuussttmmeenntt ccrreeddiitt aanndd FFFeeedddeeerrraaalll RRReeessseeerrrvvveee SSeeaassoonnaall ccrreeddiitt11 First 30 days of borrowing After 30 days of borrowing3 BBBaaannnkkk On Effective Previous On Effective Previous On Effective Previous Effective date 7/11/90 date rate 7/11/90 date rate 7/11/90 date rate Boston 7 2/24/89 6 Vi 7 2/24/89 6'/i 8. 80 7/11/90 8.75 6/27/90 New York 2/24/89 2/24/89 7/11/90 6/27/90 Philadelphia 2/24/89 2/24/89 7/11/90 6/27/90 Cleveland 2/24/89 2/24/89 7/11/90 6/27/90 Richmond 2/24/89 2/24/89 7/11/90 6/27/90 Atlanta 2/24/89 2/24/89 7/11/90 6/27/90 Chicago 2/24/89 2/24/89 7/11/90 6/27/90 St. Louis 2/24/89 2/24/89 7/11/90 6/27/90 Minneapolis 2/24/89 2/24/89 7/11/90 6/27/90 Kansas City 2/24/89 2/24/89 7/11/90 6/27/90 Dallas 2/27/89 2/27/89 7/11/90 6/27/90 San Francisco ... 7 2/24/89 6 Vi 7 2/24/89 6Vi 8.80 7/11/90 8.75 6/27/90 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. Ba o n f k Effective date A le l v l e F l) . — R. Ba o n f k Banks N.Y. Banks N.Y. Banks N.Y. In effect Dec. 31, 1977 6 6 1980—July 28 10-11 10 11998844——AApprr.. 9 8Vi-9 9 1978—Jan. 9 6-6 Vi 6Vi 29 10 10 13 9 9 20 6 Vi 6Vi Sept. 26 11 11 Nov. 21 8Vi-9 8Vi May 1 1 1 2 6V 7 i -7 1 1 N De o c v . . 1 5 7 12 1 - 2 1 3 1 1 3 2 Dec. 2 2 4 6 8V 8 i 8 8V i July 3 7-71/4 IVa Aug. 2 1 1 0 7 I 3 V /4 * 77V1/4 4 1981—May 5 8 13 1 - 4 1 4 1 1 4 4 11998855——MMaayy 2 2 0 4 7V 7V i- i 8 7 I V V i i S O e c p t. t . 2 2 1 2 0 6 8- m 8 8 V i 8 8 8 V ' /z i N De o c v . . 4 2 6 13 1 1 - 3 2 1 4 1 1 1 3 2 3 1986—Mar. 1 7 0 7-7 7 Vi 1 1 Nov. 1 8Vi-9Vi 9 91 V / l > Apr. 21 6Vi-7 6Vi 3 9 Vi 1982—July 20 11Vi—12 11 Vi July 11 6 6 23 11 Vi 11 Vi AAuugg.. 21 5Vi-6 5Vi 1979—July 20 10 10 Aug. 2 11—11Vi 11 22 5Vi 5Vi Aug. 17 lO-lOVi lOVi 3 11 11 Sept. 2 19 0 10 lO 'A V - i l 1 1 lO 1 V i 2 1 7 6 lO lO -lO V V i i l 1 O 0 V i 11998877——SSeepptt.. 1 4 1 5V 6 i -6 6 6 21 11 11 30 10 10 Oct. 8 11-12 12 Oct. 12 9Vi-10 9Vi 11998888——AAuugg.. 9 6-6Vi 6Vi 10 12 12 13 9Vi 9Vi 11 6Vi 6Vi Nov. 22 9-9Vi 9 1980—Feb. 15 12-13 13 26 9 9 1989—Feb. 24 6Vi-7 7 19 13 13 Dec. 14 8Vi-9 9 27 7 7 May 29 12-13 13 15 81/2-9 8Vi 30 12 12 17 8Vi In effect July 11, 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 Vi percent above the rate on adjustment adjustment credit borrowings by institutions with deposits of $500 million or more credit. The program was reestablished for 1986 and 1987 but was not renewed for that had borrowed in successive weeks or in more than four weeks in a calendar 1988. quarter. A 3 percent surcharge was in effect from Mar. 17, 1980 through May 7, 2. Extended credit is available to depository institutions, when similar assist- 1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was ance is not reasonably available from other sources, when exceptional circum- adopted; the surcharge was subsequently raised to 3 percent on Dec. 5, 1980, and stances or practices involve only a particular institution or when an institution is to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective experiencing difficulties adjusting to changing market conditions over a longer Sept. 22, 1981, and to 2 percent effective Oct. 12, 1981. As of Oct. 1, 1981 the period of time. formula for applying the surcharge was changed from a calendar quarter to a 3. For extended-credit loans outstanding more than 30 days, a flexible rate moving 13-week period. The surcharge was eliminated on Nov. 17, 1981. somewhat above rates on market sources of funds ordinarily will be charged, but Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A8 Domestic Financial Statistics • September 1990 1.15 RESERVE REQUIREMENTS OF DEPOSITORY INSTITUTIONS1 Percent of deposits Depository institution requirements after implementation of the Monetary Control Act Type of deposit, and deposit interval Effective date Net transaction accounts3,4 $0 million-$40.4 million.... 12/19/89 More than $40.4 million ... 12/19/89 Nonpersonal time deposits5 By original maturity Less than 1 Vi years 10/6/83 1 Vi years or more 10/6/83 Eurocurrency liabilities All types 11/13/80 1. Reserve requirements in effect on Dec. 31, 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 Type of transaction Nov. Dec. Apr. U.S. TREASURY SECURITIES Outright transactions (excluding matched transactions) Treasury bills 2 4 3 1 G E R G x e r r c d o o h s e s s s m a n p s p g a u t e l i r e o c s n h s a ses 1 6 9 8 , , , 0 0 9 5 2 8 1 9 3 0 8 2 , , 2 2 5 2 0 8 3 0 70 1 1 1 4 2 2 , , , 2 7 8 8 3 1 4 8 0 0 8 3 , , 7 5 9 3 4 0 0 0 1,8830 0 0 1 1 , , 4 4 0 2 8 0 3 9 0 0 3,3 4 1 8 0 0 4 0 0 8 543 0 0 0 5,796 0 0 0 6 5 Ot G G he r r r o o s s s s s w p s it a u h l r e in c s h 1 a s y e e s ar 3,6 3 5 0 9 0 2,1760 3207 1505 0 0 0 0 0 0 10 0 0 0 0 7 8 9 R M Ex e a d c t h u em a ri n t p y g t e i s o h n i s f t -2 2 0 1 , , 3 5 8 0 7 8 4 0 -2 2 4 3 , , 5 8 8 5 8 4 0 -2 2 5 8 , , 7 8 5 8 4 0 3 8 0 -5 3 , , 5 91 0 5 20 1,260 0 8 -2 1 , , 4 2 8 0 9 0 1 -5 2 , , 4 8 1 4 8 5 0 1,87 0 6 0 -4,3 9 0 9 4 3 0 1 1 0 1 1 t G G o r r 5 o o s s y s s e a p sa r u s l r e c s h ases 10,2 4 3 5 1 2 5,485 1, 4 43 9 6 0 0 0 0 0 0 0 0 0 10 0 0 10 0 0 1 1 2 3 M Ex a c t h u a ri n ty g e s hift -1 1 7 8 , , 9 9 7 3 5 8 -1 2 7 2 , , 7 51 2 5 0 -2 2 5 3 , , 5 2 3 5 4 0 -2 4 , , 8 9 6 0 9 2 -1,2680 -1 2 , , 1 3 6 7 3 3 -1 4 , , 7 7 1 4 3 3 -1,876 0 4 - , 7 0 3 8 9 1 1 1 4 5 5 t G G o r r 1 o o 0 s s s s y p e sa a u l r r e s c s h ases 2,4410 1,5 1 7 7 9 5 28 2 7 9 0 0 0 0 0 0 0 0 16 Maturity shift -3,529 -5,946 -2,231 -1,046 -38 -451 -254 17 Exchange 950 1,797 1,934 400 116 450 223 1 1 8 9 Ov G G er r r o o 1 s s 0 s s p s y a e u l a r e r c s s h ases 1,8580 0 1,3980 2840 0 0 0 0 0 20 Maturity shift -188 -1,086 -681 21 Exchange 500 275 600 200 226 All maturities 2 2 2 3 G G r r o o s s s s p sa u l r e c s h ases 3 6 7 , , 8 1 0 7 3 0 1 1 8 , , 5 8 6 6 2 3 1 1 3 6 , , 3 61 3 7 7 8,9490 1,8803 1, 4 4 2 8 3 9 3,3 1 8 0 4 8 743 0 5,896 0 24 Redemptions 9,099 2,200 13,230 3,530 0 1,000 400 0 0 Matched transactions 25 Gross sales 950,923 1,168,484 1,323,480 105,6% 103,077 127,729 116,220 99,104 97,970 26 Gross purchases 950,935 1,168,142 1,326,542 105,243 104,827 121,411 120,637 97,128 98,643 Repurchase agreements2 27 Gross purchases 314,621 152,613 129,518 15,350 22,737 16,185 8,050 6,409 28 Gross sales 324,666 151,497 132,688 15,350 21,145 17,777 6,627 7,832 29 Net change in U.S. government securities 11,234 15,872 -10,055 4,966 5,225 -9,976 190 FEDERAL AGENCY OBLIGATIONS Outright transactions 0 0 0 30 Gross purchases 0 0 0 31 Gross sales 32 Redemptions 276 587 442 Repurchase agreements2 33 Gross purchases 80,353 57,259 38,835 1,247 2,992 1,741 1,966 2,595 34 Gross sales 81,350 56,471 40,411 1,247 2,467 2,266 1,457 3,104 35 Net change in federal agency obligations . -1,274 -525 -587 36 Total net change in System Open Market Account 9,961 16,070 -12,073 4,966 5,750 -10,501 4,559 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 Financial Statistics • September 1990 1.18 FEDERAL RESERVE BANKS Condition and Federal Reserve Note Statements1 Millions of dollars Wednesday End of month AAAccccccooouuunnnttt 1990 1990 May 30 June 6 June 13 June 20 June 27 Apr. May June Consolidated condition statement ASSETS 1 Gold certificate account 11,065 11,065 11,065 11,065 11,065 11,060 11,065 11,065 2 Special drawing rights certificate account 8,518 8,518 8,518 8,518 8,518 8,518 8,518 8,518 3 473 459 469 474 474 532 468 470 Loans 4 To depository institutions 1,375 596 5,648 550 608 2,163 1,100 586 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 6,446 6,446 6,446 6,446 6,446 6.446 6,446 6,446 8 Held under repurchase agreements 0 702 1,053 0 0 0 0 0 U.S. Treasury securities Bought outright 9 Bills 101,968 104,784 105,312 106,556 108,433 101,973 104,960 108,838 10 Notes 91,732 91,782 91,782 91,782 91,782 91,540 91,732 91,782 11 Bonds 30,763 30,763 30,763 30,763 30,763 30,955 30,763 30,763 12 Total bought outright2 224,463 227,329 227,857 229,101 230,978 224,468 227,455 231,383 13 Held under repurchase agreements 0 2,308 1,032 0 0 0 0 0 14 Total U.S. Treasury securities 224,463 229,637 228,889 229,101 230,978 224,468 227,455 231,383 15 Total loans and securities 232,284 237,381 242,036 236,098 238,032 231,926 235,001 238,415 16 Items in process of collection 8,450 6,421 5,523 5,937 5,923 4,499 6,661 7,586 17 Bank premises 795 795 825 825 825 795 795 827 Other assets 18 Denominated in foreign currencies3 34,098 34,507 34,608 34,698 34,747 33,982 34,574 34,225 19 All other4 4,573 5,052 5,014 4,879 5,167 5,958 4,563 5,248 20 Total assets 300,256 304,196 308,059 302,494 304,752 297,270 301,646 306,354 LIABILITIES 21 Federal Reserve notes 245,910 246,598 247,182 246,770 247,101 224411,,006688 224466,,339988 224477,,998833 Deposits 22 To depository institutions 32,694 36,574 40,200 34,359 36,812 36,076 34,094 36,336 23 U.S. Treasury—General account 4,420 4,780 5,291 5,944 5,915 5,205 4,426 5,470 24 Foreign—Official accounts 207 223 224 223 189 402 309 368 25 Other 377 241 224 242 314 352 303 255 26 Total deposits 37,699 41,818 45,939 40,768 43,230 42,036 39,132 42,429 27 Deferred credit items 7,441 5,953 5,286 5,590 5.012 4,301 6,188 6,930 28 Other liabilities and accrued dividends5 4,131 4,318 4,542 4,277 4,311 4,199 4,365 3,810 29 Total liabilities 295,181 298,688 302,948 297,406 299,655 291,603 296,083 301,152 CAPITAL ACCOUNTS 30 Capital paid in 2,339 2,336 2,345 2,344 2,344 2,327 2,344 2,344 31 Surplus 2,243 2,243 2,243 2,243 2,243 2,243 2,243 2,243 32 Other capital accounts 493 929 522 500 511 1,098 981 616 33 Total liabilities and capital accounts 300,256 304,196 308,059 302,494 304,752 297,270 301,646 306,354 34 MEMO: Marketable U.S. Treasury securities held in custody for foreign and international accounts 227,961 227,961 222,823 230,141 227,365 224,256 225,879 228,260 Federal Reserve note statement 35 Federal Reserve notes outstanding issued to bank 285,846 286,166 286,841 287,921 288,282 283,191 285,819 288,487 36 LESS: Held by bank 39,936 39,568 39,659 41,150 41,181 42,123 39,421 40,504 37 Federal Reserve notes, net 245,910 246,598 247,182 246,770 224477,,110011 224411,,006688 224466,,339988 224477,,998833 Collateral held against notes net: 38 Gold certificate account 11,065 11,065 11,065 11,065 11,065 11,060 11,065 11,065 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 226,327 227,015 227,599 227,187 227,518 221,490 227,815 228,400 42 Total collateral 245,910 246,598 247,182 246,770 247,101 241,068 247,398 247,983 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 TTTyyypppeee aaannnddd mmmaaatttuuurrriiitttyyy gggrrrooouuupppiiinnngggsss 1990 1990 May 30 June 6 June 13 June 20 June 27 Apr. 30 May 31 June 29 1,375 596 5,648 550 608 1,012 1,100 586 2 Within 15 days 1,3 3 3 7 9 4 1 0 8 7 8 5,4 1 6 8 1 7 51 3 6 4 5 4 5 9 9 95 6 1 2 1,01 8 4 6 4 1 1 7 5 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 9 0 1 2 3 4 U. 9 O O W S 1 1 . 6 v v i t e e T d d h r r a a r i n e y y 5 1 a s s s y y 1 t t u e e 5 o o r a a y d r r 9 1 s a 0 t s y y o t e d e s o c 1 a a 5 u r y 1 r y s 0 i e t i a y e r e s s a — rs T otal 2 4 2 6 5 2 1 1 9 4 7 6 8 0 1 , , , , , , , 1 4 6 4 8 7 6 9 6 9 0 3 2 1 3 3 5 2 7 0 7 2 6 2 2 5 5 1 1 7 6 9 4 7 1 1 , , , , , , , 9 6 4 6 4 5 6 5 3 0 5 8 2 1 1 7 2 8 2 8 7 22 5 7 5 2 1 7 8 6 0 5 7 1 , , , , , , , 4 4 8 4 4 4 6 6 0 4 8 7 8 1 7 2 3 9 9 2 7 2 7 2 2 5 5 1 1 9 6 0 1 7 1 1 , , , , , , , 1 4 5 7 4 3 6 0 0 4 2 8 3 1 1 2 3 6 2 2 7 23 5 7 2 5 1 1 0 2 6 0 7 2 1 , , , , , , , 9 2 4 5 6 4 6 8 7 3 0 8 6 1 7 8 1 2 2 0 7 23 5 6 2 5 1 6 0 9 7 6 8 2 , , , , , , , 4 5 2 7 2 1 5 6 6 2 0 5 4 7 8 6 8 0 2 6 6 22 5 7 2 5 1 7 6 0 6 5 7 1 , , , , , , , 4 3 1 4 4 4 6 7 5 6 6 0 3 1 1 5 7 6 2 2 7 23 5 6 2 5 1 9 1 7 6 8 7 1 , , , , , , , 6 8 4 3 3 4 6 5 7 0 8 5 8 1 5 2 2 3 6 2 7 1 1 1 6 7 8 Fed W 1 e 6 i r t d a h a l i n y a s g 1 e t 5 o n c d 9 y a 0 y o d s b 1 a l y ig s a tions—Total 6 1 , , 4 5 4 2 4 6 1 6 6 4 6 6 7 1 , , 1 7 8 4 4 4 0 0 8 4 2 2 7 1 1 , , , 4 8 4 0 9 6 6 1 9 4 3 8 6 1 , , 4 6 4 1 4 7 1 9 6 9 8 5 6 1 , , 4 6 4 2 4 7 2 0 6 2 5 6 6 1 , , 4 6 4 1 4 7 4 6 6 8 1 0 6 1 , , 4 2 5 4 4 6 6 1 6 4 6 6 6 1 , , 4 6 4 2 4 7 2 0 6 2 3 6 2 2 0 1 O O v v e e r r 5 I y y e e a a r r s t o to 5 1 y 0 e a y r e s a rs 2 1 , , 8 1 1 9 1 8 5 7 8 2 1 , , 8 1 1 9 1 8 5 7 8 2 1 , , 8 1 1 4 1 8 9 7 8 2 1 , , 8 1 1 4 1 8 9 7 8 2 1 , , 8 1 1 4 0 8 6 9 8 2 1 , , 8 0 1 9 8 8 2 7 8 2 1 , , 8 1 1 9 1 8 5 7 8 2 1 , , 8 1 1 4 0 8 6 9 8 1. Holdings under repurchase agreements are classified as maturing within 15 NOTE: Components may not add to totals because of rounding, days in accordance with maximum maturity of the agreements. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A12 Domestic Financial Statistics • September 1990 1.20 AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND MONETARY BASE1 Billions of dollars, averages of daily figures 1989 1990 11998866 11998877 11998888 11998899 IItteemm DDeecc.. DDeecc.. DDeecc.. DDeecc.. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS3 1 Total reserves3 58.02 58.59 60.59 60.03 59.65 60.03 59.90 60.22 60.30 60.28 59.78 59.73 2 Nonborrowed reserves4 57.20 57.82 58.88 59.77 59.30 59.77 59.46 58.77 58.17 58.65 58.45 58.85 3 Nonborrowed reserves plus extended credit . 57.50 58.30 60.12 59.79 59.32 59.79 59.48 59.30 60.12 60.05 59.32 59.20 4 Required reserves 56.65 57.55 59.55 59.11 58.70 59.11 58.88 59.23 59.44 59.38 58.82 58.% 5 Monetary base 241.43 258.06 275.24 284.95 283.22 284.95 287.51 289.71 291.82 293.54 294.40 296.27 No t seasonally adjusted 6 Total reserves7 59.46 60.07 62.22 61.67 59.87 61.67 61.58 59.20 59.23 61.05 58.74 59.61 7 Nonborrowed reserves v. 58.64 59.30 60.50 61.40 59.52 61.40 61.14 57.75 57.11 59.42 57.41 58.73 8 Nonborrowed reserves plus extended credit . 58.94 59.78 61.75 61.42 59.54 61.42 61.17 58.29 59.06 60.82 58.28 59.07r 9 Required reserves 58.09 59.03 61.17 60.75 58.92 60.75 60.56 58.21 58.37 60.15 57.78 58.84 10 Monetary base9 245.17 262.00 279.54 289.45 284.11 289.45 288.67 286.50 288.86 293.35 293.52 297.37 NOT ADJUSTED FOR CHANGES IN RESERVE REQUIREMENTS' 11 Total reserves11 59.56 62.14 63.75 62.81 60.99 62.81 62.93 60.62 60.66 62.51 60.23 61.20 12 Nonborrowed reserves .. 58.73 61.36 62.03 62.54 60.64 62.54 62.49 59.17 58.53 60.88 58.90 60.32 13 Nonborrowed reserves plus extended credit . 59.04 61.85 63.27 62.56 60.66 62.56 62.52 59.71 60.49 62.29 59.77 60.66 14 Required reserves 58.19 61.09 62.70 61.89 60.04 61.89 61.91 59.63 59.80 61.62 59.27 60.42 1 1 6 5 E M x o c n e e s t s a r r y e s b er a v se e s13 247 1 . . 6 3 2 7 266 1 . . 0 0 6 5 283 1 . . 0 0 0 5 292. . 5 9 5 2 287. . 1 9 9 5 292. . 5 9 5 2 292 1 . . 1 0 3 2 290. . 0 9 2 9 292. . 3 8 8 6 296. . 8 9 7 0 297. . 0 9 3 6 300. . 9 1 8 7 17 Borrowings from the Federal Reserve .83 .78 1.72 .27 .35 .27 .44 1.45 2.12 1.63 1.33 .88 1. Latest monthly and biweekly figures are available from the Board's H.3(502) 8. To adjust required reserves for discontinuities because of regulatory changes statistical release. Historical data and estimates of the impact on required reserves in reserve requirements, a multiplicative procedure is used to estimate what of changes in reserve requirements are available from the Monetary and Reserves required reserves would have been in past periods had current reserve require- Projections Section. Division of Monetary Affairs. Board of Governors of the ments been in effect. Break-adjusted required reserves includes required reserves Federal Reserve System, Washington, D.C. 20551. against transactions deposits and nonpersonal time and savings deposits (but not 2. Figures reflect adjustments for discontinuities or "breaks" associated with reservable nondeposit liabilities). regulatory changes to reserve requirements. 9. The break-adjusted monetary base equals break-adjusted total reserves (line 3. Seasonally adjusted, break adjusted total reserves equal seasonally adjusted, 6), plus the (unadjusted) currency component of the money stock, plus (for all break-adjusted required reserves (line 4) plus excess reserves (line 16). quarterly reporters on the "Report of Transaction Accounts, Other Deposits and 4. Seasonally adjusted, break-adjusted nonborrowed reserves equal seasonally Vault Cash" and for all those weekly reporters whose vault cash exceeds their adjusted, break-adjusted total reserves (line 1) less total borrowings of depository required reserves) the break-adjusted difference between current vault cash and institutions from the Federal Reserve (line 17). the amount applied to satisfy current reserve requirements. 5. Extended credit consists of borrowing at the discount window under 10. Reflects actual reserve requirements, including those on nondeposit liabilthe terms and conditions established for the extended credit program to help ities, with no adjustments to eliminate the effects of discontinuities associated depository institutions deal with sustained liquidity pressures. Because there is with changes in reserve requirements. not the same need to repay such borrowing promptly as there is with traditional 11. Reserve balances with Federal Reserve Banks plus vault cash used to short-term adjustment credit, the money market impact of extended credit is satisfy reserve requirements. similar to that of nonborrowed reserves. 12. The monetary base, not break-adjusted and not seasonally adjusted, 6. The seasonally adjusted, break-adjusted monetary base consists of season- consists of total reserves (line 11), plus required clearing balances and adjustally adjusted, break-adjusted total reserves (line 1), plus the seasonally adjusted ments to compensate for float at Federal Reserve Banks, plus the currency currency component of the money stock, plus (for all quarterly reporters on the component of the money stock, plus (for all quarterly reporters on the "Report of "Report of Transaction Accounts, Other Deposits and Vault Cash" and for all Transaction Accounts, Other Deposits and Vault Cash" and for all those weekly those weekly reporters whose vault cash exceeds their required reserves,) the reporters whose vault cash exceeds their required reserves) the difference seasonally adjusted, break-adjusted difference between current vault cash and the between current vault cash and the amount applied to satisfy current reserve amount applied to satisfy current reserve requirements. requirements. After the introduction of CRR, currency and vault cash figures are 7. Break-adjusted total reserves equal break-adjusted required reserves (line 9) measured over the computation periods ending on Mondays. plus excess reserves (line 16). 13. Unadjusted total reserves (line 11) less unadjusted required reserves (line 14). 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 1990 2 1986 1987 1988 1989 Dec. Dec. Dec. Dec. Mar. Apr. May June Seasonally adjusted 1 Ml 724.7 750.4 787.5 794.8 804.8 807.4 805.5 809.6 2 M2 2,814.2 2,913.2 3,072.4 3,221.0 3,266.2 3,271.8 3,264.6 3,269.9 3 M3 3,494.5 3,678.7 3,918.4 4,042.0 4,061.5 4,065.1 4,055.7 4,055.0 4 L 4,135.5 4,338.9 4,67610 4,879.2 4,908.3 4,917.9 4,889.3 n.a. 5 Debt 7,588.3 8,307.5 9,062.0 9,777.6 9,953.0 10,005.3 10,057.4 n.a. Ml components 6 Currency3 180.6 196.7 211.8 221.9 228.4 230.1 231.6 233.4 7 Travelers checks4 6.5 7.0 7.5 7.4 7.6 7.6 7.7 7.7 8 Demand deposits5 302.1 287.0 287.0 279.7 279.3 277.8 274.6 274.5 9 Other checkable deposits6 235.5 259.7 281.3 285.7 289.5 291.8 291.6 294.0 Nontrgnsactions components 10 In M2 2,089.6 2,162.8 2,284.9 2,426.2 2,461.4 2,464.5 2,459.1 2,460.3 11 In M3 only8 680.3 765.5 845.9 821.0 795.3 793.2 791.2 785.1 Time and Savings accounts Commercial banks 12 Savings deposits 155.8 178.3 192.0 188.5 193.4 193.8 193.5 195.0 13 Money market deposit accounts 377.7 356.4 350.2 351.5 359.1 362.3 365.4 368.3 14 Small time deposits 366.3 388.1 447.5 528.6 537.2 541.4 550.8 559.4 15 Large time deposits10, 11 289.8 326.9 368.2 401.5 396.3 394.6 396.4 396.9 Thrift institutions 16 Savings deposits 214.3 236.6 235.9 220.5 221.2 222.0 221.6 220.9 17 Money market deposit accounts 193.3 167.4 150.1 132.2 135.8 136.6 134.7 133.1 18 Small time deposits 489.9 529.7 583.5 613.7 606.6 602.7 594.4 584.0 19 Large time deposits 150.0 161.9 172.9 156.8 147.3 143.0 138.2 134.8 Money market mutual funds 20 General purpose and broker-dealer 208.7 222.0 240.9 312.4 325.0 324.8 319.4 321.0 21 Institution-only 83.8 89.0 87.1 102.3 105.4 106.8 107.3 107.3 Debt components 22 Federal debt 1,805.8 1,957.4 2,113.5 2,265.7 2,325.9 2,340.9 2,353.7 n.a. 23 Nonfederal debt 5,782.5 6,350.1 6,948.5 7,511.9 7,627.1 7,664.4 7,703.7 n.a. Not seasonally adjusted 24 Ml 740.5 766.4 804.5 812.1 795.7 817.3 796.6 810.2 25 M2 2,826.5 2,925.6 3,085.2 3,233.9 3,261.0 3,283.1 3,249.6 3,267.1 26 M3 3,508.8 3,692.7 3,932.5 4,056.0 4,060.2 4,071.8 4,040.1 4,048.7 27 4,151.5 4,355.2 4,692.7 4,896.9 4,906.2 4,921.3 4,876.9 n.a. 28 7,572.0 8,289.0 9,047.3 9,762.2 9,914.3 9,966.3 10,015.6 n.a. Ml components 29 Currency 183.0 199.3 214.8 225.3 227.0 229.5 231.7 234.7 30 Travelers checks 6.0 6.5 6.9 6.9 7.3 7.3 7.5 8.1 31 Demand deposits5 314.0 298.6 298.9 291.6 271.6 279.8 268.6 274.9 32 Other checkable deposits6 237.5 262.0 283.8 288.4 289.7 300.8 288.8 292.4 Nontrgnsactions components In M2 2,086.0 2,159.2 2,280.8 2,421.8 2,465.3 2,465.7 2,453.1 2,456.9 34 In M3 only8 682.3 767.0 847.3 822.2 799.2 788.7 790.5 781.6 Time and Savings accounts Commercial banks 35 Savings deposits 154.4 176.9 190.6 187.2 193.2 194.3 194.1 196.2 36 Money market deposit accounts 379.8 359.0 353.2 355.0 360.8 362.5 361.1 365.9 37 Small time deposits' 366.1 387.3 446.0 526.4 538.3 541.7 549.8 560.5 38 Large time deposits • 289.2 325.8 366.9 399.8 399.2 394.6 396.8 396.4 Thrift institutions 39 Savings deposits 212.7 234.9 234.2 219.0 220.9 222.4 221.9 222.4 40 Money market deposit accounts 192.9 167.5 150.6 132.8 136.1 135.9 133.8 132.5 41 Small time deposits' 489.8 529.1 582.4 612.3 605.9 602.4 592.7 583.1 42 Large time deposits10 150.7 162.9 174.2 158.3 146.4 141.6 137.4 133.5 Money market mutual funds 43 General purpose and broker-dealer 208.0 221.5 240.5 312.2 329.5 328.4 318.7 318.9 44 Institution-only 84.4 89.6 87.6 102.9 106.8 105.8 106.7 106.1 Repurchase agreements and Eurodollars 45 Overnight 82.3 83.2 83.3 76.8 80.7 78.1 81.1 77.3 46 n.a. 197.1 227.7 176.3 159.7 158.7 161.0 159.1 Debt components 47 Federal debt 1,803.9 1,955.6 2,111.8 2,264.1 2,317.3 2,329.1 2,337.8 n.a. 48 Nonfederal debt 5,768.1 6,333.4 6,935.5 7,498.1 7,597.0 7,637.2 7,677.9 n.a. For notes see following page. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A14 Domestic Financial Statistics • September 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. Data are derived from the Federal Ml: (1) currency outside the Treasury, Federal Reserve Banks, and the vaults Reserve Board's flow of funds accounts. Debt data are based on monthly of depository institutions; (2) travelers checks of nonbank issuers; (3) demand 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, money market deposit Reserve float. accounts (MMDAs), savings and small-denomination time deposits (time depos- 6. Consists of NOW and ATS balances at all depository institutions, credit its—including retail RPs—in amounts of less than $100,000), and balances in both union share draft balances, and demand deposits at thrift institutions. taxable and tax-exempt general purpose and broker-dealer money market mutual 7. Sum of overnight RPs and overnight Eurodollars, money market fund funds. Excludes individual retirement accounts (IRA) and Keogh balances at balances (general purpose and broker-dealer), MMDAs, and savings and small depository institutions and money market funds. Also excludes all balances held time deposits. by U.S. commercial banks, money market funds (general purpose and broker- 8. Sum of large time deposits, term RPs, and term Eurodollars of U.S. dealer), foreign governments and commercial banks, and the U.S. government. residents, money market fund balances (institution-only), less a consolidated M3: M2 plus large-denomination time deposits and term RP liabilities (in adjustment that represents the estimated amount of overnight RPs and Eurodolamounts of $100,000 or more) issued by all depository institutions, term Eurodol- lars held by institution-only money market funds. lars held by U.S. residents at foreign branches of U.S. banks worldwide and at all 9. Small-denomination time deposits—including retail RPs—are those issued banking offices in the United Kingdom and Canada, and balances in both taxable in amounts of less than $100,000. All individual retirement accounts (IRA) and and tax-exempt, institution-only money market mutual funds. Excludes amounts Keogh accounts at commercial banks and thrifts are subtracted from small time held by depository institutions, the U.S. government, money market funds, and deposits. foreign banks and official institutions. Also subtracted is the estimated amount of 10. Large-denomination time deposits are those issued in amounts of $100,000 overnight RPs and Eurodollars held by institution-only money market mutual or more, excluding those booked at international banking facilities. 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 1990 BBaannkk ggrroouupp,, oorr ttyyppee ooff ccuussttoommeerr 11998877 11998888 11998899 Nov. Dec. Jan. Feb. Mar. Apr. DEBITS TO Seasonally adjusted Demand deposits3 1 217,116.2 226,888.4 272,793.1 296,768.7 280,074.4 286,425.2 229999,,445500..22 228855,,111111..55 227744,,440033..66 ? Major New York City banks 104,496.3 107,547.3 121,894.2R 130,440.2 131,681.3 123,744.6 132,031.4 132,470.3 124,988.2 3 112,619.8 119,341.2 150,898.9 166,328.5 148,393.1 162,680.5 167,418.8 152,641.2 149,415.4 4 ATS-NOW accounts4 2,402.7 2,757.7 3,501.8 3,855.2 3,727.5 3,910.4 4,115.7 4,075.7 3,993.3 5 Savings deposits5 526.5 579.2R 636.6 610.3 615.8 609.2 587.3 617.6 583.1 DEPOSIT TURNOVER Demand deposits3 6 612.1 641.2 781.0 855.7 797.7 820.0 885511..44 881133..33 778800..88 7 Major New York City banks 2,670.6 2,903.5 3,401.6 3,499.8 3,578.1 3,422.4 3,677.3 3,760.2 3,551.5 8 Other banks 357.0 376.8 481.5 537.3 472.1 519.5 530.1 484.0 472.5 9 ATS-NOW accounts4 13.8 14.7 18.3 19.7 18.9 19.8 20.6 20.2 19.7 10 Savings deposits5 3.1 3.1 3.5 3.3 3.3 3.3 3.1 3.2 3.0 DEBITS TO Not seasonally adjusted Demand deposits3 11 217,125.1 227,010.7 271,957.3 285,372.8 283,603.3 303,668.0 227700,,885522..77 229911,,886688..66 227766,,007777..55 1? Major New York City banks 104,518.8 107,565.0 122,241.8 129,905.5 129,690.0 131,796.0 119,305.2 137,029.5 125,750.6 13 Other banks 112,606.2 119,445.7 149,715.5 155,467.3 153,913.3 171,872.0 151,547.5 154,839.2 150,326.9 14 ATS-NOW accounts4 2,404.8 2,754.7 3,496.5 3,611.5 3,904.0 4,263.7 3,721.3 4,030.4 4,285.8 15 MMDA6 1,954.2 2,430.1 2,790.6R 2,569.1 2,880.5 3,075.9 2,551.2 2,714.9 2,848.4 16 Savings deposits' 526.8 578.0 635.8 555.9 630.1 629.3 518.7 594.2 646.8 DEPOSIT TURNOVER Demand deposits3 17 All insured banks 612.3 641.7 779.0 815.6 769.3 884477..99 779911..88 885500..44 778844..44 18 Major New York City banks 2,674.9 2,901.4 3,415.4 3,548.5 3,250.4 3,433.3 3,314.9 3,836.2 3,564.6 19 Other banks 356.9 377.1 477.8 496.3 468.1 537.5 495.2 503.6 474.7 20 ATS-NOW accounts4 13.8 14.7 18.3 18.5 19.5 21.1 18.7 20.0 20.5 71 MMDA6 5.3 6.9 8.3 7.4 8.2 8.7 7.2 7.6 7.9 22 Savings deposits 3.1 3.1 3.5 3.0 3.4 3.4 2.8 3.1 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 Financial Statistics • September 1990 1.23 LOANS AND SECURITIES All Commercial Banks1 Billions of dollars; averages of Wednesday figures 1989 1990 CCaatteeggoorryy July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June Seasonally adjusted 1 Total loans and securities2 2,512.4 2,527.4 2,538.9 2,563.3 2,579.0 2,582.6 2,585.8 2,603.8 2,623.8 2,635.0 2,644.1 2,662.0 2 U.S. government securities 374.0 375.5 378.1 389.9 394.8 394.4 402.4 412.2 418.9 422.7 427.9 438.8 3 Other securities 186.3 183.8 183.1 180.9 179.3 180.3 180.2 180.1 180.2 180.8 179.2 178.5 4 Total loans and leases2 1,952.1 1,968.2 1,977.7 1,992.5 2,004.9 2,007.9 2,003.2 2,011.6 2,024.7 2,031.6 2,037.0 2,044.7 5 Commercial and industrial ..... 631.8 636.1 637.7 641.9 645.9 642.9 639.0 637.9 642.8 648.2 647.9 651.2 6 Bankers acceptances held ... 7.9 8.1 8.4 8.8 8.1 7.6 7.4 8.0 8.3 8.4 8.4 8.7 7 Other commercial and industrial 623.9 628.0 629.3 633.2 637.8 635.3 631.6 629.8 634.5 639.8 639.5 642.5 8 U.S. addressees 619.8 624.3 625.4 628.9 632.7 629.8 623.9 623.9 628.2 633.7 634.8 637.4 9 Non-U.S. addressees 4.0 3.7 3.9 4.2 5.1 5.5 7.7 5.9 6.3 6.1 4.7 5.1 10 Real estate 720.1 727.7 735.8 742.6 749.2 756.4 759.6 768.1 774.4 779.4 787.5 793.7 11 Individual 365.8 367.5 370.3 372.6 374.6 375.9 377.9 378.9 379.2 377.8 379.2 377.9 12 Security 40.1 39.0 39.7 41.2 41.5 39.6 40.1' 41.1' 38.3' 37.C 35.7 36.1 13 Nonbank financial institutions 31.3 31.5 31.8 33.2' 33.7' 32.7 32.3 33.0 34.2' 34.3' 33.8 33.6 14 Agricultural 30.0 29.9 29.6 29.6 29.9 30.3 30.9 31.0 31.2' 31.4' 31.2 32.0 13 State and political subdivisions 42.5 42.2 41.7 41.3 40.8 40.1 38.6 38.9 38.4 38.2 37.9 37.4 16 Foreign banks 7.9 8.1 7.5 8.5 8.0 8.6 7.9 7.8 8.4 9.0 8.8 7.5 17 Foreign official institutions 4.3 4.1 4.2 3.9 3.6 3.6 3.2 3.1 3.0 3.2 3.2 3.1 18 Lease financing receivables .... 30.7 31.0 31.3 31.7 31.6 31.4 31.6 31.6 31.8 31.6 31.8 31.5 19 All other loans 47.7 51.0 48.0 46.0r 46.C 46.4' 42.1' 40.2' 42^ 41.6' 40.0 40.7 Not seasonally adjusted 20 Total loans and securities2 2,507.0 2,521.1 2,537.5 2,563.6 2,581.0 2,590.6 2,591.5 2,606.2 2,618.1 2,635.3 2,643.7 2,662.0 21 U.S. government securities 372.1 376.1 377.2 387.3 394.9 395.6 404.1 416.7 420.4 422.5 427.0 435.8 22 Other securities 184.7 183.8 183.3 181.8 180.5 181.2 180.7 179.9 179.8 180.2 178.6 177.7 23 Total loans and leases2 1,950.2 1,961.2 1,977.0 1,994.5 2,005.6 2,013.8 2,006.7 2,009.5 2,017.9 2,032.6 2,038.2 2,048.5 24 Commercial and industrial ..... 631.9 633.4 633.7 639.3 643.1 642.8 637.5 638.5 644.5 652.5 652.1 653.6 23 Bankers acceptances held3... 7.6 8.1 8.4 8.9 8.2 7.7 7.5 8.1 8.2 8.2 8.3 8.6 26 Other commercial and industrial 624.3 625.3 625.3 630.4 634.9 635.1 630.0 630.4 636.3 644.3 643.8 645.0 27 U.S. addressees 618.6 619.8 619.8 624.7 629.4 629.8 625.0 625.6 631.5 639.5 639.0 640.4 28 Non-U.S. addressees 5.7 5.5 5.5 5.6 5.5 5.3 5.0 4.9 4.8 4.8 4.8 4.6 29 Real estate 720.7 729.2 737.8 743.9 750.9 757.1 759.7 765.5 771.7 777.5 786.4 793.6 30 Individual 364.3 367.7 372.1 373.7 376.0 380.3 381.5 378.1 376.0 375.0 376.7 376.1 31 Security 40.2 38.4 38.8 40.1 40.3 38.6 38.3' 40.5' 39.2' 39.5' 36.3 38.3 32 Nonbank financial institutions 31.4 31.3 31.4 32.8' 34.0' 33.8 33.0 32.6 33.4' 34.2' 33.8 34.0 33 Agricultural 30.7 30.7 30.5 30.4 30.2 30.2 30.3 30.1 30.1 30.4 30.9 32.4 34 State and political subdivisions 42.1 41.9 41.6 41.2 40.6 39.7 39.5 39.3 38.6 38.2 37.8 37.2 33 Foreign banks 8.0 8.1 7.8 8.8 8.1 8.4 8.0 7.7 7.9 8.5 8.8 7.7 36 Foreign official institutions 4.3 4.1 4.2 3.9 3.6 3.6 3.2 3.1 3.0 3.2 3.2 3.1 37 Lease financing receivables .... 30.4 30.9 31.2 31.6 31.6 31.5 32.0 31.8 31.7 31.7 31.8 31.5 38 All other loans 46.2 45.6 47.8 48.7' 47.1' 47.7' 43.6' 42.3' 41.8' 42.1' 40.6 41.1 1. Data have been revised because of benchmarking and seasonal adjustment 2. Excludes loans to commercial banks in the United States, revisions beginning January 1973. These data also appear in the Board's G.7 (407) 3. Includes nonfinancial commercial paper held, release. For address, see inside front cover. 4. United States includes the 50 states and the District of Columbia. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Commercial Banking Institutions A17 1.24 MAJOR NONDEPOSIT FUNDS OF COMMERCIAL BANKS1 Monthly averages, billions of dollars 1989 1990 SSoouurrccee July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Seasonally adjusted 1 Total nondeposit funds 238.8 238.6 246.2 253.5 255.1 255.5 225566..22 265.4 226688..88 226666..11 226666..22 226644..33 2 Net balances due to related foreign offices 11.4 9.7 11.1 10.2 8.6 7.4 10.9 14.6 17.2 16.5 24.3 14.7 3 Borrowings from other than commercial banks in United States4 227.4 228.9 235.0 243.3 246.4 248.1 245.3 250.8 225511..66 224499..55 224411..99 224499..66 4 Domestically chartered banks 182.8 183.9 189.1 195.3 196.9 198.6 194.7 198.9 195.7 190.9 185.0 194.6 5 Foreign-related banks 44.6 44.9 46.0 48.0 49.6 49.5 50.7 51.9 56.0 58.7 56.9 55.0 Not seasonally adjusted 6 Total nondeposit funds 234.4 238.1 242.8 248.8 254.0 249.0 252.8 268.6 274.6 268.8 274.7R 269.0 7 Net balances due to related foreign offices 9.2 10.1 11.7 9.6 9.7 9.7 10.5 14.2 16.0 14.3 26.2 15.4 8 Domestically chartered banks -16.4 -15.5 -14.3 -15.0 -15.5 -19.2 -14.5 -11.1 -11.5 -10.7 -1.5 -6.3 9 Foreign-related banks 25.6 25.6 26.0 24.6 25.2 28.9 25.0 25.3 27.6 24.9 27.6 21.7 10 Borrowings from other than commercial banks in United States4 225.2 228.0 231.1 239.1 244.3 239.3 242.3 254.3 225588..66 225544..66 224488..55 225533..66 11 Domestically chartered banks 180.2 183.5 186.1 192.3 197.1 192.2 190.7 200.8 201.4 194.9 190.7 196.3 1? Federal funds and security RP borrowings 177.2 180.5 183.1 189.3 194.6 189.7 188.1 197.1 119977..00 119911..22 118877..33 119933..11 13 Other6 3.1 3.0 3.0 3.0 2.4 2.5 2.7 3.7 4.5 3.7 3.4 3.2 14 Foreign-related banks 45.0 44.5 45.0 46.8 47.2 47.1 51.5 53.5 57.2 59.7 57.8 57.4 MEMO Gross large time deposits 15 Seasonally adjusted 463.4 462.0 460.0 461.4 464.0 464.3 462.7 460.6 445577..33 445555..11 445544..66 445522..55 16 Not seasonally adjusted 461.1 462.6 461.5 462.6 464.4 462.7 460.4 460.3 460.1 455.1 455.1 452.0 U.S. Treasury demand balances at commercial banks 17 Seasonally adjusted 22.4 22.3 22.8 21.5 20.4 21.1 20.2 17.8 19.2 21.2 18.6 20.5 18 Not seasonally adjusted 23.0 15.8 24.9 20.6 14.7 19.6 23.2 22.0 16.7 20.0 25.2 21.0 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 federtl 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 Financial Statistics • September 1990 1.25 ASSETS AND LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS Last-Wednesday-of-Month Series1 Billions of dollars 1989 1990 AAccccoouunntt Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June ALL COMMERCIAL BANKING INSTITUTIONS2 1 Loans and securities 2,694.2 2,700.5 2,734.8 2,771.2 2,779.0 2,789.0 2,797.6 2,806.9 2,823.6 2,831.1 2,852.8 2 Investment securities 542.8 541.4 544.7 548.3 549.0 561.2 568.0 573.5 578.6 586.9 589.1 3 U.S. government securities 364.7 365.1 370.0 374.4 374.1 387.5 395.3 401.8 408.2 416.6 420.9 4 Other 178.1 176.3 174.7 173.9 174.9 173.8 172.7 171.7 170.5 170.2 168.2 5 Trading account assets 18.7 18.3 26.6 27.6 23.4 31.9 30.4 26.0 23.9 21.3 23.7 6 Total loans 2,132.7 2,140.8 2,163.6 2,195.3 2,206.5 2,195.8 2,199.2 2,207.4 2,221.1 2,222.9 2,240.0 7 Interbank loans 170.4 165.4 171.8 187.6 190.5 189.0 187.3 189.7 187.7 186.0 191.7 8 Loans excluding interbank 1,962.3 1,975.3 1,991.8 2,007.7 2,016.0 2,006.8 2,011.9 2,017.7 2,033.4 2,036.9 2,048.3 9 Commercial and industrial 632.4 632.1 638.9 643.0 644.3 636.4 640.6 643.8 652.2 650.2 653.5 10 Real estate 732.6 739.6 745.0 753.6 758.3 761.3 767.2 774.3 779.5 789.7 795.1 11 Individual 369.6 373.8 374.3 376.8 382.4 381.4 378.0 374.7 376.4 377.0 377.3 12 All other 227.8 229.9 233.6 234.2 231.1 227.6 226.2 224.9 225.3 220.1 222.4 13 Total cash assets 210.6 218.5 212.0 234.2 258.0 222.0 228.5 217.0 216.6 244.7 227.5 14 Reserves with Federal Reserve Banks. 28.8 31.8 28.5 38.7 42.8 24.5 29.3 31.8 31.3 27.5 31.8 15 Cash in vault 28.4 27.9 27.8 30.7 31.5 28.0 27.9 27.8 28.6 29.9 28.9 16 Cash items in process of collection ... 77.5 82.6 77.5 84.2 98.9 89.8 91.5 80.0 80.1 100.7 86.2 17 Demand balances at U.S. depository institutions 29.1 28.5 28.3 28.5 32.1 29.6 31.0 27.5 26.5 32.2 27.7 18 Other cash assets 46.9 47.6 49.9 52.2 52.7 50.1 48.9 49.8 50.1 54.4 52.9 19 Other assets 209.8 214.1 210.3 207.1 212.7 219.3 214.0 209.9 206.9 202.7 212.3 20 Total assets/total liabilities and capital.... 3,114.6 3,133.1 3,157.2 3,212.5 3,249.6 3,230.3 3,240.1 3,233.7 3,247.0 3,278.5 3,292.5 21 Deposits 2,169.0 2,177.0 2,196.0 2,223.2 2,267.6 2,243.3 2,257.8 2,246.6 2,252.3 2,288.1 2,273.9 22 Transaction deposits 581.4 586.5 585.8 600.4 641.5 611.3 615.9 593.9 600.5 617.7 598.5 23 Savings deposits 516.9 518.6 525.6 535.6 538.2 540.5 545.8 551.1 548.1 553.7 555.4 24 Time deposits 1,070.7 1,072.0 1,084.6 1,087.2 1,087.8 1,091.5 1,096.1 1,101.6 1,103.8 1,116.6 1,120.0 25 Borrowings 507.6 519.8 529.7 546.0 534.3 556.1 546.0 548.3 562.8 543.1 570.5 26 Other liabilities 227.4 226.0 225.2 236.0 239.8 223.8 227.4 228.1 220.0 235.3 234.3 27 Residual (assets less liabilities) 210.6 210.3 206.3 207.4 208.0 207.1 208.9 210.7 211.9 212.0 213.9 MEMO 28 U.S. government securities (including trading account) 376.9 377.2 389.6 394.8 390.7 412.6 418.6 419.5 423.4 429.7 434.7 29 Other securities (including trading account) 184.6 182.5 181.7 181.1 181.8 180.6 179.7 180.0 179.1 178.4 178.0 DOMESTICALLY CHARTERED COMMERCIAL BANKS3 30 Loans and securities 2,467.5 2,477.6 2,511.0 2,531.2 2,540.4 2,552.7 2,559.7 2,562.4 2,573.1 2,576.6 2,594.2 31 Investment securities 519.9 519.1 521.3 522.6 523.3 534.2 540.6 544.6 548.2 554.2 554.2 32 U.S. government securities 354.4 355.4 359.4 362.6 363.3 374.7 382.1 387.4 393.7 399.7 402.2 33 Other 165.5 163.7 161.9 160.0 160.1 159.5 158.5 157.2 154.5 154.6 152.0 34 Trading account assets 18.7 18.3 26.6 27.6 23.4 31.9 30.4 26.0 23.9 21.3 23.7 35 Total loans 1,928.8 1,940.2 1,963.2 1,981.0 1,993.7 1,986.5 1,988.7 1,991.7 2,001.0 2,001.0 2,016.3 36 Interbank loans 132.3 130.7 140.7 148.4 152.8 151.4 149.8 148.6 149.4 145.2 153.3 37 Loans excluding interbank 1,796.5 1,809.5 1,822.5 1,832.5 1,840.9 1,835.1 1,838.9 1,843.1 1,851.6 1,855.9 1,863.0 38 Commercial and industrial 512.4 511.3 515.7 516.9 516.9 513.4 517.7 518.9 523.3 519.6 519.5 39 Real estate 706.2 713.0 718.0 725.0 729.7 731.6 736.5 743.1 746.7 756.7 761.2 40 Individual 369.6 373.8 374.3 376.8 382.4 381.4 378.0 374.7 376.4 377.0 377.3 41 All other 208.3 211.4 214.4 213.9 211.9 208.7 206.8 206.4 205.2 202.6 205.0 42 Total cash assets 188.9 194.9 188.7 206.7 231.7 198.2 203.1 191.1 191.5 214.7 198.9 43 Reserves with Federal Reserve Banks. 27.0 29.5 26.7 37.9 41.7 22.7 27.5 29.8 29.8 26.6 30.8 44 Cash in vault 28.4 27.9 27.8 30.6 31.5 28.0 27.8 27.8 28.5 29.9 28.9 45 Cash items in process of collection ... 76.6 81.3 76.3 82.3 97.5 88.3 90.2 78.5 78.7 99.2 84.2 46 Demand balances at U.S. depository institutions 27.4 26.8 26.4 26.6 30.2 27.7 28.9 25.9 24.8 30.3 26.0 47 Other cash assets 29.5 29.3 31.6 29.3 30.8 31.4 28.6 29.1 29.6 28.7 28.9 48 Other assets 136.2 140.1 131.0 137.1 140.9 143.2 139.6 136.4 135.0 137.5 141.9 49 Total assets/liabilities and capital 2,792.6 2,812.5 2,830.8 2,875.0 2,913.0 2,894.0 2,902.4 2,889.9 2,899.5 2,928.8 2,935.0 50 Deposits 2,088.9 2,095.8 2,113.8 2,140.8 2,184.3 2,160.7 2,175.6 2,165.0 2,170.0 2,205.9 2,191.5 51 Transaction deposits 572.6 576.6 576.1 590.5 631.3 600.8 605.7 584.2 590.8 607.8 588.2 52 Savings deposits 514.3 515.8 523.0 532.8 535.4 537.7 542.9 548.2 545.1 550.8 552.5 53 Time deposits 1,002.0 1,003.4 1,014.7 1,017.5 1,017.7 1,022.2 1,027.0 1,032.6 1,034.1 1,047.3 1,050.9 54 Borrowings 376.7 392.4 395.1 406.8 400.6 407.3 397.3 395.9 402.8 389.1 408.5 55 Other liabilities 120.0 117.5 119.2 123.6 123.7 122.5 124.2 122.0 118.4 125.4 124.7 56 Residual (assets less liabilities) 207.0 206.7 202.7 203.7 204.4 203.4 205.3 207.1 208.3 208.4 210.3 MEMO 57 Real estate loans, revolving 46.8 47.6 48.0 48.6 49.3 50.4 50.8 51.2 52.4 53.3 54.3 58 Real estate loans, other 659.4 665.4 670.1 676.4 680.4 681.1 685.7 691.9 694.3 703.4 706.9 1. Back data are available from the Banking and Monetary Statistics section, the last Wednesday of the month based on a weekly reporting sample of Board of Governors of the Federal Reserve System, Washington, D.C., 20551. foreign-related institutions and quarter-end condition reports. These data also appear in the Board's weekly H.8 (510) release. 2. Commercial banking institutions include insured domestically chartered Figures are partly estimated. They include all bank-premises subsidiaries and commercial banks, branches and agencies of foreign banks, Edge Act and other significant majority-owned domestic subsidiaries. Loan and securities data Agreement corporations, and New York State foreign investment corporations. for domestically chartered commercial banks are estimates for the last Wednes- 3. Insured domestically chartered commercial banks include all member banks day of the month based on a sample of weekly reporting banks and quarter-end and insured nonmember banks. condition report data. Data for other banking institutions are estimates made for Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Weekly Reporting Commercial Banks A19 1.26 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS1 Millions of dollars, Wednesday figures May 2' May y May 16 May 23 May 30 June 6 June 13 June 20 June 27 1 Cash and balances due from depository institutions 116,576 103,220 114,431' 104,176' 123,112' 112,508 114,579 111,026 113,139 2 Total loans, leases, and securities, net 1,300,839 1,284,253 1,287,516 1,284,059 1,287,529 1,293,426 1,297,320 1,305,049 1,297,626 3 U.S. Treasury and government agency 172,591 170,790 172,460' 174,469' 173,321' 178,435 177,574 179,074 174,359 6 4 5 T I M n r o v a r e d t s i g t n m a g g e a e n - c t b c a o a c u c k c n e o t d u n s t e curities 1 7 5 1 6 7 4 , , , 6 6 9 1 1 7 4 8 3 1 7 5 1 6 7 3 , , , 7 5 2 3 1 7 6 1 9 1 7 5 1 6 7 5 , , , 3 3 1 0 3 2 0 9 lr ' ' 1 7 5 1 9 9 4 , , , 6 9 4 7 8 8 4 7 2 ' ' ' 1 7 6 1 9 0 3 , , , 9 2 0 3 6 6 6 1 0 ' ' ' 1 8 6 1 0 0 7 , , , 1 8 5 6 5 7 0 9 6 1 8 6 1 0 1 6 , , , 2 0 5 4 4 3 5 0 4 1 8 6 1 0 1 7 , , , 9 5 4 9 8 9 3 4 0 1 7 6 1 9 0 3 , , , 3 4 8 1 9 6 5 8 1 All other maturing in 7 One year or less 24,569 24,453 24,061' 23,467' 23,166' 22,997 22,948 22,873 22,876 8 Over one through five years 34,390 34,380 34,617' 34,729' 34,803' 35,211 35,226 35,091 35,596 9 Over five years 22,045 22,010 22,143' 22,118' 22,356' 22,490 22,622 22,626 22,710 10 Other securities 62,946 62,915 63,101' 62,881' 62,804' 62,622 62,327 62,459 62,792 11 Trading account 847 890 807r 809' 787' 781 864 942 1,474 12 Investment account 62,098 62,025 62,294r 62,071' 62,017' 61,840 61,463 61,517 61,318 13 States and political subdivisions, by maturity 34,362 34,364 34,359 34,241 34,077 33,800 33,467 33,254 33,025 14 One year or less 3,922 3,873 3,914 3,939 3,945 3,919 3,953 3,801 3,709 15 Over one year 30,439 30,492 30,446 30,302 30,132 29,881 29,514 29,453 29,316 16 Other bonds, corporate stocks, and securities 27,736 27,660 27,934r 27,830' 27,939' 28,040 27,996 28,263 28,293 17 Other trading account assets 8,115 8,353 7,545 7,014 7,468 8,435 8,663 8,613 8,346 18 Federal funds sold3 80,935 68,869 70,063 67,680 70,306 69,685 75,234 79,204 78,695 19 To commercial banks 57,211 49,367 48,974 48,555 51,496 48,632 53,566 57,645 59,645 20 To nonbank brokers and dealers in securities 17,359 13,974 15,577r 14,066' 13,390 15,186 15,991 16,274 13,925 21 To others 6,365 5,528 5,513' 5,059' 5,419 5,867 5,677 5,285 5,125 22 Other loans and leases, gross 1,017,768 1,014,974 1,016,078 1,013,754 1,015,111 1,015,618 1,014,822 1,016,908 1,014,347 23 Other loans, gross 990,893 988,144 989,231 986,750 988,142 989,007 988,261 990,346 987,745 24 Commercial and industrial 327,041 326,369 325,343 323,504 322,750 323,224 322,283 323,404 322,067 25 Bankers acceptances and commercial paper 1,558 1,584 1,555 1,582 1,604 1,777 1,679 1,672 1,664 26 All other 325,482 324,784 323,788 321,922 321,147 321,447 320,604 321,732 320,403 27 U.S. addressees 323,976 323,407 322,268 320,528 319,774 320,134 319,247 320,404 319,144 28 Non-U.S. addressees 1,506 1,378 1,519 1,393 1,372 1,313 1,357 1,328 1,260 29 Real estate loans 367,336 368,368 369,139 371,036 371,681 372,697 373,664 374,243 373,547 30 Revolving, home equity 29,030 29,100 29,283 29,413 29,594 29,700 29,839 30,005 30,126 31 All other 338,306 339,269 339,856 341,623 342,086 342,997 343,825 344,238 343,421 32 To individuals for personal expenditures 174,375 174,156 174,612 174,889 174,689 173,074 173,240 173,710 174,204 33 To depository and financial institutions 53,624 52,011 52,656' 51,663' 52,593' 51,841 50,890 49,968 49,192 34 Commercial banks in the United States 25,895 24,864 25,572 24,900 24,552 23,859 23,053 22,289 21,399 35 Banks in foreign countries 4,675 3,948 3,972 4,278 5,220 4,313 4,439 3,874 4,0% 36 Nonbank depository and other financial institutions 23,054 23,199 23,112' 22,485' 22,821' 23,668 23,399 23,806 23,696 37 For purchasing and carrying securities 14,358 14,389 14,044 13,382 13,526 14,827 14,524 14,915 15,755 38 To finance agricultural production 5,763 5,750 5,812 5,863 5,875 5,918 5,969 6,029 6,036 39 To states and political subdivisions 23,911 23,886 23,812 23,748 23,716 23,675 23,549 23,463 23,233 40 To foreign governments and official institutions ... 1,412 1,538 1,614 1,472 1,495 1,440 1,601 1,455 1,373 41 All other 23,073 21,676 22,200' 21,194' 21,816' 22,311 22,540 23,159 22,338 42 Lease financing receivables 26,874 26,830 26,847 27,004 26,969 26,611 26,562 26,563 26,602 43 LESS: Unearned income 4,529 4,535 4,544 4,571 4,552 4,565 4,572 4,571 4,585 44 Loan and lease reserve 36,986 37,114 37,186 37,168 36,927 36,804 36,729 36,638 36,328 45 Other loans and leases, net 976,252 973,325 974,348 972,015 973,632 974,249 973,521 975,700 973,434 46 All other assets 131,740 131,416 129,599' 128,514' 129,699' 131,048 131,042 130,470 133,949 47 Total assets 1,549,154 1,518,889 1,531,547' 1,516,749' 1,540,340' 1,536,982 1,542,940 1,546,545 1,544,715 48 Demand deposits 233,173 213,554 228,536' 213,126' 234,468' 224,364 224,483 224,425 221,301 49 Individuals, partnerships, and corporations 183,329 172,390 181,495' 169,583' 183,159' 179,025 181,882 177,207 174,223 50 States and political subdivisions 7,278 5,566 6,127' 5,737' 6,133' 5,967 5,467 6,744 6,280 51 U.S. government 2,766 1,638 3,689 3,157 1,472 2,870 2,187 6,383 3,562 52 Depository institutions in the United States 21,957 18,407 21,788' 18,686' 23,849' 20,506 19,036 19,936 19,714 53 Banks in foreign countries 6,446 5,924 6,146 6,089 7,385 5,840 5,952 5,207 6,170 54 Foreign governments and official institutions 960 1,210 892 720 818 657 686 649 633 55 Certified and officers' checks 10,436 8,420 8,399 9,153 11,652 9,499 9,272 8,299 10,719 5 5 5 5 6 6 6 6 6 6 6 6 6 7 8 9 0 1 2 3 4 5 6 7 T O N L r i o t a F T A D B S U I a h n n b n t o e r o l e . t a l d i r S r e s r r p l t a i a e i a . o r o e v l t i c s o n t i s i s g i g a u h t e w d s i n i o b s r t a e a o u i o v y r i n n c n g a f l e r d i t o g l o l y t t r i s b r i a s i o v n a , p e a x n i e b b m s f o n p l - r r o i a l a s a b l e a n o i r n i t n t r n n m a t m r i i c d t i t t d c l o e n e u a e - a w s F s l e t n n l s o i r e e u f c t o o a s s d d o s e b n t n u h , r e s h o s i b m r o e p r b n a d r i d f s o o o n l f i , i r v i n t t n c R e h t r i a e a i h s s o a n y a e i t e w n l o d s e e d n i e U d n r c d s o n v e s n m t e r i m o i t p t t e a B u o o e d n s n t r a d i a n e S o a t y k n t n d i 5 a o s s d e t , n p e s d a s o n e si b d t e s b n a tu n r k e s s 7 6 3 2 3 9 8 3 2 9 8 0 7 2 6 0 3 2 0 1 8 , , , , , , , , , 0 5 0 6 1 6 0 6 8 8 5 2 8 4 8 3 3 1 6 3 1 1 4 5 1 3 4 9 5 6 6 0 5 2 6 6 7 6 2 2 3 9 8 3 9 9 7 2 1 7 4 5 1 5 0 2 2 , , , , , , , , , 4 3 5 6 2 2 8 1 0 8 5 3 4 6 0 0 7 8 3 6 6 3 6 1 7 3 6 6 4 0 9 4 1 8 0 4 2 6 7 2 9 9 3 9 3 8 8 1 7 2 0 0 7 1 0 6 0 , , , , , , , , , 2 2 2 6 6 2 8 0 8 5 5 8 1 4 6 5 5 3 2 7 6 2 7 4 7 7 5 5 0 8 5 5 0 8 4 5 ' ' ' 2 2 7 7 9 7 8 7 0 4 3 9 8 2 9 7 8 0 1 0 , , , , , , , , , 4 5 4 3 3 3 2 3 4 7 5 8 0 1 4 1 9 7 5 3 1 2 1 6 7 1 5 3 2 4 1 8 0 0 5 8 ' ' ' 2 2 7 7 9 8 7 0 4 3 8 7 7 3 8 0 0 9 2 1 , , , , , , , , , 3 2 1 1 6 7 7 2 2 7 5 8 8 7 9 0 1 7 9 2 0 0 2 0 1 5 6 2 7 9 9 9 0 9 8 3 ' ' ' ' ' 2 2 7 7 9 8 0 9 8 4 3 0 3 6 7 0 0 7 4 3 , , , , , , , , , 1 1 0 3 5 2 2 8 2 7 5 1 1 6 2 9 8 1 2 1 3 9 3 5 1 7 6 6 9 0 0 0 6 8 4 0 2 2 7 7 9 2 8 4 9 9 0 1 0 5 9 0 5 7 6 7 1 , , , , , , , , , , 7 4 0 2 1 8 8 0 1 6 5 8 8 7 9 1 0 6 0 6 3 4 7 0 1 1 7 8 2 2 4 2 2 1 3 2 2 3 7 7 8 2 8 4 8 0 0 3 2 9 0 2 6 3 6 3 0 , , , , , , , , , 3 9 4 7 1 1 1 8 3 5 8 9 2 6 9 2 4 0 0 5 0 0 5 7 7 8 5 9 9 9 4 0 8 0 7 7 2 3 0 4 9 2 3 7 0 8 3 2 0 9 3 1 5 7 3 , , , , , , , , , 4 2 0 0 0 1 6 3 0 4 8 3 3 8 4 5 2 3 7 2 0 9 2 7 7 3 4 0 6 6 6 0 5 9 5 68 Total liabilities 1,446,647 1,415,939 1,428,789' 1,413,795' 1,437,688' 1,433,196 1,438,755 1,442,275 1,440,558 69 Residual (total assets minus total liabilities)6 102,507 102,949 102,757 102,954 102,652 103,786 104,185 104,270 104,156 70 T M o E t M al O l oans and leases (gross) and investments adjusted 7 1,259,248 1,251,671 1,254,702 1,252,343 1,252,960 1,262,304 1,262,003 1,266,324 1,257,495 71 Total loans and leases (gross) adjusted 1,015,597 1,009,613 1,011,596 1,007,979 1,009,368 1,012,813 1,013,438 1,016,178 1,011,998 72 Time deposits in amounts of $100,000 or more 214,510 215,729 215,084 215,613 215,305 215,309 214,189 213,266 212,417 73 U.S. Treasury securities maturing in one year or less .. 20,200 19,945 20,270' 19,858' 19.341' 20,044 20,546 21,427 19,650 74 Loans sold outright to affiliates—total8 295 292 295' 289' 310' 312 304 277 273 75 Commercial and industrial 143 139 143' 160r 161' 160 156 156 155 76 Other 153 152 152' 129' 149' 151 148 120 118 77 Nontransaction savings deposits (including MMDAs)... 278,507 279,051 280,552' 280,742' 281,008' 283,771 285,168 282,285 281,992 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 Financial Statistics • September 1990 1.28 ASSETS AND LIABILITIES OF LARGE WEEKLY REPORTING COMMERCIAL BANKS IN NEW YORK CITY1 Millions of dollars, Wednesday figures 1990 AAccccoouunntt May 2 May 9 May 16 May 23 May 30 June 6 June 13 June 20 June 27 1 Cash balances due from depository institutions 22,051 21,671 22,491 22,815 28,161 22,378 26,726 22,839 25,658 2 Total loans, leases, and securities, net2 221,559 217,093 218,306 216,033 218,334 216,989 217,980 218,900 219,108 Securities 3 U.S. Treasury and government agency 0 0 0 0 0 0 0 0 0 4 Trading account3 0 0 0 0 0 0 0 0 0 5 Investment account 23,264' 23,312' 23,118' 23,219' 23,248' 23,376 23,343 23,322 23,238 6 Mortgage-backed securities4 12,558r 12,557' 12,617' 12,593' 12,563' 12,726 12,723 12,716 11,568 All other maturing in 7 One year or less 3,734 3,779 3,723 3,734 3,718 3,718 3,716 3,715 3,908 8 Over one through five years 3,375'' 3,380' 3,183' 3,327' 3,325 3,299 3,273 3,269 3,874 9 Over five years 3,5%' 3,5%' 3,595' 3,565' 3,642' 3,632 3,631 3,622 3,887 10 Other securities3 0 0 0 0 0 0 0 0 0 11 Trading account3 0 0 0 0 0 0 0 0 0 12 Investment account 13,051' 13,047' 13,067' 12,908' 12,807' 12,735 12,679 13,134 13,042 13 States and political subdivisions, by maturity 6,760 6,770 6,755 6,619 6,536 6,419 6,348 6,317 6,277 14 One year or less 535 544 549 556 557 554 560 558 582 15 Over one year 6,225 6,226 6,206 6,062 5,980 5,866 5,788 5,759 5,694 16 Other bonds, corporate stocks, and securities 6,291r 6,277' 6,312' 6,289' 6,270' 6,316 6,330 6,817 6,764 17 Other trading account assets3 0 0 0 0 0 0 0 0 0 Loans and leases 18 Federal funds sold5 21,369' 17,412 17,400 16,805 18,194 16,491 18,296 18,173 21,060 19 To commercial banks 11,302r 9,300 8,318 8,924 10,594 7,546 9,434 9,346 13,169 20 To nonbank brokers and dealers in securities 6,382' 5,251' 6,162' 5,057' 4,770 5,981 6,262 6,110 5,253 21 To others 3,684' 2,861' 2,920' 2,823' 2,829 2,964 2,600 2,716 2,638 22 Other loans and leases, gross 182,032' 181,489 182,921 181,313 182,236 182,320 181,585 182,201 179,648 23 Other loans, gross 176,527' 175,993 177,443 175,674 176,608 176,766 176,048 176,676 174,138 24 Commercial and industrial 59,221 58,962 59,854 58,605 58,487 58,328 58,004 58,083 56,826 25 Bankers acceptances and commercial paper 109 149 105 125 112 99 113 134 116 26 All other 59,112 58,814 59,749 58,480 58,376 58,229 57,891 57,949 56,710 27 U.S. addressees 58,448 58,236 59,104 57,878 57,819 57,722 57,366 57,450 56,223 28 Non-U.S. addressees 664 577 645 602 557 507 526 499 487 29 Real estate loans 62,571 62,754 62,740 62,931 62,798 62,928 62,991 63,243 62,741 30 Revolving, home equity 4,051 4,050 4,055 4,061 4,064 4,070 4,078 4,089 4,094 31 All other 58,520 58,704 58,685 58,870 58,733 58,858 58,913 59,154 58,648 32 To individuals for personal expenditures 19,966 19,878 19,976 20,090 19,986 20,005 20,033 19,523 19,514 33 To depository and financial institutions 19,758' 19,446 19,461 19,512 20,419 19,935 19,443 19,854 18,781 34 Commercial banks in the United States 7,886' 8,002 8,042 7,823 7,908 7,933 7,474 8,150 7,025 35 Banks in foreign countries 3,530 3,093 3,076 3,452 4,232 3,393 3,441 2,933 3,203 36 Nonbank depository and other financial institutions 8,342 8,350 8,343 8,238 8,278 8,610 8,528 8,771 8,552 37 For purchasing and carrying securities 4,720 5,063 4,792 4,132 4,222 4,808 4,698 5,105 5,722 38 To finance agricultural production 125 118 140 138 138 137 139 136 135 39 To states and political subdivisions 5,173 5,168 5,188 5,154 5,125 5,248 5,104 5,028 4,988 40 To foreign governments and official institutions 209 325 391 255 294 265 434 292 211 41 All other 4,783 4,280 4,900 4,857 5,140 5,112 5,202 5,412 5,219 42 Lease financing receivables 5,506 5,495 5,479 5,639 5,628 5,554 5,538 5,525 5,511 43 LESS: Unearned income 1,808 1,819 1,827 1,826 1,812 1,817 1,819 1,825 1,828 44 Loan and lease reserve 16,350 16,348 16,373 16,386 16,341 16,116 16,106 16,105 16,052 45 Other loans and leases, net6 163,875' 163,322 164,721 163,101 164,084 164,387 163,661 164,271 161,769 46 All other assets7 57,020' 53,517' 53,468' 50,834' 50,836' 54,466 54,250 54,880 54,367 47 Total assets 300,631' 292,282' 294,265' 289,682' 297,330' 293,834 298,955 296,619 299,133 Deposits 48 Demand deposits 49,661 45,136 48,617 46,740 52,878 47,289 48,137 47,308 48,995 49 Individuals, partnerships, and corporations 34,156 31,489 33,551 31,800 35,220 33,128 34,514 33,632 32,555 50 States and political subdivisions 743 548 633 477 567 610 505 660 948 51 U.S. government 343 244 741 582 217 406 160 951 602 52 Depository institutions in the United States 4,317 3,670 5,103 4,642 4,793 4,531 3,718 4,441 4,746 53 Banks in foreign countries 5,187 4,772 4,844 4,851 5,999 4,582 4,819 4,056 4,831 54 Foreign governments and official institutions 804 1,061 740 567 637 517 554 517 497 55 Certified and officers' checks 4,110 3,352 3,004 3,820 5,445 3,514 3,865 3,049 4,814 56 Transaction balances other than demand deposits (ATS, NOW, Super NOW, telephone transfers) 8,969 8,742 8,634 8,547 8,642 8,879 8,784 8,675 8,651 57 Nontransaction balances 117,048 116,745 117,135 116,797 116,943 117,706 118,435 116,655 115,765 58 Individuals, partnerships, and corporations 108,765 108,362 108,750 108,378 108,588 109,353 110,182 108,244 107,393 59 States and political subdivisions 6,201 6,280 6,270 6,296 6,234 6,212 6,062 6,309 6,258 60 U.S. government 36 36 38 42 35 37 39 39 37 61 Depository institutions in the United States 1,803 1,823 1,832 1,842 1,844 1,853 1,904 1,855 1,869 62 Foreign governments, official institutions, and banks 244 245 244 239 242 251 248 207 208 63 Liabilities for borrowed money 68,223 62,772 62,012 58,746 60,522 62,486 68,042 66,905 64,932 64 Borrowings from Federal Reserve Banks 0 0 0 0 0 0 3,834 0 0 65 Treasury tax-and-loan notes 5,837 4,787 2,138 1,775 1,488 738 363 5,167 4,918 66 All other liabilities for borrowed money8 62,386 57,984 59,874 56,972 59,034 61,748 63,845 61,739 60,014 67 Other liabilities and subordinated notes and debentures 32,094' 34,179' 33,300' 34,371' 34,182' 32,676 30,574 32,196 35,997 68 Total liabilities 275,994' 267,575' 269,698' 265,202' 273,168' 269,036 273,972 271,739 274,340 69 Residual (total assets minus total liabilities)9 24,637 24,707 24,567 24,480 24,162 24,798 24,984 24,880 24,793 MEMO 70 Total loans and leases (gross) and investments adjusted2,10 220,529 217,958 220,146 217,498 217,984 219,444 218,9% 219,334 216,794 71 Total loans and leases (gross) adjusted10 184,214 181,598 183,961 181,371 181,928 183,332 182,973 182,877 180,514 72 Time deposits in amounts of $100,000 or more 40,207' 39,874' 39,708 39,622 39,663 40,146 39,308 39,229 38,640 73 U.S. Treasury securities maturing in one year or less 1,932' 1,781' 1,793' 1,740' 1,827' 2,188 2,223 2,415 2,033 1. These data also appear in the Board's H.4.2 (504) release. For address, see 7. Includes trading account securities. inside front cover. 8. Includes federal funds purchased and securities sold under agreements to 2. Excludes trading account securities. repurchase. 3. Not available due to confidentiality. 9. Not a measure of equity capital for use in capital adequacy analysis or for 4. Includes U.S. government-issued or guaranteed certificates of participation other analytic uses. in pools of residential mortgages. 10. Exclusive of loans and federal funds transactions with domestic commer- Digitized for FRA5S. EInRclu des securities purchased under agreements to resell. cial banks. http://fraser.stlou6i.s fIencdlu.odersg a/ llocated 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 May 2 May 9' May 16' May 23' May 30' June 6 June 13 June 20 June 27 1 Cash and due from depository institutions .. 14,055 13,096 14,084 13,302 15,056 14,270 14,561 13,816 14,587 2 Total loans and securities 152,113' 151,161 152,409 151,526 154,352 152,459 156,763 156,370 156,949 3 U.S. Treasury and government agency securities 11,493 10,142 10,112 13,342 13,849 14,144 14,430 14,359 15,194 4 Other securities 7,269 7,356 7,127 6,953 6,933 6,910 7,003 7,035 7,117 5 Federal funds sold2 7,475 7,479 8,578 5,658 7,917 4,236 7,081 6,386 6,197 6 To commercial banks in the United States 5,972 6,276 7,307 4,352 6,688 2,553 5,710 5,100 5,228 7 To others 1,503 1,203 1,271 1,306 1,229 1,683 1,371 1,286 %9 8 Other loans, gross 125,876' 126,184 126,592 125,573 125,653 127,169 128,249 128,590 128,441 9 Commercial and industrial 75,687' 75,931 75,258 75,436 75,823 77,456 77,995 77,504 78,103 10 Bankers acceptances and commercial paper 2,285' 2,326 2,268 2,310 2,306 2,446 2,540 2,431 2,328 11 AUother 73,402' 73,605 72,990 73,126 73,517 75,010 75,455 75,073 75,775 12 U.S. addressees 71,957' 72,172 71,544 71,666 72,047 73,534 74,098 73,667 74,359 13 Non-U.S. addressees 1,445 1,433 1,446 1,460 1,470 1,476 1,357 1,406 1,416 14 Loans secured by real estate 21,890 21,960 22,301 22,279 22,369 22,361 22,589 22,786 22,824 15 To financial institutions 25,386' 25,681 25,860 25,033 24,695 24,680 24,284 24,858 24,247 16 Commercial banks in the United States. 18,465' 18,519 18,795 18,490 18,411 18,183 18,247 18,880 18,189 17 Banks in foreign countries 2,281 2,524 2,367 1,913 1,668 1,847 1,388 1,270 1,283 18 Nonbank financial institutions 4,640' 4,638 4,698 4,630 4,616 4,650 4,649 4,708 4,775 19 To foreign governments and official institutions 220 210 218 188 185 191 207 238 226 20 For purchasing and carrying securities ... 1,319 1,042 1,336 1,237 1,231 1,091 1,403 1,675 1,506 21 All other3 1,374' 1,360 1,619 1,400 1,350 1,390 1,771 1,529 1,535 22 Other assets (claims on nonrelated parties) . 33,922 33,984 32,702 32,800 32,550 33,667 33,580 32,984 32,950 23 Net due from related institutions 15,690 13,239 10,074 11,270 10,396 13,284 12,722 16,265 13,319 24 Total assets 215,780 211,481 209,268 208,898 212,355 213,683 217,626 219,435 217,803 25 Deposits or credit balances due to other than directly related institutions 51,528' 50,907 50,052 50,328 50,178 50,567 50,910 51,064 51,180 26 Transaction accounts and credit balances 4,247 4,052 4,059 3,998 3,872 3,877 3,776 4,423 4,572 27 Individuals, partnerships, and corporations 2,930 2,707 2,656 2,718 2,684 2,689 2,628 2,703 2,683 28 Other 1,317 1,345 1,403 1,280 1,188 1,188 1,148 1,720 1,889 29 Nontransaction accounts 47,281' 46,855 45,993 46,330 46,306 46,690 47,134 46,641 46,608 30 Individuals, partnerships, and corporations 39,571' 39,383 38,971 38,844 38,823 39,372 39,166 38,943 38,976 31 Other 7,710' 7,472 7,022 7,486 7,483 7,318 7,968 7,698 7,632 32 Borrowings from other than directly related institutions 101,464 102,282 97,141 96,808 97,032 100,561 102,466 105,387 101,985 33 Federal funds purchased6 43,714 43,043 39,019 38,843 39,523 43,068 45,274 48,771 42,915 34 From commercial banks in the United States 19,920 19,116 16,915 18,073 18,934 20,062 21,646 23,883 24,849 35 From others 23,794 23,927 22,104 20,770 20,589 23,006 23,628 24,888 18,066 36 Other liabilities for borrowed money 57,750 59,239 58,122 57,965 57,509 57,493 57,192 56,616 59,070 37 To commercial banks in the United States 31,484' 31,910 32,967 31,983 32,297 32,461 32,577 32,146 32,874 38 To others 26,266' 27,329 25,155 25,982 25,212 25,032 24,615 24,470 26,196 39 Other liabilities to nonrelated parties 33,324 33,021 32,060 35,632 36,744 37,237 36,874 36,261 36,856 40 Net due to related institutions 29,464' 25,270 30,013 26,130 28,400 25,319 27,374 26,723 27,781 41 Total liabilities 215,780 211,481 209,268 208,898 212,355 213,683 217,626 219,435 217,803 42 T M o E t M al O l oans (gross) and securities adjusted . 127,676' 126,366 126,307 128,684 129,253 131,723 132,806 132,390 133,532 43 Total loans (gross) adjusted7 108,914' 108,868 109,068 108,389 108,471 110,669 111,373 110,9% 111,221 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 Financial Statistics • September 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 1989 1990 11998855 11998866 11998877 11998888 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar. June 1 AU holders—Individuals, partnerships, and corporations 321.0 363.6 343.5 354.7 330.4 329.3 337.3 352.2 328.7 n.a. ?, Financial business 32.3 41.4 36.3 38.6 36.3 33.0 33.7 33.8 34.1 n.a. 3 Nonfinancial business 178.5 202.0 191.9 201.2 182.2 185.9 190.4 202.5 183.3 n.a. 4 Consumer 85.5 91.1 90.0 88.3 87.4 86.6 87.9 90.3 86.6 n.a. 5 Foreign 3.5 3.3 3.4 3.7 3.7 2.9 2.9 3.1 3.0 n.a. 6 Other 21.2 25.8 21.9 22.8 20.7 21.0 22.4 22.5 21.7 n.a. Weekly reporting banks 1989 1990 11998855 11998866 11998877 11998888 DDeecc.. DDeecc.. DDeecc.. DDeecc.. Mar. June Sept. Dec. Mar. June 7 AU holders—Individuals, partnerships, and corporations 168.6 195.1 183.8 198.3 181.9 182.2 186.6 196.7 183.7 186.3 8 Financial business 25.9 32.5 28.6 30.5 27.2 25.4 26.3 27.6 25.6 25.0 9 Nonfinancial business 94.5 106.4 100.0 108.7 98.6 99.8 101.6 108.8 100.1 101.7 10 Consumer 33.2 37.5 39.1 42.6 41.1 42.4 43.0 44.1 42.4 43.3 11 Foreign 3.1 3.3 3.3 3.6 3.3 2.9 2.8 3.0 2.8 2.9 12 Other 12.0 15.4 12.7 12.9 11.7 11.7 12.9 13.2 12.8 13.3 1. Figures include cash items in process of collection. Estimates of gross Historical data back to March 1985 have been revised to account for corrections deposits are based on reports supplied by a sample of commercial banks. Types of bank reporting errors. Historical data before March 1985 have not been revised, of depositors in each category are described in the June 1971 Bulletin, p. 466. and may contain reporting errors. Data for all commercial banks for March 1985 Figures may not add to totals because of rounding. were revised as follows (in billions of dollars): all holders, - .3; financial business, 2. Beginning in March 1984, these data reflect a change in the panel of weekly -.8; nonfinancial business, -.4; consumer, .9; foreign, .1; other, -.1. Data for reporting banks, and are not comparable to earlier data. Estimates in billions of weekly reporting banks for March 1985 were revised as follows (in billions of dollars for December 1983 based on the new weekly reporting panel are: financial dollars): all holders, -.1; financial business, -.7; nonfinancial business, -.5; business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other consumer, 1.1; foreign, .1; other, -.2. 9.5. 3. Beginning March 1988, these data reflect a change in the panel of weekly Beginning March 1985, financial business deposits and, by implication, total reporting banks, and are not comparable to earlier data. Estimates in billions of gross demand deposits have been redefined to exclude demand deposits due to dollars for December 1987 based on the new weekly reporting panel are: financial thrift institutions. Historical data have not been revised. The ' tated 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 insure' nmercial 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 IInnssttrruummeenntt 1985 1986 1987 1988 1989 Dec. Dec. Dec. Dec. Dec. Dec. Jan. Feb. Mar. Apr. May Commercial paper (seasonally adjusted unless noted otherwise) 1 All issuers 298,779 329,991 358,056 457,297 529,055 529,055 533,137 540,148 546,786 544,481 538,686 Financial companies1 Dealer-placed paper 2 Total 78,443 101,072 102,844 160,094 187,084 187,084 183,401 185,391 184,097 185,107 186,155 3 Bank-related (not seasonally adjusted) 1,602 22,,226655 1,428 1,248 n.a. n.a. n.a. n.a. n.a. n.a. n.a. Directly placed paper 4 Total 135,320 115511,,882200 173,980 119944,,553377 212,210 212,210 214,996 215,650 221155,,550011 213,843 209,203 5 Bank-related (not seasonally adjusted) 44,778 40,860 43,173 43,155 n.a. n.a. n.a. n.a. n.a. n.a. n.a. 6 Nonfinancial companies 85,016 77,099 81,232 102,666 129,761 129,761 134,740 139,107 147,188 145,531 143,328 Bankers dollar acceptances (not seasonally adjusted)6 7 Total 68,413 64,974 70,565 66,631 62,972 62,972 60,019 57,852 55,865 53,945 54,766 Holder 8 Accepting banks 11,197 13,423 10,943 9,086 9,433 9,433 9,954 10,351 9,574 9,200' 9,000 9 Own bills 9,471 11,707 9,464 8,022 8,510 8,510 8,467 8,907 8,386 7,850'' 7,632 10 Bills bought 1,726 1,716 1,479 1,064 924 924 1,488 1,444 1,188 1,350 1,368 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 1,066 1,069 1,123 1,180 1,141 1,291 13 Others 56,279 50,234 58,658 56,052 52,473 52,473 48,996 46,379 45,111 43,604r 44,475 Basis 14 Imports into United States 15,147 14,670 16,483 14,984 15,651 15,651 15,100 14,522 14,418 13,413 13,993 15 Exports from United States 13,204 12,960 15,227 14,410 13,683 13,683 13,437 12,567 12,161 12,610 12,727 16 AU other 40,062 37,344 38,855 37,237 33,638 33,638 31,482 30,764 29,286 27,922 28,046 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 Rate Period Av r e a r t a e g e Period Av r e a r t a e g e Period Apr. 1 7.75 1987 8.21 1988— 8.75 1989— Apr. .. May 1 8.00 1988 9.32 Feb. . 8.51 May .. 15 8.25 1989 10.87 Mar. .. 8.50 Sept. 4 8.75 Apr. . 8.50 July ... Oct. 7 9.25 1987— Jan. 7.50 May ... 8.84 Aug. .. 22 9.00 Feb. 7.50 June .. 9.00 Sept. .. Nov. 5 8.75 Mar. 7.50 July ... 9.29 Oct. ... Apr. 7.75 Aug. .. 9.84 Nov. .. Feb. 2 8.50 May 8.14 Sept. .. 10.00 Dec. .. May 11 9.00 June 8.25 Oct. ... 10.00 July 14 9.50 July 8.25 Nov. .. 10.05 1990— Jan. ... Aug. 11 10.00 Aug. 8.25 Dec. .. 10.50 Feb. Nov. 28 10.50 Sept. 8.70 Mar. .. Oct. 9.07 1989— Jan. ... 10.50 Apr. .. Feb. 10 11.00 Nov. 8.78 Feb. .. 10.93 May ... 24 11.50 Dec. 8.75 Mar. .. 11.50 June June 5 11.00 July July 31 10.50 Jan. 8 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 Financial Statistics • September 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. 1990 IInnssttrruummeenntt 11998877 11998888 11998899 Mar. Apr. May June June 1 June 8 June 15 June 22 June 29 MONEY MARKET RATES 1 Federal funds1,2 6.66 7.57 9.21 8.28 8.26 8.18 8.29 8.19 8.26 8.30 8.28 8.28 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 paper • 3 1-month 6.74 7.58 9.11 8.32 8.32 8.24 8.21 8.18 8.17 8.18 8.24 8.25 4 3-month 6.82 7.66 8.99 8.28 8.30 8.25 8.14 8.16 8.12 8.12 8.16 8.17 5 6-month 6.85 7.68 8.80 8.23 8.29 8.23 8.06 8.13 8.06 8.03 8.06 8.07 Finance paper, directly placed ' 6 1-month 6.61 7.44 8.99 8.23 8.23 8.14 8.12 8.10 8.09 8.10 8.13 8.16 7 3-month 6.54 7.38 8.72 8.04 8.13 8.12 8.01 8.05 8.01 7.99 8.02 8.04 8 6-month 6.37 7.14 8.16 7.49 7.74 8.04 7.79 7.92 7.76 7.79 7.80 7.83 Bankers acceptances • 9 3-month 6.75 7.56 8.87 8.15 8.21 8.12 8.00 8.00 7.96 7.99 8.03 8.04 10 6-month 6.78 7.60 8.67 8.11 8.18 8.08 7.89 7.94 7.87 7.88 7.92 7.90 Certificates of deposit, secondary market 11 1-month 6.75 7.59 9.11 8.30 8.32 8.25 8.20 8.19 8.17 8.19 8.22 8.24 12 3-month 6.87 7.73 9.09 8.35 8.42 8.35 8.23 8.25 8.22 8.21 8.24 8.27 13 6-month 7.01 7.91 9.08 8.48 8.57 8.48 8.28 8.35 8.28 8.26 8.29 8.31 14 Eurodollar deposits. 3-month 7.07 7.85 9.16 8.37 8.44 8.35 8.23 8.24 8.23 8.24 8.20 8.25 U.S. Treasury bills Secondary market 15 3-month 5.78 6.67 8.11 7.90 7.77 7.74 7.73 7.74 7.70 7.70 7.74 7.77 16 6-month 6.03 6.91 8.03 7.85 7.84 7.76 7.63 7.68 7.61 7.61 7.65 7.66 17 1-year 6.33 7.13 7.92 7.76 7.80 7.73 7.53 7.61 7.51 7.50 7.57 7.57 Auction average10 18 3-month 5.82 6.69 8.12 7.87 7.78 7.78 7.74 7.80 7.69 7.73 7.74 7.78 19 6-month 6.05 6.92 8.04 7.83 7.82 7.82 7.64 7.74 7.62 7.64 7.64 7.67 20 1-year 6.33 7.17 7.91 7.76 7.72 8.05 7.65 n.a. 7.65 n.a. n.a. n.a. CAPITAL MARKET RATES U.S. Treasury notes and bonds" Constant maturities 21 1-year 6.77 7.65 8.53 8.35 8.40 8.32 8.10 8.18 8.08 8.05 8.14 8.13 22 2-year 7.42 8.10 8.57 8.63 8.72 8.64 8.35 8.46 8.33 8.31 8.41 8.36 23 3-year 7.68 8.26 8.55 8.63 8.78 8.69 8.40 8.50 8.38 8.36 8.44 8.42 24 5-year 7.94 8.48 8.50 8.60 8.77 8.74 8.43 8.52 8.41 8.39 8.47 8.45 25 7-year 8.23 8.71 8.52 8.65 8.81 8.78 8.52 8.61 8.50 8.48 8.56 8.55 26 10-year 8.39 8.85 8.49 8.59 8.79 8.76 8.48 8.58 8.46 8.44 8.52 8.51 27 30-year 8.59 8.96 8.45 8.56 8.76 8.73 8.46 8.56 8.44 8.42 8.49 8.49 Composite 28 Over 10 years (long-term) 8.64 8.98 8.58 8.74 8.92 8.90 8.62 8.73 8.60 8.57 8.66 8.65 State and local notes and bonds Moody's series14 29 Aaa 7.14 7.36 7.00 6.98 7.04 6.97 6.88 6.75 6.85 6.90 6.93 6.95 30 BBaaaa 8.17 7.83 7.40 7.41 7.43 7.37 7.11 7.11 7.15 7.08 7.10 7.10 31 BBoonndd BBuuyyeerr sseerriieess1155 7.63 7.68 7.23 7.29 7.39 7.35 7.24 7.26 7.21 7.20 7.28 7.27 Corporate bonds Seasoned issues16 32 All industries 9.91 10.18 9.66 9.73 9.82 9.87 9.67 9.76 9.67 9.64 9.67 9.69 33 Aaa 9.38 9.71 9.26 9.37 9.46 9.47 9.26 9.38 9.27 9.21 9.26 9.27 34 Aa 9.68 9.94 9.46 9.51 9.64 9.70 9.49 9.57 9.49 9.46 9.49 9.52 35 A 9.99 10.24 9.74 9.82 9.89 9.89 9.70 9.79 9.73 9.69 9.69 9.70 36 Baa 10.58 10.83 10.18 10.21 10.30 10.41 10.22 10.29 10.21 10.19 10.24 10.25 37 A-rated, recently offered utility bonds 9.96 10.20 9.79 9.92 10.09 10.04 9.85 9.87 9.78 9.83 9.89 9.92 MEMO: Dividend/price ratio 38 Preferred stocks 8.37 9.23 9.05 9.02 9.05 9.04 9.01 9.03 8.98 8.99 9.00 9.05 39 Common stocks 3.08 3.64 3.45 3.49 3.51 3.44 3.36 3.35 3.31 3.32 3.37 3.42 1. Weekly, monthly and annual figures are averages of all calendar days, places. Thus, average issuing rates in bill auctions will be reported using two where the rate for a weekend or holiday is taken to be the rate prevailing on the rather than three decimal places. preceding business day. The daily rate is the average of the rates on a given day 11. Yields are based on closing bid prices quoted by at least five dealers. weighted by the volume of transactions at these rates. 12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields 2. Weekly figures are averages for statement week ending Wednesday. are read from a yield curve at fixed maturities. Based on only recently issued, 3. Rate for the Federal Reserve Bank of New York. actively traded securities. 4. Unweighted average of offering rates quoted by at least five dealers (in the 13. Averages (to maturity or call) for all outstanding bonds neither due nor case of commercial paper), or finance companies (in the case of finance paper). callable in less than 10 years, including one very low yielding "flower" bond. Before November 1979, maturities for data shown are 30-59 days, 90-119 days, 14. General obligations based on Thursday figures; Moody's Investors Service. and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 15. General obligations only, with 20 years to maturity, issued by 20 state and 150-179 days for finance paper. local governmental units of mixed quality. Based on figures for Thursday. 5. Yields are quoted on a bank-discount basis, rather than in an investment 16. Daily figures from Moody's Investors Service. Based on yields to maturity yield basis (which would give a higher figure). on selected long-term bonds. 6. Dealer closing offered rates for top-rated banks. Most representative rate 17. Compilation of the Federal Reserve. This series is an estimate of the yield (which may be, but need not be, the average of the rates quoted by the dealers). on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of 7. Unweighted average of offered rates quoted by at least five dealers early in call protection. Weekly data are based on Friday quotations. the day. 18. Standard and Poor's corporate series. Preferred stock ratio based on a 8. Calendar week average. For indication purposes only. sample of ten issues: four public utilities, four industrials, one financial, and one 9. Unweighted average of closing bid rates quoted by at least five dealers. transportation. Common stock ratios on the 500 stocks in the price index. 10. Rates are recorded in the week in which bills are issued. Beginning with the NOTE. These data also appear in the Board's H. 15 (519) and G. 13 (415) releases. Treasury bill auction held on Apr. 18, 1983, bidders were required to state the For address, see inside front cover. percentage yield (on a bank discount basis) that they would accept to two decimal Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A25 1.36 STOCK MARKET Selected Statistics 1989 1990 IInnddiiccaattoorr 11998877 11998888 11998899 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May June Prices and trading (averages of daily figures) Common stock prices 1 New York Stock Exchange (Dec. 31, 1965 = 50) 161.78 149.97 180.13 192.49 188.50 192.67 187.96 182.55 186.26 185.61 191.35 196.68 2 Industrial 195.31 180.83 228.04 229.40 224.38 230.12 225.79 220.60 226.14 226.86 234.85 242.42 3 Transportation 140.52 134.09 174.90 190.36 174.26 177.25 173.67 166.69 175.08 173.54 173.53 177.37 4 Utility 74.29 72.22 94.33 94.67 94.95 99.73 95.69 92.15 92.99 91.92 93.29 93.65 5 Finance 146.48 127.41 162.01 166.55 160.89 155.63 150.11 142.68 143.14 138.57 142.94 147.93 6 Standard & Poor's Corporation (1941-43 = 10)' 287.00 265.88 323.05 347.40 340.22 348.57 339.97 330.45 338.47 338.18 350.25 360.39 7 American Stock Exchange (Aug. 31, 1973 = 50? 316.78 295.08 356.67 383.63 371.92 373.87 367.40 355.30 360.77 353.32 353.82 361.62 Volume of trading (thousands of shares) 8 New York Stock Exchange 188,922 161,386 165,568 182,394 144,389 160,671 172,420 155,960 149,240 140,062 163,486 153,634 9 American Stock Exchange 13,832 9,955 13,124 13,853 12,001 13,298 14,831 13,735 15,133 13,961 14,005 12,421 Customer financing (end-of-period balances, in millions of dollars) 10 Margin credit at broker-dealers3 31,990 32,740 34,320 35,110 34,630 34,320 32,640 31,480 30,760 31,060 31,600 31,720 Free credit balances at brokers* 11 Margin-account5 4,750 5,660 7,040 6,000 5,815 7,040 6,755 6,575 6,525 6,465 6,215 6,490 12 Cash-account 15,640 16,595 18,505 16,340 16,345 18,505 17,370 16,200 16,510 15,375 15,470 15,625 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 Financial Statistics • September 1990 1.37 SELECTED FINANCIAL INSTITUTIONS Selected Assets and Liabilities Millions of dollars, end of period 1989 1990 AAccccoouunntt 11998877 11998888 July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr. SAIF-insured institutions 1 Assets 1,250,855 1,350,500 1,329,503 1,315,920' 1,298,682' 1,286,711' 1,277,192' 1,249,647' 1,237,203' 1,225,179 2 Mortgages 721,593 764,513 762,206 760,786 755,427' 748,780' 745,091' 733,903' 727,371' 721,479 3 Mortgage-backed securities 201,828 214,587 204,365 195,309 188,493 181,465' 176,387' 170,536' 169,396' 167,240 4 Contra-assets to mortgage assets1 . 42,344 37,950 27,660' 27,433 27,085' 25,950' 24,976' 25,421' 23,620' 22,674 5 Commercial loans 23,163 33,889 33,206 33,035 32,936 32,572 32,344' 32,154' 31,933' 31,781 6 Consumer loans 57,902 61,922 61,079 60,958 60,405 59,722' 59,372' 58,722' 57,138' 56,822 7 Contra-assets to nonmortgage loans . 3,467 3,056 3,199 3,163 3,129' 3,107' 3,194' 3,508' 2,041' 2,152 8 Cash and investment securities 169,717 186,986 175,135 171,564 169,526' 172,727' 172,466' 166,015' 160,554' 157,038 n. a. n.a. 9 Other3 122,462 129,610 124,370 124,864 122,109' 120,501' 119,703' 117,246' 116,472' 115,644 10 Liabilities and net worth . 1,250,855 1,350,500 1,329,503 l,315,920r 1,298,682' 1,286,711' 1,277,192' 1,249,647' 1,237,203' 1,225,179 11 Savings capital 932,616 971,700 963,158 960,344 958,901 948,500 946,655 945,649 933,861' 926,499 12 Borrowed money 249,917 299,400 301,571 289,634 281,684' 275,979' 268,462 252,204' 252,845' 247,692 13 FHLBB 116,363 134,168 141,875 138,331 133,633 130,514 127,671 124,578 121,732' 120,561 14 Other 133,554 165,232 159,696 151,303 148,051' 145,465' 140,791 127,626' 131,113' 127,131 15 Other 21,941 24,216 31,887'' 33,811 29,742' 30,971' 31,991' 27,395' 27,139' 28,249 16 Net worth n.a. n.a. 32,887' 32,130r 28,355' 31,261' 30,084' 24,398' 23,355' 22,740 SAIF-insured federal savings banks 17 Assets 284,270 425,966 506,988 504,233 500,937 502,484 499,995 498,522 18 Mortgages 161,926 230,734 285,061 285,557 283,162 283,652 282,510 283,844 19 Mortgage-backed securities 45,826 64,957 74,379 72,124 72,478 72,332 71,204 70,499 20 Contra-assets to mortgage assets1 . 9,100 13,140 13,974 13,872 13,801 13,506 13,216 13,548 21 Commercial loans 6,504 16,731 18,346 18,233 18,256 18,299 18,172 18,143 22 Consumer loans 17,696 24,222 28,993 28,987 28,762 28,322 28,079 28,212 23 Contra-assets to nonmortgage loans . 678 889 1,022 1,026 1,073 1,048 1,082 1,193 24 Finance leases plus interest 591 880 1,089 1,076 1,092 1,085 1,092 1,101 n.a. n.a. n.a. n.a. 25 Cash and investment ... 35,347 61,029 65,979 65,040 64,073 65,193 65,191 64,538 26 Other 24,069 35,412 40,352 40,542 40,659 40,799 40,852 39,981 27 Liabilities and net worth . 284,270 425,966 506,988 504,233 500,937 502,484 499,995 498,522 28 Savings capital 203,196 298,197 352,547 352,158 353,474 355,923 355,874 360,547 29 Borrowed money 60,716 99,286 121,194 117,973 115,627 114,231 111,369 108,448 30 FHLBB 29,617 46,265 59,781 59,189 57,941 57,793 56,842 57,032 31 Other 31,099 53,021 61,413 58,784 57,686 56,438 54,527 51,416 32 Other 5,324 8,075 10,696 11,443 9,904 10,317 10,749 9,041 33 Net worth 15,034 20,218 26,253 26,381 25,952 25,983 25,958 22,716 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 1.37—Continued 1989 1990 AAccccoouunntt 11998877 July Aug. Sept. Oct. Nov Dec. Jan. Feb. Mar. Apr. Credit unions4 34 Total assets/liabilities and capital 174,593 179,029 180,035 181,812 181,527 182,856 183,688 183,301 186,119 192,718 193,208 35 Federal 114,566 117,475 117,463 118,746 118,887 119,682 120,666 120,489 122,885 126,690 127,250 36 State 60,027 61,554 62,572 63,066 62,640 63,174 63,022 62,812 63,234 66,028 65,958 37 Loans outstanding n a. 113,191 119,720 120,577 122,522 122,997 122,899 122,608 122,332 121,968 121,660 122,616 38 Federal 73,766 78,472 78,946 80,548 80,570 80,601 80,272 80,041 79,715 79,407 80,205 39 State 39,425 41,248 41,631 41,874 42,427 42,298 42,336 42,291 42,253 42,253 42,411 40 Savings 159,010 162,405 162,754 164,050 164,695 165,533 167,371 166,629 168,609 175,942 175,745 41 Federal 104,431 106,266 106,038 106,633 107,588 108,319 109,653 109,818 111,246 115,714 115,554 42 State 54,579 56,139 56,716 57,417 57,107 57,214 57,718 56,811 57,363 60,228 60,191 Life insurance companies 43 Assets 1,044,459 1,166,870 1,247,341 1,257,045 1,266,773 1,276,181 1,289,467 1,303,691 Securities 44 Government 84,426 84,051 84,438 83,225 82,867 83,727 83,609 84,381 45 United States5 57,078 58,564 57,698 56,978 56,684 57,726 57,290 58,169 46 State and local 10,681 9,136 9,061 9,002 9,037 9,019 9,280 9,191 47 Foreign6 16,667 16,351 17,679 17,245 17,146 16,982 17,039 17,021 48 Business 569,199 660,416 726,599 735,441 742,537 748,075 758,803 777,415 n.a. n.a. n.a. n.a. 49 Bonds 472,684 556,043 606,686 614,585 621,856 628,695 637,690 642,445 50 Stocks 96,515 104,373 119,913 120,856 120,681 119,380 121,113 134,970 51 Mortgages 203,545 232,863 237,865 238,944 240,189 242,391 243,728 246,345 52 Real estate 34,172 37,371 38,622 38,822 38,942 39,343 39,339 39,368 53 Policy loans 53,626 54,236 55,812 56,077 56,403 56,727 56,916 57,141 54 Other assets 89,586 97,933 104,005 104,536 105,835 105,918 107,072 110,284 1. Contra-assets are credit-balance accounts that must be subtracted from the International Bank for Reconstruction and Development. corresponding gross asset categories to yield net asset levels. Contra-assets to NOTE. SAIF-insured institutions: Estimates by the OTS for all institutions mortgage loans, contracts, and pass-through securities include loans in process, insured by the SAIF and based on the OTS thrift Financial Report. unearned discounts and deferred loan fees, valuation allowances for mortgages SAIF-insured federal savings banks: Estimates by the OTS for federal savings "held for sale," and specific reserves and other valuation allowances. banks insured by the SAIF and based on the OTS thrift Financial Report. 2. Contra-assets are credit-balance accounts that must be subtracted from the Credit unions: Estimates by the National Credit Union Administration for corresponding gross asset categories to yield net asset levels. Contra-assets to federally chartered and federally insured state-chartered credit unions serving nonmortgage loans include loans in process, unearned discounts and deferred loan natural persons. fees, and specific reserves and valuation allowances. Life insurance companies: Estimates of the American Council of Life Insurance 3. Holding of stock in Federal Home Loan Bank and Finance leases plus for all life insurance companies in the United States. Annual figures are annualinterest are included in "Other" (line 9). statement asset values, with bonds carried on an amortized basis and stocks at 4. Data include all federally insured credit unions, both federal and state year-end market value. Adjustments for interest due and accrued and for chartered, serving natural persons. differences between market and book values are not made on each item separately 5. Direct and guaranteed obligations. Excludes federal agency issues not but are included, in total, in "other assets." guaranteed, which are shown in the table under "Business" securities. As of June 1989 Savings bank data are no longer available. 6. Issues of foreign governments and their subdivisions and bonds of the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A28 Domestic Financial Statistics • September 1990 1.38 FEDERAL FISCAL AND FINANCING OPERATIONS Millions of dollars Calendar year FFFiiissscccaaalll FFFiiissscccaaalll FFFiiissscccaaalll TTTyyypppeee ooofff aaaccccccooouuunnnttt ooorrr ooopppeeerrraaatttiiiooonnn yyyeeeaaarrr yyyeeeaaarrr yyyeeeaaarrr 1990 111999888777 111999888888 111999888999''' Jan. Feb. Mar. Apr. May June U.S. budget1 1 Receipts, total 854,143 908,166 990,701 99,538 65,170 64,819 139,624 69,212 110,614 2 On-budget 640,741 666,675 727,035 74,243 44,133 38.99C 106,775 45,514 83,717 3 Off-budget 213,402 241,491 263,666 25,295 21,037 25,829 32,849 23,697 26,897 4 Outlays, total 1,003,830 1,063,318 1,142,563' 91,272' 100,434 118,155 97,866 111,772 121,836 5 On-budget 809,998 860,627' 931,342' 72,958' 80,871' 97,632' 79,750 91,822 105,877 6 Off-budget 193,832 202,691 211,221 18,314' 19,563 20,523' 18,116 19,950 15,959 7 Surplus, or deficit (-), total -149,687 -155,152r -151,862' 8,265 -35,264 -53,336 41,759 -42,560 -11,222 8 On-budget -169,257 -193,952' -204,307' 1,285 -36,738 -58,642 27,025 -46,308 -22,160 9 Off-budget 19,570 38,800 52,445 6,980 1,474 5,306 14,733 3,747 10,937 Source of financing (total) 10 Borrowing from the public 151,717 166,139 140,811 15,841 18,221 56,090 -5,935 23,380 23,519 11 Operating cash (decrease, or increase (-)) . -5,052 -7,962' 3,425 -18,117' 25,463' 1,123 -20,830 25,594 -20,916 12 Other 2 3,022 -3,025 7,626' -5,989' -8,420' -3,877' -14,994 -6,414' 8,619 MEMO 13 Treasury operating balance (level, end of period) 36,436 44,398 40,973 45,051 19,589 18,466 39,2% 13,702 34,618 14 Federal Reserve Banks 9,120 13,023' 13,452 13,153 6,613 4,832 5,205 4,426 5,470 15 Tax and loan accounts 27,316 31,375 27,521 31,899 12,976 13,634 34,091 9,276 29,148 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 SSoouurrccee oorr ttyyppee year year 1988 1989 1990 1990 11998888 11998899 H2 HI H2 HI Apr. May June RECEIPTS 1 All sources 908,166 990,701 449,330 527,574 470,329 548,977 139,624 69,212 110,614 ? Individual income taxes, net 401,181 445,690 200,300 233,572 218,661 243,529 74,375 21,467 49,639 3 Withheld 341,435 361,386 179,600 174,230 193,296 190,219 27,855 32,548 31,469 4 Presidential Election Campaign Fund .... 33 32 4 28 3 30 6 6 5 132,199 154,839 29,880 121,563 33,303 118,241 62,629 7,235 19,573 6 Refunds 72,487 70,567 9,186 62,251 7,943 64,962 16,115 18,322 1,408 Corporation income taxes 7 Gross receipts 109,683 117,015 56,409 61,585 52,269 58,830 15,424 2,461 1199,,551133 8 Refunds 15,487 13,723 7,250 7,259 6,842 8,326 2,049 904 944 9 Social insurance taxes and contributions, net 334,335 359,416 157,603 200,127 162,574 210,476 43,821 37,450 3344,,332266 10 Employment taxes and contributions 305,093 332,859 144,983 184,569 152,407 195,269 41,090 2299,,886699 3333,,669944 11 Self-employment taxes and contributions3 17,691 18,504 3,032 16,371 1,947 19,017 1100,,668855 11,,447722 22,,993344 1? Unemployment insurance 24,584 22,011 10,359 13,279 7,909 12,929 2,377 7,155 252 13 Other net receipts4 4,659 4,547 2,262 2,277 2,260 2,278 354 426 380 14 35,604 34,386 19,299 16,814 16,844 18,188 3,181 3,743 3,566 15 Customs deposits 15,411 16,334 8,107 7,918 8,667 8,096 1,273 1,371 1,387 16 Estate and gift taxes 7,594 8,745 4,054 4,583 4,451 6,442 2,307 1,045 852 17 Miscellaneous receipts 19,909 22,839 10,809 10,235 13,703 11,742 1,291 2,579 2,276 OUTLAYS 18 All types 1,063,318 l,142,563r 552,727r 565,404' 587,524' 641,335 97,866 111,772' 121,836 19 National defense 290,361 303,551 150,496 148,098 149,613 152,733 22,155 26,339 27,875 70 International affairs 10,471 9,596 2,627' 6,567' 6,029' 6,770 1,026 1,204 578 71 General science, space, and technology .... 10,841 12,891 5,852 6,238 7,091 6,974 1,247 1,106 1,253 ?? 2,297 3,745 1,966 2,221 1,564' 1,504 269 396 230 73 Natural resources and environment 14,625 16,084 9,072 7,022 9,183 7,343 1,211 1,536 1,233 24 Agriculture 17,210 16,948 6,911 9,619 4,132 7,450 2,089 1,254 170 75 Commerce and housing credit 18,828 27,810 19,836 4,129 22,200 38,788 3,890 8,937 17,880 76 Transportation 27,272 27,623 14,922 12,953 14,982 13,754 2,272 2,452 2,421 27 Community and regional development 5,294 5,755 2,690 1,833 4,879 3,987 534 681 552 28 Education, training, employment, and social services 31,938 35,697 16,162 18,083 18,663 19,537 33,,226666 33,,112277 33,,009922 79 Health 44,490 48,391 23,360 24,078 25,339 29,488 5,210 5,098 5,249 30 Social security and medicare 297,828 317,506 149,017 162,195 162,322 175,997 28,536 29,372 32,538 31 Income security 129,332 136,765 64,978 70,937 67,950 78,456 12,714 13,031 11,023 37 Veterans benefits and services 29,406 30,066 15,797 14,891 14,864 15,217 1,316 2,608 3,742 33 Administration of justice 8,436 9,396 4,361 4,801 4,963 4,983 861 895 859 34 General government 9,518 8,940 5,137 3,858 4,760' 4,891 395 678' 1,378 35 General-purpose fiscal assistance 1,816 n.a. 0 0 n.a. n.a. n.a. n.a. n.a. 36 Net interest 151,748 169,314 78,317 86,009 87,927 91,155 14,542 16,062 14,493 37 Undistributed offsetting receipts -36,967 -37,212 -18,771 -18,131 -18,935 -17,688 -3,668 -3,002 -2,730 1. Functional details do not add to total outlays for calendar year data because 5. Deposits of earnings by Federal Reserve Banks and other miscellaneous revisions to monthly totals have not been distributed among functions. Fiscal year receipts. total for outlays does not correspond to calendar year data because revisions from 6. Net interest function includes interest received by trust funds. the Budget have not been fully distributed across months. 7. Consists of rents and royalties on the outer continental shelf and U.S. 2. Old-age, disability, and hospital insurance, and railroad retirement accounts. government contributions for employee retirement. 3. Old-age, disability, and hospital insurance. SOURCES. U.S. Department of the Treasury, Monthly Treasury Statement of 4. Federal employee retirement contributions and civil service retirement and Receipts and Outlays of the U.S. Government, and the U.S. Office of Managedisability fund. ment and Budget, Budget of the U.S. Government, Fiscal Year 1990. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A30 Domestic Financial Statistics • September 1990 1.40 FEDERAL DEBT SUBJECT TO STATUTORY LIMITATION Billions of dollars 1988 1989 1990 IItteemm June 30 Sept. 30 Dec. 31 Mar. 31 June 30 Sept. 30 Dec. 31 Mar. 31 June 30 1 Federal debt outstanding 2,555.1 2,614.6 2,707.3 2,763.6 2,824.0 2,881.1 2,975.5 3,081.9 3,175.5 ?. Public debt securities 2,547.7 2,602.2 2,684.4 2,740.9 2,799.9 2,857.4 2,953.0 3,052.0 3,143.8 3 Held by public 2,013.4 2,051.7 2,095.2 2,133.4 2,142.1 2,180.7 2,245.2 2,329.3 n.a. 4 Held by agencies 534.2 550.4 589.2 607.5 657.8 676.7 707.8 722.8 n.a. 5 Agency securities 7.4 12.4 22.9 22.7 24.0 23.7 22.5 29.9 n.a. 6 Held by public 7.0 12.2 22.6 22.3 23.6 23.5 22.4 29.8 n.a. 7 Held by agencies .5 .2 .3 .4 .5 .1 .1 .2 n.a. 8 Debt subject to statutory limit 2,532.2 2,586.9 2,669.1 2,725.6 2,784.6 2,829.8 2,921.7 2,988.9 3,077.0 9 Public debt securities 2,532.1 2,586.7 2,668.9 2,725.5 2,784.3 2,829.5 2,921.4 2,988.6 3,076.6 10 Other debt1 .1 .1 .2 .2 .2 .3 .3 .3 .4 11 MEMO: Statutory debt limit 2,800.0 2,800.0 2,800.0 2,800.0 2,800.0 2,870.0 3,122.7 3,122.7 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 1990 TTyyppee aanndd hhoollddeerr 11998866 11998877 11998888 11998899 Q3 Q4 QL Q2 1 Total gross public debt 2,214.8 2,431.7 2,684.4 2,953.0 2,857.4 2,953.0 3,052.0 3,143.8 By type 2 Interest-bearing debt 2,212.0 2,428.9 2,663.1 2,931.8 2,836.3 2,931.8 3,029.5 3,121.5 3 Marketable 1,619.0 1,724.7 1,821.3 1,945.4 1,892.8 1,945.4 1,995.3 2,028.0 4 Bills 426.7 389.5 414.0 430.6 406.6 430.6 453.1 453.5 5 927.5 1,037.9 1,083.6 1,151.5 1,133.2 1,151.5 1,169.4 1,192.7 6 Bonds 249.8 282.5 308.9 348.2 338.0 348.2 357.9 366.8 7 Nonmarketable1 593.1 704.2 841.8 986.4 943.5 986.4 1,034.2 1,093.5 8 State and local government series 110.5 139.3 151.5 163.3 158.6 163.3 163.5 164.3 9 Foreign issues2 4.7 4.0 6.6 6.8 6.8 6.8 37.1 36.4 10 Government 4.7 4.0 6.6 6.8 6.8 6.8 37.1 36.4 11 Public .0 .0 .0 .0 .0 .0 .0 .0 12 Savings bonds and notes 90.6 99.2 107.6 115.7 114.0 115.7 118.0 120.1 13 Government account series 386.9 461.3 575.6 695.6 663.7 695.6 705.1 758.7 14 Non-interest-bearing debt 2.8 2.8 21.3 21.2 21.1 21.2 22.4 22.3 By holder4 15 U.S. government agencies and trust funds 403.1 477.6 589.2 707.8 676.7 707.8 722.8 16 Federal Reserve Banks 211.3 222.6 238.4 228.4 220.6 228.4 219.3 17 Private investors 1,602.0 L,731.4R 1,858.5R 2,015.8R L,958.3R 2,015.8R 2,115.1 18 Commercial banks 203.5 201.5 193.8 180.6R 174.8R 180.6' 182.0 19 Money market funds 28.0 14.6 11.8 14.4 12.9 14.4 31.3 20 Insurance companies 105.6 104.9 107.3 107.9 105.8R 107.9 108.0 21 Other companies 68.8 84.6 87.1 93.8 93.5 93.8 95.0 n. a. 22 State and local Treasurys 262.8 284.6 313.6 337.1 332.2R 337.1 338.0 Individuals 73 Savings bonds 92.3 101.1 109.6 117.7 115.7 117.7 119.9 24 70.4 71.3' 19.2' 93.8R 93.5R 93.8' 95.0 25 Foreign and international 263.4 299.7 362.2R 393.4R 394.6R 393.4r 386.9 26 Other miscellaneous investors 506.6 569. lr 593.9R 674.3 632.4r 674.3 754.9 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 Apr/ May' May 23 May 30 June 6 June 13 Immediate delivery 1 U.S. Treasury securities 110,050 101,623 112,722 106,862 114,737 97,102 101,448R 95,06c 112,209 81,628 103,248 98,039 By maturity 2 Bills 37,924 29,387 30,737 32,971 30,760 27,086 26,540 28,747' 33,493 24,046 28,660 27,497 3 Other within 1 year 3,271 3,426 3,183 2,687 2,814 2,040 1,925 2,278 3,264 1,878 1,725 2,242 4 1-5 years 27,918 27,777 33,664 30,182 37,013 28,487 37,826' 27,806 30,627 22,318 26,939 34,615 5 5-10 years 24,014 24,939 28,680 26,197 26,145 23,750 20,957' 24,148 27,583 19,834 26,544 21,578 6 Over 10 years 16,923 16,093 16,458 14,825 18,005 15,739 14,200' 12,081 17,242 13,552 19,380 12,108 By type of customer 7 U.S. government securities dealers 2,936 2,761 3,286 3,354 3,839 3,729 3,576 2,692 4,303 4,174 4,271 8 U.S. government securities brokers 61,539 59,844 66,419 59,618 65,591 54,891 58,735' 54,314 62,601 46,253 57,445 55,997 9 All others3 45,575 39,019 43,016 43,890 45,308 38,482 39,136' 38,054' 45,305 32,647 41,628 37,772 10 Federal agency securities 18,084 15,903 18,626 19,751 17,998 18,442 13,303 15,006' 16,564 21,630 19,358 16,265 11 Certificates of deposit 4,112 3,369 2,798 1,728 1,437 1,123 1,100 1,350 1,269 988 1,133 1,151 12 Bankers acceptances 2,965 2,316 2,222 1,532 1,391 1,182 1,253 1,306 1,271 1,169 1,245 1,059 13 Commercial paper 17,135 22,927 31,805 39,797 36,605 36,746 36,112 37,516 37,514 35,824 37,356 37,325 Futures contracts 14 Treasury bills 3,233 2,627 2,525 2,607 2,022 1,846 1,431 1,563 2,471 1,555 1,275 2,157 1 1 5 6 T Fe r d ea e s r u a r l y a g c e o n u c p y o n s s e curities 8,963 5 9,6951 9,602 9,79 1 8 2 10,78 1 0 2 9,81 4 9 7 10,48 2 1 0 8,5507' 11,510 5 7,25 2 8 1 12,2 1 3 5 8 0 7,9221 Forward transactions 17 U.S. Treasury securities 2,029 2,095 2,127 1,837 2,449 1,393 2,218 1,170 1,520 1,057 1,770 1,416 18 Federal agency securities 9,290 8,008 9,483 10,064 12,826 9,772 11,360 8,360 8,738 13,444 10,639 6,053 1. Transactions are market purchases and sales of securities as reported to the securities, nondealer departments of commercial banks, foreign banking agencies, Federal Reserve Bank of New York by the U.S. government securities dealers on and the Federal Reserve System. its published list of primary dealers. 4. Futures contracts are standardized agreements arranged on an organized Averages for transactions are based on the number of trading days in the period. exchange in which parties commit to purchase or sell securities for delivery at a The figures exclude allotments of, and exchanges for, new U.S. Treasury future date. securities, redemptions of called or matured securities, purchases or sales of 5. Forward transactions are agreements arranged in the over-the-counter securities under repurchase agreement, reverse repurchase (resale), or similar market in which securities are purchased (sold) for delivery after 5 business days contracts. from the date of the transaction for Treasury securities (Treasury bills, notes, and 2. Data for immediate transactions do not include forward transactions. bonds) or after 30 days for mortgage-backed agency issues. 3. Includes, among others, all other dealers and brokers in commodities and Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A32 Domestic Nonfinancial Statistics • September 1990 1.43 U.S. GOVERNMENT SECURITIES DEALERS Positions and Financing1 Averages of daily figures, in millions of dollars 1990 1990 IItteemm 11998877 11998888 11998899 Apr. May June May 30 June 6 June 13 June 20 June 27 Positions Net immediate2 1 U.S. Treasury securities -6,216 -22,765 -5,940 —6,505' -14,454' -6,806 -10,765 -3,622 -4,928 -7,653 -11,676 2 Bills 4,317 2,238 7,835 9,820' 2,713 5,424 1,072 8,534 5,594 4,343 2,990 3 Other within 1 year 1,557 -2,236 -1,528 837 190 2,071 210 1,093 2,202 2,598 1,972 4 1-5 years 649 -3,020 2,338 4,163' 1,673 2,423 3,806 1,868 2,956 2,800 1,925 5 5-10 years -6,564 -9,663 -8,133 -5,891 -3,701' -3,905 -1,393 -1,829 -3,275 -4,447 -5,584 6 Over 10 years -6,174 -10,084 -6,452 -15,434 -15,329' -12,818 -14,459 -13,288 -12,404 -12,947 -12,979 7 Federal agency securities 31,911 28,230 31,913 34,928 36,216' 35,986 32,745 32,300 37,041 39,291 34,116 8 Certificates of deposit 8,188 7,300 6,674 3,579' 3,509 3,039 3,440 3,481 3,067 2,786 2,911 9 Bankers acceptances 3,660 2,486 2,089 1,277 1,081 1,299 1,021 1,487 1,370 1,307 1,023 10 Commercial paper 7,496 6,152 8,242 7,492 7,410 9,315 6,265 9,788 8,750 10,265 8,217 Futures positions 11 Treasury bills -3,373 -2,210 -4,599 -7,017 -8,091 -5,961 -7,556 -7,553 -6,958 -4,784 -4,837 12 Treasury coupons 5,988 6,224 -2,918 -4,739' -5,604 -7,860 -6,939 -7,793 -7,961 -7,448 -8,016 13 Federal agency securities -95 0 14 22 22 183 5 10 109 272 305 Forward positions 14 U.S. Treasury securities -1,211 346 -545 -1,188' -305 767 297 -153 4 1,268 1,864 15 Federal agency securities -18,817 -16,348 -16,878 -12,146' -14,888 -15,467 -12,750 -12,083 -16,052 -19,099 -13,640 Financing3 Reverse repurchase agreements4 16 Overnight and continuing 126,709 136,327 157,955 160,104 161,523 0 155,850 155,318 162,631 151,271 149,491 17 Term 148,288 177,477 225,126 220,483 219,006 0 211,400 208,799 212,339 214,964 209,526 Repurchase agreements5 18 Overnight and continuing 170,763 172,695 219,083 227,829 218,348 0 214,737 215,525 219,932 216,806 217,708 19 Term 121,270 137,056 179,557 175,175 182,135 0 174,829 172,743 178,047 178,358 172,693 1. Data for dealer positions and sources of financing are obtained from reports ties involved are not available for trading purposes. Immediate positions include submitted to the Federal Reserve Bank of New York by the U.S. Treasury reverses to maturity, which are securities that were sold after having been securities dealers on its published list of primary dealers. obtained under reverse repurchase agreements that mature on the same day as the Data for positions are averages of daily figures, in terms of par value, based on securities. Data for immediate positions do not include forward positions. the number of trading days in the period. Positions are net amounts and are shown 3. Figures cover financing involving U.S. Treasury and federal agency securion a commitment basis. Data for financing are in terms of actual amounts ties, negotiable CDs, bankers acceptances, and commercial paper. borrowed or lent and are based on Wednesday figures. 4. Includes all reverse repurchase agreements, including those that have been 2. Immediate positions are net amounts (in terms of par values) of securities arranged to make delivery on short sales and those for which the securities owned by nonbank dealer firms and dealer departments of commercial banks on obtained have been used as collateral on borrowings, that is, matched agreements. a commitment, that is, trade-date basis, including any such securities that have 5. Includes both repurchase agreements undertaken to finance positions and been sold under agreements to repurchase (RPs). The maturities of some "matched book" repurchase agreements. repurchase agreements are sufficiently long, however, to suggest that the securi- 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 1990 AAggeennccyy 11998855 11998866 11998877 11998888 Jan. Feb. Mar. Apr. May 1 Federal and federally sponsored agencies 293,905 307,361 341,386 381,498 414,414 420,309 420,246 0 0 2 Federal agencies 36,390 36,958 37,981 35,668 34,995 42,974 42,492 42,526 42,482 3 Defense Department1 71 33 13 8 7 7 7 7 7 4 Export-Import Bank ' 15,678 14,211 11,978 11,033 10,985 10,985 11,017 11,017 11,017 5 Federal Housing Administration 115 138 183 150 239 280 318 352 365 6 Government National Mortgage Association participation certificates 2,165 2,165 1,615 0 0 0 0 0 0 7 Postal Service6 1,940 3,104 6,103 6,142 6,445 6,445 6,445 6,445 6,148 8 Tennessee Valley Authority 16,347 17,222 18,089 18,335 17,319 25,257 24,705 24,705 24,945 9 United States Railway Association6 74 85 0 0 0 0 0 0 0 10 Federally sponsored agencies7 257,515 270,553 303,405 345,830 379,419 377,335 377,755 0 0 11 Federal Home Loan Banks 74,447 88,758 115,727 135,836 133,699 132,975 131,526 127,401 125,515 12 Federal Home Loan Mortgage Corporation 11,926 13,589 17,645 22,797 25,298 25,017 26,152 28,789 0 13 Federal National Mortgage Association 93,896 93,563 97,057 105,459 115,164 116,207 116,815 117,357 118,108 14 Farm Credit Banks8 68,851 62,478 55,275 53,127 55,809 53,790 53,732 53,700 53,795 15 Student Loan Marketing Association 8,395 12,171 16,503 22,073 30,908 30,806 30,988 0 0 16 Financing Corporation10 0 0 1,200 5,850 8,170 8,170 8,170 8,170 8,170 17 Farm Credit Financial Assistance Corporation 0 0 0 690 847 847 847 847 847 18 Resolution Funding Corporation 0 0 0 0 9,524 9,524 9,524 13,026 13,026 MEMO 19 Federal Financing Bank debt" 153,373 157,510 152,417 142,850 134,263 133,567 135,448 136,957 141,536 Lending to federal and federally sponsored agencies 20 Export-Import Bank3 15,670 14,205 11,972 11,027 10,979 10,979 11,011 11,011 11,011 21 Postal Service6 1,690 2,854 5,853 5,892 6,195 6,195 6,195 6,195 5,898 22 Student Loan Marketing Association 5,000 4,970 4,940 v 4,910 4,880 4,880 4,880 4,880 4,880 23 Tennessee Valley Authority 14,622 15,797 16,709 16,955 15,939 15,877 15,325 15,325 15,565 24 United States Railway Association 74 85 0 0 0 0 0 0 0 Other Lending14 25 Farmers Home Administration 64,234 65,374 59,674 58,496 53,461 52,831 52,726 51,916 51,591 26 Rural Electrification Administration 20,654 21,680 21,191 19,246 19,212 19,219 19,221 19,191 19,182 27 Other 31,429 32,545 32,078 26,324 23,597 23,586 26,090 28,439 33,409 1. Consists of mortgages assumed by the Defense Department between 1957 10. The Financing Corporation, established in August 1987 to recapitalize the and 1963 under family housing and homeowners assistance programs. Federal Savings and Loan Insurance Corporation, undertook its first borrowing in 2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976. October 1987. 3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter. 11. The Farm Credit Financial Assistance Corporation (established in January 4. Consists of debentures issued in payment of Federal Housing Administration 1988 to provide assistance to the Farm Credit System) undertook its first insurance claims. Once issued, these securities may be sold privately on the borrowing in July 1988. securities market. 12. The Resolution Funding Corporation, established by the Financial Institu- 5. Certificates of participation issued before fiscal 1969 by the Government tions Reform, Recovery, and Enforcement Act of 1989, undertook its first National Mortgage Association acting as trustee for the Farmers Home Admin- borrowing in October 1989. istration; Department of Health, Education, and Welfare; Department of Housing 13. Includes FFB purchases of agency assets and guaranteed loans; the latter and Urban Development; Small Business Administration; and the Veterans contain loans guaranteed by numerous agencies with the guarantees of any Administration. particular agency being generally small. The Farmers Home Administration item 6. Off-budget. consists exclusively of agency assets, while the Rural Electrification Administra- 7. Includes outstanding noncontingent liabilities: notes, bonds, and deben- tion entry contains both agency assets and guaranteed loans. tures. Some data are estimated. 14. The FFB, which began operations in 1974, is authorized to purchase or sell 8. Excludes borrowing by the Farm Credit Financial Assistance Corporation, obligations issued, sold, or guaranteed by other federal agencies. Since FFB shown in line 17. incurs debt solely for the purpose of lending to other agencies, its debt is not 9. Before late 1981, the Association obtained financing through the Federal included in the main portion of the table in order to avoid double counting. Financing Bank (FFB). Borrowing excludes that obtained from the FFB, which is shown on line 21. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A34 Domestic Nonfinancial Statistics • September 1990 1.45 NEW SECURITY ISSUES Tax-Exempt State and Local Governments Millions of dollars 1989 1990 TTyyppee ooff iissssuuee oorr iissssuueerr,, oorr uussee 11998877 11998888 11998899 Nov. Dec. Jan. Feb. Mar. Apr. May June 1 All issues, new and refunding1 102,407 114,522 113,646 9,564 13,636 6,694 6,329 9,880 8,582 12,032' 13,625 Type of issue 2 General obligation 30,589 30,312 35,774 3,328 2,158 2,675 3,010 3,199 3,386 3,166 4,426 3 Revenue 71,818 84,210 77,873 6,237 11,478 4,019 3,319 6,681 5,196 8,866 9,199 Type of issuer 4 State 10,102 8,830 11,819 930 911 712 1,196 707 1,387 1,003 1,090 5 Special district and statutory authority2 65,460 74,409 71,022 5,473 9,391 4,744 3,277 6,247 4,366 7,485 8,556 6 Municipalities, counties, and townships 26,845 31,193 30,805 3,161 3,334 1,238 1,856 2,926 2,243 3,544 3,977 7 Issues for new capital, total 56,789 79,665 84,062 7,777 10,195 6,263 5,635 6,667 7,744 10,486r 10,974 Use of proceeds 8 Education 9,524 15,021 15,133 1,058 1,495 1,374 1,420 1,018 1,054' 1,694 2,612 9 Transportation 3,677 6,825 6,870 675 645 98 511 1,158 l,215r 1,375 1,592 10 Utilities and conservation 7,912 8,496 11,427 1,137 2,219 1,747 718 502 991' 1,232 2,159 11 Social welfare 11,106 19,027 16,703 1,441 2,518 1,017 432 1,425 2,664 2,628 2,199 12 Industrial aid 7,474 5,624 5,036 444 1,119 200 115 432 232 681 693 13 Other purposes 18,020 24,672 28,894 3,022 2,199 1,827 2,439 2,132 2,426 2,155 4,366 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 TTyyppee ooff ii oo ss rr ss uu uu ee ss ee oo rr iissssuueerr,, 11998877 11998888 11998899'' Oct. Nov. Dec. Jan. Feb. Mar. Apr. May 1 Ali issues1 392,569' 410,294' 348,255 24,898' 20,777' 21,762' 15,084 13,728' 20,918' 15,056' 22,751 2 Bonds2 326,061' 352,494' 202,350 21,218' 16,537' 17,817' 12,806 10,809' 17,124' 13,30c 20,400 Type of offering 3 Public, domestic 209,685' 201,616' 179,592 20,090' 14,454' 16,191' 10,754 9,902' 15,230' 12,30c 17,600 4 Private placement, domestic3 92,070 127,700 114,629 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 5. Sold abroad 24,306 23,178 22,758 1,128 2,083 1,626 2,052 907 1,894 1,000 2,800 Industry group 6 Manufacturing 60,857' 70,454' 76,090 3,646 3,611' 4,285' 2,036 2,438' 3,179' 3,445' 1,881 7 Commercial and miscellaneous 49,773 62,024' 49,247 1,830 1,253 347 655 131 253 617' 1,083 8 Transportation 11,974 10,075' 10,050 906 312 1,083 35 53 386 194 817 9 Public utility 23,004 19,318 16,739 1,753' 1,022 1,171' 1,043 1,057 317 435' 887 10 Communication 7,340 5,952' 8,478 782' 812 577 23 35 704 500 225 11 Real estate and financial 173,115' 184,67C 156,376 12,302' 9,526' 10,355' 9,016 7,096 12,286' 8,109' 15,507 12 Stocks2 66,508 57,802 57,870 3,680 4,240 3,945 2,278 2,919 3,794 1,756 2,351 Type 13 Preferred 10,123 6,544 6,194 570 160 626 50 167 1,028 193 665 14 Common ^ 43,225 35,911 26,030 3,110 4,080 3,319 2,228 2,752 2,767 1,564 1,686 15 Private placement3 13,157 15,346 25,647 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Industry group 16 Manufacturing 13,880 7,608 9,308 190 378 279 835 431 521 253 86 17 Commercial and miscellaneous 12,888 8,449 7,446 728 498 1,045 248 1,017 552 666 706 18 Transportation 2,439 1,535 1,929 50 0 0 0 0 0 0 22 19 Public utility 4,322 1,898 3,090 465 211 244 106 582 533 219 471 20 Communication 1,458 515 1,904 0 0 0 0 0 0 0 380 21 Real estate and financial 31,521 37,798 34,028 2,214 3,153 2,377 1,090 889 2,188 619 686 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May INVESTMENT COMPANIES' 1 Sales of own shares2 271,237 306,445 23,872 24,673 30,982 35,620 26,118 28,817 29,788 27,428 2 Redemptions of own shares3 267,451 272,165 21,702 19,573 24,967 27,331 20,978 23,777 27,306 23,337 3 Net sales 3,786 34.280 2,170 5,100 6,015 8,289 5,140 5,040 2,482 4,091 4 Assets4 472,297 553,871 534,922 549,892 553,871 535,165 542,725 549,638 542,061 574,299 5 Cash position5 45,090 44,780 46.146 47,875 44.780 48,865 51,356 50,454 55,213 52,869 6 Other 427,207 509,091 488,776 502,017 509,091 486,300 491,369 499,184 486,848 521,430 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. 1.48 CORPORATE PROFITS AND THEIR DISTRIBUTION Billions of dollars; quarterly data are at seasonally adjusted annual rates. 1988 1989 1990 AAccccoouunntt 11998877 11998888 11998899 Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Corporate profits with inventory valuation and capital consumption adjustment 298.7 328.6 301.3 325.3 330.9 340.2 316.3 307.8 295.2 285.9 228899..77 2 Profits before tax 266.7 306.8 290.6 305.3 314.4 318.8 318.0 296.0 275.0 273.7 283.3 3 Profits tax liability 124.7 137.9 129.7 138.4 141.2 143.2 144.4 134.9 122.6 116.9 124.8 4 Profits after tax 142.0 168.9 160.9 166.9 173.2 175.6 173.6 161.1 152.4 156.7 158.5 5 Dividends 98.7 110.4 122.1 108.6 112.2 115.2 118.5 120.9 123.3 125.6 128.1 6 Undistributed profits 43.3 58.5 38.9 58.3 61.1 60.4 55.1 40.2 29.1 31.1 30.4 7 Inventory valuation -18.9 -25.0 n.a. -28.8 -30.4 -20.1 -38.3 -21.0 n.a. n.a. n.a. 8 Capital consumption adjustment 50.9 46.8 29.3 48.9 46.9 41.5 36.6 32.3 26.5 21.9 17.5 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 11999900 04 Ql Q2 Q3 Q4 Ql Q2 Q3 1 Total nonfarm business 430.76 475.52 507.23 442.11 459.47 470.86 484.93 486.80 500.29 506.84 511.59 Manufacturing 2 Durable goods industries 78.30 83.68 85.71 80.56 81.26 82.97 85.66 84.84 88.04 83.97 84.99 3 Nondurable goods industries 88.01 100.86 105.18 92.76 93.96 98.57 102.00 108.92 104.32 105.56 105.33 Nonmanufacturing 4 Mining 12.66 12.52 13.40 12.38 12.15 12.70 12.59 12.65 12.86 13.77 14.02 Transportation 5 Railroad 7.06 8.12 8.14 7.45 8.02 7.37 8.16 8.94 8.58 7.99 7.78 6 Air 7.28 8.91 12.39 7.69 7.04 9.49 12.48 6.61 11.10 12.11 15.09 7 Other 7.00 7.56 7.68 6.89 8.07 7.40 7.89 6.87 8.39 7.01 7.61 Public utilities 8 Electric 32.03 34.20 34.87 33.69 33.69 35.34 33.73 34.04 31.94 36.75 35.52 9 Gas and other 14.64 16.52 17.65 15.04 17.12 16.67 15.84 16.46 17.59 17.79 18.44 10 Commercial and other 183.76 203.14 222.22 185.65 198.15 200.36 206.59 207.46 217.46 221.89 222.82 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 DomesticN onfinancial Statistics • September 1990 1.51 DOMESTIC FINANCE COMPANIES Assets and Liabilities1 Billions of dollars, end of period 1990 1985 Q3 Q4 Q1 Q2 Q3 Q4 ASSETS Accounts receivable, gross2 1 Consumer 111.9 134.7 141.1 146.3 146.2 139.1 143.9 146.3 140.8 2 Business 157.5 173.4 207.4 223.3 236.5 243.3 250.9 246.8 256.0 3 Real estate 28.0 32.6 39.5 43.1 43.5 45.1 47.1 48.7 48.9 4 Total 297.4 340.6 388.1 412.7 426.2 427.5 441.9 441.8 445.8 Less: 5 Reserves for unearned income 39.2 41.5 45.3 48.4 50.0 51.0 52.2 52.9 52.0 6 Reserves for losses 4.9 5.8 6.8 7.1 7.3 7.4 7.5 7.7 7.7 7 Accounts receivable, net 253.3 293.3 336.0 357.3 368.9 369.2 382.2 381.3 386.1 45.3 58.6 58.3 68.7 72.4 75.1 81.4 85.2 91.6 8 All other 298.6 9 Total assets LIABILITIES 18.0 18.6 16.4 11.9 15.4 11.3 12.1 12.2 14.5 10 Bank loans 99.2 117.8 128.4 129.4 142.0 147.8 149.0 147.2 149.5 11 Commercial paper Debt 12.7 17.5 28.0 n.a. n.a. n.a. n.a. n.a. n.a. 12 Other short-term 94.4 117.5 137.1 n.a. n.a. n.a. n.a. n.a. n.a. 13 Long-term n.a. n.a. n.a. 51.5 50.6 56.9 59.8 60.3 63.8 14 Due to parent n.a. n.a. n.a. 139.3 137.9 133.6 140.5 145.1 147.8 15 Not elsewhere classified 41.5 44.1 52.8 58.9 59.8 58.1 63.5 61.8 62.6 16 All other liabilities 32.8 36.4 31.5 34.9 35.6 36.6 38.8 39.8 39.4 17 Capital, surplus, and undivided profits 18 Total liabilities and capital 298.6 351.9 394.2 426.0 441.3 444.3 463.6 466.4 477.6 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 11998888 11998899 Dec. Jan. Feb. Mar. Apr. May 1 Total 205,992 234,578 258,504 258,504 259,467 259,015 261,662 262,379 266,859 Retail financing of installment sales 2 Automotive 36,139 36,957 39,139 39,139 39,252 39,125 39,264 39,550 39,245 3 Equipment 25,075 28,199 29,674 29,674 29,690 29,483 29,789 30,115 30,635 4 Pools of securitized assets n.a. n.a. 698 698 720 681 704 662 622 Wholesale 5 Automotive 30,070 32,357 33,074 33,074 30,463 29,491 29,963 29,672 29,896 6 Equipment 5,578 5,954 6,896 6,896 9,183 9,155 9,408 9,372 9,429 7 All other 8,329 9,312 9,918 9,918 9,943 9,877 10,030 9,961 9,892 8 Pools of securitized assets2 n.a. n.a. 0 0 0 0 0 0 0 Leasing 9 Automotive 22,097 24,875 27,074 27,074 26,978 27,161 28,325 28,528 28,878 10 Equipment 43,493 57,658 68,112 68,112 68,904 69,335 68,755 69,473 72,715 11 Pools of securitized assets n.a. n.a. 1,247 1,247 1,242 1,377 1,433 1,646 1,597 12 Loans on commercial accounts receivable and factored commercial accounts receivable 18,170 18,103 19,081 19,081 18,975 19,155 19,426 18,716 18,700 13 All other business credit 17,042 21,162 23,590 23,590 24,118 24,176 24,565 24,685 25,250 Net change (during period) 14 33,866 22,434 22,580 2,504 -1,255 -452 2,647 717 4,480 Retail financing of installment sales 15 Automotive 9,925 819 2,182 87 112 -127 140 286 -305 16 Equipment 2,056 1,386 1,475 197 16 -207 306 327 520 17 Pools of securitized assets n.a. n.a. -26 -41 22 -39 23 -42 -40 Wholesale 18 Automotive 7,158 2,288 716 414 -2,611 -972 472 -291 224 19 Equipment 250 377 940 -131 68 -28 254 -37 57 20 All other 1,293 983 605 -45 26 -66 153 -69 -69 21 Pools of securitized assets n.a. n.a. 0 0 0 0 0 0 0 Leasing 22 Automotive 2,174 2,777 2,201 -387 -97 183 1,164 203 351 23 Equipment 5,271 9,752 9,187 2,124 792 431 -580 718 3,243 24 Pools of securitized assets2 n.a. n.a. 526 154 -5 135 56 213 -49 25 Loans on commercial accounts receivable and factored commercial accounts receivable 2,245 -65 979 86 -107 180 272 -711 -16 26 All other business credit 3,498 4,119 3,7% 46 528 59 388 120 565 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 Dec. Jan. Feb. Mar. Apr. May June Terms and yields in primary and secondary markets PRIMARY MARKETS Conventional mortgages on new homes Terms1 1 Purchase price (thousands of dollars) 137.0 150.0 159.6 162.7 148.5 148.9 138.2 155.5 162.1 149.8 2 Amount of loan (thousands of dollars) 100.5 110.5 117.0 119.9 107.3 109.0 100.9 114.6 119.7 111.8 3 Loan/price ratio (percent) 75.2 75.5 74.5 74.4 73.4 74.6 74.7 75.4 75.0 76.4 4 Maturity (years) 27.8 28.0 28.1 27.9 27.1 27.4 26.6 26.6 28.1 26.9 5 Fees and charges (percent of loan amount) 2.26 2.19 2.06 2.18 1.85 1.87 1.96 2.00 2.41 1.96 6 Contract rate (percent per year) 8.94 8.81 9.76 9.70 9.59 9.56 9.70 9.83 9.87 9.80 Yield (percent per year) 7 OTS series3 9.31 9.18 10.11 10.07 9.91 9.88 10.03 10.17 10.28 10.13 8 HUD series4 10.17 10.30 10.21 9.72 10.00 10.12 10.20 10.46 10.19 10.12 SECONDARY MARKETS Yield (percent per year) 9 FHA mortgages (HUD series) 10.16 10.49 10.24 9.72 10.01 10.22 10.30 10.75 10.23 10.18 10 GNMA securities6 9.44 9.83 9.71 9.07 9.24 9.44 9.53 9.77 9.77 9.54 Activity in secondary markets FEDERAL NATIONAL MORTGAGE ASSOCIATION Mortgage holdings (end of period) 11 Total 95,030 101,329 104,974 110,721 111,329 111,628 112,353 112,463 112,791 112,855 12 FHA/VA-insured 21,660 19,762 19,640 20,283 20,471 20,614 20,688 20,707 20,723 20,830 13 Conventional 73,370 81,567 85,335 90,438 90,858 91,014 91,665 91,756 92,068 92,025 Mortgage transactions (during period) 14 Purchases 20,531 23,110 22,518 2,982 2,214 1,537 1,945 1,705 1,630 1,802 Mortgage commitments1 15 Contracted (during period) 25,415 23,435 27,409 2,495 1,787 3,216 3,789 5,700 n.a. n.a. 16 Outstanding (end of period) 4,886 2,148 6,037 6,037 5,619 4,977 6,765 10,534 n.a. n.a. FEDERAL HOME LOAN MORTGAGE CORPORATION Mortgage holdings (end of period f 17 Total 12,802 15,105 20,105 21,852 20,361 20,112 19,823 19,730 n.a. n.a. 18 FHA/VA 686 620 590 584 578 572 561 555 n.a. n.a. 19 Conventional 12,116 14,485 19,516 21,269 19,782 19,540 19,261 19,174 n.a. n.a. Mortgage transactions (during period) 20 Purchases 76,845 44,077 78,588 8,718 6,423 5,676 6,301 5,719 n.a. n.a. 21 Sales 75,082 39,780 73,446 8,526 7,764 5,796 6,503' 5,687' 4,575 6,291 Mortgage commitments9 22 Contracted (during period) 71,467 66,026 88,519 7,820 8,020 5,922 6,119 10,441 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 • September 1990 1.54 MORTGAGE DEBT OUTSTANDING1 Millions of dollars, end of period 1989 1990 TTyyppee ooff hhoollddeerr,, aanndd ttyyppee ooff pprrooppeerrttyy 11998877 11998888 11998899'' Ql Q2 Q3 Q4' Qlp 1 All holders 2,977,293 3,242,267r 3,519,833 3,307,397' 3,378,104' 3,447,291' 3,519,833 3,568,853 2 1- to 4-family 1,959,607 2,168,803r 2,388,857 2,215,142' 2,271,549' 2,328,881' 2,388,857 2,425,966 3 Multifamily 273,954 287,056r 302,216 291,512' 295,337' 298,633' 302,216 306,130 4 Commercial 654,863 699,620r 742,301 714,774' 724,485' 733,189' 742,301 750,378 5 88,869 86,788' 86,459 85,969' 86,733' 86,588' 86,459 86,379 6 Selected financial institutions 1,664,211 1,805,428' 1,891,568 1,838,109^ 1,870,362' 1,887,299' 1,891,568 1,897,852 7 Commercial banks 591,369 669,160 756,786 688,662 715,049 737,979 756,786 771,319 8 1- to 4-family 276,270 314,283 358,652 324,681 338,872 349,739 358,652 365,539 9 Multifamily 33,330 34,131 36,994 34,172 34,954 36,075 36,994 37,705 10 Commercial 267,340 305,242 343,841 313,941 324,878 335,296 343,841 350,444 11 Farm 14,429 15,504 17,299 15,868 16,345 16,869 17,299 17,631 12 Savings institutions3 860,467 903,629' 893,709 914,537' 919,153' 913,553' 893,709 883,628 13 1- to 4-family 602,408 657,591' 657,868 667,671' 673,608' 670,308' 657,868 649,537 14 Multifamily 106,359 108,003' 103,832 107,880' 107,622' 106,023' 103,832 103,025 15 Commercial 150,943 137,384' 131,377 138,330' 137,275' 136,561' 131,377 130,443 16 Farm 757 651' 632 656' 648' 661' 632 622 17 Life insurance companies 212,375 232,639 241,073 234,910 236,160 235,767 241,073 242,904 18 1- to 4-family 13,226 15,284 13,531 12,690 12,745 13,045 13,531 13,882 19 Multifamily 22.524 23,562 26,646 24,636 25,103 25,913 26,646 27,308 20 Commercial 166,722 184,124 191,369 188,073 188,756 187,208 191,369 192,244 21 Farm 9,903 9,669 9,527 9,511 9,556 9,601 9,527 9,471 22 Finance companies4 40,349 43,521 48,917 45,389 47,251 48,66C 48,917 50,184 23 Federal and related agencies 192,721 200,570 211,524 199,970' 201,909 206,674' 211,524 215,737 24 Government National Mortgage Association 444 26 23 26 24 24' 23 23 25 1- to 4-family 25 26 23 26 24 24' 23 23 26 Multifamily 419 0 0 0 0 0 0 0 27 Farmers Home Administration5 43,051 42,018 42,080 41,780 40,711 41,117 42,080 42,837 28 1- to 4-family 18,169 18,347 19,091 18,347 18,391 18,405 19,091 19,585 29 Multifamily 8,044 8,513 9,168 8,615 8,778 8,916 9,168 9,396 30 Commercial 6,603 5,343 4,463 5,101 3,885 4,366 4,463 4,553 31 Farm 10,235 9,815 9,358 9,717 9,657 9,430 9,358 9,303 32 Federal Housing and Veterans Administration 5,574 5,973 6,061 6,198' 6,424 6,023 6,061 6,215 33 1- to 4-family 2,557 2,672 2,850 2,673' 2,827 2,900 2,850 2,924 34 Multifamily 3,017 3,301 3,211 3,525 3,597 3,123 3,211 3,291 35 Federal National Mortgage Association 96,649 103,013 110,721 101,991 103,309 107,052 110,721 113,580 36 1- to 4-family 89,666 95,833 102,295 94,727 95,714 99,168 102,295 104,945 37 Multifamily 6,983 7,180 8,426 7,264 7,595 7,884 8,426 8,635 38 Federal Land Banks 34,131 32,115 30,788 31,261 31,467 30,943 30,788 30,667 39 1- to 4-family 2,008 1,890 1,889 1,839 1,851 1,821 1,889 1,938 40 Farm 32,123 30,225 28,899 29,422 29,616 29,122 28,899 28,729 41 Federal Home Loan Mortgage Corporation 12,872 17,425 21,852 18,714 19,974 21,515 21,852 22,415 42 1- to 4-family 11,430 15,077 18,249 16,192 17,305 18,493 18,249 18,722 43 Multifamily 1,442 2,348 3,603 2,522 2,669 3,022 3,603 3,693 44 Mortgage pools or trusts6 718,297 810,887 948,714 • 839,684 861,827 898,388 948,714 976,262 45 Government National Mortgage Association 317,555 340,527 374,650 348,622 353,154 361,291 374,650 385,343 46 1- to 4-family 309,806 331,257 362,865 337,563 341,951 349,830 362,865 373,265 47 Multifamily 7,749 9,270 11,785 11,059 11,203 11,461 11,785 12,078 48 Federal Home Loan Mortgage Corporation 212,634 226,406 272,870 234,695 242,789 256,896 272,870 280,932 49 1- to 4-family 205,977 219,988 266,060 228,389 236,404 250,123 266,060 273,953 50 Multifamily 6,657 6,418 6,810 6,306 6,385 6,773 6,810 6,979 51 Federal National Mortgage Association 139,960 178,250 228,232 188,071 196,501 208,894 228,232 235,136 52 1- to 4-family 137,988 172,331 219,577 181,352 188,774 200,302 219,577 226,265 53 Multifamily 1,972 5,919 8,655 6,719 7,727 8,592 8,655 8,870 54 Farmers Home Administration5 245 104 79 96 85 78 79 80 55 1- to 4-family 121 26 23 24 23 22 23 23 56 Multifamily 0 0 0 0 0 0 0 0 57 Commercial 63 38 22 34 26 22 22 23 58 Farm 61 40 34 38 36 34 34 34 59 Individuals and others7 402,064 425,382 468,026 429,634' 444,006' 454,930' 468,026 479,002 60 1- to 4-family 242,053 258,598 293,002 260,768 273,762' 283,472' 293,002 300,593 61 Multifamily 75,458 78,411 83,085 78,814 79,704' 80,851' 83,085 85,149 62 Commercial 63,192 67,489 71,229 69,295' 69,665' 69,736' 71,229 72,671 63 Farm 21,361 20,884 20,711 20,757 20,875 20,871 20,711 20,589 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, amounts outstanding, end of period 1989 1990 HHoollddeerr,, aanndd ttyyppee ooff ccrreeddiitt 11998888 11998899 Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr/ May Seasonally adjusted 1 Total 664,701 716,624 705,703 710,133 713,903 716,624 717,829 717,869 720,445 720,835 724,745 2 Automobile 284,556 290,770 288,839 290,210 290,972 290,770 290,904 289,629 290,932 288,936 288,849 3 Revolving 174,057 197,110 190,378 191,734 194,679 197,110 199,146 199,927 202,263 203,965 207,104 4 Mobile home 25,201 22,343 22,661 22,621 22,197 22,343 22,604 22,633 22,708 22,702 23,027 5 Other 180,887 206,401 203,825 205,568 206,055 206,401 205,175 205,680 204,543 205,232 205,765 Not seasonally adjusted 6 Total 674,719 727,561 708,370 711,295 715,145 727,561 721,026 717,062 713,138 715,801 720,304 By major holder 7 Commercial banks 324,792 343,865 332,502 335,657 337,285 343,865 342,266 339,418 334,645 337,576 339,631 8 Finance companies 146,212 140,832 146,296 143,293 142,802 140,832 140,740 139,115 137,857 138,174 138,384 9 Credit unions 88,340 90,875 91,285 91,291 90,965 90,875 90,452 90,127 89,556 89,689 89,869 10 Retailers2 48,302 42,638 37,400 37,045 37,906 42,638 39,959 37,904 37,302 37,207 37,347 11 Savings institutions 63,399 57,228 59,556 58,720 58,236 57,228 55,425 54,771 54,095 53,606 53,301 12 Gasoline companies 3,674 3,935 4,052 3,947 3,853 3,935 4,013 3,803 3,792 3,928 4,024 13 Pools of securitized assets .. n.a. 48,188 37,279 41,342 44,098 48,188 48,171 51,924 55,891 55,621 57,748 By major type of credit3 14 Automobile 284,328 290,421 293,114 293,664 292,543 290,421 288,984 288,036 286,539 286,220 287,058 15 Commercial banks 123,392 126,613 126,972 128,213 128,111 126,613 127,075 127,149 126,289 126,483 126,997 16 Finance companies 97,245 82,721 90,217 86,655 85,725 82,721 81,918 80,227 79,523 79,295 78,927 17 Pools of securitized assets2 n.a. 18,191 11,785 15,024 15,376 18,191 17,827 18,931 19,563 19,406 20,151 18 Revolving 183,909 208,188 188,684 189,913 194,640 208,188 203,288 200,147 199,306 201,783 204,805 19 Commercial banks 123,020 130,956 119,413 120,484 122,728 130,956 128,384 124,821 122,024 124,039 125,386 20 Retailers 43,697 37,967 32,961 32,618 33,432 37,967 35,359 33,378 32,794 32,721 32,857 21 Gasoline companies 3,674 3,935 4,052 3,947 3,853 3,935 4,013 3,803 3,792 3,928 4,024 22 Pools of securitized assets n.a. 22,977 19,731 20,371 22,186 22,977 23,450 26,204 29,542 29,403 30,913 23 Mobile home 25,143 22,283 22,808 22,849 22,319 22,283 22,717 22,726 22,426 22,484 22,820 24 Commercial banks 9,025 9,155 9,121 9,130 9,144 9,155 9,109 9,162 9,142 9,231 9,505 25 Finance companies 7,191 4,716 5,106 5,205 4,682 4,716 5,411 5,410 5,178 5,168 5,224 26 Other 181,339 206,669 203,764 204,869 205,643 206,669 206,037 206,153 204,236 205,314 205,621 27 Commercial banks 69,355 77,141 76,996 77,830 77,302 77,141 77,698 78,286 77,190 77,823 77,743 28 Finance companies 41,776 53,395 50,973 51,433 52,395 53,395 53,411 53,478 53,156 53,711 54,233 29 Retailers 4,605 4,671 4,439 4,427 4,474 4,671 4,600 4,526 4,508 4,486 4,490 30 Pools of securitized assets n.a. 7,020 5,763 5,947 6,536 7,020 6,894 6,789 6,786 6,812 6,684 1. The Board's series cover most short- and intermediate-term credit extended 2. Outstanding balances of pools upon which securities have been issued; these to individuals that is scheduled to be repaid (or has the option of repayment) in balances are no longer carried on the balance sheets of the loan originator. two or more installments. 3. Totals include estimates for certain holders for which only consumer credit These data also appear in the Board's G.19 (421) release. For address, see totals are available. inside front cover. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A40 Domestic Nonfinancial Statistics • September 1990 1.56 TERMS OF CONSUMER INSTALLMENT CREDIT1 Percent unless noted otherwise 1989 1990 IItteemm 11998877 11998888 11998899 Nov. Dec. Jan. Feb. Mar. Apr. May INTEREST RATES Commercial banks2 1 48-month new car3 10.45 10.85 12.07 11.94 n.a. n.a. 11.80 n.a. n.a. 11.82 2 24-month personal 14.22 14.68 15.44 15.42 n.a. n.a. 15.27 n.a. n.a. 15.41 3 120-month mobile home 13.38 13.54 14.11 13.97 n.a. n.a. 13.91 n.a. n.a. 14.09 4 Credit card 17.92 17.78 18.02 18.07 n.a. n.a. 18.12 n.a. n.a. 18.14 Auto finance companies 5 New car 10.73 12.60 12.62 13.27 13.27 12.64 12.67 12.31 12.21 12.23 6 Used car 14.60 15.11 16.18 16.09 16.10 15.77 15.91 15.97 16.02 16.03 OTHER TERMS4 Maturity (months) 7 New car 53.5 56.2 54.2 55.1 55.1 54.7 54.7 54.3 54.2 54.5 8 Used car 45.2 46.7 46.6 45.6 45.5 45.5 46.4 46.4 46.5 46.1 Loan-to-value ratio 9 New car 93 94 91 89 89 89 88 88 87 87 10 Used car 98 98 97 % 96 95 96 95 96 96 Amount financed (dollars) 11 New car 11,203 11,663 12,001 12,279 12,301 12,381 12,053 12,216 12,089 12,064 12 Used car 7,420 7,824 7,954 8,063 8,096 8,040 8,065 8,132 8,105 8,169 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 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998855 11998866 11998877 11998888 11998899 Q3 Q4 Q1 Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total net borrowing by domestic nonfinancial sectors 846.3 831.1 693.2 754.5 711.8 749.3 734.2 748.9 672.4 684.7 741.1 771.2 By sector and instrument ? U.S. government 223.6 215.0 144.9 157.5 149.8 162.5 142.1 199.9 70.9 149.0 179.4 229955..88 Treasury securities 223.7 214.7 143.4 140.0 150.0 141.6 100.5 201.1 65.8 149.1 184.0 266.2 4 Agency issues and mortgages -.1 .4 1.5 17.4 -.2 20.9 41.6 -1.2 5.1 -.2 -4.6 29.6 Private domestic nonfinancial sectors 622.7 616.1 548.3 597.1 562.0 586.8 592.2 549.0 601.5 535.8 561.7 475.4 6 Debt capital instruments 451.4 460.3 458.5 454.6 412.4 458.8 432.4 412.0 429.0 400.2 408.2 364.5 7 Tax-exempt obligations 135.4 22.7 34.1 34.0 25.4 34.8 34.3 29.3 23.0 35.0 14.3 37.4 8 Corporate bonds 73.8 121.3 99.9 114.1 114.3 110.9 98.4 100.4 127.9 102.5 126.6 87.9 9 Mortgages 242.2 316.3 324.5 306.5 272.6 313.1 299.7 282.3 278.2 262.7 267.3 239.2 10 Home mortgages 156.8 218.7 234.9 231.0 214.9 230.9 214.0 205.6 217.7 207.7 228.7 190.6 11 Multifamily residential 29.8 33.5 24.4 16.7 14.4 19.4 17.3 18.3 16.0 14.7 8.5 19.7 1? Commercial 62.2 73.6 71.6 60.8 43.7 65.4 67.7 62.8 42.4 40.2 29.3 30.3 13 Farm -6.6 -9.5 -6.4 -2.1 -.3 -2.6 .7 -4.4 2.2 .1 .8 -1.3 14 Other debt instruments 171.3 155.8 89.7 142.5 149.6 128.0 159.8 137.0 172.5 135.6 153.4 110.9 IS Consumer credit 82.5 58.0 32.9 51.1 39.1 35.5 73.1 22.5 42.2 30.5 61.1 3.4 16 Bank loans n.e.c 38.6 66.7 10.8 38.4 45.5 7.3 66.6 15.6 35.1 60.1 71.2 -3.0 17 Open market paper 14.6 -9.3 2.3 11.6 20.8 17.1 20.0 41.4 39.2 16.7 -14.3 68.8 18 Other 35.6 40.5 43.8 41.5 44.3 68.0 .1 57.4 56.0 28.3 35.4 41.7 19 By borrowing sector 622.7 616.1 548.3 597.1 562.0 586.8 592.2 549.0 601.5 535.8 561.7 475.4 ?0 State and local governments 90.9 36.2 33.6 29.8 24.6 28.1 30.6 29.7 27.6 29.5 11.7 32.8 ?1 284.6 289.2 271.9 289.8 277.6 291.4 283.5 243.7 260.9 282.7 323.3 223.6 ?? Nonfinancial business 247.2 290.7 242.8 277.5 259.7 267.3 278.0 275.6 313.0 223.6 226.7 219.0 73 -14.5 -16.3 -10.6 -7.5 -.4 -2.2 -11.8 1.0 -3.0 -9.4 9.6 9.3 74 Nonfarm noncorporate 129.3 103.2 107.9 87.4 64.1 100.5 80.4 86.3 66.1 58.1 46.1 52.8 25 Corporate 132.4 203.7 145.5 197.5 196.0 169.0 209.4 188.2 249.9 174.9 171.0 156.8 26 Foreign net borrowing in United States 1.2 9.7 4.9 6.9 9.8 4.1 13.3 -2.3 .4 25.6 15.5 16.8 71 3.8 3.1 7.4 6.9 4.9 5.9 5.1 3.2 10.7 8.4 -2.5 6.6 78 Bank loans n.e.c -2.8 -1.0 -3.6 -1.8 -.1 .0 -5.7 4.9 1.7 -1.2 -5.8 -2.5 7,9 Open market paper 6.2 11.5 2.1 9.6 12.3 10.3 21.0 10.2 -6.1 20.4 24.9 16.0 30 U.S. government loans -6.0 -3.9 -1.0 -7.8 -7.4 -12.1 -7.1 -20.7 -5.9 -2.0 -1.1 -3.3 31 Total domestic plus foreign 847.5 840.9 698.1 761.4 721.6 753.3 747.6 746.6 672.8 710.3 756.6 788.0 Financial sectors 32 Total net borrowing by financial sectors 201.3 318.9 315.0 246.5 210.8 216.3 302.5 387.2 117.0 132.9 205.9 189.9 By instrument 33 U.S. government related 101.5 187.9 185.8 119.8 155.8 128.6 156.7 205.7 101.4 129.7 186.3 115511..99 34 Sponsored credit agency securities 20.6 15.2 30.2 44.9 25.2 46.5 62.3 84.9 12.5 10.0 -6.5 32.0 35 Mortgage pool securities 79.9 173.1 156.4 74.9 130.5 82.1 94.4 120.8 88.9 119.6 192.8 120.0 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 55.0 87.7 145.8 181.5 15.6 3.3 19.6 38.0 38 Corporate bonds 50.9 82.9 78.9 51.7 37.0 32.5 43.0 54.0 31.4 24.9 37.7 37.1 39 Mortgages .1 .1 .4 .3 .0 -.1 1.2 .3 .0 .3 -.6 -.4 40 Bank loans n.e.c 2.6 4.0 -3.3 1.4 1.8 -5.6 -.3 3.0 .3 1.7 2.1 9.1 41 Open market paper 32.0 24.2 28.8 53.6 27.2 35.1 70.4 55.2 .9 20.0 32.8 1.7 42 Loans from Federal Home Loan Banks 14.2 19.8 24.4 19.7 -11.0 25.8 31.4 69.1 -16.9 -43.7 -52.4 -9.6 By sector 43 201.3 318.9 315.0 246.5 210.8 216.3 302.5 387.2 117.0 132.9 205.9 118899..99 44 Sponsored credit agencies 21.7 14.9 29.5 44.9 25.2 46.5 62.3 84.9 12.5 10.0 -6.5 32.0 45 Mortgage pools 79.9 173.1 156.4 74.9 130.5 82.1 94.4 120.8 88.9 119.6 192.8 120.0 46 Private financial sectors 99.7 131.0 129.2 126.7 55.0 87.7 145.8 181.5 15.6 3.3 19.6 38.0 47 Commercial banks -4.9 -3.6 7.1 -3.9 -1.4 -.9 3.7 -13.4 -.9 12.3 -3.5 4.4 48 Bank affiliates 16.6 15.2 14.3 5.2 6.2 6.1 .8 6.4 6.5 16.8 -4.9 -9.6 49 Savings and loan associations 17.3 20.9 19.6 19.9 -14.1 24.1 26.3 71.3 -16.2 -48.3 -63.3 -12.4 50 Mutual savings banks 1.5 4.2 8.1 1.9 -1.4 .5 3.8 -2.8 -1.1 -3.3 1.4 -.9 51 Finance companies 57.2 54.5 40.3 67.0 46.2 40.7 63.6 80.3 30.9 22.5 51.1 24.3 5? REITs .5 1.0 .8 4.1 -1.2 -5.9 15.0 -.9 -2.2 -2.4 .5 -1.0 53 SCO Issuers 11.5 39.0 39.1 32.5 20.8 23.1 32.5 40.6 -1.4 5.7 38.2 33.3 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A42 Domestic Nonfinancial Statistics • September 1990 1.57—Continued 1988 1989 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998855 11998866 11998877 11998888 11998899 Q3 Q4 Q1 Q2 Q3 Q4 Ql All sectors 54 Total net borrowing 1,048.8 1,159.8 1,013.2 1,007.9 932.4 969.7 1,050.1 1,133.8 789.8 843.3 962.5 977.9 55 U.S. government securities 324.2 403.4 331.5 277.2 305.6 291.1 298.8 405.6 172.3 278.6 365.7 447.7 56 State and local obligations 135.4 22.7 34.1 34.0 25.4 34.8 34.3 29.3 23.0 35.0 14.3 37.4 57 Corporate and foreign bonds 128.4 207.3 186.3 172.7 156.3 149.3 146.4 157.6 170.0 135.7 161.8 131.6 58 Mortgages 242.2 316.4 324.9 306.7 272.6 313.0 300.8 282.6 278.1 263.0 266.7 238.9 59 Consumer credit 82.5 58.0 32.9 51.1 39.1 35.5 73.1 22.5 42.2 30.5 61.1 3.4 60 Bank loans n.e.c 38.3 69.7 3.8 38.0 47.2 1.7 60.7 23.6 37.1 60.6 67.5 3.7 61 Open market paper 52.8 26.4 33.2 74.9 60.3 62.5 111.5 106.8 34.0 57.1 43.4 86.5 62 Other loans 45.0 56.1 66.5 53.4 25.9 81.7 24.4 105.9 33.1 -17.3 -18.0 28.8 63 MEMO: U.S. government, cash balance 14.4 .0 -7.9 10.4 -5.9 10.6 -17.9 -22.5 43.7 -16.6 -28.2 27.3 Totals net of changes in U.S. government cash balances 64 Net borrowing by domestic nonfinancial 831.9 831.2 701.1 744.2 717.7 738.6 752.2 771.4 628.7 701.4 769.3 743.9 65 Net borrowing by U.S. government 209.3 215.0 152.8 147.1 155.7 151.8 160.0 222.4 27.2 165.6 207.7 268.5 External corporate equity funds raised in United States 66 Total net share issues 20.1 90.5 14.3 -117.9 -60.8 -73.5 -163.5 -162.9 -48.8 -41.0 9.3 -7.2 67 Mutual funds 84.4 159.0 71.6 -.7 38.3 1.5 11.9 3.6 24.0 54.8 70.8 55.9 68 All other -64.3 -68.5 -57.3 -117.2 -99.1 -75.0 -175.4 -166.5 -72.7 -95.8 -61.5 -63.1 69 Nonfinancial corporations -81.5 -80.8 -76.5 -130.5 -130.8 -92.0 -195.0 -180.0 -105.0 -145.0 -93.0 -78.0 70 Financial corporations 13.5 11.1 21.4 12.4 14.0 14.6 13.5 10.0 17.3 14.2 14.6 16.5 71 Foreign shares purchased in United States 3.7 1.2 -2.1 .9 17.6 2.4 6.1 3.6 15.0 35.0 16.9 -1.7 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 1990 Transaction category, or sector 11998855 11998866 11998877 11998888 11998899 Q3 Q4 Ql Q2 Q3 Q4 Ql 1 Total funds advanced in credit markets to domestic nonfinancial sectors 846.3 831.1 693.2 754.5 711.8 749.3 734.2 748.9 672.4 684.7 741.1 771.2 By public agencies and foreign 2 Total net advances 202.0 314.0 262.8 215.5 193.8 181.2 255.8 310.8 -2.4 220.4 246.3 132.2 3 U.S. government securities 45.9 69.4 70.1 85.0 30.1 24.1 119.6 77.6 -105.9 116.5 32.3 -25.7 4 Residential mortgages 94.6 170.1 153.2 86.3 144.2 82.4 105.5 123.4 101.7 139.3 212.3 137.6 5 FHLB advances to thrifts 14.2 19.8 24.4 19.7 -11.0 25.8 31.4 69.1 -16.9 -43.7 -52.4 -9.6 6 Other loans and securities 47.3 54.7 15.1 24.4 30.4 49.0 -.7 40.7 18.7 8.3 54.1 29.8 Total advanced, by sector 7 U.S. government 17.8 9.7 -7.9 -9.4 -1.4 4.3 -27.1 -1.1 -3.9 -12.2 11.5 8.8 8 Sponsored credit agencies 103.5 187.2 183.4 112.0 130.1 114.4 152.8 194.3 8.0 132.1 186.2 137.4 9 Monetary authorities 18.4 19.4 24.7 10.5 -7.3 15.5 18.9 5.2 -3.9 -30.7 .1 -7.7 10 Foreign 62.3 97.8 62.7 102.3 72.4 47.0 111.2 112.5 -2.6 131.1 48.5 -6.4 Agency and foreign borrowing not in line 1 11 Sponsored credit agencies and mortgage pools.. 101.5 187.9 185.8 119.8 155.8 128.6 156.7 205.7 101.4 129.7 186.3 151.9 12 Foreign 1.2 9.7 4.9 6.9 9.8 4.1 13.3 -2.3 .4 25.6 15.5 16.8 Private domestic funds advanced 13 Total net advances 747.0 714.8 621.1 665.8 683.6 700.8 648.5 641.4 776.7 619.7 696.6 807.7 14 U.S. government securities 278.2 333.9 261.4 192.2 275.4 267.0 179.3 328.0 278.2 162.2 333.4 473.4 15 State and local obligations 135.4 22.7 34.1 34.0 25.4 34.8 34.3 29.3 23.0 35.0 14.3 37.4 16 Corporate and foreign bonds 40.8 84.2 87.5 97.6 103.7 86.8 66.5 80.9 129.0 107.2 97.9 80.8 17 Residential mortgages 91.8 82.0 106.1 161.3 85.1 167.9 125.8 100.5 131.9 83.1 24.9 72.7 18 Other mortgages and loans 214.8 211.8 156.5 200.3 182.9 170.0 274.0 171.8 197.6 188.5 173.8 133.8 19 LESS: Federal Home Loan Bank advances 14.2 19.8 24.4 19.7 -11.0 25.8 31.4 69.1 -16.9 -43.7 -52.4 -9.6 Private financial intermediation 20 Credit market funds advanced by private financial institutions 579.9 744.0 560.8 561.2 514.2 429.1 634.9 564.9 523.3 323.4 645.3 611.1 21 Commercial banking 186.0 197.5 136.8 155.3 177.1 118.4 220.5 120.6 158.6 166.6 262.5 169.9 22 Savings institutions 87.9 107.6 136.8 120.4 -92.9 156.9 94.0 34.3 -73.2 -135.9 -197.1 -63.7 23 Insurance and pension funds 154.4 174.6 210.9 198.0 183.1 152.2 190.1 257.1 162.1 122.8 190.5 196.4 24 Other finance 151.6 264.2 76.3 87.4 247.0 1.7 130.3 152.9 275.8 169.8 389.4 308.5 25 Sources of funds 579.9 744.0 560.8 561.2 514.2 429.1 634.9 564.9 523.3 323.4 645.3 611.1 26 Private domestic deposits and RPs 214.3 262.6 144.1 219.9 207.7 191.3 277.9 128.4 174.2 255.4 273.0 196.6 27 Credit market borrowing 99.7 131.0 129.2 126.7 55.0 87.7 145.8 181.5 15.6 3.3 19.6 38.0 28 Other sources 265.9 350.4 287.5 214.6 251.5 150.1 211.2 255.0 333.5 64.7 352.8 376.5 29 Foreign funds 19.7 12.9 43.7 9.3 -11.6 -41.5 45.2 -28.6 -19.4 22.7 -21.3 5.1 30 Treasury balances 10.3 1.7 -5.8 7.3 -3.4 5.6 -4.1 -21.6 26.6 -15.0 -3.6 15.9 31 Insurance and pension reserves 131.9 149.3 176.1 177.6 153.6 87.3 253.9 187.9 125.1 37.9 263.6 103.3 32 Other, net 104.1 186.5 73.6 20.4 112.9 98.8 -83.7 117.3 201.1 19.1 114.1 252.3 Private domestic nonfinancial investors 33 Direct lending in credit markets 266.8 101.8 189.6 231.3 224.4 359.3 159.4 258.0 269.0 299.6 70.9 234.6 34 U.S. government securities 157.8 60.9 100.0 131.8 150.0 209.3 140.5 213.2 128.3 179.2 79.4 199.3 35 State and local obligations 37.7 -21.7 45.6 33.9 15.8 56.0 22.1 35.8 -9.1 35.8 .9 -1.3 36 Corporate and foreign bonds 4.2 39.3 24.1 -4.1 24.3 -6.1 -29.4 -33.0 70.8 10.6 48.6 -4.6 37 Open market paper 47.5 5.4 6.6 37.2 4.5 75.6 -1.3 44.9 18.9 53.5 -99.3 25.3 38 Other 19.6 17.9 13.3 32.6 29.8 24.5 27.4 -2.8 60.1 20.4 41.3 15.9 39 Deposits and currency 224.6 283.0 160.2 222.5 226.9 215.1 248.7 173.6 213.6 232.9 287.5 228.3 40 Currency 12.4 14.4 19.0 14.7 11.7 29.3 5.1 19.3 12.6 9.1 5.7 25.7 41 Checkable deposits 41.9 95.0 -3.0 12.4 .6 -22.3 97.8 -54.1 -93.2 -3.5 153.1 -23.9 42 Small time and savings accounts 138.5 120.6 76.0 122.8 100.5 73.1 86.1 19.9 111.2 130.0 140.8 132.3 43 Money market fund shares 8.9 38.3 27.2 22.8 84.8 -3.5 58.1 51.1 111.8 124.3 51.9 85.8 44 Large time deposits 7.4 -11.4 26.7 40.7 20.9 136.9 12.6 97.9 29.9 10.7 -55.0 5.6 45 Security RPs 17.7 20.2 17.2 21.2 1.1 7.0 23.3 13.6 14.5 -6.0 -17.8 -3.2 46 Deposits in foreign countries -2.1 5.9 -2.8 -12.1 7.5 -5.5 -34.4 25.9 26.8 -31.6 8.8 6.0 47 Total of credit market instruments, deposits, and currency 491.4 384.8 349.8 453.8 451.3 574.4 408.1 431.6 482.6 532.5 358.4 462.9 48 Public holdings as percent of total 23.8 37.3 37.6 28.3 26.9 24.1 34.2 41.6 -.4 31.0 32.6 16.8 49 Private financial intermediation (in percent) 77.6 104.1 90.3 84.3 75.2 61.2 97.9 88.1 67.4 52.2 92.6 75.7 50 Total foreign funds 82.0 110.7 106.4 111.6 60.8 5.4 156.4 83.9 -22.0 153.9 27.2 -1.2 MEMO: Corporate equities not included above 51 Total net issues 20.1 90.5 14.3 -117.9 -60.8 -73.5 -163.5 -162.9 -48.8 -41.0 9.3 -7.2 52 Mutual fund shares 84.4 159.0 71.6 -.7 38.3 1.5 11.9 3.6 24.0 54.8 70.8 55.9 53 Other equities -64.3 -68.5 -57.3 -117.2 -99.1 -75.0 -175.4 -166.5 -72.7 -95.8 -61.5 -63.1 54 Acquisitions by financial institutions 45.6 53.7 21.4 .5 5.2 13.2 20.9 -1.1 -11.6 -11.8 45.3 52.8 55 Other net purchases -25.5 36.8 -7.1 -118.4 -66.0 -86.7 -184.4 -161.8 -37.1 -29.2 -36.0 -60.0 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 20/1 ine 13. 26. Line 39 less lines 40 and 46. 50. Sum of lines 10 and 29. 27. Excludes equity issues and investment company shares. Includes line 19. 51. 53. Includes issues by financial institutions. 29. Foreign deposits at commercial banks, bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts branches, and liabilities of foreign banking agencies to foreign affiliates, less outstanding may be obtained from Flow of Funds Section, Division of Research claims on foreign affiliates and deposits by banking in foreign banks. and Statistics, Board of Governors of the Federal Reserve System, Washington, 30. Demand deposits and note balances at commercial banks. D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A44 Domestic Nonfinancial Statistics • September 1990 1.59 SUMMARY OF CREDIT MARKET DEBT OUTSTANDING Billions of dollars; period-end levels. 1988 1989 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, sseeccttoorr 11998855 11998866 11998877 11998888 Q3 Q4 Ql Q2 Q3 Q4 Ql Nonfinancial sectors 1 Total credit market debt owed by domestic nonfinancial sectors 6,795.1 7,631.2 8,335.0 9,080.8 8,856.6 9,080.8 9,240.7 9,415.1 9,591.5 9,806.5 9,987.4 By sector and instrument 2 U.S. government 1,600.4 1,815.4 1,960.3 2,117.8 2,063.9 2,117.8 2,155.7 2,165.7 2,204.3 2,267.6 2,359.1 i Treasury securities 1,597.1 1,811.7 1,955.2 2,095.2 2,051.7 2,095.2 2,133.4 2,142.1 2,180.7 2,245.2 2,329.3 4 Agency issues and mortgages 3.3 3.6 5.2 22.6 12.2 22.6 22.3 23.6 23.5 22.4 29.8 5 Private domestic nonfinancial sectors 5,194.7 5,815.8 6,374.7 6,963.1 6,792.7 6,963.1 7,084.9 7,249.4 7,387.2 7,539.0 7,628.4 6 Debt capital instruments 3,485.5 3,957.5 4,428.0 4,881.8 4,763.3 4,881.8 4,971.9 5,079.8 5,186.1 5,294.2 5,372.1 7 Tax-exempt obligations 655.5 679.1 713.2 759.8 746.1 759.8 764.7 769.9 781.5 785.2 792.1 8 Corporate bonds 542.9 664.2 764.1 878.2 853.6 878.2 903.3 935.3 960.9 992.5 1,014.5 9 Mortgages 2,287.1 2,614.2 2,950.7 3,243.8 3,163.6 3,243.8 3,303.9 3,374.6 3,443.7 3,516.4 3,565.6 10 Home mortgages 1,490.2 1,720.8 1,943.1 2,173.9 2,117.8 2,173.9 2,215.1 2,271.5 2,328.9 2,388.9 2,426.0 11 Multifamily residential 213.0 246.2 270.0 286.7 281.0 286.7 290.4 294.2 297.5 301.1 305.0 12 Commercial 478.1 551.4 648.7 696.4 677.9 696.4 712.5 722.2 730.8 740.0 748.2 13 Farm 105.9 95.8 88.9 86.8 87.0 86.8 86.0 86.7 86.6 86.5 86.4 14 Other debt instruments 1,709.3 1,858.4 1,946.7 2,081.3 2,029.4 2,081.3 2,113.0 2,169.7 2,201.1 2,244.8 2,256.3 15 Consumer credit 601.8 659.8 692.7 743.7 721.2 743.7 741.7 756.7 771.0 790.6 775.4 16 Bank loans n.e.c 592.7 656.1 664.3 702.6 687.7 702.6 715.9 729.4 743.6 758.3 757.4 17 Open market paper 72.2 62.9 73.8 85.4 80.3 85.4 96.1 110.1 113.3 107.1 123.7 18 Other 442.6 479.6 516.0 549.5 540.2 549.5 559.4 573.5 573.2 588.8 599.8 19 By borrowing sector 5,194.7 5,815.8 6,374.7 6,963.1 6,792.7 6,963.1 7,084.9 7,249.4 7,387.2 7,539.0 7,628.4 20 State and local governments 473.9 510.1 543.7 573.5 565.7 573.5 578.5 584.8 595.1 598.1 603.8 21 Households 2,295.5 2,591.8 2,864.5 3,151.7 3,068.0 3,151.7 3,200.8 3,269.3 3,348.2 3,442.3 3,472.5 22 Nonfinancial business 2,425.4 2,714.0 2,966.5 3,237.9 3,159.0 3,237.9 3,305.6 3,395.3 3,443.9 3,498.6 3,552.0 23 Farm 173.4 156.6 145.5 137.6 143.6 137.6 136.7 139.4 137.7 137.1 138.3 24 Nonfarm noncorporate 898.3 1,001.6 1,109.4 1,200.9 1,172.6 1,200.9 1,223.5 1,239.3 1,249.1 1,265.0 1,279.2 25 Corporate 1,353.6 1,555.8 1,711.6 1,899.4 1,842.9 1,899.4 1,945.5 2,016.6 2,057.2 2,096.4 2,134.5 26 Foreign credit market debt held in United States 234.7 236.4 242.9 249.8 246.1 249.8 249.5 249.7 255.2 259.4 264.1 27 Bonds 71.8 74.9 82.3 89.2 87.4 89.2 90.5 92.1 94.2 94.2 96.4 28 Bank loans n.e.c 27.9 26.9 23.3 21.5 22.7 21.5 21.6 22.7 22.6 21.4 19.6 29 Open market paper 33.9 37.4 41.2 50.9 46.3 50.9 54.4 52.7 57.5 63.0 68.2 30 U.S. government loans 101.1 97.1 96.1 88.3 89.8 88.3 83.0 82.2 80.9 80.9 79.9 31 Total domestic plus foreign 7,029.9 7,867.6 8,578.0 9,330.7 9,102.8 9,330.7 9,490.1 9,664.8 9,846.7 10,066.0 10,251.5 Financial sectors 32 Total credit market debt owed by financial sectors 1,213.2 1,563.6 1,885.5 2,084.1 1,996.5 2,084.1 2,191.3 2,229.9 2,262.8 2,327.3 2,351.4 By instrument 33 U.S. government related 632.7 844.2 1,026.5 1,098.4 1,054.6 1,098.4 1,140.8 1,166.5 1,202.6 1,254.1 1,282.5 34 Sponsored credit agency securities 257.8 273.0 303.2 348.1 328.5 348.1 364.3 369.0 370.4 373.3 376.0 35 Mortgage pool securities 368.9 565.4 718.3 745.3 721.1 745.3 771.5 792.5 827.2 875.8 901.5 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 580.5 719.5 859.0 985.7 941.9 985.7 1,050.5 1,063.5 1,060.2 1,073.2 1,068.9 38 Corporate bonds 204.5 287.4 366.3 418.0 406.4 418.0 458.6 466.1 472.7 483.0 491.3 39 Mortgages 2.7 2.7 3.1 3.4 3.1 3.4 3.5 3.5 3.5 3.4 3.3 40 Bank loans n.e.c 32.1 36.1 32.8 34.2 32.9 34.2 32.2 33.8 34.1 36.0 35.4 41 Open market paper 252.4 284.6 323.8 377.4 358.0 377.4 392.5 398.3 398.8 409.1 406.1 42 Loans from Federal Home Loan Banks... 88.8 108.6 133.1 152.8 141.6 152.8 163.8 161.9 151.1 141.8 132.9 43 Total, by sector 1,213.2 1,563.6 1,885.5 2,084.1 1,996.5 2,084.1 2,191.3 2,229.9 2,262.8 2,327.3 2,351.4 44 Sponsored credit agencies 263.9 278.7 308.2 353.1 333.5 353.1 369.3 374.0 375.4 378.3 381.0 45 Mortgage pools 368.9 565.4 718.3 745.3 721.1 745.3 771.5 792.5 827.2 875.8 901.5 46 Private financial sectors 580.5 719.5 859.0 985.7 941.9 985.7 1,050.5 1,063.5 1,060.2 1,073.2 1,068.9 47 Commercial banks 79.2 75.6 82.7 78.8 76.6 78.8 73.3 74.5 77.0 77.4 76.4 48 Bank affiliates 106.2 116.8 131.1 136.2 136.3 136.2 140.0 141.2 144.0 142.4 142.3 49 Savings and loan associations 98.9 119.8 139.4 159.3 148.1 159.3 170.1 167.9 155.7 145.2 134.7 50 Mutual savings banks 4.4 8.6 16.7 18.6 18.1 18.6 17.8 17.7 17.5 17.2 16.9 51 Finance companies 261.2 328.1 378.8 445.8 427.7 445.8 464.3 478.0 481.2 496.5 496.1 52 REITs 5.6 6.5 7.3 11.4 7.6 11.4 11.1 10.6 10.0 10.1 9.9 53 SCO issuers 25.0 64.0 103.1 135.7 127.5 135.7 173.8 173.5 174.9 184.4 192.8 All sectors 54 Total credit market debt 8,243.1 9,431.2 10,463.4 11,414.8 11,099.3 11,414.8 11,681.5 11,894.8 12,109.5 12,393.3 12,602.9 55 U.S. government securities 2,227.0 2,653.8 2,981.8 3,211.1 3,113.5 3,211.1 3,291.5 3,327.2 3,401.8 3,516.7 3,636.5 56 State and local obligations 655.5 679.1 713.2 759.8 746.1 759.8 764.7 769.9 781.5 785.2 792.1 57 Corporate and foreign bonds 819.2 1,026.4 1,212.7 1,385.4 1,347.4 1,385.4 1,452.3 1,493.5 1,527.8 1,569.6 1,602.2 58 Mortgages 2,289.8 2,617.0 2,953.8 3,247.2 3,166.7 3,247.2 3,307.4 3,378.1 3,447.3 3,519.8 3,568.9 59 Consumer credit 601.8 659.8 692.7 743.7 721.2 743.7 741.7 756.7 771.0 790.6 775.4 60 Bank loans n.e.c 652.7 719.1 720.3 758.3 743.3 758.3 769.7 785.8 800.3 815.6 812.4 61 Open market paper 358.5 384.9 438.8 513.6 484.6 513.6 543.1 561.1 569.6 579.2 598.0 62 Other loans 638.6 691.1 750.2 795.6 776.5 795.6 811.1 822.6 810.2 816.5 817.5 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Flow of Funds A45 1.60 SUMMARY OF CREDIT MARKET CLAIMS, BY HOLDER Billions of dollars, except as noted; period-end levels. 1988 1989 1990 TTrraannssaaccttiioonn ccaatteeggoorryy,, oorr sseeccttoorr 11998855 11998866 11998877 11998888 Q3 Q4 Q1 Q2 Q3 Q4 Q1 1 Total funds advanced in credit markets to domestic nonfinancial sectors 6,795.1 7,631.2 8,335.0 9,080.8 8,856.6 9,080.8 9,240.7 9,415.1 9,591.5 9,806.5 9,987.4 By public agencies and foreign 7 Total held 1,460.5 1,794.7 2,044.9 2,196.5 2,130.2 2,196.5 2,252.4 22,,225588..22 22,,331155..77 22,,338855..33 22,,440000..44 3 U.S. government securities 423.8 493.2 563.3 648.3 613.3 648.3 661.2 638.7 664.7 678.5 665.0 4 Residential mortgages 518.2 712.3 862.0 900.4 873.3 900.4 927.2 951.2 990.9 1,044.6 1,074.6 5 FHLB advances to thrifts 88.8 108.6 133.1 152.8 141.6 152.8 163.8 161.9 151.1 141.8 132.9 6 Other loans and securities 429.7 480.5 486.6 495.0 502.1 495.0 500.3 506.4 509.0 520.5 527.9 7 Total held, by type of lender 1,460.5 1,794.7 2,044.9 2,196.5 2,130.2 2,196.5 2,252.4 2,258.2 2,315.7 2,385.3 2,400.4 8 U.S. government 246.7 253.3 238.0 212.7 226.3 212.7 208.3 207.9 205.3 206.3 209.5 9 Sponsored credit agencies and mortgage pools ... 659.8 869.8 1,048.9 1,113.0 1,071.2 1,113.0 1,151.1 1,154.6 1,192.6 1,243.1 1,266.4 10 Monetary authority 186.0 205.5 230.1 240.6 230.8 240.6 235.4 238.4 227.6 233.3 224.4 11 Foreign 367.9 466.1 527.9 630.3 601.9 630.3 657.6 657.3 690.1 702.7 700.1 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 1,054.6 1,098.4 1,140.8 1,166.5 1,202.6 1,254.1 1,282.5 13 Foreign 234.7 236.4 242.9 249.8 246.1 249.8 249.5 249.7 255.2 259.4 264.1 Private domestic holdings 14 Total private holdings 6,202.1 6,917.1 7,559.5 8,232.5 8,027.2 8,232.5 8,378.5 8,573.1 8,733.6 8,934.8 9,133.6 15 U.S. government securities 1,803.2 2,160.6 2,418.5 2,562.8 2,500.3 2,562.8 2,630.3 2,688.5 2,737.2 2,838.3 2,971.6 16 State and local obligations 655.5 679.1 713.2 759.8 746.1 759.8 764.7 769.9 781.5 785.2 792.1 17 Corporate and foreign bonds 517.6 601.3 689.6 787.2 770.6 787.2 808.7 839.6 866.3 891.0 912.7 18 Residential mortgages 1,185.1 1,254.7 1,351.1 1,560.2 1,525.5 1,560.2 1,578.3 1,614.5 1,635.5 1,645.4 1,656.4 19 Other mortgages and loans 2,129.7 2,330.0 2,520.1 2,715.2 2,626.3 2,715.2 2,760.2 2,822.5 2,864.2 2,916.8 2,933.7 20 LESS: Federal Home Loan Bank advances 88.8 108.6 133.1 152.8 141.6 152.8 163.8 161.9 151.1 141.8 132.9 Private financial intermediation 21 Credit market claims held by private financial institutions 5,283.1 6,025.7 6,604.6 7,167.5 7,002.7 7,167.5 7,306.9 7,461.0 7,546.1 7,703.9 7,833.1 77 Commercial banking 1,978.9 2,176.3 2,313.1 2,468.4 2,421.6 2,468.4 2,490.9 2,538.2 2,588.6 2,645.5 2,680.9 7,3 Savings institutions 1,191.2 1,297.9 1,445.5 1,567.7 1,535.2 1,567.7 1,565.5 1,556.1 1,526.2 1,478.7 1,446.9 74 Insurance and pension funds 1,369.7 1,544.3 1,755.2 1,953.3 1,901.9 1,953.3 2,007.0 2,050.9 2,085.2 2,136.4 2,173.8 25 Other finance 743.4 1,007.1 1,090.7 1,178.1 1,144.0 1,178.1 1,243.5 1,315.7 1,346.1 1,443.4 1,531.5 ?6 Sources of funds 5,283.1 6,025.7 6,604.6 7,167.5 7,002.7 7,167.5 7,306.9 7,461.0 7,546.1 7,703.9 7,833.1 77 Private domestic deposits and RPs 2,930.0 3,188.4 3,324.8 3,560.2 3,480.0 3,560.2 3,584.1 3,631.0 3,690.3 3,767.8 3,808.0 28 Credit market debt 580.5 719.5 859.0 985.7 941.9 985.7 1,050.5 1,063.5 1,060.2 1,073.2 1,068.9 79 Other sources 1,772.7 2,117.9 2,420.8 2,621.5 2,580.7 2,621.5 2,672.3 2,766.5 2,795.6 2,862.9 2,956.1 30 Foreign funds 5.6 18.6 62.2 71.5 52.0 71.5 61.8 50.0 55.7 59.9 57.9 31 Treasury balances 25.8 27.5 21.6 29.0 34.2 29.0 13.5 34.4 30.3 25.6 18.5 37 Insurance and pension reserves 1,289.4 1,427.9 1,597.2 1,761.8 1,722.3 1,761.8 1,811.2 1,844.9 1,863.9 1,909.2 1,943.5 33 Other, net 451.8 643.9 739.6 759.2 772.4 759.2 785.7 837.2 845.6 868.3 936.2 Private domestic nonfinancial investors 34 Credit market claims 1,499.5 1,610.8 1,813.9 2,050.7 1,966.4 2,050.7 2,122.1 2,175.6 2,247.8 2,304.1 2,369.5 35 U.S. government securities 814.7 899.1 992.0 1,077.8 1,022.3 1,077.8 1,109.8 1,132.3 1,186.1 1,227.8 1,285.8 36 Tax-exempt obligations 231.9 211.2 256.8 303.7 289.0 303.7 307.2 308.8 316.3 319.5 313.2 37 Corporate and foreign bonds 38.0 77.8 102.2 93.9 106.1 93.9 125.7 135.4 141.0 147.5 158.3 38 Open market paper 131.0 136.4 160.7 200.9 185.8 200.9 208.0 218.0 221.4 210.6 206.5 39 Other 283.8 286.2 302.3 374.5 363.2 374.5 371.3 381.0 383.0 398.6 405.7 40 Deposits and currency 3,120.4 3,399.2 3,553.9 3,791.9 3,710.3 3,791.9 3,819.2 3,879.9 3,927.8 4,018.6 4,058.2 41 Currency 171.9 186.3 205.4 220.1 213.4 220.1 220.7 226.4 224.4 231.8 233.8 4? Checkable deposits 422.5 517.4 514.0 525.3 495.9 525.3 492.8 494.0 485.0 525.9 500.9 43 Small time and savings accounts 1,831.9 1,948.3 2,017.1 2,156.5 2,137.3 2,156.5 2,168.9 2,189.3 2,224.4 2,256.7 2,297.5 44 Money market fund shares 227.3 265.6 292.8 315.6 303.6 315.6 340.3 359.9 389.2 400.4 434.0 45 Large time deposits 339.9 328.5 355.2 395.9 384.7 395.9 412.5 417.2 421.8 416.9 409.2 46 Security RPs 108.3 128.5 145.7 166.9 158.6 166.9 169.6 170.7 169.8 167.9 166.5 47 Deposits in foreign countries 18.5 24.5 23.7 11.6 16.8 11.6 14.4 22.5 13.1 19.1 16.4 48 Total of credit market instruments, deposits, and currency 4,619.9 5,010.0 5,367.8 5,842.6 5,676.7 5,842.6 5,941.3 6,055.5 6,175.6 6,322.7 6,427.7 49 Public holdings as percent of total 20.8 22.8 23.8 23.5 23.4 23.5 23.7 23.4 23.5 23.7 23.4 50 Private financial intermediation (in percent) 85.2 87.1 87.4 87.1 87.2 87.1 87.2 87.0 86.4 86.2 85.8 51 Total foreign funds 373.5 484.7 590.2 701.8 653.8 701.8 719.4 707.3 745.9 762.6 758.0 MEMO: Corporate equities not included above 52 Total market value 2,823.9 3,360.6 3,325.0 3,620.3 3,577.6 3,620.3 3,731.8 4,072.4 4,398.9 4,382.4 4,335.2 53 Mutual fund shares 240.2 413.5 460.1 478.3 478.1 478.3 486.3 514.8 539.7 551.9 548.5 54 Other equities 2,583.7 2,947.1 2,864.9 3,142.0 3,099.5 3,142.0 3,245.4 3,557.7 3,859.2 3,830.6 3,786.6 55 Holdings by financial institutions 800.0 972.1 1,013.8 1,186.1 1,160.0 1,186.1 1,253.4 1,366.3 1,500.5 1,505.0 1,476.4 56 Other holdings 2,023.9 2.388.4 2,311.2 2,434.2 2,417.6 2,434.2 2,478.4 2,706.2 2,898.4 2,877.4 2,858.7 NOTES BY LINE NUMBER. 32. Excludes net investment of these reserves in corporate equities. 1. Line 1 of table 1.59. 33. Mainly retained earnings and net miscellaneous liabilities. 2. Sum of lines 3-6 or 7-10. 34. Line 14 less line 21 plus line 28. 6. Includes farm and commercial mortgages. 35-39. Lines 15-19 less amounts acquired by private finance plus amounts 12. Credit market debt of federally sponsored agencies, and net issues of borrowed by private finance. Line 39 includes mortgages. federally related mortgage pool securities. 41. Mainly an offset to line 10. 14. Line 1 less line 2 plus line 12 and 13. Also line 21 less line 28 plus line 34. 48. Lines 34 plus 40, or line 14 less line 29 plus 41 and 47. Also sum of lines 29 and 48 less lines 41 and 47. 49. Line 2/line 1 and 13. 19. Includes farm and commercial mortgages. 50. Line 21/line 14. 27. Line 40 less lines 41 and 47. 51. Sum of lines 11 and 30. 28. Excludes equity issues and investment company shares. Includes line 20. 52-54. Includes issues by financial institutions. 30. Foreign deposits at commercial banks plus bank borrowings from foreign NOTE. Full statements for sectors and transaction types in flows and in amounts affiliates, less claims on foreign affiliates and deposits by banking in foreign banks. outstanding may be obtained from Flow of Funds Section, Stop 95, Division of 31. Demand deposits and note balances at commercial banks. Research and Statistics, Board of Governors of the Federal Reserve System, Washington, D.C. 20551. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A46 Domestic Nonfinancial Statistics • September 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 Oct. Nov. Dec. Jan. Feb. Mar. Apr. May' June 1 Industrial production (1987 = 100) 100.0 105.4 108.1 107.7 108.1 108.6 107.5 108.5 108.9r 108.7' 109.3 109.8 Market groupings 2 Products, total (1987 = 100) 100.0 105.3 108.6 108.1 108.9 109.7 108.4 109.4 no.r 109.6' 110.4 111.0 3 Final, total (1987 = 100) 100.0 105.6 109.1 108.5 109.4 110.3 108.5 109.7 110.7' 110.2' 111.2 112.0 4 Consumer goods (1987 = 100) 100.0 104.0 106.7 107.3 107.4 108.3 106.0 107.0 107.5' MK^ 107.5 108.2 5 Equipment (1987 = 100) 100.0 107.6 112.3 110.1 112.0 112.9 111.8 113.3 114.9 114.5' 116.1 116.9 6 Intermediate (1987 = 100) 100.0 104.4 106.8 106.9 107.3 107.9 108.0 108.4 108.2' 107.8' 108.0 108.0 7 Materials (1987 = 100) 100.0 105.6 107.4 107.1 107.0 106.9 106.2 107.1 107.1' 107.2' 107.6 107.8 Industry groupings 8 Manufacturing (1987 = 100) 100.0 105.8 108.9 108.4 108.9 108.8 108.1 109.6 109.8' 109.3' 110.2 110.7 Capacity utilization (percent)2 9 Manufacturing 81.4 83.9 83.9 82.9 83.0 82.8 82.0 83.0 82.9 82.3' 82.7 82.9 10 Construction contracts (1982 = 100)3 164.8 166.4 170.8' 180.0 167.0 166.0 158.0 154.0 157.0 147.0 155.0 153.0 11 Nonagricultural employment, total4 123.9 128.0 131.6 132.4 132.7 132.9 133.3 133.8 133.9 133.9 134.3 134.4 12 Goods-producing, total 101.5 103.7 105.3 105.2 105.2 104.9 104.8 105.5 105.2 104.7 104.5 104.3 13 Manufacturing, total 96.7 98.6 99.6 99.2 99.1 99.0 98.3 98.8 98.7 98.6 98.4 98.3 14 Manufacturing, production- worker ... 91.9 93.9 94.8 94.1 93.9 93.8 92.8 93.5 93.3 93.3 93.1 93.0 15 Service-producing 133.3 138.2 142.7 143.8 144.2 144.6 145.2 145.6 145.9 146.1 146.8 146.9 16 Personal income, total 235.0 252.8 275.4 280.0 282.5 283.9 286.4 288.5 290.8 291.6 292.4 n.a. 17 Wages and salary disbursements 226.3 244.4 264.7 271.0 271.1 272.9 274.1 276.5 278.1 279.7 280.8 n.a. 18 Manufacturing 183.8 196.5 207.3 211.1 209.1 209.2 208.1 210.3 212.1 211.4 213.6 n.a. 19 Disposable personal income 213.6 228.0 240.7 278.4 281.2 282.4 285.4 287.4 289.9 290.3 290.9 n.a. 20 Retail sales6 113.6 118.3 124.0 241.9 243.7 242.8 249.6 249.7 248.7 246.3' 244.9 246.2 Prices7 21 Consumer (1982-84 = 100) 113.6 118.3 124.0 125.6 125.9 126.1 127.4 128.0 128.7 128.9 129.2 129.9 22 Producer finished goods (1982 = 100) ... 105.4 108.0 113.6 114.9 114.9 115.4 117.6 117.4 117.0 117.0 117.7 117.9 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 April 1990. See "Industrial Production: 1989 merce). Developments and Historical Revision" in the Federal Reserve Bulletin, vol. 76 6. Based on Bureau of Census data published in Survey of Current Business. (April 1990), pp. 187-204. The revised indexes for January through June 1985 were 7. Data without seasonal adjustment, as published in Monthly Labor Review. shown in the September Bulletin. Seasonally adjusted data for changes in the price indexes may be obtained from 2. Ratios of indexes of production to indexes of capacity. Based on data from the Bureau of Labor Statistics, U.S. Department of Labor. Federal Reserve, McGraw-Hill Economics Department, Department of Commerce, and other sources. NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5,and 6, 3. Index of dollar value of total construction contracts, including residential, and indexes for series mentioned in notes 3 and 7 may also be found in the Survey nonresidential and heavy engineering, from McGraw-Hill Information Systems of Current Business. Company, F. W. Dodge Division. Figures for industrial production for the last two months are preliminary and 4. Based on data in Employment and Earnings (U.S. Department of Labor). estimated, respectively. 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 Nov. Dec. Jan. Feb. Mar/ Apr. May June HOUSEHOLD SURVEY DATA 1 Noninstitutional population1 185,010 186,837 188,601 189,238 189,381 189,506 189,607 189,717 189,844 189,983 190,122 2 Labor force (including Armed Forces)1 122,122 123,893 126,077 126,709 126,762 126,610 126,825 127,017 127,061 127,159 126,981 3 Civilian labor force 119,865 121,669 123,869 124,488 124,546 124,397 124,630 124,829 124,886 125,004 124,836 4 Nonagricultural industries 109,232 111,800 114,142 114,676 114,691 114,728 114,957 115,133 114,983 115,045 115,041 5 Agriculture 3,208 3,169 3,199 3,160 3,197 3,134 3,079 3,200 3,133 3,305 3,348 6 Number 7,425 6,701 6,528 6,652 6,658 6,535 6,594 6,495 6,770 6,653 6,447 7 Rate (percent of civilian labor force) .... 6.2 5.5 5.3 5.3 5.3 5.3 5.3 5.2 5.4 5.3 5.2 8 Not in labor force 62,888 62,944 62,524 62,529 62,619 62,896 62,782 62,700 62,783 62,824 63,141 ESTABLISHMENT SURVEY DATA 9 Nonagricultural payroll employment3 102,200 105,584 108,573 109,452 109,570 109,931 110,304 110,427 no,4or 110,757 110,797 10 Manufacturing 19,024 19,403 19,611 19,517 19,489 19,355 19,452 19,423 19,403r 19,376 19,345 11 Mining 717 721 722 737 739 745 749 751 755 758 760 12 Contract construction 4,967 5,125 5,302 5,355 5,304 5,418 5,485 5,432 5,323r 5,306 5,292 13 Transportation and public utilities 5,372 5,548 5,703 5,753 5,834 5,850 5,865 5,875 5,875r 5,894 5,909 14 Trade 24,327 25,139 25,807 26,044 26,029 26,154 26,126 26,127 26,147r 26,171 26,171 15 Finance 6,547 6,676 6,814 6,871 6,885 6,8% 6,916 6,922 6,921r 6,929 6,933 16 Service 24,236 25,600 26,889 27,345 27,419 27,557 27,709 27,783 27,763r 27,847 27,963 17 Government 17,010 17,372 17,726 17,830 17,871 17,956 18,002 18,114 18,214r 18,476 18,424 1. Persons 16 years of age and over. Monthly figures, which are based on 3. Data include all full- and part-time employees who worked during, or sample data, relate to the calendar week that contains the 12th day; annual data received pay for, the pay period that includes the 12th day of the month, and are averages of monthly figures. By definition, seasonality does not exist in exclude proprietors, self-employed persons, domestic servants, unpaid family population figures. Based on data from Employment and Earnings (U.S. Depart- workers, and members of the Armed Forces. Data are adjusted to the March 1984 ment of Labor). benchmark and only seasonally adjusted data are available at this time. Based on 2. Includes self-employed, unpaid family, and domestic service workers. data from Employment and Earnings (U.S. Department of Labor). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A48 Domestic Nonfinancial Statistics • September 1990 2.12 OUTPUT, CAPACITY, AND CAPACITY UTILIZATION1 Seasonally adjusted 1989 1990 1989 1990 1989 1990 SSeerriieess Q3 Q4 Qlr Q2 Q3 Q4 Ql Q2 Q3 Q4 Ql' Q2 Output (1987 = 100) Capacity (percent of 1987 output) Utilization rate (percent) 1 Total industry 108.1 108.1 108.3 109.3 128.8 129.5 130.3 131.2 84.0 83.5 83.1 83.3 2 Mining 100.8 100.6 101.3 102.3 116.7 116.1 115.7 115.2 86.4 86.7 87.6 88.8 3 Utilities 106.2 110.6 105.7 107.4 125.5 125.7 126.0 126.4 84.6 88.0 83.9 85.0 4 Manufacturing 108.9 108.7 109.2 110.1 130.2 131.1 132.1 133.2 83.7 82.9 82.6 82.7 5 Primary processing 106.4 106.1 106.4 106.2 122.7 123.4 124.2 124.9 86.7 85.9 85.7 85.0 6 Advanced processing. . 110.1 109.9 110.5 112.0 133.7 134.7 135.8 137.0 82.4 81.6 81.4 81.7 Previous cycle2 Latest cycle3 1989 1990 High Low High Low June Oct. Nov. Dec. Jan. Feb. Mar/ Apr/ May' June Capacity utilization rate (percent) 7 Total industry 89.2 72.6 87.3 71.8 84.6 83.3 83.5 83.7 82.7 83.2 83.4 83.0 83.3 83.5 8 Mining 94.4 88.4 96.6 80.6 85.8 86.5 87.1 86.3 87.8 87.3 87.5 89.6 89.1 87.8 9 Utilities 95.6 82.5 88.3 76.2 84.8 85.5 86.2 92.3 84.8 82.5 84.2 84.1 84.6 86.3 10 Manufacturing 88.9 70.8 87.3 70.0 84.4 82.9 83.0 82.8 82.0 83.0 82.9 82.3 82.7 82.9 11 Primary processing.... 92.2 68.9 89.7 66.8 87.0 86.6 86.1 85.2 85.7 86.1 85.2 84.9 84.9 85.2 12 Advanced processing.. 87.5 72.0 86.3 71.4 83.2 81.4 81.7 81.8 80.5 81.7 82.0 81.3 81.9 82.0 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 1987 1989 1990 1989 GGrroouuppss por- avg. tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. Mayp Junee Index (1987 = 100) MAJOR MARKET1 1 Total index 100.0 108.1 108.4 107.8 108.2 108.2 107.7 108.1 108.6 107.5 108.5 108.9 108.7 109.3 109.8 ? 60.8 108.6 109.1 108.2 108.5 108.8 108.1 108.9 109.7 108.4 109.4 110.1 109.6 110.4 111.0 Final products 46.0 109.1 109.8 108.7 109.1 109.6 108.5 109.4 110.3 108.5 109.7 110.7 110.2 111.2 112.0 4 26.0 106.7 106.3 105.2 105.6 106.3 107.3 107.4 108.3 106.0 107.0 107.5 106.9 107.5 108.2 5 Durable consumer goods 5.6 107.9 108.4 105.6 105.8 107.6 106.8 105.7 106.8 99.4 106.2 110.8 107.1 109.8 112.1 6 Automotive products 2.5 106.9 106.7 101.1 103.2 104.9 102.9 102.4 104.5 85.2 99.3 109.3 102.3 108.0 112.4 7 Autos and trucks 1.5 105.7 106.2 97.1 101.1 103.1 99.7 98.4 100.1 66.3 92.7 107.7 95.8 105.6 112.9 8 Autos, consumer .9 101.2 100.5 89.3 95.1 102.0 100.7 92.8 92.6 62.1 86.9 100.5 87.7 96.8 103.8 9 Trucks, consumer .6 113.3 115.7 110.1 111.3 105.0 98.2 108.0 112.6 73.3 102.3 120.0 109.3 120.4 128.3 10 Auto parts and allied goods 1.0 108.7 107.4 107.0 106.3 107.4 107.6 108.2 111.2 113.6 109.4 111.6 112.2 111.6 111.5 11 Other 3.1 108.7 109.8 109.2 107.9 109.8 109.8 108.4 108.6 110.6 111.6 112.0 110.9 111.2 111.9 17 Appliances, A/C, and TV .8 106.7 110.5 107.5 106.5 109.3 107.6 102.0 101.0 108.4 107.8 108.1 104.4 103.8 105.6 N Carpeting and furniture .9 101.5 102.1 101.0 98.1 100.9 101.1 100.4 102.0 103.7 104.7 105.9 106.5 106.3 106.5 14 Miscellaneous home goods 1.4 114.5 114.3 115.4 114.8 115.8 116.6 117.1 117.1 116.2 118.2 118.0 117.3 118.5 118.9 15 Nondurable consumer goods 20.4 106.4 105.8 105.1 105.6 106.0 107.4 107.8 108.7 107.8 107.2 106.6 106.9 106.8 107.2 16 Foods and tobacco 9.1 104.2 103.0 102.2 103.3 103.7 105.6 105.8 106.4 105.5 106.2 105.8 105.6 105.4 104.9 17 Clothing 2.6 101.6 102.3 101.4 100.3 101.6 101.9 100.1 99.4 100.6 99.6 97.0 96.3 96.7 96.4 18 Chemical products 3.5 109.4 109.8 109.6 110.1 107.8 110.3 111.3 110.3 112.7 112.0 111.0 113.5 113.2 113.7 19 2.5 114.3 112.9 113.1 114.1 116.2 117.2 118.1 116.9 116.2 117.6 116.4 116.0 116.9 117.6 70 2.7 106.7 106.1 105.2 104.7 106.0 106.0 108.0 115.2 107.9 101.5 103.1 104.0 103.6 106.5 '1 .7 102.8 103.0 104.5 102.3 103.4 103.1 103.0 100.5 105.1 106.6 101.8 101.6 99.3 102.7 22 Residential utilities 2.0 108.1 107.2 105.5 105.6 106.9 107.0 109.8 120.7 109.0 99.6 103.6 105.0 105.2 107.9 n 20.0 112.3 114.3 113.2 113.6 113.8 110.1 112.0 112.9 111.8 113.3 114.9 114.5 116.1 116.9 74 Business equipment 13.9 119.1 121.4 119.9 120.4 120.7 116.0 118.7 119.9 118.0 120.1 122.2 121.4 123.4 124.6 75 Information processing and related .. 5.6 121.7 124.0 122.7 122.0 123.7 119.9 123.5 124.0 124.0 124.7 126.0 125.8 126.5 127.3 76 Office and computing 1.9 137.2 139.1 137.1 139.3 141.8 132.8 141.0 142.7 142.7 144.3 147.2 148.3 148.4 148.9 77 4.0 113.8 114.9 115.1 113.8 113.8 112.4 113.4 112.8 113.5 113.4 113.9 114.2 115.8 115.6 78 2.5 123.8 128.3 123.8 128.4 127.0 112.9 117.0 123.4 111.4 122.7 130.6 126.3 132.5 137.2 79 1.2 103.9 102.9 95.9 101.6 103.1 97.6 98.0 97.6 69.6 91.7 104.5 95.2 105.7 112.3 30 Other 1.9 116.5 117.4 116.4 118.6 119.1 116.3 117.8 118.5 118.7 117.4 117.8 117.6 118.8 119.0 31 Defense and space equipment 5.4 97.4 98.3 98.7 98.9 98.9 96.6 96.7 96.6 97.5 97.6 97.5 97.2 97.5 97.4 3? Oil and gas well drilling .6 93.7 96.7 95.3 95.3 97.3 97.3 99.9 100.3 98.3 100.1 106.0 114.3 118.6 122.7 33 Manufactured homes .2 92.3 92.8 86.5 89.5 87.5 87.9 89.4 91.6 91.6 94.3 92.9 89.7 91.3 90.0 34 Intermediate products, total 14.7 106.8 106.7 106.7 106.4 106.3 106.9 107.3 107.9 108.0 108.4 108.2 107.8 108.0 108.0 35 Construction supplies 6.0 106.1 106.2 106.5 105.5 105.2 106.3 107.0 107.4 107.9 108.2 107.3 106.5 106.0 105.5 36 Business supplies 8.7 107.3 107.0 106.8 106.9 107.0 107.3 107.5 108.2 108.0 108.5 108.9 108.6 109.3 109.7 37 39.2 107.4 107.6 107.3 107.8 107.4 107.1 107.0 106.9 106.2 107.1 107.1 107.2 107.6 107.8 38 Durable goods materials 19.4 111.6 112.1 111.5 112.0 112.0 110.8 110.8 110.4 109.4 110.8 110.9 110.6 112.0 112.5 39 Durable consumer parts 4.2 109.0 110.3 107.7 109.2 108.8 106.9 105.7 102.5 96.5 102.8 104.5 102.5 107.5 108.1 40 7.3 114.7 115.0 115.0 115.6 115.5 114.4 115.3 115.8 116.5 117.6 117.6 117.4 117.4 117.9 41 Other 7.9 110.2 110.4 110.4 110.4 110.6 109.5 109.4 109.5 109.7 108.7 108.1 108.7 109.4 109.9 4? Basic metal materials 2.8 112.1 111.9 113.1 113.0 112.9 111.0 108.6 109.3 108.5 109.9 107.5 110.0 109.3 110.4 43 Nondurable goods materials 9.0 105.3 105.5 106.7 105.7 104.2 106.1 104.9 104.3 105.4 105.8 105.2 106.0 105.0 105.7 44 Textile materials 1.2 99.8 103.2 104.9 102.1 99.6 98.6 96.1 95.8 94.6 96.2 94.9 95.9 96.4 97.2 45 Pulp and paper materials 1.9 103.8 102.4 104.8 103.6 104.1 107.7 104.6 103.7 105.0 105.3 103.0 106.0 104.2 104.6 46 3.8 106.4 106.5 108.2 107.3 104.5 106.8 105.8 103.8 105.8 107.3 107.5 107.4 106.0 107.5 47 Other 2.1 107.6 107.9 106.8 107.0 106.5 107.5 108.4 110.4 110.9 108.8 108.7 108.9 108.6 108.2 48 Energy materials 10.9 101.4 101.0 100.1 101.7 101.6 101.3 101.9 102.7 101.2 101.7 102.0 102.2 101.8 101.2 49 7.2 99.9 100.8 100.0 102.5 100.7 99.8 100.5 99.0 101.1 102.1 101.2 100.9 99.8 98.4 50 Converted fuel materials 3.7 104.3 101.7 100.4 100.4 103.6 104.2 104.5 110.0 101.4 100.9 103.4 104.7 105.8 106.8 51 Total excluding autos and trucks 97.3 108.2 108.6 108.2 108.4 108.4 108.0 108.4 108.9 108.6 108.9 109.0 109.0 109.4 109.7 52 Total excluding motor vehicles and parts ... 95.3 108.3 108.7 108.3 108.5 108.5 108.1 108.6 109.1 109.0 109.2 109.2 109.3 109.6 109.9 53 Total excluding office and computing machines 97.5 107.4 107.7 107.1 107.5 107.4 107.1 107.3 107.7 106.6 110077..66 110088..00 110077..77 110088..33 110088..88 54 Consumer goods excluding autos and trucks 24.5 106.8 106.3 105.7 105.9 106.5 107.7 107.9 108.8 108.4 110077..88 110077..55 110077..66 110077..66 110077..99 55 Consumer goods excluding energy 23.3 106.7 106.3 105.2 105.8 106.4 107.4 107.3 107.5 105.8 107.6 108.0 107.3 107.9 108.4 56 Business equipment excluding autos and trucks 12.7 120.6 123.2 122.3 122.3 122.4 117.8 120.7 112222..11 112222..88 112222..99 112244..00 112244..00 112255..22 112255..88 57 Business equipment excluding office and computing equipment 12.0 116.2 118.6 117.2 117.4 117.3 113.3 115.0 116.2 114.0 111166..22 111188..22 111177..11 111199..44 112200..66 58 Materials excluding energy 28.4 109.6 110.0 110.0 110.0 109.5 109.3 108.9 108.4 108.1 109.2 109.1 109.1 109.8 110.3 1. The following series in major market groups will no longer be published: business supplies, commercial energy products, and textile, paper, and chemical consumer staples, nonfood staples, business and defense equipment, general materials. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A50 Domestic Nonfinancial Statistics • September 1990 2.13 INDUSTRIAL PRODUCTION Indexes and Gross Value1—Continued 1987 1989 1990 GGrroouuppss c S o I d C e p p r o o r - - a 1 v 98 g 9 . tion June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar/ Apr. Mayp June'' Index (1987 = 100) MAJOR INDUSTRY 1 Total index 100.0 108.1 108.4 107.8 108.2 108.2 107.7 108.1 108.6 107.5 108.5 108.9 108.7 109.3 109.8 2 Manufacturing 84.4 108.9 109.3 108.6 109.1 109.1 108.4 108.9 108.8 108.1 109.6 109.8 109.3 110.2 110.7 3 Primary processing 26.7 106.4 106.3 106.8 106.6 105.8 106.6 106.2 105.3 106.2 106.9 106.0 105.9 106.1 106.6 4 Advanced processing 57.7 110.1 110.7 109.5 110.2 110.6 109.3 110.1 110.4 109.0 110.9 111.7 111.0 112.2 112.7 5 Durable 47.3 110.9 111.8 110.6 111.3 111.5 109.4 110.1 110.4 108.6 110.7 111.9 110.9 112.4 113.0 6 Lumber and products ... 24 2.0 103.0 103.5 102.8 102.4 102.6 103.2 104.8 106.4 106.0 104.3 105.0 103.3 102.9 101.1 7 Furniture and fixtures ... 25 1.4 105.3 107.0 104.9 104.5 105.7 105.6 104.4 105.1 105.1 104.8 105.9 107.6 108.3 108.5 8 Clay, glass, and stone products 32 2.5 108.0 108.0 106.2 107.8 106.5 107.7 108.2 108.6 110.0 108.0 107.7 104.6 106.0 105.8 9 Primary metals 33 3.3 109.2 108.7 108.8 111.7 109.9 108.6 104.8 102.6 105.0 107.9 105.4 106.4 105.4 106.4 10 Iron and steel 333311,,22 1.9 109.3 107.1 107.5 109.8 109.7 109.2 104.1 100.3 104.6 110.6 106.1 106.7 104.5 105.1 11 Raw steel .1 108.5 110.2 109.7 106.8 102.9 106.4 100.6 97.6 109.9 109.0 105.9 104.9 107.6 12 Nonferrous 333-6,9 1.4 109.0 110.9 110.4 114.0 109.8 107.6 105.8 105.8 105.6 104.0 104.3 105.9 106.6 108.3 13 Fabricated metal products ... 34 5.4 107.2 108.3 107.6 106.5 106.0 105.9 106.9 106.3 105.1 105.6 105.5 105.0 106.9 106.7 14 Nonelectrical machinery 35 8.6 121.8 123.4 121.6 121.8 123.4 119.0 122.9 123.8 123.7 124.2 125.2 125.4 126.4 126.6 15 Office and computing machines 357 2.5 137.2 139.1 137.1 139.3 141.8 132.8 141.0 142.7 142.7 144.3 147.3 148.3 148.4 148.9 16 Electrical machinery 36 8.6 109.5 109.1 108.6 110.6 110.8 110.2 110.1 110.1 110.1 111.0 112.3 111.1 111.6 111.9 17 Transportation equipment ... 37 9.8 107.2 109.0 106.6 107.8 108.0 102.1 102.8 104.4 94.7 103.5 107.9 105.1 109.1 111.4 18 Motor vehicles and parts .. 371 4.7 104.9 105.0 99.6 102.7 103.2 99.7 99.0 98.7 76.8 94.1 103.5 95.8 103.8 108.2 19 Autos and light trucks 22..33 110055..00 110055..33 9955..99 110000..22 110022..99 9999..99 9977..66 9999..00 6655..77 91.8 110066..77 9944..55 110044..66 20 Aerospace and miscellaneous transportation equipment 372-6,9 5.1 109.3 112.6 113.0 112.4 112.3 104.3 106.3 109.6 111.0 111.9 111.9 113.5 113.9 114.3 21 Instruments 38 3.3 116.4 118.3 118.5 116.4 116.2 116.1 115.6 114.8 116.0 116.2 115.7 115.4 116.8 117.9 22 Miscellaneous manufactures . 39 1.2 114.9 116.1 115.9 116.5 116.2 116.9 117.0 116.4 117.0 118.1 118.6 117.8 119.2 119.4 23 Nondurable 3377..22 106.4 106.2 106.1 106.2 106.0 107.2 107.3 106.7 107.5 108.3 107.2 107.3 107.4 107.8 24 Foods 20 88..88 105.5 104.2 104.0 104.8 105.4 106.8 107.4 108.0 106.8 107.4 107.1 106.8 106.7 106.5 25 Tobacco products 21 1.0 99.7 100.4 94.2 95.0 93.3 99.7 98.8 98.5 101.3 102.3 100.0 99.0 97.5 95.0 26 Textile mill products .... 22 1.8 101.9 102.4 104.2 101.5 101.5 101.9 99.3 99.8 100.6 103.0 99.8 100.7 101.7 102.6 27 Apparel products 23 2.4 104.3 105.2 104.4 104.7 104.5 103.9 103.7 102.6 102.4 102.1 99.8 98.8 99.2 99.1 28 Paper and products 26 3.6 103.2 101.8 104.1 103.0 102.2 105.3 104.1 103.4 103.8 105.0 102.8 105.3 103.9 104.9 29 Printing and publishing .. 27 6.4 108.5 108.6 106.6 107.8 109.4 109.3 109.6 109.6 110.7 112.1 111.4 111.1 112.4 113.0 30 Chemicals and products . 28 8.6 108.5 109.1 109.7 109.6 107.5 109.4 109.8 107.6 109.9 110.5 109.5 110.3 109.5 110.5 31 Petroleum products 29 1.3 106.1 106.6 108.2 107.0 108.7 106.9 109.3 104.3 108.6 112.0 109.1 107.7 106.3 108.6 32 Rubber and plastic products 30 3.0 108.9 109.0 109.0 109.0 108.5 108.8 109.1 110.1 110.7 109.1 109.8 108.9 111.0 111.4 33 Leather and products ... 31 .3 103.7 102.2 103.7 103.2 103.5 102.2 99.4 103.0 104.3 102.9 103.3 102.3 103.6 102.3 34 Mining 7.9 100.5 100.4 100.0 100.7 101.6 100.7 101.2 100.1 101.7 101.0 101.1 103.3 102.6 101.0 35 Metal 10 .3 141.4 143.3 151.7 144.3 145.4 143.2 145.9 155.5 144.8 143.4 141.4 150.5 150.5 154.1 36 Coal 11,12 1.2 105.7 100.3 101.1 103.1 109.6 109.9 108.1 103.5 114.1 111.9 112.9 114.2 110.0 107.6 37 Oil and gas extraction ... 13 5.7 95.5 96.3 94.9 96.3 95.9 94.3 95.5 94.0 94.4 94.1 94.6 96.4 96.5 94.5 38 Stone and earth minerals 14 .7 113.9 115.0 116.8 113.3 114.1 118.0 115.8 119.7 121.2 120.0 116.5 120.4 119.1 120.1 39 Utilities 7.6 107.1 106.3 106.6 106.2 105.9 107.4 108.3 116.1 106.8 104.0 106.2 106.2 106.9 109.2 40 Electric 491,3PT 6.0 108.1 107.6 108.5 108.1 107.1 109.7 109.5 116.3 108.3 107.1 109.7 109.3 109.8 112.2 41 Gas 492,3PT 1.6 103.0 101.8 99.3 99.2 101.0 99.1 103.9 115.6 101.2 92.3 93.3 94.8 96.1 97.9 42 Manufacturing excluding motor vehicles and parts 7799..88 110099..22 110099..66 110099..22 110099..55 109.5 108.9 109.4 110099..33 110099..99 110.5 111100..22 111100..55 111100..99 43 Manufacturing excluding office and computing machines 8822..00 110088..11 110088..55 110077..88 110088..22 110088..11 110077..77 110077..99 110077..77 110077..11 110088..66 110088..77 110088..44 110099..33 Gross value (billions of 1982 dollars, annual rates) MAJOR MARKET 44 Products, total 1734.8 1,889.8 1,894.4 1,869.0 1,883.7 1,894.3 1,878.3 1,896.9 1,905.5 1,863.6 1,903.3 1,922.6 1,903.8 1,921.0 1,942.5 45 Final 1350.9 1,480.1 1,485.6 1,459.6 1,475.3 1,486.2 1,465.6 1,482.8 1,492.5 1,447.9 1,488.3 1,507.5 1,490.6 1,507.1 1,528.3 46 Consumer goods 833.4 884.6 878.5 868.9 870.1 878.8 883.2 889.0 898.6 864.3 888.6 893.4 881.8 887.5 899.7 47 Equipment 517.5 595.5 607.1 590.8 605.3 607.5 582.4 593.8 594.0 583.6 599.8 614.1 608.8 619.5 628.6 48 Intermediate 384.0 409.6 408.8 409.3 408.4 408.1 412.7 414.1 413.0 415.7 415.0 415.1 413.3 413.9 414.2 NOTE. Mining and utilities series is no longer published. Industrial Production" and accompanying tables that contain revised indexes 1. These data also appear in the Board's G. 12.3 (414) release. For address, see (1977=100) through December 1984 in the Federal Reserve Bulletin, vol. 71 (July inside front cover. 1985), pp. 487-501. The revised indexes for January through June 1985 were A major revision of the industrial production index and the capacity shown in the September Bulletin. utilization rates was released in July 1985. See "A Revision of the Index of 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 Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar. Apr/ May Private residential real estate activity (thousands of units) NEW UNITS 1 1,535 1,456 1,339 1,334 1,310 1,362 1,364 1,416 1,739 1,297 1,232 1,108 1,065 ? 1,024 994 932 933 946 959 984 984 985 974 912 813 802 3 2-or-more-family 511 462 407 401 364 403 380 432 754 323 320 295 263 4 Started 1,621 1,488 1,376 1,325 1,263 1,423 1,347 1,273 1,568 1,488 1,307 1,2.16 1,205 1,146 1,081 1,003 987 969 1,023 1,010 931 1,099 1,154 996 898 893 6 2-or-more-family 474 407 373 338 294 400 337 342 469 334 311 318 312 7 Under construction, end of period1 . 987 919 850 901 892 894 881 886 892 900 887 888800 861 8 591 570 535 565 565 565 558 567 571 575 567 556622 549 9 2-or-more-family 397 350 315 336 327 329 323 319 321 325 320 318 312 10 1,669 1,530 1,423 1,437 1,366 1,317 1,486 1,302 1,443 1,351 1,378' 1,293 1,353 11 1,123 1,085 1,026 1,037 959 987 1,078 933 1,031 1,041 1,037' 937 990 12 2-or-more-family 546 445 396 400 407 330 408 369 412 310 341r 356 363 13 Mobile homes shipped 233 218 198 194 186 190 189 189 195 200 193 189 191 Merchant builder activity in 1-family units 14 672 675 650 719 638 636 687 633 613 660066 555599 553300 553322 15 Number for sale, end of period 366 367 362 364 364 363 363 362 365 366 363 362 358 Price (thousands of dollars)1 16 Units sold 104.7 113.3 120.4 122.9 120.0 123.0 125.0 125.2 125.0 126.9 119.9 113333..44 112288..55 17 Units sold 127.9 139.0 148.3 158.6 151.1 147.8 151.4 154.3 151.7 150.9 144.8 154.2 150.4 EXISTING UNITS (1-family) 18 Number sold 3,530 3,594 3,439 3,440 3,510 3,490 3,560 3,560 3,520 3,400 3,400 3,330 3,300 Price of units sold (thousands of dollars) 19 85.6 89.2 93.0 95.8 93.8 9922..44 93.1 9922..55 9966..33 9955..22 9966..33 9955..66 9955..66 20 Average 106.2 112.5 118.0 121.6 118.3 116.7 117.9 118.1 120.0 118.3 119.5 117.8 118.7 Value of new construction3 (millions of dollars) CONSTRUCTION 21 Total put in place 410,209^ 422,076' 432,068' 433,934' 433,430' 429,277' 433,381' 431,995' 445,959' 455,571' 457,272' 447,209 445,635 ?? 319,641' 327,102' 333,514' 334,955' 332,087' 332,131' 329,847' 325.011' 338,078' 343,118' 347,366' 342,749 336,584 ?3 194,656 198,101 196,551' 195,577' 192,980' 192,087' 190,855' 189,636' 200,149' 203,013' 206,868' 204,105 199,718 24 Nonresidential, total 124,985r 129,001' 136,963' 139,378' 139,107' 140,044' 138,992' 135,375' 137,929' 140,105' 140,498' 138,644 136,866 Buildings 75 13,707 14,931 18,506' 19,384' 19,976' 19,175' 19,134' 18,863' 19,68c 21,072' 21,086' 21,017 20,752 76 55,448 58,104 59,389' 59,874' 59,279' 61,353' 59,627' 57,090' 57,376' 58,748' 57,210' 55,498 53,958 77 Other 15,464 17,278 17,848' 18,976' 18,696' 17,868' 18,160r 16,612' 17,706' 16,964' 17,646' 18,145 18,157 28 Public utilities and other 40,366r 38,688' 41,220' 41,144' 41,156' 41,648' 42,071' 42,810' 43,167' 43,321' 44,556' 43,984 43,999 ">9 Public 90,566' 94,971' 98,551' 98,979' 101,343' 97,146' 103,534' 106,984' 107,881' 112,453' 109,906' 104,460 109,052 30 4,327 3,579 3,520' 3,804' 4,942' 2,076 3,664 3,552 3,838' 3,886' 5,099' 3,702 3,965 31 26,958' 30,140' 29,502' 29,233' 29,696' 28,426' 30,376' 33,450' 31,901' 37,018' 32,374' 29,864 30,946 37 Conservation and development... 5,519' 4,726' 4,969' 5,034' 5,186' 4,953' 4,916' 5,371' 5,192' 5,559' 4,996' 5,009 5,129 33 Other 53,762' 56,526' 60,56C 60,908' 61,519' 61,691' 64,578' 64,611' 66,95C 65,99C 67,437' 65,885 69,012 1. Not at annual rates. NOTE. Census Bureau estimates for all series except (1) mobile homes, which 2. Not seasonally adjusted. are private, domestic shipments as reported by the Manufactured Housing 3. Value of new construction data in recent periods may not be strictly Institute and seasonally adjusted by the Census Bureau, and (2) sales and prices comparable with data in previous periods because of changes by the Bureau of the of existing units, which are published by the National Association of Realtors. All Census in its estimating techniques. For a description of these changes see back and current figures are available from the originating agency. Permit Construction Reports (C-30-76-5), issued by the Bureau in July 1976. authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning with 1978. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A52 Domestic Nonfinancial Statistics • September 1990 2.15 CONSUMER AND PRODUCER PRICES Percentage changes based on seasonally adjusted data, except as noted Change from 12 Change from 3 months earlier months earlier (at annual rate) Change from 1 month earlier IIInnndddeeexxx IIIttteeemmm llleeevvveeelll 1989 1990 1990 JJJuuunnneee 11998899 11999900 111999999000 JJuunnee JJuunnee Sept. Dec. Mar. June Feb/ Mar/ Apr/ May June CONSUMER PRICES2 (1982-84=100) 1 All items 5.2 4.7 2.3 4.9 8.5 3.5 .5 .5 .2 .2 .5 129.9 2 Food 6.3 5.6 3.6 5.5 11.4 2.1 .5 .3 -.2 .0 .8 132.0 3 Energy items 8.8 .5 -12.6 3.9 14.8 -2.0 -.7 -.8 -.4 -.7 .6 99.5 4 All items less food and energy 4.5 4.9 3.5 4.7 7.5 3.9 .5 .7 .2 .3 .4 134.8 5 Commodities 3.4 3.3 1.3 3.4 7.8 .7 1.0 .5 .0 .1 .1 123.2 6 Services 5.1 5.8 4.5 5.7 7.2 5.5 .4 .7 .4 .4 .6 141.6 PRODUCER PRICES (1982=100) 7 Finished goods 6.1 3.1 .4 5.0 6.7 .7 .0 -.3 -.3 .3 .2 117.9 8 Consumer foods 5.6 5.0 .7 12.4 9.5 -1.9 .7 -.7 -.6 .6 -.4 124.5 9 Consumer energy 16.4 -3.7 -15.3 -5.3 24.0 -13.8 -4.5 -2.8 -1.7 -1.0 -.9 67.6 10 Other consumer goods 5.3 3.8 2.3 4.2 3.5 5.1 .4 .3 .1 .5 .7 128.8 11 Capital equipment 4.3 2.9 4.4 2.0 3.4 2.3 .4 .2 .2 .0 .4 122.3 12 Intermediate materials3 5.1 .1 -.7 -.4 2.5 -1.1 -.7 .0 .0 -.1 -.2 112.8 13 Excluding energy 4.9 .0 -.7 -1.0 1.3 .3 -.1 .3 .1 .1 -.1 120.5 Crude materials 14 Foods 2.9 3.1 -2.2 19.2 8.7 -11.2 .6 .8 -.8 -2.5 .4 115.2 15 Energy 10.7 -10.3 -7.0 13.2 1.0 -39.2 .4 -4.7 -7.8 2.1 -6.2 69.5 16 Other 5.1 -.6 .6 -15.3 4.3 10.6 -.8 2.0 2.2 1.0 -.6 137.1 1. Not seasonally adjusted. 3. Excludes intermediate materials for food manufacturing and manufactured 2. Figures for consumer prices are those for all urban consumers and reflect a animal feeds. rental equivalence measure of homeownership after 1982. SOURCE. Bureau of Labor Statistics. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Selected Measures A53 2.16 GROSS NATIONAL PRODUCT AND INCOME Billions of current dollars except as noted; quarterly data are at seasonally adjusted annual rates. 1989 1990 11998877rr 11998888rr 11998899^^ Q2' Q3' Q4' Ql' Q2 GROSS NATIONAL PRODUCT 1 Total 4,515.6 4,873.7 5,200.8 5,174.0 5,238.6 5,289.3 5,375.4 5,451.6 By source 4 5 2 3 Pe N D S rs e o u o r n r n v a d a i b c l u l e r e c s a o g b n o l s e o u d g m s o p o t d i s o n expenditures 3 1 1 , , , 0 4 5 0 0 2 8 0 9 3 4 1 . . . . 4 7 4 3 3 1 1 , , , 2 4 7 0 3 5 2 6 8 7 0 0 . . . . 2 5 7 0 3 1 1 , , , 4 4 8 1 5 7 4 3 0 4 5 0 . . . . 1 6 5 0 3 1 1 , , , 4 4 8 1 2 7 2 2 5 3 5 7 . . . . 1 9 6 1 3 1 1 , , , 4 4 8 1 8 8 5 3 4 7 9 7 . . . . 3 1 8 3 3 1 1 , , , 5 4 8 1 7 1 9 4 1 8 8 8 . . . . 2 5 5 8 3 1 1 , , , 5 4 9 1 8 9 2 7 8 2 1 4 . . . . 1 1 3 7 3 1 1 , , , 6 4 9 1 1 7 6 7 9 9 8 1 . . . . 6 5 4 5 6 Gross private domestic investment 699.5 747.1 771.2 776.7 775.8 762.7 747.2 772.4 7 Fixed investment 671.2 720.8 742.9 744.0 746.9 737.7 758.9 741.2 8 Nonresidential 444.9 488.4 511.9 511.4 518.1 511.8 523.1 513.5 9 Structures 133.7 139.9 146.2 144.2 147.0 147.1 148.8 146.9 10 Producers' durable equipment 311.2 348.4 365.7 367.2 371.0 364.7 374.3 366.6 11 Residential structures 226.3 232.5 231.0 232.7 228.9 225.9 235.9 227.7 12 Change in business inventories 28.3 26.2 28.3 32.7 28.9 25.0 -11.8 31.2 13 Nonfarm 32.3 29.8 23.3 26.1 26.2 24.1 -17.0 30.1 14 Net exports of goods and services -114.7 -74.1 -46.1 -51.3 -49.3 -35.3 -30.0 -27.0 15 Exports 449.6 552.0 626.2 628.8 623.7 642.8 661.3 661.7 16 Imports 564.3 626.1 672.3 680.0 673.0 678.1 691.3 688.7 17 Government purchases of goods and services .. 921.4 962.5 1,025.6 1,022.7 1,027.8 1,043.3 1,070.1 1,086.7 18 Federal 381.3 380.3 400.0 402.5 399.2 399.9 410.6 420.7 19 State and local 540.2 582.3 625.6 620.2 628.6 643.4 659.6 666.0 By major type of product 20 Final sales, total 4.487.3 4.847.5 5,172.5 5.141.3 5,209.7 5,264.3 5,387.2 5,420.5 21 Goods 1.788.4 1,935.1 2,072.7 2.079.4 2.090.2 2,085.9 2,111.0 2,147.1 22 Durable 780.5 860.2 906.7 904.6 922.1 907.4 919.9 936.3 23 Nondurable 1,007.9 1,074.9 1,166.1 1,174.9 1,168.1 1,178.6 1.191.2 1,210.8 24 Services 2,292.4 2.488.6 2,671.2 2,639.2 2.693.3 2,747.5 2.791.3 2,844.0 25 Structures 434.9 450.0 456.9 455.3 455.0 455.9 473.0 460.5 26 Change in business inventories 28.3 26.2 28.3 32.7 28.9 25.0 -11.8 31.2 27 Durable goods 22.9 19.9 11.9 8.4 6.6 13.2 -21.6 12.2 28 Nondurable goods 5.4 6.4 16.4 24.3 22.2 11.9 9.8 18.9 MEMO 3,845.3 4,016.9 4,117.7 4,112.2 4,129.7 4,133.2 4,150.6 4,163.2 29 Total GNP in 1982 dollars NATIONAL INCOME 3,660.3 3,984.9 4,223.3 4,216.8 4,232.1 4,267.1 4,350.3 n.a. 30 Total 2,686.4 2,905.1 3,079.0 3,062.6 3,095.2 3.128.6 3.180.4 3,229.1 31 Compensation of employees 2,249.7 2,431.1 2,573.2 2,560.0 2.586.6 2.612.7 2,651.6 2,693.3 32 Wages and salaries 419.4 446.6 476.6 473.2 479.9 486.7 497.1 505.5 33 Government and government enterprises .. 1,830.3 1,984.5 2,096.6 2,086.9 2.106.7 2,126.0 2.154.5 2,187.8 34 Other 436.6 474.0 505.8 502.6 508.6 515.9 528.8 535.9 35 Supplement to wages and salaries 227.2 248.5 263.9 262.6 265.1 268.4 276.0 279.4 36 Employer contributions for social insurance 209.4 225.5 241.9 239.9 243.5 247.5 252.8 256.4 37 Other labor income 38 Proprietors' income1 323.4 354.2 379.3 379.6 368.1 381.7 404.0 402.8 39 Business and professional1 280.6 310.5 330.7 329.1 329.5 336.0 346.6 352.1 40 Farm' 42.8 43.7 48.6 50.5 38.7 45.7 57.4 50.7 41 Rental income of persons2 13.7 16.3 8.2 9.7 5.8 4.1 5.5 4.4 42 Corporate profits' 308.3 337.6 311.6 321.4 306.7 290.9 296.8 n.a. 43 Profits before tax3 275.3 316.7 307.7 314.6 291.4 289.8 296.9 n.a. 44 Inventory valuation adjustment -19.4 -27.0 -21.7 -23.1 -6.1 -14.5 -11.4 1.8 45 Capital consumption adjustment 52.4 47.8 25.5 29.9 21.4 15.6 11.3 7.9 46 Net interest 328.6 371.8 445.1 443.4 456.2 461.7 463.6 470.0 1. With inventory valuation and capital consumption adjustments. 3. For after-tax profits, dividends, and the like, see table 1.48. 2. With capital consumption adjustment. SOURCE. Survey of Current Business (Department of Commerce). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A54 Domestic Nonfinancial Statistics • September 1990 2.17 PERSONAL INCOME AND SAVING Billions of current dollars; quarterly data are at seasonally adjusted annual rates. Exceptions noted. 1989 1990 AAccccoouunntt 11998877rr 11998888'' 11998899^^ Q2r Q3r Q4' Qr Q2 PERSONAL INCOME AND SAVING 1 Total personal income 3,766.4 4,070.8 4,384.3 4,362.9 4,402.8 4,469.2 4,562.8 4,623.4 2 Wage and salary disbursements 2,249.7 2,431.1 2,573.2 2,560.0 2,586.6 2,612.7 2,651.6 2,693.3 3 Commodity-producing industries 649.9 696.4 720.6 719.3 722.3 721.4 724.6 729.3 4 Manufacturing 490.3 524.0 541.8 541.4 543.2 540.9 541.2 547.9 5 Distributive industries 531.8 572.0 604.7 602.6 607.1 614.6 627.0 636.9 6 Service industries 648.5 716.2 771.4 764.9 777.4 790.0 802.9 821.7 7 Government and government enterprises 419.4 446.6 476.6 473.2 479.9 486.7 497.1 505.5 8 Other labor income 209.4 225.5 241.9 239.9 243.5 247.5 252.8 256.4 9 Proprietors' income1 323.4 354.2 379.3 379.6 368.1 381.7 404.0 402.8 10 Business and professional 280.6 310.5 330.7 329.1 329.5 336.0 346.6 352.1 11 Farm1 42.8 43.7 48.6 50.5 38.7 45.7 57.4 50.7 12 Rental income of persons2 13.7 16.3 8.2 9.7 5.8 4.1 5.5 4.4 13 Dividends 91.8 102.2 114.4 113.2 115.7 118.2 120.5 122.9 14 Personal interest income 501.3 547.9 643.2 642.1 655.2 664.9 670.5 681.3 15 Transfer payments 549.9 587.7 636.9 630.2 641.8 655.9 680.9 686.2 16 Old-age survivors, disability, and health insurance benefits ... 282.9 300.5 325.3 321.9 328.3 334.1 347.2 347.1 17 LESS: Personal contributions for social insurance 172.9 194.1 212.8 212.0 214.0 215.8 222.9 223.9 18 EQUALS: Personal income 3,766.4 4,070.8 4,384.3 4,362.9 4,402.8 4,469.2 4,562.8 4,623.4 19 LESS: Personal tax and nontax payments 571.6 591.6 658.8 665.5 659.5 669.6 675.1 693.7 20 EQUALS: Disposable personal income 3,194.7 3,479.2 3,725.5 3,697.3 3,743.4 3,799.6 3,887.7 3,929.6 21 LESS: Personal outlays 3,102.2 3,333.6 3,553.7 3,528.5 3,588.8 3,625.5 3,696.4 3,728.5 22 EQUALS: Persona] saving 92.5 145.6 171.8 168.9 154.5 174.1 191.3 201.2 MEMO Per capita (1982 dollars) 23 Gross national product 15,759.4 16,302.4 16,550.2 16,554.8 16,578.5 16,546.0 16,575.9 16,586.5 24 Personal consumption expenditures 10,310.7 10,578.3 10,678.5 10,649.4 10,739.9 10,688.2 10,692.1 10,658.2 25 Disposable personal income 10,946.0 11,368.0 11,531.0 11,492.0 11,538.0 11,541.0 11,586.0 11,571.0 26 Saving rate (percent) 2.9 4.2 4.6 4.6 4.1 4.6 4.9 5.1 GROSS SAVING 27 Gross saving 555.5 656.1 691.5 697.9 692.4 674.8 664.8 n.a. 28 Gross private saving 662.6 751.3 779.3 770.3 776.0 786.4 795.0 n.a. 29 Personal saving 92.5 145.6 171.8 168.9 154.5 174.1 191.3 201.2 30 Undistributed corporate profits' 83.2 91.4 53.0 58.5 53.9 39.8 36.7 n.a. 31 Corporate inventory valuation adjustment -19.4 -27.0 -21.7 -23.1 -6.1 -14.5 -11.4 1.8 Capital consumption allowances 32 Corporate 303.2 322.1 346.4 341.1 351.6 356.5 356.7 359.5 33 Noncorporate 183.8 192.2 208.0 201.8 215.9 216.0 210.3 211.6 34 Government surplus, or deficit (-), national income and product accounts -107.1 -95.3 -87.8 -72.4 -83.6 -111.6 -130.2 n.a. 35 Federal -158.2 -141.7 -134.3 -122.7 -131.7 -150.1 -168.3 n.a. 36 State and local 51.0 46.5 46.4 50.3 48.1 38.5 38.1 n.a. 37 Gross investment 544.9 627.8 674.4 677.6 676.1 671.8 665.6 693.8 38 Gross private domestic 699.5 747.1 771.2 776.7 775.8 762.7 747.2 772.4 39 Net foreign -154.6 -119.2 —96.8 -99.1 -99.7 -90.9 -81.6 -78.6 40 Statistical discrepancy -10.6 -28.2 -17.0 -20.3 -16.2 -3.0 0.7 n.a. 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 1989r 1990 Item credits or debits 11998877rr 11998888rr 11998899'' Ql Q2 Q3 Q4 Qlp 1 Balance on current account --116622,,331155 --112288,,886622 --111100,,003355 -27,104 -28,649 -27,591 -26,692 -22,941 2 Not seasonally adjusted -22,961 -27,528 -31,620 -27,926 -19,164 Merchandise trade balance -159,500 -126,986 -114,864 -28,093 -28,222 -29,803 -28,746 -26,371 Merchandise exports 250,266 320,337 360,465 88,267 91,111 89,349 91,738 %,044 Merchandise imports -409,766 -447,323 -475,329 -116,360 -119,333 -119,152 -120,484 -122,415 Military transactions, net -3,530 -5,452 -6,319 -1,763 -1,667 -1,114 -1,776 -1,370 Investment income, net 5,326 1,610 -913 465 -1,957 17 561 608 Other service transactions, net 9,964 16,971 26,783 5,842 6,203 6,839 7,900 7,681 Remittances, pensions, and other transfers -4,299 -4,261 -3,758 -999 -962 -909 -889 -874 U.S. government grants -10,276 -10,744 -10,963 -2,556 -2,044 -2,621 -3,742 -2,615 11 Change in U.S. government assets, other than official reserve assets, net (increase, -) 997 2,969 1,185 962 -303 574 -47 -486 12 Change in U.S. official reserve assets (increase, -). 9,149 -3,912 -25,293 -4,000 -12,095 -5,9% -3,202 -3,177 13 Gold 0 0 0 0 0 0 0 0 14 Special drawing rights (SDRs) -509 127 -535 -188 68 -211 -204 -247 15 Reserve position in International Monetary Fund. 2,070 1,025 471 316 -159 337 -23 234 16 Foreign currencies 7,588 -5,064 -25,229 -4,128 -12,004 -6,122 -2,975 -3,164 17 Change in U.S. private assets abroad (increase, -). -73,092 -83,232 -102,953 -29,821 11,017 -38,654 -45,4% 33,172 18 Bank-reported claims -42,119 -56,322 -50,684 -23,586 26,829 -21,269 -32,658 45,655 19 Nonbank-reported claims 5,324 -2,847 1,391 1,851 -2,384 1,877 47 20 U.S. purchase of foreign securities, net -5,251 -7,846 -21,938 -2,062 -6,144 -9,623 -4,109 -4,871 21 U.S. direct investments abroad, net -31,046 -16,217 -31,722 -6,024 -7,284 -9,639 -8,776 -7,612 22 Change in foreign official assets in United States (increase, +) 45,210 39,515 8,823 7,797 -4,961 13,003 -7,016 -8,825 23 U.S. Treasury securities 43,238 41,741 333 4,630 -9,726 12,771 -7,342 -5,874 24 Other U.S. government obligations 1,564 1,309 1,383 721 -97 190 569 -531 25 Other U.S. government liabilities -2,503 -710 332 -200 470 -350 412 -368 26 Other U.S. liabilities reported by U.S. banks3 3,918 -319 4,940 2,191 3,820 -251 -820 -1,926 27 Other foreign official assets5 -1,007 -2,506 1,835 455 572 643 165 -126 Change in foreign private assets in United States (increase, U. + S . ) bank-reported liabilities i 1 8 7 9 3 , , 0 2 2 6 6 0 1 7 8 0 1 , , 2 9 3 2 5 6 2 6 0 1 5 , ,8 1 2 9 9 9 6 1 0 7 , , 6 4 0 8 5 6 -20 7 , , 8 7 0 5 6 5 6 2 1 7 , , 1 8 3 4 3 5 7 3 6 6 , , 3 6 3 7 6 4 - - 1 2 8 8 , , 6 1 6 2 5 5 U.S. nonbank-reported liabilities 2,863 6,664 2,867 3,717 -407 -2,175 1,732 Foreign private purchases of U.S. Treasury securities, net -7,643 20,239 29,951 9,323 2,339 12,618 5,671 -864 Foreign purchases of other U.S. securities, net 42,120 26,353 39,568 8,731 9,574 10,470 10,793 2,732 Foreign direct investments in United States, net 46,894 58,435 72,244 21,348 17,055 12,375 21,466 7,592 34 Allocation of SDRs 0 0 0 0 0 0 0 0 35 Discrepancy 66,,779900 --88,,440044 2222,,444433 -8,439 27,236 -2,469 6,117 20,922 36 Owing to seasonal adjustments 3,093 -1,697 -4,953 3,560 3,116 37 Statistical discrepancy in recorded data before seasonal adjustment 6,790 -8,404 22,443 -11,532 28,933 2,484 2,558 17,806 MEMO Changes in official assets 38 U.S. official reserve assets (increase, -) 9,149 -3,912 -25,293 -4,000 -12,095 -5,996 -3,202 -3,177 39 Foreign official assets in United States (increase, +) excluding line 25 47,713 40,225 8,491 7,997 -5,431 13,353 -7,428 -8,457 40 Change in Organization of Petroleum Exporting Countries official assets in United States (part of line 22 above) -9,956 -2,996 10,713 7,100 460 4,532 -1,379 2,976 1. Seasonal factors are not calculated for lines 6, 10, 12-16, 18-20, 22-34, and 4. Primarily associated with military sales contracts and other transactions 38-41. arranged with or through foreign official agencies. 2. Data are on an international accounts (IA) basis. Differs from the Census 5. Consists of investments in U.S. corporate stocks and in debt securities of basis data, shown in table 3.11, for reasons of coverage and timing. Military private corporations and state and local governments. exports are excluded from merchandise data and are included in line 6. NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business 3. Reporting banks include all kinds of depository institutions besides commer- (Department of Commerce). cial banks, as well as some brokers and dealers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A56 International Statistics • September 1990 3.11 U.S. FOREIGN TRADE1 Millions of dollars; monthly data are seasonally adjusted. 1989 1990 IItteemm 11998877 11998888 11998899'' Nov/ Dec/ Jan/ Feb/ Mar/ Apr/ Mayp 1 EXPORTS of domestic and foreign merchandise excluding grant-aid shipments, f.a.s. value 254,073 322,427' 363,812 30,618 31,262 31,372 31,576 33,266 32,058 32,786 GENERAL IMPORTS including merchandise for immediate consumption plus entries into bonded warehouses 2 Customs value 406,241 440,952 473,211 40,531 38,058 41,570 38,672 41,636 39,364 40,518 Trade balance 3 Customs value -152,169 -118,526 -109,399 -9,913 -6,796 -10,198 -7,096 -8,370 -7,306 -7,731 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 Dec. Jan. Feb. Mar. Apr." Mayp June" 1 Total 48,511 45,798 47,802 74,609 75,506 74,173 76,303 76,283 77,028 77,298 2 Gold stock, including Exchange Stabilization Fund1 11,064 11,078 11,057 11,059 11,059 11,059 11,060 11,060 11,065 11,065 3 Special drawing rights2,3 8,395 10,283 9,637 9,951 10,041 10,216 10,092 10,103 10,396 10,490 4 Reserve position in International Monetary Fund 11,730 11,349 9,745 9,048 9,173 8,985 8,727 8,687 8,764 8,449 5 Foreign currencies4 17,322 13,088 17,363 44,551 45,233 43,913 46,424 46,433 46,803 47,294 1. Gold held under earmark at Federal Reserve Banks for foreign and interna- in the IMF also are valued on this basis beginning July 1974. tional accounts is not included in the gold stock of the United States; see table 3. Includes allocations by the International Monetary Fund of SDRs as follows: 3.13. Gold stock is valued at $42.22 per fine troy ounce. $867 million on Jan. 1, 1970; $717 million on Jan. 1, 1971; $710 million on Jan. 1, 2. Beginning July 1974, the IMF adopted a technique for valuing the SDR based 1972; $1,139 million on Jan. 1, 1979; $1,152 million on Jan. 1, 1980; and $1,093 on a weighted average of exchange rates for the currencies of member countries. million on Jan. 1, 1981; plus transactions in SDRs. From July 1974 through December 1980, 16 currencies were used; from January 4. Valued at current market exchange rates. 1981, 5 currencies have been used. The U.S. SDR holdings and reserve position 3.13 FOREIGN OFFICIAL ASSETS HELD AT FEDERAL RESERVE BANKS1 Millions of dollars, end of period 1989 1990 AAsssseettss 11998866 11998877 11998888 p Dec. Jan. Feb. Mar. Apr. May June 1 Deposits 287 244 347 589 251 309 300 402 309 368 Assets held in custody 2 U.S. Treasury securities2 155,835 195,126 232,547 224,911 225,618 221,798 250,447 252,759 253,691 255,651 3 Earmarked gold3 14,048 13,919 13,636 13,456 13,458 13,458 13,458 13,458 13,460 13,433 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 at face value. 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 Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 1 Total, all currencies 456,628 518,618 505,595 548,074 545,366 549,368 553,815 535,059 535,886 541,383 7 Claims on United States 114,563 138,034 169,111 195,913 198,835 192,688 188,700 176,095 177,104 182,236 83,492 105,845 129,856 154,825 157,092 149,285 145,156 135,171 133,573 140,763 4 Other banks in United States 13,685 16,416 14,918 15,301 17,042 17,840 18,064 15,511 17,965 15,647 5 17,386 15,773 24,337 25,787 24,701 25,563 25,480 25,413 25,566 25,826 6 Claims on foreigners 312,955 342,520 299,728 302,525 300,575 307,937 313,934 308,117 307,470 306,015 7 Other branches of parent bank 96,281 122,155 107,179 111,053 113,810 120,359 122,457 120,488 118,835 116,640 8 105,237 108,859 96,932 95,098 90,703 91,712 94,065 89,837 90,812 90,422 9 Public borrowers 23,706 21,832 17,163 16,148 16,456 15,392 15,148 15,973 16,217 16,172 10 Nonbank foreigners 87,731 89,674 78,454 80,226 79,606 80,474 82,264 81,819 81,606 82,781 11 Other assets 29,110 38,064 36,756 49,636 45,956 48,743 51,181 50,847 51,312 53,132 12 Total payable in U.S. dollars 317,487 350,107 357,573 380,282 382,414 375,315R 375,511R 358,543 360,224 363,140 N Claims on United States 110,620 132,023 163,456 188,105 191,184 184,782 180,738 168,833 169,9% 173,899 14 82,082 103,251 126,929 149,908 152,294 144,055 139,920 130,350 129,162 135,223 IS Other banks in United States 12,830 14,657 14,167 14,543 16,386 17,018 17,187 14,992 17,209 14,818 16 15,708 14,115 22,360 23,654 22,504 23,709 23,631 23,491 23,625 23,858 17 Claims on foreigners 195,063 202,428 177,685 168,404 169,690 167,722 172,132 167,616 168,419 167,630 18 Other branches of parent bank 72,197 88,284 80,736 79,585 82,949 86,114 87,403 85,028 84,930 83,381 19 66,421 63,707 54,884 48,966 48,396 45,385 46,582 43,408 43,814 44,449 20 Public borrowers 16,708 14,730 12,131 11,446 10,961 10,332 10,529 11,110 11,191 10,912 21 Nonbank foreigners 39,737 35,707 29,934 28,407 27,384 25,891 27,618 28,070 28,484 28,888 22 Other assets 11,804 15,656 16,432 23,773 21,540 22,81r 22,641r 22,094 21,809 21,611 United Kingdom 23 Total, all currencies 140,917 158,695 156,835 164,916 161,947 166,915 169,727 167,162 173,127 177,891 74 Claims on United States 24,599 32,518 40,089 44,661 39,212 41,208 40,161 38,809 42,366 43,259 75 Parent bank 19,085 27,350 34,243 40,848 35,847 37,292 36,311 34,648 37,572 39,101 76 Other banks in United States 1,612 1,259 1,123 1,199 1,058 1,441 1,365 1,301 1,262 747 77 3,902 3,909 4,723 2,614 2,307 2,475 2,485 2,860 3,532 3,411 78 Claims on foreigners 109,508 115,700 106,388 105,349 107,657 109,837 110,911 109,227 111,175 114,757 79 Other branches of parent bank 33,422 39,903 35,625 35,064 37,728 37,701 38,410 39,636 41,613 43,358 30 39,468 36,735 36,765 36,317 36,159 37,668 36,488 34,803 35,224 35,730 31 4,990 4,752 4,019 3,181 3,293 3,128 3,076 3,857 3,980 3,943 32 Nonbank foreigners 31,628 34,310 29,979 30,787 30,477 31,340 32,937 30,931 30,358 31,726 33 Other assets 6,810 10,477 10,358 14,906 15,078 15,870 18,655 19,126 19,586 19,875 34 Total payable in U.S. dollars 95,028 100,574 103,503 106,086 103,427 103,038 103,752 101,024 107,483 110,198 35 Claims on United States 23,193 30,439 38,012 41,504 36,404 38,261 37,006 35,752 39,091 39,386 36 18,526 26,304 33,252 39,304 34,329 35,731 34,462 32,697 35,663 36,724 37 Other banks in United States 1,475 1,044 964 861 843 1,118 1,036 1,122 1,041 521 38 3,192 3,091 3,796 1,339 1,232 1,412 1,508 1,933 2,387 2,141 39 68,138 64,560 60,472 56,872 59,062 56,939 58,763 57,166 60,165 63,025 40 Other branches of parent bank 26,361 28,635 28,474 26,961 29,872 28,655 30,224 30,421 32,885 34,441 41 23,251 19,188 18,494 16,884 16,579 16,399 15,984 13,748 14,141 14,635 47 Public borrowers 3,677 3,313 2,840 2,404 2,371 2,321 2,266 3,074 3,131 3,114 43 Nonbank foreigners 14,849 13,424 10,664 10,623 10,240 9,564 10,289 9,923 10,008 10,835 44 Other assets 3,697 5,575 5,019 7,710 7,961 7,838 7,983 8,106 8,227 7,787 Bahamas and Caymans 45 Total, all currencies 142,592 160,321 170,639 172,762 176,006 167,385 164,908 155,145 150,767 154,851 46 78,048 85,318 105,320 118,037 124,205 117,177 114,263 105,466 102,184 105,617 47 54,575 60,048 73,409 82,605 87,882 79,525 76,475 70,535 65,084 69,807 48 11,156 14,277 13,145 13,185 15,071 15,403 15,827 13,564 15,902 14,079 49 12,317 10,993 18,766 22,247 21,252 22,249 21,961 21,367 21,198 21,731 50 Claims on foreigners 60,005 70,162 58,393 46,391 44,168 42,610 43,162 42,393 41,467 42,147 51 Other branches of parent bank 17,296 21,277 17,954 14,414 11,309 13,371 14,409 13,171 13,306 12,917 57 27,476 33,751 28,268 21,641 22,611 20,119 19,595 19,370 18,499 19,947 53 Public borrowers 7,051 7,428 5,830 5,340 5,217 4,764 4,753 4,684 4,490 4,350 54 Nonbank foreigners 8,182 7,706 6,341 4,996 5,031 4,356 4,405 5,168 5,172 4,933 55 Other assets 4,539 4,841 6,926 8,334 7,633 7,598 7,483 7,286 7,116 7,087 56 Total payable in U.S. dollars 136,813 151,434 163,518 167,182 170,780 160,832 159,484 150,061 145,994 149,467 1. Beginning with June 1984 data, reported claims held by foreign branches from $50 million to $150 million equivalent in total assets, the threshold now have been reduced by an increase in the reporting threshold for "shell" branches applicable to all reporting branches. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A58 International Statistics • September 1990 3.14—Continued 1989 1990 LLiiaabbiilliittyy aaccccoouunntt 11998866 11998877 11998888 Nov. Dec. Jan. Feb. Mar. Apr. May All foreign countries 57 Total, all currencies 456,628 518,618 505,595 548,074 545,366 549,368 553,815 535,059 535,886 541,383 58 Negotiable CDs 31,629 30,929 28,511 26,555 23,500 23,510 23,620 21,767 24,113 25,061 59 To United States 152,465 161,390 185,577 190,149 197,239 178,452 181,164 173,674 168,669 169,791 60 Parent bank 83,394 87,606 114,720 128,799 138,803 117,318 119,967 114,169 109,642 109,831 61 Other banks in United States 15,646 20,355 14,737 10,811 11,704 11,850 11,990 10,799 11,782 10,356 62 Nonbanks 53,425 53,429 56,120 50,539 46,732 49,284 49,207 48,706 47,245 49,604 63 To foreigners 253,775 304,803 270,923 302,346 296,850 315,991 317,318 309,756 313,446 315,101 64 Other branches of parent bank 95,146 124,601 111,267 115,484 119,591 126,965 126,786 124,084 120,405 120,722 65 Banks 77,809 87,274 72,842 81,200 76,452 82,042 77,449 75,017 77,875 78,681 66 Official institutions 17,835 19,564 15,183 18,938 16,750 19,004 20,637 17,704 20,683 19,570 67 Nonbank foreigners 62,985 73,364 71,631 86,724 84,057 87,980 92,446 92,951 94,483 96,128 68 Other liabilities 18,759 21,496 20,584 29,024 27,777 31,415 31,713 29,862 29,658 31,430 69 Total payable in U.S. dollars 336,406 361,438 367,483 392,983 396,282 385,010r 385,634' 369,306 368,626 369,517 70 Negotiable CDs 28,466 26,768 24,045 22,539 19,619 18,512 18,783 17,084 19,601 20,188 71 To United States 144,483 148,442 173,190 179,927 187,286 167,754 169,669 162,606 157,579 157,851 72 Parent bank 79,305 81,783 107,150 122,910 132,954 111,328 113,487 108,128 103,252 103,389 73 Other banks in United States 14,609 18,951 13,468 9,512 10,519 10,560 10,684 9,296 10,415 8,939 74 Nonbanks 50,569 47,708 52,572 47,505 43,813 45,866 45,498 45,182 43,912 45,523 75 To foreigners 156,806 177,711 160,766 177,459 176,460 185,192 183,378 176,939 178,035 177,888 76 Other branches of parent bank 71,181 90,469 84,021 82,912 87,636 91,736 90,360 86,908 84,090 84,415 77 Banks 33,850 35,065 28,493 33,370 30,537 32,551 28,741 27,639 29,207 28,265 78 Official institutions 12,371 12,409 8,224 11,713 9,873 11,063 11,740 9,248 11,909 11,480 79 Nonbank foreigners 39,404 39,768 40,028 49,464 48,414 49,842 52,537 53,144 52,829 53,728 80 Other liabilities 6,651 8,517 9,482 13,058 12,917 13,552' 13,804' 12,677 13,411 13,590 United Kingdom 81 Total, all currencies 140,917 158,695 156,835 164,916 161,947 166,915 169,727 167,162 173,127 177,891 82 Negotiable CDs 27,781 26,988 24,528 22,837 20,056 19,791 19,656 18,266 20,535 21,455 83 To United States 24,657 23,470 36,784 33,101 36,036 31,893 32,686 32,780 33,931 33,755 84 Parent bank 14,469 13,223 27,849 25,430 29,726 23,256 23,752 22,970 23,339 23,179 85 Other banks in United States 2,649 1,536 2,037 1,096 1,256 1,545 2,115 1,827 1,841 1,847 86 Nonbanks 7,539 8,711 6,898 6,575 5,054 7,092 6,819 7,983 8,751 8,729 87 To foreigners 79,498 98,689 86,026 96,509 92,307 99,720 101,565 101,160 103,362 106,181 88 Other branches of parent bank 25,036 33,078 26,812 26,656 27,397 29,216 28,074 29,848 28,581 29,193 89 Banks 30,877 34,290 30,609 33,016 29,780 33,568 32,110 29,116 31,026 31,580 90 Official institutions 6,836 11,015 7,873 9,724 8,551 9,368 10,758 9,184 10,829 11,269 91 Nonbank foreigners 16,749 20,306 20,732 27,113 26,579 27,568 30,623 33,012 32,926 34,139 92 Other liabilities 8,981 9,548 9,497 12,469 13,548 15,511 15,820 14,956 15,299 16,500 93 Total payable in U.S. dollars 99,707 102,550 105,907 109,116 108,178 106,676 106,416 103,544 109,708 110,607 94 Negotiable CDs 26,169 24,926 22,063 20,715 18,143 16,931 16,910 15,660 17,936 18,621 95 To United States 22,075 17,752 32,588 30,130 33,056 28,542 28,817 29,383 30,386 29,666 % Parent bank 14,021 12,026 26,404 24,578 28,812 22,428 22,513 22,219 22,446 22,339 97 Other banks in United States 2,325 1,308 1,752 863 1,065 1,217 1,807 1,552 1,553 1,456 98 Nonbanks 5,729 4,418 4,432 4,689 3,179 4,897 4,497 5,612 6,387 5,871 99 To foreigners 48,138 55,919 47,083 52,135 50,517 54,574 53,751 52,095 54,371 55,163 100 Other branches of parent bank 17,951 22,334 18,561 16,845 18,384 19,660 18,556 19,182 18,799 18,589 101 Banks 15,203 15,580 13,407 13,587 12,244 14,701 11,920 9,976 11,233 11,007 102 Official institutions 4,934 7,530 4,348 6,755 5,454 5,649 6,717 5,192 6,703 7,264 103 Nonbank foreigners 10,050 10,475 10,767 14,948 14,435 14,564 16,558 17,745 17,636 18,303 104 Other liabilities 3,325 3,953 4,173 6,136 6,462 6,629 6,938 6,406 7,015 7,157 Bahamas and Caymans 105 Total, all currencies 142,592 160,321 170,639 172,762 176,006 167,385 164,908 155,145 150,767 154,851 106 Negotiable CDs 847 885 953 671 678 681 671 522 524 528 107 To United States 106,081 113,950 122,332 121,021 124,859 114,829 113,137 108,003 101,024 103,655 108 Parent bank 49,481 53,239 62,894 70,107 75,579 65,380 64,085 61,528 55,311 57,136 109 Other banks in United States 11,715 17,224 11,494 8,438 8,883 8,677 8,198 7,310 8,544 7,075 110 Nonbanks 44,885 43,487 47,944 42,476 40,397 40,772 40,854 39,165 37,169 39,444 111 To foreigners 34,400 43,815 45,161 47,521 47,382 48,974 48,726 44,314 46,741 48,410 112 Other branches of parent bank 12,631 19,185 23,686 23,352 23,414 24,911 25,110 20,778 22,446 25,535 113 Banks 8,617 10,769 8,336 9,137 8,823 8,439 8,059 7,983 8,617 8,154 114 Official institutions 2,719 1,504 1,074 1,131 1,097 1,528 1,290 1,078 1,247 962 115 Nonbank foreigners 10,433 12,357 12,065 13,901 14,048 14,096 14,267 14,475 14,431 13,759 116 Other liabilities 1,264 1,671 2,193 3,549 3,087 2,901 2,374 2,306 2,478 2,258 117 Total payable in U.S. dollars 138,774 152,927 162,950 167,835 171,250 162,141 160,212 150,758 146,259 149,707 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 Nov. Dec. Jan.' Feb. Mar. Apr. May' 1 Total1 259,556 299,782 315,065r 308,303' 305,433 300,030' 297,493 303,828' 303,241 By type 2 Liabilities reported by banks in the United States 31,838 31,519 39,104'' 36,486' 34,303 33,633' 35,208 36,382' 35,786 3 U.S. Treasury bills and certificates3 88,829 103,722 82,474 76,985 76,157 73,099 73,039 69,454 72,322 U.S. Treasury bonds and notes 4 Marketable 122,432 149,056 174,778 176,084 176,411 174,986 171,130 176,722 173,875 5 Nonmarketable 300 523 564 568 572 576 580 3,596 3,620 6 U.S. securities other than U.S. Treasury securities5 16,157 14,962 18,145 18,180 17,990 17,736 17,536 17,674 17,638 By area 7 Western Europe1 124,620 125,097 137,760 134,907 135,688 134,050' 136,807 139,829' 139,776 8 Canada 4,961 9,584 9,130 9,553 9,368 7,976 8,386 7,880 6,621 9 Latin America and Caribbean 8,328 10,099 9,893' 8,809' 7,943 8,327' 9,229' 9,147 9,239 10 116,098 145,608 149,759r 147,064' 143,966 140,924 134,700 136,514 135,113 11 Africa 1,402 1,369 1,020' 995' 817 99C 902' 861 1,040 12 Other countries 4,147 7,501 6,941 6,406 7,077 7,187 6,889 6,000 7,829 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 1990 IItteemm 11998866 11998877 11998888 June' Sept.' Dec.' Mar.' 1 Banks' own liabilities 29,702 55,438 74,980 69,213 73,755 67,805 63,105 2 Banks' own claims 26,180 51,271 68,983 62,234 70,328 65,127 60,999 3 Deposits 14,129 18,861 25,100 23,866 22,960 20,489 21,456 4 Other claims 12,052 32,410 43,884 38,368 47,368 44,638 39,543 5 Claims of banks' domestic customers 2,507 551 364 723 2,558 3,102 1,190 1. Data on claims exclude foreign currencies held by U.S. monetary author- 2. Assets owned by customers of the reporting bank located in the United ities. States that represent claims on foreigners held by reporting banks for the accounts of the domestic customers. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A60 International Statistics • September 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 11998899 Nov.' Dec. Jan.' Feb. Mar. Apr.' May? 1 All foreigners 618,874 685,339 736,112' 731,849 736,112' 705,383 696,813' 704,185' 703,879 716,455 7, Banks' own liabilities 470,070 514,532 576,732r 565,652 576,732' 544,172 538,567' 541,694' 546,045 551,142 3 Demand deposits 22,383 21,863 22,090' 21,538 22,090' 19,982 20,894' 20,518' 21,140 20,905 4 148,374 152,164 168,744r 165,517 168,744' 159,144 156,304' 154,725' 148,832 151,020 5 Other3 51,677 51,366 67,569r 66,632 67,569' 62,807 58,484' 60,433' 65,949 65,144 6 Own foreign offices 247,635 289,138 318,330r 311,964 318,33(f 302,238 302,884' 306,017' 310,123 314,073 7 Banks' custody liabilities5 148,804 170,807 159,380 166,197 159,380 161,211 158,246 162,492 157,835 165,313 8 U.S. Treasury bills and certificates6 101,743 115,056 91,100 97,018 91,100 90,703 88,032 88,015 83,644 88,907 9 Other negotiable and readily transferable instruments 16,776 16,426 19,526 19,297 19,526 18,658 18,655 21,031' 20,251 20,669 10 Other 30,285 39,325 48,754 49,882 48,754 51,851 51,560 53,446' 53,939 55,737 11 Nonmonetary international and regional organizations 4,464 3,224 4,772 5,771 4,772 4,671 3,765' 4,896 55,,772288 44,,555588 17 Banks' own liabilities 2,702 2,527 3,156 4,453 3,156 3,071 2,218 3,334 3,781 2,913 13 Demand deposits 124 71 96 62 96 36 55 156 52 28 14 1,538 1,183 927 1,075 927 1,042 624 1,137 2,025 773 15 Other. 1,040 1,272 2,133 3,316 2,133 1,993 1,539 2,041 1,705 2,112 16 Banks' custody liabilities5 1,761 698 1,616 1,318 1,616 1,599 1,547 1,562 1,947 1,645 17 U.S. Treasury bills and certificates6 265 57 197 321 197 102 160 191 190 174 18 Other negotiable and readily transferable instruments7 1,497 641 1,417 996 1,417 1,497 1,387 1,371 11,,774400 11,,446633 19 Other 0 0 2 0 2 0 0 0 17 8 20 Official institutions9 120,667 135,241 113,471' 121,578 113,471' 110,459 106,732' 108,247 105,836 108,108 71 Banks' own liabilities 28,703 27,109 31,098r 34,133 31,098' 30,755 30,443' 31,366 33,604 32,433 r>. Demand deposits 1,757 1,917 2,196' 1,834 2,196' 1,601 1,654' 1,826 2,066 1,644 73 12,843 9,767 10,55^ 11,237 10,550' 9,769 10,658 9,704 10,959 11,110 24 Other 14,103 15,425 18,351 21,063 18,351 19,385 18,132 19,836 20,579 19,679 7.5 Banks' custody liabilities5 91,965 108,132 82,373 87,444 82,373 79,704 76,289 76,881 72,231 75,674 26 U.S. Treasury bills and certificates6 88,829 103,722 76,985 82,474 76,985 76,157 73,099 73,039 69,454 72,322 27 Other negotiable and readily transferable instruments7 2,990 4,130 5,028 4,845 5,028 3,459 2,892 3,671 2,605 3,158 28 Other 146 280 361 125 361 88 298 171 173 195 29 Banks10 414,280 459,523 514,251' 507,132 514,251' 491,782 484,881' 490,793' 493,997 504,140 30 Banks' own liabilities 371,665 409,501 453,737' 444,253 453,737' 427,414 421,392' 422,578' 425,149 431,116 31 Unaffiliated foreign banks 124,030 120,362 135,407 132,289 135,407' 125,175 IIS.SOS' 116,561' 115,026 117,043 32 Demand deposits 10,898 9,948 10,339 10,736 10,339 9,523 10,072' 9,625 9,863 9,671 33 Time deposits2 79,717 80,189 90,557' 86,827 90,557 79,518 74,873' 75,296' 68,568 71,148 34 Other3. 33,415 30,226 34,5llr 34,725 34,511' 36,133 33,563' 31,640' 36,596 36,223 35 Own foreign offices 247,635 289,138 318,33c 311,964 318,330' 302,238 302,884' 306,017' 310,123 314,073 36 Banks' custody liabilities5 42,615 50,022 60,514 62,879 60,514 64,369 63,489 68,215 68,848 73,024 37 U.S. Treasury bills and certificates6 9,134 7,602 9,367 9,670 9,367 9,614 9,342 9,359 9,374 11,578 .38 Other negotiable and readily transferable instruments7 5,392 5,725 5,124 4,858 5,124 5,090 4,918 7,611' 7,633 7,942 39 Other 28,089 36,694 46,023 48,351 46,023 49,665 49,229 51,244' 51,841 53,504 40 Other foreigners 79,463 87,351 103,618' 97,368 103,618' 98,471 101,434' 100,248' 98,318 99,650 41 Banks' own liabilities 67,000 75,396 88,742' 82,812 88,742' 82,932 84,513' 84,415' 83,510 84,681 47 Demand deposits 9,604 9,928 9,458' 8,907 9,458' 8,821 9,114' 8,911' 9,159 9,561 43 54,277 61,025 66,711' 66,378 66,711' 68,815 70,148' 68,588' 67,281 67,989 44 Other. 3,119 4,443 12,573 7,527 12,573 5,295 5,251' 6,915 7,069 7,130 45 Banks' custody liabilities5 12,463 11,956 14,877 14,556 14,877 15,539 16,921 15,834 14,809 14,969 46 U.S. Treasury bills and certificates 3,515 3,675 4,551 4,553 4,551 4,830 5,431 5,425 4,627 4,834 47 Other negotiable and readily transferable instruments7 6,898 5,929 7,958 8,598 7,958 8,612 9,457 8,378 8,273 8,106 48 Other 2,050 2,351 2,368 1,405 2,368 2,098 2,033 2,031 1,909 2,030 49 MEMO: Negotiable time certificates of deposit in custody for foreigners 7,314 6,425 7,203 7,050 7,203 8,576 8,457 7,634 7,183 7,161 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

Bank-Reported Data A61 3.17—Continued 1989 1990 Area and country 11998877 11998888 11998899'' Nov.r Dec.' Jan/ Feb/ Mar/ Apr/ May" 1 Total 618,874 685,339 736,112 731,849 736,112 705,383 696,813 704,185 703,879 716,455 2 Foreign countries 614,411 682,115 731,340 726,078 731,340 700,713 693,048 699,289 698,151 711,897 3 Europe 234,641 231,912 237,453 242,675 237,453 231,067 224,715 224,907 229,579 236,429 1 1 1 4 5 6 8 9 7 0 1 2 G G A N F D B F It i r a e r e u e e n a e l l r n t s l y n g h m e t a m r c i c e n i a u e e a r a d n m l r a y k - n L d u s xembourg 2 1 9 5 7 9 2 , , , , , 8 0 0 3 6 9 7 0 3 3 1 2 4 8 2 6 7 7 5 4 2 7 9 0 0 7 3 2 1 1 6 4 5 2 1 0 4 , , , , , , , 7 7 3 2 6 1 0 5 2 7 7 1 7 0 5 2 8 9 7 2 6 2 0 5 2 5 9 2 1 1 6 6 7 1 0 1 1 6 , , , , , , , , 9 6 5 6 2 4 0 5 1 0 1 7 1 3 1 1 7 6 3 3 8 1 3 5 7 0 9 2 1 1 6 9 7 1 1 0 1 4 , , , , , , , , 0 1 2 0 4 9 5 4 6 2 4 3 7 5 1 7 2 8 9 5 0 5 9 8 7 0 6 2 1 1 6 6 7 1 1 1 0 6 , , , , , , , , 9 6 5 2 4 0 6 1 5 0 1 7 3 1 1 1 6 7 3 3 8 3 5 7 1 9 0 2 1 1 2 7 7 1 1 1 3 1 , , , , , , , , 9 5 7 0 6 2 0 4 3 9 8 9 3 8 5 4 2 5 2 4 2 3 4 1 0 2 7 2 1 1 1 8 8 1 1 1 1 1 , , , , , , , , 8 7 2 0 8 6 2 9 4 5 2 1 1 2 4 1 7 0 0 4 7 8 6 4 4 7 0 2 1 1 1 9 7 1 1 2 1 , , , , , , , 9 4 4 9 4 7 7 7 9 2 8 5 0 3 6 6 2 7 1 8 4 6 1 4 0 8 8 2 1 4 7 8 2 9 4 1 , , , , , , , 2 7 2 7 6 8 1 4 9 6 3 7 5 7 6 6 3 2 3 1 1 8 9 2 4 8 3 2 1 7 2 9 3 8 1 6 , , , , , , , 1 8 6 1 1 8 3 3 3 5 9 0 6 0 6 4 7 1 2 0 5 5 0 0 7 3 4 13 Norway 1,362 1,559 2,401 1,954 2,401 1,256 997 2,619 1,453 1,5% 14 Portugal 801 903 2,407 2,251 2,407 2,381 2,285 2,385 2,354 2,359 15 Spain 2,621 5,494 4,364 4,911 4,364 5,424 4,280 4,911 4,234 4,535 16 Sweden . 1,379 1,284 1,491 1,921 1,491 2,303 1,468 1,574 1,889 1,837 17 Switzerland 33,766 34,199 34,496 31,714 34,496 33,283 33,036 33,964 33,488 35,300 18 Turkey 703 1,012 1,818 1,373 1,818 1,048 886 1,039 1,432 2,007 19 United Kingdom 116,852 111,811 102,362 108,940 102,362 102,282 99,749 96,718 99,367 104,257 20 Yugoslavia 710 529 1,474 1,017 1,474 1,349 1,402 1,613 1,599 1,934 21 Other Western Europe1 9,798 8,598 13,563 15,170 13,563 13,220 12,088 10,214 11,797 10,967 22 U.S.S.R 32 138 350 286 350 229 376 141 446 158 23 Other Eastern Europe2 582 591 619 600 619 1,138 1,277 1,299 1,431 1,674 24 Canada 30,095 21,062 18,864 18,246 18,864 19,246 21,329 18,536 19,480 19,849 25 Latin America and Caribbean 220,372 271,146 310,514 299,596 310,514 300,601 305,620 314,575 310,389 317,068 26 Argentina 5,006 7,804 7,304 7,809 7,304 7,380 7,496 8,036 8,236 8,343 27 Bahamas 74,767 86,863 98,932 96,090 98,932 95,513 94,627 98,003 89,803 98,154 28 Bermuda 2,344 2,621 2,884 2,638 2,884 2,539 2,239 2,308 2,812 2,494 29 Brazil 4,005 5,314 6,334 6,317 6,334 6,679 7,128 7,280 6,720 6,087 30 British West Indies 81,494 113,840 138,263 129,436 138,263 131,959 135,940 141,075 145,118 144,051 31 Chile 2,210 2,936 3,212 3,102 3,212 3,052 3,134 3,261 3,408 3,517 32 Colombia 4,204 4,374 4,653 4,806 4,653 4,435 4,610 4,510 4,404 4,471 33 Cuba 12 10 10 15 10 31 10 9 9 10 34 Ecuador 1,082 1,379 1,391 1,343 1,391 1,232 1,325 1,337 1,338 1,367 35 Guatemala 1,082 1,195 1,312 1,309 1,312 1,338 1,362 1,403 1,451 1,473 36 Jamaica 160 269 209 191 209 204 217 245 224 215 37 Mexico 14,480 15,185 15,399 15,013 15,399 14,773 15,802 15,246 15,066 15,097 38 Netherlands Antilles 4,975 6,420 6,310 6,287 6,310 6,192 6,470 6,412 6,460 6,806 39 Panama 7,414 4,353 4,361 4,537 4,361 4,543 4,743 4,766 4,749 4,539 40 Peru 1,275 1,671 1,984 1,946 1,984 1,927 1,975 1,836 1,703 1,533 41 Uruguay 1,582 1,898 2,284 2,335 2,284 2,419 2,397 2,513 2,575 2,560 42 Venezuela 9,048 9,147 9,468 9,857 9,468 9,832 9,615 9,871 9,643 9,717 43 Other 5,234 5,868 6,205 6,565 6,205 6,554 6,530 6,464 6,668 6,635 44 Asia 121,288 147,838 156,128 151,877 156,128 141,600 132,085 132,744 130,810 128,772 China 45 Mainland 1,162 1,895 1,772 1,570 1,772 1,681 1,470 1,573 1,840 1,803 46 Taiwan 21,503 26,058 19,565 21,318 19,565 19,151 17,901 15,552 15,414 15,153 47 Hong Kong 10,180 12,248 12,395 12,237 12,395 11,824 11,115 11,569 12,180 12,650 48 India 582 699 780 990 780 907 762 1,033 1,013 1,148 49 Indonesia 1,404 1,180 1,281 1,306 1,281 1,061 1,174 1,545 1,560 1,192 50 Israel 1,292 1,461 1,243 1,096 1,243 1,039 894 1,497 1,310 1,213 51 Japan 54,322 74,015 81,183 75,498 81,183 70,223 65,127 66,078 65,548 62,075 52 Korea 1,637 2,541 3,214 3,530 3,214 2,617 2,562 2,320 2,109 2,013 53 Philippines 1,085 1,163 1,764 1,275 1,764 1,150 1,263 1,198 1,176 1,097 54 Thailand .. 1,345 1,236 2,093 1,909 2,093 2,381 2,524 1,930 1,595 1,973 55 Middle-East oil-exporting countries3. 13,988 12,083 13,369 13,623 13,369 13,262 12,558 12,450 11,645 13,048 56 Other 12,788 13,260 17,468 17,527 17,468 16,305 14,735 15,999 15,421 15,406 57 Africa 3,945 3,991 3,823 3,772 3,823 3,627 3,778 3,644 3,722 3,777 58 Egypt 1,151 911 686 637 686 640 722 601 594 646 59 Morocco 194 68 78 76 78 86 95 80 111 86 60 South Africa 202 437 205 293 205 257 261 277 236 241 61 Zaire 67 85 86 60 86 82 77 74 70 66 62 Oil-exporting countries4 1,014 1,017 1,120 1,120 1,120 993 1,110 1,048 936 1,016 63 Other 1,316 1,474 1,648 1,586 1,648 1,570 1,513 1,563 1,775 1,722 64 Other countries 4,070 6,165 4,559 9,913 4,559 4,571 5,521 4,883 4,173 6,002 65 Australia 3,327 5,293 3,867 9,141 3,867 3,891 4,798 3,994 3,469 5,250 66 All other 744 872 692 771 692 680 723 889 703 751 67 Nonmonetary international and regional organizations 4,464 3,224 4,772 5,771 4,772 4,671 3,765 4,8% 5,728 4,558 68 International 2,830 2,503 3,825 4,635 3,825 3,599 2,765 3,634 4,147 3,393 69 Latin American regional 1,272 589 684 586 684 857 655 949 1,123 912 70 Other regional6 362 133 263 551 263 214 345 313 458 253 1. Includes the Bank for International Settlements and Eastern European 4. Comprises Algeria, Gabon, Libya, and Nigeria. countries that are not listed in line 23. 5. Excludes "holdings of dollars" of the International Monetary Fund. 2. Comprises Bulgaria, Czechoslovakia, the German Democratic Republic, 6. Asian, African, Middle Eastern, and European regional organizations, Hungary, Poland, and Romania. except the Bank for International Settlements, which is included in "Other 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and Western Europe." United Arab Emirates (Trucial States). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A62 International Statistics • September 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 Area and country 11998877 11998888 11998899 Nov. Dec." Jan." Feb." Mar." Apr." MayP 1 Total 459,877 491,165 533,763" 535,105" 533,763 511,739 499,176 489,951 490,521 490,677 2 Foreign countries 456,472 489,094 530,324' 532,118" 530,324 507,246 495,102 486,158 486,505 486,695 3 Europe 102,348 116,928 U8,885r 112,050" 118,885 105,603 104,162 104,191 104,989 103,618 4 Austria 793 483 415 559 415 658 429 500 592 431 5 Belgium-Luxembourg 9,397 8,515 6,478 6,606 6,478 6,668 7,063 6,358 6,330 6,754 6 Denmark 717 483 582 609 582 664 635 608 750 1,069 7 Finland 1,010 1,065 1,027 1,129 1,027 1,224 1,218 1,153 1,025 931 8 France 13,548 13,243 16,146 16,058" 16,146 15,839 16,392 15,631 16,087 16,224 9 Germany 2,039 2,329 2,865 2,657 2,865 1,990 2,762 2,783 2,476 3,037 10 Greece 462 433 788 702" 788 735 773 664 622 597 11 Italy 7,460 7,936 6,662 5,718 6,662 4,934 5,377 5,010 4,230 4,758 12 Netherlands 2,619 2,541 1,904 2,259 1,904 1,659 1,567 2,182 2,027 1,968 13 Norway 934 455 609 635 609 600 672 777 918 738 14 Portugal 477 261 376 275 376 309 288 273 381 407 15 Spain 1,853 1,823 1,930 1,840 1,930 2,790 2,040 2,240 1,726 1,887 16 Sweden 2,254 1,977 1,773 2,555 1,773 2,718 2,158 2,236 2,206 2,711 17 Switzerland 2,718 3,895 6,141 4,942" 6,141 4,835 4,922 5,056 4,826 4,999 18 Turkey 1,680 1,233 1,071" 1,066" 1,071 1,087 1,088 1,123 1,120 1,724 19 United Kingdom 50,823 65,706 65,388r 59,940" 65,388 54,462 52,121 52,993 55,439 51,710 20 Yugoslavia 1,700 1,390 1,329 1,288" 1,329 1,243 1,158 1,157 1,121 1,128 21 Other Western Europe 619 1,152 1,302 1,253" 1,302 1,133 1,271 1,183 970 786 22 U.S.S.R 389 1,255 1,179" 1,075 1,179 1,192 1,322 1,356 1,322 945 23 Other Eastern Europe 852 754 921 883 921 864 905 907 820 817 24 Canada 25,368 18,889 15,427r 15,515' 15,427 16,694 16,768 15,082 15,199 16,320 25 Latin America and Caribbean 214,789 214,264 230,353" 232,670" 230,353 224,116 220,258 212,902 202,761 208,110 26 Argentina 11,996 11,826 9,270" 10,294" 9,270 12,117 8,718 8,189 8,025 7,692 27 Bahamas 64,587 66,954 77,921" 77,805" 77,921 70,102 71,891 69,095 63,927 70,296 28 Bermuda 471 483 1,315 841 1,315 485 401 425 443 800 29 Brazil 25,897 25,735 23,749" 24,565" 23,749 23,503 23,210 21,884 21,849 21,828 30 British West Indies 50,042 55,888 68,664" 69,519" 68,664 70,889 70,048 72,329 67,555 67,357 31 Chile 6,308 5,217 4,353 4,485" 4,353 4,212 4,208 4,079 3,714 3,626 32 Colombia 2,740 2,944 2,784r 2,784 2,784 2,530 2,610 2,720 2,649 2,626 33 Cuba 1 1 1 1 1 0 0 0 0 0 34 Ecuador 2,286 2,075 1,688' 1,858 1,688 1,588 1,570 11,,553366 1,527 1,503 35 Guatemala4 144 198 197 190 197 213 200 220088 207 206 36 Jamaica 188 212 297 260 297 284 274 265 260 262 37 Mexico 29,532 24,637 23,381' 23,509" 23,381 22,027 21,400 16,798 17,254 17,040 38 Netherlands Antilles 980 1,306 1,921 1,099 1,921 1,764 1,702 1,692 1,759 1,645 39 Panama 4,744 2,521 1,740 1,792 1,740 1,748 1,688 1,732 1,743 1,653 40 Peru 1,329 1,013 771 836 771 750 752 733 721 664 41 Uruguay 963 910 928 915 928 932 935 926 886 876 42 Venezuela 10,843 10,733 9,647" 10,129" 9,647 9,289 8,956 8,528 8,423 8,284 43 Other Latin America and Caribbean 1,738 1,612 1,726 1,787 1,726 1,682 1,695 1,764 1,818 1,751 44 Asia 106,096 130,881 157,416" 159,219" 157,416 152,452 145,033 145,675 155,408 150,172 China Mainland 968 762 634 610 634 620 619 599 674 516 46 Taiwan 4,592 4,184 2,776 2,702 2,776 2,157 1,824 2,016 1,890 1,942 47 Hong Kong 8,218 10,143 11,128" 10,465" 11,128 7,696 6,605 7,418 8,965 9,714 48 India 510 560 621 637 621 625 892 721 588 579 49 Indonesia 580 674 651 655 651 641 611 604 560 599 50 Israel 1,363 1,136 813 758 813 749 752 737 721 710 51 Japan 68,658 90,149 111,270" 114,928" 111,270 113,387 108,352 108,527 117,487 108,204 52 Korea 5,148 5,213 5,296 5,838 5,296 5,156 4,880 5,016 4,964 5,104 53 Philippines 2,071 1,876 1,344 1,498 1,344 1,297 1,163 1,204 1,221 1,351 54 Thailand 496 848 1,140 1,064 1,140 1,172 1,052 992 1,070 1,202 55 Middle East oil-exporting countries 4,858 6,213 10,149 8,675 10,149 8,663 9,250 8,774 8,376 9,572 56 Other Asia 8,635 9,122 11,594 11,387 11,594 10,290 9,035 9,066 8,894 10,679 57 Africa 4,742 5,718 5,890" 5,914 5,890 5,935 5,967 5,984 5,953 55,,994400 58 Egypt 521 507 502 471 502 470 493 474 491 448888 59 Morocco 542 511 559 547 559 575 588 581 596 582 60 South Africa 1,507 1,681 1,628 1,686 1,628 1,619 1,629 1,648 1,632 1,639 61 Zaire 15 17 16 16 16 16 17 25 19 20 62 Oil-exporting countries 1,003 1,523 1,648" 1,641 1,648 1,667 1,749 1,749 1,705 1,697 63 Other 1,153 1,479 1,537 1,553 1,537 1,588 1,491 1,507 1,509 1,515 64 Other countries 3,129 2,413 2,354 6,750 2,354 2,446 2,914 2,324 2,195 2,535 65 Australia 2,100 1,520 1,781 6,174 1,781 1,815 2,015 1,632 1,551 1,657 66 Mother 1,029 894 573 576 573 631 900 692 644 878 67 Nonmonetary international and regional organizations7 3,404 2,071 3,439" 2,987 3,439 4,493 4,074 3,794 4,016 3,982 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, ana 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'' Nov.' Dec.' Jan.' Feb.' Mar.' Apr.' May" 1 Total 444444499999997777777,,,,,,,666666633333335555555 555555533333338888888,,,,,,,666666688888889999999 555555599999990000000,,,,,,,222222255555551111111 555555599999990000000,,,,,,,222222255555551111111 555555544444441111111,,,,,,,777777722222227777777 22 BBaannkkss'' oowwnn ccllaaiimmss oonn ffoorreeiiggnneerrss 444444455555559999999,,,,,,,888888877777777777777 444444499999991111111,,,,,,,111111166666665555555 555555533333333333333,,,,,,,777777766666663333333 535,105 555555533333333333333,,,,,,,777777766666663333333 511,739 499,176 444444488888889999999,,,,,,,999999955555551111111 490,521 490,677 33 FFoorreeiiggnn ppuubblliicc bboorrrroowweerrss 66666664444444,,,,,,,666666600000005555555 66666662222222,,,,,,,666666655555558888888 55555559999999,,,,,,,888888877777777777777 62,947 55555559999999,,,,,,,888888877777777777777 58,969 56,909 55555553333333,,,,,,,999999922222220000000 53,244 52,595 44 OOwwnn ffoorreeiiggnn ooffffiicceess22 222222222222224444444,,,,,,,777777722222227777777 222222255555557777777,,,,,,,444444433333336666666 222222299999995555555,,,,,,,999999944444448888888 296,375 222222299999995555555,,,,,,,999999944444448888888 289,826 283,970 222222277777774444444,,,,,,,888888866666661111111 274,272 274,999 55 UUnnaaffffiilliiaatteedd ffoorreeiiggnn bbaannkkss 111111122222227777777,,,,,,,666666600000009999999 111111122222229999999,,,,,,,444444422222225555555 111111133333334444444,,,,,,,888888844444448888888 134,228 111111133333334444444,,,,,,,888888844444448888888 123,647 120,114 111111122222223333333,,,,,,,000000000000003333333 125,170 125,770 66 DDeeppoossiittss 66666660000000,,,,,,,666666688888887777777 66666665555555,,,,,,,888888899999998888888 77777778888888,,,,,,,000000000000005555555 76,034 77777778888888,,,,,,,000000000000005555555 69,522 67,121 66666669999999,,,,,,,999999977777777777777 71,770 72,192 77 OOtthheerr 66666666666666,,,,,,,999999922222222222222 66666663333333,,,,,,,555555522222227777777 55555556666666,,,,,,,888888844444443333333 58,193 55555556666666,,,,,,,888888844444443333333 54,125 52,993 55555553333333,,,,,,,000000022222227777777 53,400 53,577 88 AAllll ootthheerr ffoorreeiiggnneerrss 44444442222222,,,,,,,999999933333336666666 44444441111111,,,,,,,666666644444446666666 44444443333333,,,,,,,000000099999990000000 41,556 44444443333333,,,,,,,000000099999990000000 39,297 38,184 33333338888888,,,,,,,111111166666667777777 37,835 37,312 99 CCllaaiimmss ooff bbaannkkss'' ddoommeessttiicc ccuussttoommeerrss33...... 33333337777777,,,,,,,777777755555558888888 44444447777777,,,,,,,555555522222224444444 55555556666666,,,,,,,444444488888888888888 55555556666666,,,,,,,444444488888888888888 55555551111111,,,,,,,777777777777776666666 3333333,,,,,,,666666699999992222222 8888888,,,,,,,222222288888889999999 11111112222222,,,,,,,888888833333334444444 11111112222222,,,,,,,888888833333334444444 11111116666666,,,,,,,777777788888888888888 11 Negotiable and readily transferable 22222226666666,,,,,,,666666699999996666666 22222225555555,,,,,,,777777700000000000000 22222229999999,,,,,,,000000066666663333333 22222229999999,,,,,,,000000066666663333333 22222220000000,,,,,,,666666633333334444444 12 Outstanding collections and other 7777777,,,,,,,333333377777770000000 11111113333333,,,,,,,555555533333335555555 11111114444444,,,,,,,555555599999991111111 11111114444444,,,,,,,555555599999991111111 11111114444444,,,,,,,333333355555554444444 13 MEMO: Customer liability on 22222223333333,,,,,,,111111100000007777777 11111119999999,,,,,,,555555599999996666666 11111112222222,,,,,,,777777755555553333333 11111112222222,,,,,,,777777755555553333333 11111113333333,,,,,,,555555566666663333333 Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States 40,909 45,502' 45,309 47,265 45,309 43,932 45,263 41,646 38,628 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 subsidianes 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 1990 MMaattuurriittyy;; bbyy bboorrrroowweerr aanndd aarreeaa 11998866 11998877 11998888 June' Sept.' Dec.' Mar. 1 Total 232,295 235,130 233,184 232,277 234,112 237,474 213,845 By borrower 2 Maturity of 1 year or less 160,555 163,997 172,634 167,904 169,279 177,223 160,093 3 Foreign public borrowers 24,842 25,889 26,562 24,343 24,102 23,483 22,725 135,714 138,108 146,071 143,561 145,178 153,741 137,368 5 Maturity over 1 year 71,740 71,133 60,550 64,373 64,832 60,251 53,751 6 Foreign public borrowers 39,103 38,625 35,291 39,033 39,537 35,822 30,218 7 All other foreigners 32,637 32,507 25,259 25,340 25,295 24,429 23,533 By area Maturity of 1 year or less 8 Europe 61,784 59,027 55,909 58,398 53,122 5533,,330000 4488,,336688 9 Canada 5,895 5,680 6,282 5,693 6,236 5,886 5,694 10 Latin America and Caribbean 56,271 56,535 57,991 50,479 52,227 52,929 46,719 11 Asia 29,457 35,919 46,224 45,600 50,445 57,766 51,747 12 Africa 2,882 2,833 3,337 3,601 3,514 3,225 3,169 13 All other3 4,267 4,003 2,891 4,134 3,735 4,118 4,396 Maturity of over 1 year2 14 Europe 6,737 6,696 4,666 4,561 6,065 4,595 44,,440077 15 Canada 1,925 2,661 1,922 2,592 2,459 2,353 2,702 16 Latin America and Caribbean 56,719 53,817 47,547 50,537 49,046 45,844 37,835 17 Asia 4,043 3,830 3,613 3,803 4,203 4,142 5,479 18 Africa 1,539 1,747 2,301 2,408 2,475 2,633 2,764 19 All other3 777 2,381 501 472 584 684 564 1. Reporting banks include all kinds of depository institutions besides commer- 2. Remaining time to maturity, cial banks, as well as some brokers and dealers. 3. Includes nonmonetary international and regional organizations. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A64 International Statistics • September 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 1988 1989 1990 AArreeaa oorr ccoouunnttrryy 11998866 11998877 Mar. June Sept. Dec. Mar. June Sept. Dec. Mar. 1 Total 386.5 382.4 370.9 351.9 354.0 346.3 346. V 340.0' 346.0' 337.8' 336.2' 2 G-10 countries and Switzerland 156.6 159.7 156.3 150.7 148.7 152.7 145.4' 145.1' 146.4' 152.7' 146.5' 3 Belgium-Luxembourg 8.4 10.0 9.1 9.2 9.5 9.0 8.6 7.8 6.9 6.3 6.5 4 France 13.6 13.7 11.8 10.9 10.3 10.5 11.2 10.8 11.1 11.7 10.5 5 Germany 11.6 12.6 11.8 10.6 9.2 10.3 10.2 10.6 10.4 10.5 11.2 6 Italy 9.0 7.5 7.4 6.3 5.6 6.8 5.2 6.1 6.8 7.4 6.0 7 Netherlands 4.6 4.1 3.3 3.2 2.9 2.7 2.8 2.8 2.4 3.1 3.1 8 Sweden 2.4 2.1 2.1 1.9 1.9 1.8 2.3 1.8 2.0 2.0 2.1 9 Switzerland 5.8 5.6 5.1 5.6 5.2 5.4 5.1 5.4 6.1 7.1 6.3' 10 United Kingdom 70.9 68.8 71.7 70.4 67.6 66.2 65.6r 64.5' 63.7' 67.(y 63.8' 11 Canada 5.2 5.5 4.7 5.3 4.9 5.0 4.0 5.1 5.9 5.4' 4.8 12 Japan 25.1 29.8 29.2 27.3 31.6 34.9 30.5' 30.2' 3i.tr 32.2' 32.1 13 Other developed countries 26.1 26.4 26.4 24.0 23.0 21.0 21.1' 21.2' 2i.or 20.7 23.1 14 Austria 1.7 1.9 1.6 1.6 1.6 1.5 1.4 1.7 1.5 1.5 1.5 15 Denmark 1.7 1.7 1.4 1.1 1.2 1.1 1.1 1.4 1.1 1.1 1.1 16 Finland 1.4 1.2 1.0 1.2 1.3 1.1 1.0 1.0 1.1 1.0 1.1 17 Greece 2.3 2.0 2.3 2.1 2.1 1.8 2.1 2.3 2.4' 2.5 2.6 18 Norway 2.4 2.2 1.9 1.9 2.0 1.8 1.6 1.8 1.4 1.4 1.7 19 Portugal .9 .6 .5 .4 .4 .4 .4 .6 .4 .4 .4 20 Spain 5.8 8.0 8.9 7.2 6.3 6.2 6.6 6.2 6.9 7.1 8.3 21 Turkey 2.0 2.0 2.0 1.8 1.6 1.5 1.3 1.1 1.2' 1.2 1.3 22 Other Western Europe 1.5 1.6 1.9 1.7 1.9 1.3 1.1 1.1 1.0 .7 1.1 23 South Africa 3.0 2.9 2.8 2.8 2.7 2.4 2.2 2.1 2.1 2.0 2.0 24 Australia 3.4 2.4 2.0 2.2 1.8 1.8 2.4 1.9 2.1 1.6 2.1 25 OPEC countries3 19.4 17.4 17.6 17.0 17.9 16.6 16.2 16.1' 16.2 17.1' 15.7' 26 Ecuador 2.2 1.9 1.9 1.8 1.8 1.7 1.6 1.5 1.5 1.3 1.2 27 Venezuela 8.7 8.1 8.1 8.0 7.9 7.9 7.9 7.5 7.4' 7.0' 6.1 28 Indonesia 2.5 1.9 1.8 1.8 1.8 1.7 1.7 1.9 2.0 2.0 2.1 29 Middle East countries 4.3 3.6 3.9 3.5 4.6 3.4 3.3 3.4 3.5 5.0 4.4 30 African countries 1.8 1.9 1.9 1.9 1.9 1.9 1.7 1.6 1.9 1.7' 1.8' 31 Non-OPEC developing countries 99.6 97.8 94.4 91.8 87.2 85.3 85^ 83.4' 81.2' 77.5' 71.1' Latin America 32 Argentina 9.5 9.5 9.6 9.5 9.3 9.0 8.5' 7.9 7.6 6.3' 5.5 33 Brazil 25.3 24.7 23.8 23.7 22.4 22.4 22.8' 22.1' 20^ 19.0' 17.5 34 Chile 7.1 6.9 6.6 6.4 6.3 5.6 5.7 5.2' 4.9 4.6 4.3 35 Colombia 2.1 2.0 2.0 2.2 2.1 2.1 1.9 1.7 1.6 1.8 1.8 36 Mexico 24.0 23.5 22.4 21.1 20.4 18.8 18.3' 17.7' 17.2' 17.7' 15.2' 37 Peru 1.4 1.1 1.1 .9 .8 .8 .7 .6 .6 .6 .5 38 Other Latin America 3.1 2.8 2.8 2.6 2.5 2.6 2.7 2.6 2.9 2.8 2.7 Asia China 39 Mainland .4 .3 .4 .4 .2 .3 .5 .3 .3 .3 .3 40 Taiwan 4.9 8.2 6.1 4.9 3.2 3.7 4.9 5.2 5.0 4.5 3.8 41 India 1.2 1.9 2.1 2.3 2.0 2.1 2.6 2.4 2.7 3.1 3.5 42 Israel 1.5 1.0 1.0 1.0 1.0 1.2 .9 .8 .7 .7 .6 43 Korea (South) 6.7 5.0 5.7 5.9 6.0 6.1 6.1 6.6 6.5 5.9 5.3 44 Malaysia 2.1 1.5 1.5 1.5 1.7 1.6 1.7 1.6 1.7 1.7 1.8 45 Philippines 5.4 5.2 5.1 4.9 4.7 4.5 4.4 4.4 4.0 4.1 3.7 46 Thailand .9 .7 1.0 1.1 1.2 1.1 1.0 1.0 1.3 1.3 1.1 47 Other Asia .7 .7 .7 .8 .8 .9 .8 .8 1.0 1.0 1.2 Africa 48 Egypt .7 .6 .5 .6 .5 .4 .5 .6 .5 .4 .4 49 Morocco .9 .9 .9 .9 .8 .9 .9 .9 .8 .9 .9 50 Zaire .1 .0 .1 .1 .0 .0 .0 .0 .0 .0 .0 51 Other Africa4 1.6 1.3 1.2 1.2 1.2 1.1 1.1 1.1 1.0 1.0 .9 52 Eastern Europe 3.5 3.2 3.1 3.3 3.1 3.6 3.5 3.4 3.5 3.5 3.5 53 U.S.S.R .1 .3 .3 .4 .4 .7 .7 .6 .8 .7 .8 54 Yugoslavia 2.0 1.8 1.9 1.9 1.8 1.8 1.7 1.7 1.7 1.6 1.4 55 Other 1.4 1.1 1.0 1.0 1.0 1.1 1.1 1.1 1.1 1.3 1.3 56 Offshore banking centers 61.5 54.5 51.5 43.0 47.3 44.2 48.5 43.1 48.9 36.2' 43. or 57 Bahamas 22.4 17.3 15.9 8.9 12.9 11.0 15.8 11.0 11.1 5.1' 9.3' 58 Bermuda .6 .6 .8 1.0 .9 .9 1.1 .7 1.3 1.7 .9 59 Cayman Islands and other British West Indies 12.3 13.5 11.6 10.3 11.9 12.9 12.0 10.8 15.3 8.9' 10.9 60 Netherlands Antilles 1.8 1.2 1.3 1.2 1.2 1.0 .9 1.0 1.1 2.3 2.6 61 Panama5 4.0 3.7 3.2 3.0 2.6 2.5 2.2 1.9 1.5 1.4 1.3 62 Lebanon .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 .1 63 Hong Kong 11.1 11.2 11.3 11.6 10.5 9.6 9.6 10.4 10.7 9.7 9.8 64 Singapore 9.2 7.0 7.4 6.9 7.0 6.1 6.8 7.3 7.8 7.0 8.0' 65 Others6 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 .0 66 Miscellaneous and unallocated7 19.8 23.2 21.5 22.2 26.7 22.6 25.V 27.4 28.5 29.8' 33.1 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 1990 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998866 11998877 11998888'' Dec. Mar. June Sept. Dec. Mar/ 1 25,587 28,302 33,646 33,646' 37,384' 36,998' 35,584' 37,406' 41,218 7 Payable in dollars 21,749 22,785 28,040 28,040' 31,594' 31,925' 30,746' 32,588' 32,837 3 Payable in foreign currencies 3,838 5,517 5,606 5,606 5,790 5,073 4,838 4,819' 8,381 By type 4 12,133 12,424 15,130 15,13(/ 17,453' 17,124' 16,268' 17,524' 20,674 5 Payable in dollars 9,609 8,643 11,243 11,243' 13,373' 13,265' 12,44C 13,631' 13,369 6 Payable in foreign currencies 2,524 3,781 3,888 3,888 4,080 3,860 3,829 3,893 7,305 7 Commercial liabilities 13,454 15,878 18,516 18,516' 19,931' 19,874' 19,315' 19,882' 20,544 8 Trade payables 6,450 7,305 6,466 6,466' 7,030' 6,35C 6,812' 7,206' 7,111 1 9 0 A Pa d y v a a b n l c e e in r e d c o e l i l p a t r s s and other liabilities 1 7 2 , , 0 1 0 4 4 0 1 8 4 , , 5 1 7 4 3 2 1 1 2 6 , , 0 79 5 7 0 1 1 2 6 , , 0 7 5 9 0 7 ' 1 1 2 8 ,9 ,2 0 2 1 c ' 1 1 3 8 , , 5 6 2 6 4 1 r ' 1 1 2 8 , , 5 3 0 0 3 6 ' ' 1 1 2 8 , , 6 9 7 5 6 7 ' 1 1 3 9 , , 4 4 3 6 3 8 11 Payable in foreign currencies 1,314 1,737 1,719 1,719 1,711 1,213 1,009 925' 1,076 By area or country Financial liabilities 17 7,917 8,320 9,918 9,918' 12,571' 11,404' 1100,,337744'' 1100,,669977'' 1133,,665588 13 Belgium-Luxembourg 270 213 289 289 320 357 308 340 350 14 661 382 319 3^ 224' 278 262 243 255 15 368 551 699 699' 741 838 809 736' 711 16 Netherlands 542 866 879 879 873' 834 853 946 870 17 Switzerland 646 558 1,033 1,033' 954 978 839 578 545 18 United Kingdom 5,140 5,557 6,533 6,533' 9,266' 7,939' 7,087' 7,582' 6,887 19 Canada 399 360 663 663 616 544 599 583 482 70 Latin America and Caribbean 1,944 1,189 1,239 1,239 677 1,216 1,315 1,226 1,807 71 Bahamas 614 318 184 184 189 165 186 157 237 77 Bermuda 4 0 0 0 0 0 0 17 0 73 32 25 0 0 0 0 0 0 44 74 British West Indies 1,146 778 645 645 471 621 698 594 1,046 75 Mexico 22 13 1 1 15 17 4 6 5 26 Venezuela 0 0 0 0 0 0 0 0 0 2277 1,805 2,451 3,306 3,306 3,583' 3,860' 3,878 4,916 4,618 77 2 88 9 J M ap id a d n l e East oil-exporting countries2 1,398 8 2,042 8 2,563 3 2,563 3 2,825 1 ' 3,10 1 C 2 3,130 2 4,064 2 3,577 3 3 3 1 0 Af O ri i c l a -e xporting countries 1 1 4 1 0 1 0 1 5 3 3 2 4 2 2 0 0 3 32 All other4 67 100 2 2 2 97 97 100 105 Commercial liabilities 33 4,446 5,516 7,351 7,351' 7,965' 7,778' 88,,33^^ 88,,886677'' 99,,007788 34 Belgium-Luxembourg 101 132 170 170 134 114' 137' 178 233 35 352 426 455 455 579 535' 806' 872' 883 36 715 909 1,699 1,699 1,373' 1,190 1,183' 1,362' 1,143 37 424 423 591 591 670 688' 548' 699' 702 38 385 559 417 417 459' 447' 531' 621 583 39 United Kingdom 1,341 1,599 2,065 2,065 2,585 2,709 2,703' 2,599' 2,906 40 Canada 1,405 1,301 1,217 1,217 1,163 1,133' 1,189' 1,066' 1,124 41 Latin America and Caribbean 924 864 1,118 1,118 1,267 1,611' 1,053' 1,127 1,264 47 32 18 49 49 35 34 27 41 37 43 156 168 286 286 426 388 305 308 516 44 Brazil 61 46 95 95 103 541 113 100 117 45 British West Indies 49 19 34 34 31 42 30 27 18 46 217 189 179 179 198 179' 187' 243 208 47 Venezuela 216 162 177 177 179 131' 107' 154 86 48 5,080 6,565 6,923 6,923 7,330' 6,957' 7,038' 6,953' 6,806 49 2,042 2,578 3,097 3,097 3,059 2,708' 2,674' 2,772' 2,624 50 Middle East oil-exporting countries2,5 1,679 1,964 1,386 1,386 1,526 1,431 1,406 1,346' 1,341 51 619 574 578 578 706 752' 639' 838 755 52 Oil-exporting countries3 197 135 202 202 272 253 246 300 248 53 All other4 980 1,057 1,328 1,328 UOC 1,642' 1,077' 1,031 1,517 1. For a description of the changes in the International Statistics tables, see 3. Comprises Algeria, Gabon, Libya, and Nigeria. July 1979 Bulletin, p. 550. 4. Includes nonmonetary international and regional organizations. 2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and 5. Revisions include a reclassification of transactions, which also affects the United Arab Emirates (Trucial States). totals for Asia and the grand totals. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A66 International Statistics • September 1990 3.23 CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the United States1 Millions of dollars, end of period 1988 1989 1990 TTyyppee,, aanndd aarreeaa oorr ccoouunnttrryy 11998866 11998877 11998888rr Dec/ Mar/ Juner Sept/ Dec/ Mar.p 1 Total 36,265 30,964 33,842 33,842 31,608 34,282 32,022 31,011 30,278 2 Payable in dollars 33,867 28,502 31,507 31,507 29,293 32,088 29,797 28,683 27,050 3 Payable in foreign currencies 2,399 2,462 2,335 2,335 2,315 2,193 2,225 2,328 3,228 By type 4 Financial claims 26,273 20,363 21,843 21,843 19,616 21,808 19,116 17,326 17,062 5 Deposits 19,916 14,894 15,792 15,792 14,456 16,734 12,442 10,360 10,786 6 Payable in dollars 19,331 13,765 14,693 14,693 13,542 15,814 11,577 9,434 9,533 7 Payable in foreign currencies 585 1,128 1,099 1,099 914 921 865 926 1,253 8 Other financial claims 6,357 5,470 6,051 6,051 5,160 5,074 6,673 6,966 6,276 9 Payable in dollars 5,005 4,656 5,320 5,320 4,267 4,362 5,812 6,170 4,891 10 Payable in foreign currencies 1,352 814 731 731 893 713 862 796 1,386 11 Commercial claims 9,992 10,600 11,999 11,999 11,992 12,473 12,906 13,685 13,216 12 Trade receivables 8,783 9,535 10,924 10,924 10,730 11,042 11,421 12,073 11,623 13 Advance payments and other claims 1,209 1,065 1,075 1,075 1,262 1,432 1,485 1,612 1,593 14 Payable in dollars 9,530 10,081 11,494 11,494 11,485 11,913 12,408 13,079 12,626 15 Payable in foreign currencies 462 519 505 505 507 560 498 606 590 By area or country Financial claims 16 Europe 10,744 9,531 10,276 10,276 8,848 8,614 7,507 6,830 7,577 17 Belgium-Luxembourg 41 7 18 18 22 161 166 13 22 18 France 138 332 226 226 233 198 209 153 198 19 Germany 116 102 138 138 171 199 147 194 510 20 Netherlands 151 350 348 348 384 297 292 303 305 21 Switzerland 185 65 217 217 260 67 111 90 124 22 United Kingdom 9,855 8,467 8,977 8,977 7,469 7,378 6,340 5,848 5,160 23 Canada 4,808 2,844 2,339 2,339 2,210 2,617 2,428 1,916 1,807 24 Latin America and Caribbean 9,291 7,012 8,122 8,122 7,465 9,351 8,278 7,428 6,819 25 Bahamas 2,628 1,994 1,838 1,838 2,171 1,881 1,707 1,513 1,582 26 Bermuda 6 7 19 19 25 33 33 7 4 27 Brazil 86 63 47 47 49 78 70 224 79 28 British West Indies 6,078 4,433 5,733 5,733 4,799 6,949 6,080 5,273 4,740 29 Mexico 174 172 151 151 117 114 105 94 152 30 Venezuela 21 19 21 21 25 31 36 20 21 31 Asia 1,317 879 830 830 951 1,109 801 829 769 32 Japan 999 605 561 561 627 640 440 439 423 33 Middle East oil-exporting countries 7 8 5 5 8 8 7 8 7 34 Africa 85 65 106 106 89 80 75 140 67 35 Oil-exporting countries3 28 7 10 10 8 8 8 12 11 36 All other4 28 33 170 170 52 37 27 183 24 Commercial claims 37 Europe 3,725 4,180 5,051 5,051 4,984 5,290 5,423 6,140 6,018 38 Belgium-Luxembourg 133 178 178 178 202 205 220 241 219 39 France 431 650 661 661 760 770 824 948 951 40 Germany 444 562 623 623 657 675 688 666 690 41 Netherlands 164 133 208 208 161 413 396 478 449 42 Switzerland 217 185 327 327 251 231 222 305 270 43 United Kingdom 999 1,073 1,323 1,323 1,300 1,371 1,3% 1,550 1,689 44 Canada 934 936 974 974 1,114 1,181 1,278 1,045 1,089 45 Latin America and Caribbean 1,857 1,930 2,237 2,237 2,114 2.100 2,131 2,163 2,045 46 Bahamas 28 19 36 36 34 13 10 57 22 47 Bermuda 193 170 230 230 234 238 270 323 242 48 Brazil 234 226 298 298 277 314 232 285 227 49 British West Indies 39 26 22 22 23 30 33 36 38 50 Mexico 412 368 460 460 482 438 508 507 522 51 Venezuela 237 283 226 226 213 229 188 148 189 52 Asia 2,755 2,915 2,973 2,973 3,097 3,145 3,301 3,532 3,276 53 Japan 881 1,158 943 943 1,042 998 1,177 1,184 1,058 54 Middle East oil-exporting countries2 563 450 445 445 428 430 406 509 419 55 Africa 500 401 434 434 386 407 390 419 427 56 Oil-exporting countries3 139 144 122 122 95 111 80 108 89 57 All other4 222 238 331 331 297 350 381 386 361 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.- Nov. Dec/ Jan/ Feb/ Mar/ Apr/ Mayp May U.S. corporate securities STOCKS 1 Foreign purchases 181,185 213,160 70,154 13,833r 15,413 13,747 13,463 16,430 11,457 15,057 183,185 203,537 76,857 14,951r 16,870 14,130 13,692 19,117 12,356 17,562 2 Foreign sales -2,000 9,623 -6,704 —L,118R -1,457 -383 -229 -2,687 -899 -2,505 3 Net purchases, or sales (—) ... -1,825 9,857 -6,815 -1,117' -1,409 -353 -230 -2,733 -937 -2,562 4 Foreign countries -3,350 278 -3,049 -1,655 -281 -183 -144 -990 -666 -1,067 5 Europe -281 -708 -580 -296 -255 -155 -157 7 -85 -190 6 France 218 -830 97 -119 -41 41 3 105 6 -57 7 Germany -535 167 -54 -34 -9 -18 -38 48 -25 -21 8 Netherlands -2,243 -3,468 -1,493 -509 -442 -240 -242 -441 -221 -348 9 Switzerland -954 3,729 -1,126 -718 391 -275 183 -720 -99 -216 10 United Kingdom 1,087 -845 -564 -138' -458 -140 51 -163 -212 -101 11 Canada 1,238 3,089 -435 -24 -478 -111 -178 -208 -27 89 12 Latin America and Caribbean . -2,474 3,531 -836 303 69 -27 93 -425 116 -593 13 Middle East1 1,365 3,405 -1,678 342 -124 231 -30 -921 -55 -903 14 Other Asia 1,922 3,340 -1,543 310 -53 166 -104 -764 -92 -749 15 Japan 188 131 -34 19 9 2 -34 1 -2 0 16 Africa 121 268 -218 37 -147 -125 12 -27 -91 13 17 Other countries 18 Nonmonetary international and regional organizations -176 -234 111 -1 -48 -30 1 46 38 57 BONDS2 86,381 120,540 45,830 11,134' 13,703 9,464 10,297 9,248 8,355 8,467 19 Foreign purchases 58,417 86,510 37,497 6,658' 9,331 7,810 7,780 8,061 7,499 6,347 20 Foreign sales 27,964 34,031 8,334 4,476 4,372 1,654 2,517 1,186 856 2,120 21 Net purchases, or sales (-) 28,506 33,678 8,616 4,465' 4,319 2,054 2,491 1,026 850 2,195 22 Foreign countries 17,239 19,848 4,084 2,712 1,412 1,135 245 915 1,008 781 23 Europe 143 372 181 -14 6 118 9 5 -58 108 24 France 1,344 -238 -460 -117 -33 -114 -253 -15 -40 -39 25 Germany 1,514 850 -8 143 41 -43 15 -11 -2 33 26 Netherlands 505 -165 241 54 -277 157 58 -69 59 36 27 Switzerland 13,084 18,459 4,249 2,328 1,937 1,132 475 1,009 1,158 475 28 United Kingdom 711 1,116 1,386 -86 204 178 474 183 353 198 29 Canada 1,931 3,686 2,608 539 492 493 883 313 411 508 30 Latin America and Caribbean . -178 -182 473 -57 242 87 100 36 -2 251 31 Middle East1 8,900 9,063 -66 1,343 1,954 152 796 -461 -993 440 32 Other Asia 7,686 6,331 141 11,,004455 1,728 170 1,103 -419 -1,044 331 33 Japan -8 56 85 88 27 3 36 -8 48 8 34 Africa -89 91 44 4 -11 5 -43 48 24 9 35 Other countries 36 Nonmonetary international and regional organizations -542 353 -282 12 52 -399 27 160 6 -76 Foreign securities 37 Stocks, net purchases, or sales (-)3 -1,959 -12,832 -3,590 -584' -2,217 772 -981 -90 -872 -2,419 38 75,356 109,789 53,517 10,383' 9,913 12,983 10,481 11,765 8,360 9,928 39 Foreign sales3 77,315 122,621 57,107 10,966' 12,130 12,211 11,461 11,855 9,233 12,347 40 Bonds, net purchases, or sales (-) -7,434 -6,049 -12,595 477' -275 556 -159 -9,605 -1,830 -1,557 41 218,521 234,215 107,209 20,465' 18,545 18,512 20,671 22,375 20,184 25,467 42 Foreign sales 225,955 240,264 119,804 19,987' 18,819 17,955 20,830 31,981 22,015 27,024 43 Net purchases, or sales (—), of stocks and bonds .... -9,393 -18,881 -16,185 -106' -2,492 1,328 -1,139 -9,695 -2,702 -3,976 44 Foreign countries -9,873 -18,914 -15,022 -185' -2,500 1,220 -1,229 -8,094 -2,852 -4,067 45 -7,864 -17,728 -2,340 168' -933 1,398 -1,226 -305 -669 -1,539 46 -3,747 -4,180 -4,005 -324' -970 -58 -144 -1,323 -1,797 -683 47 Latin America and Caribbean 1,384 426 -6,741 -102 -269 33 161 -6,648 -171 -117 48 979 2,722 -1,247 -22' -549 111 -307 693 -341 -1,403 49 -54 93 -28 13 56 -14 9 -1 -28 6 50 Other countries -571 -246 -661 83' 165 -249 277 -511 154 -331 51 Nonmonetary international and regional organizations 480 33 -1,163 78R 8 110088 8899 --11,,660011 115500 9911 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 • September 1990 3.25 MARKETABLE U.S. TREASURY BONDS AND NOTES Foreign Transactions Millions of dollars 1990 1989 1990 Country or area 1988 1989' J M an a . y - Nov. Dec/ Jan/ Feb/ Mar/ Apr/ Mayp Transactions, net purchases or sales (-) during period1 1 Estimated total2 48,832 54,607 -5,957 8,154r 1,054 819 1,454 -8,793 3,083 -2,520 2 Foreign countries2 48,170 52,705 -4,609 8,350' -462 1,090 1,795 -8,597 4,022 -2,919 3 Europe2 14,319 35,939 2,838 4,203' 2,432 1,238 2,191 -2,374 6,031 -4,247 4 Belgium-Luxembourg 923 1,048 125 210 -85 144 -337 -256 458 115 5 Germany2 -5,268 7,904 1,921 1,64c 1,735 -216 1,672 -475 633 306 6 Netherlands -356 -1,141 -1,654 54 -386 -330 -1,400 -411 749 -263 7 Sweden -323 886 213 -232 29 -71 270 -22 763 -727 8 Switzerland2 -1,074 1,097 -306 -780 -355 -284 -5 -251 422 -189 9 United Kingdom 9,640 20,198 197 3,793r 1,285 150 1,627 -298 2,250 -3,533 10 Other Western Europe 10,786 5,968 2,334 -481 209 1,845 363 -664 747 43 11 Eastern Europe -10 -21 6 0 0 0 0 0 6 0 12 Canada 3,761 701 -5,705 375 164 -542 -2,137 -1,383 110 -1,752 13 Latin America and Caribbean 713 490 3,042 1,372 -886 -333 91 672 2,134 478 14 Venezuela -109 311 -96 163 -36 -107 -48 38 -49 71 15 Other Latin America and Caribbean 1,130 -297 1,122 576 -610 262 16 270 -35 610 16 Netherlands Antilles -308 475 2,015 634 -240 -488 123 365 2,218 -204 17 27,603 14,021 -3,542 1,741r -2,767 447 2,287 -5,119 -3,877 2,721 18 Japan 21,750 2,404 -7,110 1,176' -1,133 837 852 -5,630 -6,102 2,933 19 -13 116 -110 9 39 9 13 -43 -81 -8 20 All other 1,786 1,439 -1,132 649 555 273 -650 -351 -294 -110 21 Nonmonetary international and regional organizations 661 1,902 -1,348 -196' 1,516 -272 -341 -196 -939 400 22 International 1,106 1,473 -913 -143 1,335 -360 -286 -92 -553 378 23 Latin America regional -31 231 100 0 0 38 -11 -26 74 25 Memo 24 Foreign countries 48,170 52,705 -4,609 8,350' -462 1,090 1,795 -8,597 4,022 -2,919 25 Official institutions 26,624 27,028 -2,209 1,686 1,305 328 -1,425 -3,856 5,592 -2,847 26 Other foreign2 21,546 25,677 -2,401 6,664' -1,767 763 3,220 -4,741 -1,570 -72 Oil-exporting countries 27 Middle East3 1,963 8,148 3,396 -26 -640 916 970 1,020 668 -178 28 Africa4 1 -1 -1 -1 0 -1 0 0 0 0 1. Estimated official and private transactions in marketable U.S. Treasury 3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and securities with an original maturity of more than 1 year. Data are based on United Arab Emirates (Trucial States). monthly transactions reports. Excludes nonmarketable U.S. Treasury bonds and 4. Comprises Algeria, Gabon, Libya, and Nigeria, notes held by official institutions of foreign countries. 2. Includes U.S. Treasury notes publicly issued to private foreign residents denominated in foreign currencies. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Interest and Exchange Rates A69 3.26 DISCOUNT RATES OF FOREIGN CENTRAL BANKS Percent per year Rate on July 31, 1990 Rate on July 31, 1990 Rate on July 31, 1990 Country Country Country Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Percent e M ffe o c n t t i h v e Austria.. 6.5 Oct. 1989 France 9.5 Apr. 1990 Norway 8.0 June 1983 Belgium . 10.25 Oct. 1989 Germany, Fed. Rep. of 6.0 Oct. 1989 Switzerland 6.0 Oct. 1989 Canada.. 13.48 July 1990 Italy 12.5 May 1990 United Kingdom2 Denmark 10.5 Oct. 1989 Japan 5.25 Mar. 1990 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 1990 CCoouunnttrryy,, oorr ttyyppee 11998877 11998888 11998899 Jan. Feb. Mar. Apr. May June July 1 Eurodollars 7.07 7.85 9.16 8.22 8.24 8.37 8.44 8.35 8.23 8.09 2 United Kingdom 9.65 10.28 13.87 15.13 15.07 15.23 15.17 15.11 14.95 14.92 3 Canada 8.38 9.63 12.20 12.24 12.96 13.35 13.59 13.77 13.73 13.58 4 Germany 3.97 4.28 7.04 8.22 8.27 8.42 8.20 8.27 8.24 8.17 5 Switzerland 3.67 2.94 6.83 9.35 9.31 8.88 9.01 8.83 8.71 8.81 6 Netherlands 5.24 4.72 7.28 8.82 8.93 8.70 8.46 8.37 8.26 8.16 7 France 8.14 7.80 9.27 11.19 10.93 10.56 9.92 9.70 9.94 9.91 8 Italy 11.15 11.04 12.44 12.88 13.22 13.03 12.11 12.09 11.33' 11.38 9 Belgium 7.01 6.69 8.65 10.48 10.54 10.39 10.19 9.90 9.63 9.30 10 Japan 3.87 3.96 4.73 6.02 6.22 6.33 6.62 6.84 6.86 7.02 NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A70 International Statistics • September 1990 3.28 FOREIGN EXCHANGE RATES1 Currency units per dollar 1990 Country/currency Feb. Mar. Apr. May June' July 1 Australia/dollar2 70.137 78.409 79.186 75.932 75.562 76.366 76.106 77.903 79.076 2 Austria/schilling 12.649 12.357 13.236 11.803 11.514 11.862 11.699 11.843 11.520 3 Belgium/franc 37.358 36.785 39.409 34.998 35.398 34.868 34.325 34.602 33.715 4 Canada/dollar 1.3259 1.2306 1.1842 1.1965 1.1800 1.1641 1.1747 1.1730 1.1570 5 China, P.R./yuan 3.7314 3.7314 3.7673 4.7339 4.7339 4.7339 4.7339 4.7339 4.7339 6 Denmark/krone 6.8478 6.7412 7.3210 6.4729 6.5349 6.4305 6.3349 6.4080 6.2339 7 Finland/markka 4.4037 4.1933 4.2963 3.9642 4.0276 3.9923 3.9270 3.9561 3.8386 8 France/franc 6.0122 5.9595 6.3802 5.6897 5.7555 5.6638 5.5989 5.6613 5.4924 9 Germany/deutsche mark. 1.7981 1.7570 1.8808 1.6758 1.7053 1.6863 1.6630 1.6832 1.6375 10 Greece/drachma 135.47 142.00 162.60 158.04 162.44 163.77 163.82 164.78 160.59 11 Hong Kong/dollar 7.7986 7.8072 7.8008 7.8103 7.8129 7.7966 7.7877 7.7855 7.7704 12 India/rupee 12.943 13.900 16.213 16.990 17.116 17.294 17.325 17.421 17.412 13 Ireland/punt2 148.79 152.49 141.80 158.28 156.26 158.97 161.21 159.28 163.75 14 Italy/lira 1,297.03 1,302.39 1,372.28 1,243.68 1,257.67 1,238.38 1,221.93 1,235.60 1,199.65 15 Japan/yen 144.60 128.17 138.07 145.69 153.31 158.46 154.04 153.70 149.04 16 Malaysia/ringgit 2.5186 2.6190 2.7079 2.7137 2.7170 2.7264 2.7024 2.7104 2.7051 17 Netherlands/guilder 2.0264 1.9778 2.1219 1.8892 1.9204 1.8984 1.8704 1.8946 1.8452 18 New Zealand/dollar2 59.328 65.560 59.354 59.156 58.471 57.883 57.293 58.254 59.147 19 Norway/krone 6.7409 6.5243 6.9131 6.4760 6.5972 6.5457 6.4477 6.4700 6.2925 20 Portugal/escudo 141.20 144.27 157.53 147.71 150.59 149.29 147.08 147.90 143.93 21 Singapore/dollar 2.1059 2.0133 1.9511 1.8641 1.8777 1.8783 1.8589 1.8471 1.8193 22 South Africa/rand 2.0385 2.2770 2.6214 2.5449 2.6158 2.6552 2.6468 2.6592 2.6253 23 South Korea/won 825.94 734.52 674.29 692.47 700.50 708.76 711.85 718.07 718.75 24 Spain/peseta 123.54 116.53 118.44 108.27 109.37 107.00 103.98 103.91 100.41 25 Sri Lanka/rupee 29.472 31.820 35.947 40.018 40.018 40.018 40.023 40.018 40.018 26 Sweden/krona 6.3469 6.1370 6.4559 6.1250 6.1683 6.1160 6.0560 6.0896 5.9470 27 Switzerland/franc 1.4918 1.4643 1.6369 1.4879 1.5133 1.4866 1.4198 1.4250 1.3924 28 Taiwan/dollar 31.753 28.636 26.407 26.118 26.361 26.369 26.961 27.391 27.163 29 Thailand/baht 25.775 25.312 25.725 25.733 25.926 26.024 25.928 25.876 25.706 30 United Kingdom/pound2 163.98 178.13 163.82 169.61 162.45 163.72 167.74 171.03 180.98 MEMO 31 United States/dollar3 96.94 98.60 92.04 92.43 89.68 1. Averages of certified noon buying rates in New York for cable transfers. currencies of 10 industrial countries. The weight for each of the 10 countries is the Data in this table also appear in the Board's G.5 (405) release. For address, see 1972-76 average world trade of that country divided by the average world trade of inside front cover. all 10 countries combined. Series revised as of August 1978 (see Federal Reserve 2. Value in U.S. cents. Bulletin, vol. 64, August 1978, p. 700). 3. Index of weighted-average exchange value of U.S. dollar against the Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A71 Guide to Tabular Presentation, Statistical Releases, and Special Tables GUIDE TO TABULAR PRESENTATION Symbols and Abbreviations c Corrected 0 Calculated to be zero e Estimated n.a. Not available p Preliminary n.e.c. Not elsewhere classified r Revised (Notation appears on column heading when IPCs Individuals, partnerships, and corporations about half of the figures in that column are changed.) REITs Real estate investment trusts * Amounts insignificant in terms of the last decimal place RPs Repurchase agreements shown in the table (for example, less than 500,000 SMSAs Standard metropolitan statistical areas when the smallest unit given is millions) Cell not applicable General Information Minus signs are used to indicate (1) a decrease, (2) a negative obligations of the Treasury. "State and local government" figure, or (3) an outflow. also includes municipalities, special districts, and other po- "U.S. government securities" may include guaranteed litical subdivisions. issues of U.S. government agencies (the flow of funds figures In some of the tables, details do not add to totals because also include not fully guaranteed issues) as well as direct of rounding. STATISTICAL RELEASES—List Published Semiannually, with Latest BULLETIN Reference Issue Page Anticipated schedule of release dates for periodic releases June 1990 A88 SPECIAL TABLES—Published Irregularly, with Latest BULLETIN Reference Title and Date Issue Page Assets and liabilities of commercial banks March 31, 1989 December 1989 A72 June 30, 1989 January 1990 All September 30, 1989 February 1990 All December 31, 1989 June 1990 All Terms of lending at commercial banks May 1989 March 1990 A73 August 1989 November 1989 A73 November 1989 March 1990 A79 February 1990 September 1990 A73 Assets and liabilities of U.S. branches and agencies of foreign banks June 30, 1989 November 1989 A78 September 30, 1989 March 1990 A84 December 31, 1989 September 1990 A78 March 31, 1990 September 1990 A82 Pro forma balance sheet and income statements for priced service operations March 31, 1989 September 1989 All June 30, 1989 February 1990 A78 September 30, 1989 March 1990 A88 March 31, 1990 September 1990 A86 Digitized foSr pFeRcAiaSlE Rta bles follow. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 5-9, 19901 A. Commercial and Industrial Loans Weighted Loan rate (percent) Loans Amount of Average average made Partici- Characteristic (th l o o u a s n a s n ds (tho s u iz s e a nds maturity2 Weighted Standard Inter- co u m nd m er i tp l a o t a i n o s n of dollars) of dollars) average quartile ment (percent) Days effective3 range5 (percent) ALL BANKS 1 Overnight7 11,853,050 8.82-9.24 2 One month and under 10,912,605 959 17 9.47 8.86-9.81 80.0 7.1 3 Fixed rate 7,977,233 1,164 17 9.36 8.90-9.81 76.1 8.3 4 Floating rate 2,935,373 648 15 9.78 8.78-10.48 90.7 3.7 5 Over one month and under a year ... 7,991,517 110 142 10.67 9.48-11.57 78.4 5.6 6 Fixed rate 3,133,089 101 124 10.32 9.34-11.32 71.8 7.9 7 Floating rate 4,858,429 117 154 10.90 10.26-11.63 82.7 4.2 8 Demand8 12,632,977 205 10.60 9.51-11.57 83.8 5.6 9 Fixed rate 2,102,193 414 9.79 8.99-10.50 87.9 6.7 10 Floating rate 10,530,783 186 10.76 10.38-11.57 82.9 5.4 11 Total short term 43,390,149 294 9.93 8.98-10.58 76.8 5.3 12 Fixed rate (thousands of dollars) 25,064,398 556 24 9.40 8.91-9.62 71.4 5.7 13 1-24 228,103 7 111 12.48 11.63-13.31 22.6 .1 14 25-49 138,401 32 138 11.88 11.03-12.78 21.1 .1 15 50-99 153,555 64 100 12.00 11.48-12.62 44.0 4.9 16 100-499 514,784 192 114 10.89 10.05-12.01 44.1 2.0 17 500-999 438,873 670 50 10.27 9.33-11.07 71.7 6.0 18 1000 and over 23,590,682 7,738 20 9.29 8.87-9.52 72.9 5.8 19 Floating rate (thousands of dollars).. 18,325,752 179 102 10.64 9.53-11.57 84.1 4.8 20 1-24 494,854 10 150 12.17 11.57-12.75 71.8 .9 21 25-49 534,203 34 136 11.98 11.35-12.68 79.4 2.5 22 50-99 855,633 66 146 11.72 11.02-12.28 81.0 1.9 23 100-499 3,284,718 192 155 11.40 10.52-12.01 86.8 5.4 24 500-999 1,338,306 653 145 10.93 10.47-11.57 89.0 8.6 25 1000 and over 11,818,038 4,268 80 10.19 9.09-11.02 83.8 4.7 Months 26 Total long term 5,129,535 223 10.92 10.38-11.73 77.9 8.6 27 Fixed rate (thousands of dollars) .. 910,047 110 10.45 9.42-11.30 52.8 6.8 28 1-99 122,178 16 12.29 11.07-13.31 22.8 .2 29 100-499 98,957 240 11.51 10.53-12.13 41.7 6.0 30 500-999 66,844 686 10.86 10.52-11.30 42.1 .0 31 1000 and over 622,067 4,145 9.88 9.27-10.38 61.8 8.9 32 Floating rate (thousands of dollars) 4,219,488 286 11.02 10.38-11.85 83.3 8.9 33 1-99 280,109 26 12.19 11.57-12.75 45.5 5.0 34 100-499 563,180 210 11.62 10.79-12.19 66.7 9.9 35 500-999 294,586 648 11.38 10.52-12.01 73.6 21.0 36 1000 and over 3,081,613 4,292 10.77 10.38-11.57 90.6 8.0 Loan rate (percent) Days Prime rate Effective3 Nominal9 LOANS MADE BELOW PRIME11 37 Overnight7 11,321,358 8,837 9.05 8.66 10.01 64.1 3.3 38 One month and under 9,613,620 4,344 16 9.20 8.82 10.01 80.9 7.2 39 Over one month and under a year 3,233,191 435 132 9.39 9.03 10.10 85.6 9.0 40 Demand8 4,011,782 1,287 9.15 8.81 10.03 72.7 5.5 41 Total short term 28,179,950 2,008 9.16 8.78 10.02 73.5 42 Fixed rate 22,108,343 2,800 9.13 8.76 10.01 71.7 6.4 43 Floating rate 6,071,607 989 9.24 10.06 80.1 2.5 Months 44 Total long term 1,272,533 9.48 78.6 7.7 45 Fixed rate .... 511,375 425 9.51 9.17 10.11 58.8 13.2 46 Floating rate .. 761,158 936 9.47 9.10 10.20 92.0 4.0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A74 Special Tables • September 1990 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 5-9, 1990'—Continued A. Commercial and Industrial Loans—Continued Weighted Loan rate (percent) Loans AAmmoouunntt ooff Average aavveerraaggee made Partici- Characteristic (th l o o u a s n a s n ds (tho s u iz s e a nds mmaattuurriittyy22 WWeeiigghhtteedd Standard Inter- co u m nd m e i r t - p lo at a i n o s n of dollars) of dollars) average quartile ment ((ppeerrcceenntt)) Days effective3 range5 (percent) LARGE BANKS 1 Overnight7 9,972,446 7,774 » 9.13 .07 8.80-9.21 58.8 3.7 2 One month and under 9,111,727 5,306 17 9.44 .11 8.82-9.81 79.2 6.0 3 Fixed rate 6,611,497 7,238 17 9.38 .11 8.86-9.81 74.4 7.3 4 Floating rate 2,500,230 3,111 14 9.62 .32 8.73-10.12 92.1 2.7 5 Over one month and under a year . 4,325,095 741 129 10.20 .09 9.36-10.89 87.8 5.1 6 Fixed rate 1,916,165 2,321 115 9.88 .18 9.21-10.42 86.2 8.9 7 Floating rate 2,408,931 480 141 10.45 .11 9.49-11.19 89.1 2.0 8 Demand8 7,663,066 418 » 10.39 .19 9.25-11.30 77.7 6.0 9 Fixed rate 1,463,583 816 * 9.99 .26 9.25-10.87 85.3 9.1 10 Floating rate 6,199,483 375 * 10.49 .23 9.25-11.35 75.9 5.2 11 Total short term 31,072,334 1,143 31 9.68 .06 8.94-10.42 73.5 5.1 12 Fixed rate (thousands of dollars) .. 19,962,617 4,147 19 9.35 .06 8.87-9.60 68.5 5.8 13 1-24 8,331 9 107 11.45 .35 10.75-12.00 37.4 .0 14 25-49 10,529 33 106 11.46 .46 11.00-12.00 36.9 .0 15 50-99 17,650 63 72 11.20 .39 10.52-11.84 50.5 .0 16 100-499 150,576 220 39 10.48 .33 10.00-11.35 69.9 2.9 17 500-999 249,903 676 36 10.20 .18 9.45-11.00 74.2 5.6 18 1000 and over 19,525,629 8,569 19 9.32 .06 8.86-9.58 68.5 5.8 19 Floating rate (thousands of dollars) 11,109,717 497 76 10.28 .19 9.18-11.07 82.4 4.0 20 1-24 81,985 11 151 11.89 .14 11.02-12.68 83.4 .6 21 25-49 114,989 34 144 11.75 .11 11.02-12.19 86.9 1.2 22 50-99 216,115 66 135 11.60 .11 10.75-12.13 88.7 1.0 23 100-499 1,127,104 202 146 11.20 .05 10.47-11.63 89.9 3.4 24 500-999 625,820 649 153 10.94 .07 10.47-11.57 90.0 7.3 25 1000 and over 8,943,703 5,346 67 10.06 .20 8.98-10.89 80.7 4.0 Months 26 Total long term 3,333,455 1,018 46 10.51 .18 9.69-11.19 88.3 5.1 27 Fixed rate (thousands of dollars) .. 504,798 1,009 37 9.71 .16 9.22-9.99 61.5 5.6 28 1-99 7,107 22 47 11.71 .31 11.41-12.68 23.7 .0 29 100-499 17,006 250 46 11.44 .29 11.06-11.57 67.6 5.3 30 500-999 13,546 686 61 10.20 .49 9.26-11.57 45.3 .0 31 1000 and over 467,140 5,565 36 9.60 .12 9.00-9.81 62.3 5.9 32 Floating rate (thousands of dollars) 2,828,657 1,020 47 10.65 .24 10.38-11.35 93.1 5.0 33 1-99 44,013 41 38 11.90 .25 10.92-12.68 75.6 8.9 34 100-499 231,691 232 40 11.34 .17 10.47-12.01 85.6 11.8 35 500-999 144,635 654 41 11.20 .12 10.47-12.01 91.8 12.9 36 1000 and over 2,408,319 5,061 49 10.53 .26 10.31-11.19 94.2 3.9 Loan rate (percent) DDaayyss Prune rate Effective3 Nominal9 LOANS MADE BELOW PRIME 37 Overnight7 9,446,174 9,308 * 9.05 8.66 10.00 57.1 3.9 38 One month and under 8,259,155 8,763 16 9.25 8.86 10.00 79.4 6.7 39 Over one month and under a year 2,336,876 3,450 132 9.35 8.99 10.00 88.5 7.9 40 Demand8 2,947,156 3,056 * 9.12 8.80 10.01 63.4 6.5 41 Total short term 22,989,361 6,388 22 9.16 8.78 10.00 69.1 5.6 42 Fixed rate 18,021,924 7,286 17 9.16 8.78 10.00 66.8 6.7 43 Floating rate 4,967,437 4,413 54 9.16 8.79 10.00 77.3 1.8 Months 44 Total long term 1,067,293 3,962 42 9.26 8.93 10.01 85.2 5.5 45 Fixed rate 404,739 4,554 31 9.33 9.02 10.00 61.4 10.9 46 Floating rate .. 662,554 3,671 48 9.22 8.87 10.01 99.8 2.1 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets A73 4.23—Continued A. Commercial and Industrial Loans—Continued WWeeiigghhtteedd Loan rate (percent) Loans Amount of Average made PPaarrttiiccii-- Characteristic (tho lo u a s n a s n ds (tho s u iz s e a nds mmaattuurriittyy22 WWeeiigghhtteedd Standard IInntteerr-- co u m nd m e i r t p lo at a i n o s n of dollars) of dollars) Days e a f v fe e c ra ti g v e e 3 error* q r u a a n r g t e il 5 e (p m er e c n e t n t) (percent) OTHER BANKS 1 Overnight7 1,880,604 2,441 * 9.07 .10 8.91-9.24 99.7 .0 2 One month and under 1,800,878 186 17 9.64 .33 9.01-10.47 83.9 12.4 3 Fixed rate 1,365,735 230 17 9.29 .36 9.00-9.80 84.3 13.4 4 Floating rate 435,143 117 18 10.72 .32 9.35-11.86 82.7 9.3 5 Over one month and under a year .. 3,666,422 55 158 11.23 .22 10.47-12.19 67.3 6.3 6 Fixed rate 1,216,924 40 139 11.01 .23 9.47-12.40 49.1 6.4 7 Floating rate 2,449,498 67 167 11.34 .23 10.47-12.13 76.4 6.3 8 Demand8 4,969,911 115 * 10.92 .21 10.47-11.63 93.1 5.0 9 Fixed rate 638,611 194 * 9.33 .39 8.97-9.27 93.8 1.1 10 Floating rate 4,331,300 108 * 11.16 .07 10.52-11.85 93.0 5.6 11 Total short term 12,317,816 102 83 10.54 .14 9.24-11.57 85.1 5.7 12 Fixed rate (thousands of dollars) ... 5,101,781 127 44 9.62 .23 8.91-9.96 82.8 5.3 13 1-24 219,772 7 111 12.52 .15 11.84-13.31 22.0 .1 14 25-49 127,872 32 138 11.91 .14 11.04-12.78 19.8 .1 15 50-99 135,905 64 101 12.11 .25 11.63-12.62 43.1 5.6 16 100-499 364,207 182 130 11.06 .39 10.25-12.55 33.4 1.6 17 500-999 188,970 664 66 10.37 .19 9.14-11.57 68.3 6.6 18 1000 and over 4,065,053 5,279 25 9.15 .17 8.91-9.41 94.5 6.0 19 Floating rate (thousands of dollars). 7,216,035 90 145 11.19 .09 10.47-11.91 86.7 6.1 20 1-24 412,869 9 150 12.22 .08 11.57-12.75 69.5 1.0 21 25-49 419,213 34 135 12.04 .08 11.52-12.68 77.3 2.9 22 50-99 639,518 65 148 11.77 .06 11.07-12.40 78.4 2.2 23 100-499 2,157,614 187 157 11.51 .15 10.75-12.13 85.2 6.5 24 500-999 712,486 657 141 10.93 .06 10.47-11.57 88.0 9.7 25 1000 and over 2,874,335 2,623 134 10.63 .16 10.07-11.57 93.3 6.8 Months 26 Total long term 1,796,080 91 46 11.69 .07 11.02-12.28 58.5 14.9 27 Fixed rate (thousands of dollars) .. 405,249 52 57 11.37 .23 10.47-12.06 42.1 8.1 28 1-99 115,072 16 49 12.32 .17 11.07-13.31 21.9 .2 29 100-499 81,952 238 57 11.53 .28 10.53-12.13 36.3 6.1 30 500-999 53,298 686 53 11.03 .23 10.69-11.30 41.2 .0 31 1000 and over 154,927 2,343 64 10.70 .40 10.11-11.35 60.4 17.9 32 Floating rate (thousands of dollars) 1,390,831 116 42 11.78 .06 11.30-12.28 63.3 16.9 33 1-99 236,096 24 46 12.25 .08 11.63-12.75 39.9 4.3 34 100-499 331,489 197 37 11.81 .16 11.07-12.19 53.5 8.6 35 500-999 149,951 642 46 11.55 .25 11.02-11.85 56.1 28.9 36 1000 and over 673,294 2,781 43 11.65 .11 11.30-12.28 77.9 22.7 Loan rate (percent) DDaayyss rnme rate Effective3 Nominal9 LOANS MADE BELOW PRIME" 37 Overnight7 1,875,184 7,042 * 9.06 8.67 10.02 99.8 .0 38 One month and under 1,354,465 1,066 15 8.93 8.55 10.10 90.1 10.5 39 Over one month and under a year 896,314 133 134 9.51 9.12 10.34 78.1 11.7 40 Demand8 1,064,626 494 * 9.23 8.84 10.11 98.6 2.6 41 Total short term 5,190,589 497 35 9.14 8.75 10.12 93.3 5.3 42 Fixed rate 4,086,419 754 21 9.01 8.63 10.06 93.3 5.2 43 Floating rate 1,104,170 220 112 9.61 9.20 10.30 93.1 5.7 Months 44 Total long term 205,240 117 57 10.65 10.15 10.95 44.3 19.4 45 Fixed rate 106,636 96 76 10.22 9.74 10.52 48.9 21.8 46 Floating rate .. 98,604 156 37 11.13 10.60 11.42 39.4 16.9 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A76 Special Tables • September 1990 4.23 TERMS OF LENDING AT COMMERCIAL BANKS Survey of Loans Made, February 5-9, 1990—Continued B. Loans to Farmers12 Size class of loans (thousands) Characteristic All sizes $1-9 $10-24 $25-49 $50-99 $100-249 an $ d 2 5 o 0 v er ALL BANKS 1 Amount of loans (thousands of dollars) $ 1,291,198 $ 105,639 $ 133,327 $ 157,468 $ 205,758 $ 258,937 $ 430,069 2 3 N W u e m ig b h e te r d o f a v lo e a ra n g s e maturity (months)2 48, 1 1 2 0 . 8 8 29,3 8 4 . 8 4 8, 1 7 1 9 . 4 4 4, 1 6 4 5 . 7 9 3, 2 0 1 3 . 1 6 1, 1 8 2 1 . 1 0 4 8 6 .7 6 4 Weighted average interest rate (percent)3 11.78 12.55 12.40 12.19 12.18 11.86 11.00 5 6 I S n t t a e n r d q a u r a d r t e il r e r o r r a nge5 11.02-12. . 4 7 7 3 11.87-13. . 0 2 3 6 11.83-12. . 9 4 0 2 11.63-12. . 7 1 5 8 11.57-12. . 7 2 5 2 11.46-12. . 6 3 8 0 10.47-11. . 6 6 2 7 By purpose of loan ! Feeder livestock 11.40 12.53 12.32 12.17 11.95 11.55 11.00 8 Other livestock 11.66 12.87 12.63 12.61 12.94 10.64 9 Other current operating expenses 12.11 12.49 12.52 12.26 12.34 12.04 11.15 10 Farm machinery and equipment 12.21 12.69 11.96 12.06 12.21 * 11 Farm real estate 11.45 12.58 11.88 11.69 11.29 * * 12 Other 11.59 12.44 12.35 11.93 11.81 11.54 11.10 Percentage of amount of loans 13 With floating rates 71.0 51.6 58.6 64.3 68.8 76.0 80.2 14 Made under commitment 64.7 49.6 46.7 49.6 48.2 56.6 92.1 By purpose of loan 15 Feeder livestock 27.7 11.2 18.4 15.8 18.4 19.6 48.2 16 Other livestock 10.9 9.7 8.2 12.1 8.3 15.7 17 Other current operating expenses 39.5 59.4 51.1 40.9 47.2 54.6 17.8 18 Farm machinery and equipment 5.2 13.3 10.5 13.0 6.0 * * 19 Farm real estate 4.7 .6 3.4 6.6 4.6 * * 20 Other 12.0 5.9 8.3 11.6 15.6 14.1 11.9 LARGE FARM LENDERS12 1 Amount of loans (thousands of dollars) $ 639,193 $ 16,743 $ 30,002 $ 38,274 $ 53,480 $ 107,393 $ 393,300 2 3 N W u e m ig b h e te r d o f a v lo e a ra n g s e maturity (months)2 9,4 9 7 .4 0 4,5 7 1 .4 8 1,9 9 6 .6 2 1, 1 1 0 1 . 1 1 1 8 2 0 . 5 5 1 7 0 0 . 2 5 3 8 7 .5 1 4 6 5 We I S n i t g t a e h n r t d e q a d u r a d a r v t e i e l r e r r a o r g r a e 4 n g in e t 5 e rest rate (percent)3 10.52-1 1 2 1 . . . 1 2 7 3 7 1 11.63-1 1 2 2 . . . 7 2 2 5 3 2 11.35-1 1 2 1 . . . 4 9 3 7 2 9 11.30-1 1 2 1 . . . 1 8 1 9 2 4 11.12-1 1 2 1 . . . 1 7 1 9 4 6 11.02-1 1 2 1 . . . 1 6 2 9 1 2 10.47-1 1 1 0 . . . 6 5 9 2 1 6 By purpose of loan 7 Feeder livestock 11.14 12.20 11.94 11.90 11.61 11.49 11.00 8 Other livestock 10.55 12.34 12.18 11.71 11.72 * 10.29 9 Other current operating expenses 11.60 12.23 11.85 11.89 11.93 11.74 11.18 10 Farm machinery and equipment 12.22 12.66 12.24 11.95 * * 11 Farm real estate 11.43 12.25 12.19 11.92 * * * 12 Other 11.26 12.07 11.86 11.46 11.46 11.32 11.05 Percentage of amount of loans 13 With floating rates 84.3 79.3 84.6 86.7 88.8 97.5 80.1 14 Made under commitment 87.0 75.9 73.9 77.6 77.9 78.2 93.1 By purpose of loan 15 Feeder livestock 39.6 11.4 17.5 23.9 28.5 21.7 50.3 16 Other livestock 10.1 4.8 5.7 3.7 4.7 14.0 17 Other current operating expenses 28.1 65.9 54.7 46.9 37.9 40.7 17.8 18 Farm machinery and equipment 1.9 3.6 4.6 3.8 * 19 Farm real estate 5.9 1.0 4.1 5.0 * * * 20 Other 14.4 13.3 13.4 16.7 18.5 24.8 10.9 OTHER BANKS12 1 Amount of loans (thousands of dollars) $ 652,005 $ 88,895 $ 103,325 $ 119,194 $ 152,278 $ 151,544 * 2 i N W u e m ig b h e te r d o f a v lo e a ra n g s e maturity (months)2 38, 1 6 4 3 . 8 9 24,8 8 3 .5 0 6, 1 8 1 3 . 2 7 3, 1 5 5 4 . 6 9 2, 2 2 4 2 . 6 1 1, 1 1 2 0 . 9 7 * * 4 Weighted average interest rate (percent)3 12.28 12.62 12.54 12.31 12.33 12.03 * 6 5 I S n ta te n r d q a u r a d r t e il r e r o r r a nge5 11.63-12. . 8 1 2 3 11.99-13. . 1 1 2 2 12.00-13. . 0 1 7 3 11.63-12. . 8 1 1 1 11.63-12. . 8 1 2 5 11.62-12. . 8 2 2 0 * * By purpose of loan 7 Feeder livestock 12.03 12.60 12.42 12.32 12.19 * * 8 Other livestock 12.60 12.92 12.71 12.68 * * * 9 Other current operating expenses 12.38 12.54 12.74 12.41 12.44 12.17 * 10 Farm machinery and equipment 12.21 12.69 11.93 12.07 * * 11 Farm real estate 11.48 • * » * * * 12 Other 12.07 12.64 12.63 * 11.96 * * For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Financial Markets All 4.23—Continued B. Loans to Farmers12—Continued Size class of loans (thousands) Characteristic $250 All sizes $1-9 $10-24 $25-49 $50-99 $100-249 and over Percentage of amount of loans 13 With floating rates 58.0 46.4 51.0 57.1 61.7 60.7 * 14 Made under commitment 42.7 44.6 38.9 40.7 37.8 41.3 * By purpose of loan 15 Feeder livestock 16.0 11.1 18.7 13.2 14.8 * * 16 Other livestock 11.7 10.6 8.9 14.8 * * * 17 Other current operating expenses 50.7 58.2 50.0 38.9 50.4 64.4 * 18 Farm machinery and equipment 8.4 15.1 12.3 15.9 * * * 19 Farm real estate 3.5 * * * * * 20 Other 9.7 4.5 6.8 * 14.5 * * *Fewer than 10 sample loans. 1. The survey of terms of bank lending to business collects data on gross loan volume of loans. Base pricing rates include the prime rate (sometimes referred to extensions made during the first full business week in the mid-month of each as a bank's "basic" or "reference" rate); the federal funds rate; domestic money quarter by a sample of 340 commercial banks of all sizes. A sample of 250 banks market rates other than the federal funds rate; foreign money market rates; and reports loans to farmers. The sample data are blown up to estimate the lending other base rates not included in the foregoing classifications. terms at all insured commercial banks during that week. The estimated terms of 7. Overnight loans are loans that mature on the following business day. bank lending are not intended for use in collecting the terms of loans extended 8. Demand loans have no stated date of maturity. over the entire quarter or residing in the portfolios of those banks. Mortgage 9. Nominal (not compounded) annual interest rates are calculated from survey loans, purchased loans, foreign loans, and loans of less than $1,000 are excluded data on the stated rate and other terms of the loan and weighted by loan size. from the survey. 10. The prime rate reported by each bank is weighted by the volume of loans As of Dec. 31, 1988, assets of most of the large banks were at least $6.0 billion. extended and then averaged. For all insured banks total assets averaged $220 million. 11. The proportion of loans made at rates below prime may vary substantially 2. Average maturities are weighted by loan size and exclude demand loans. from the proportion of such loans outstanding in banks' portfolios. 3. Effective (compounded) annual interest rates are calculated from the stated 12. Among banks reporting loans to farmers (Table B), most "large banks" rate and other terms of the loan and weighted by loan size. (survey strata 1 to 2) had over $20 million in farm loans, and most "other banks" 4. The chances are about two out of three that the average rate shown would (survey strata 3 to 5) had farm loans below $20 million. differ by less than this amount from the average rate that would be found by a The survey of terms of bank lending to fanners now includes loans secured by complete survey of lending at all banks. farm real estate. In addition, the categories describing the purpose of farm loans 5. The interquartile range shows the interest rate range that encompasses the have now been expanded to include "purchase or improve farm real estate." In middle 50 percent of the total dollar amount of loans made. previous surveys, the purpose of such loans was reported as "other." 6. The most common base rate is that rate used to price the largest dollar Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A78 Special Tables • September 1990 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 19891 Millions of dollars All states2 New York California Illinois IItteemm in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 in I T c B l o u F t d a ' i s l n g I o B n F ly 's 3 in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 1 Total assets4 579,512 276,560 428,794 222,011 78,779 27,531 44,143 17,046 2 Claims on nonrelated parties 519,718 214,142 382,870 172,287 72,681 20,414 43,739 16,079 3 Cash and balances due from depository institutions 145,685 124,231 121,701 103,019 8,319 7,483 1133,,880066 1122,,554444 4 Cash items in process of collection and unposted debits 1,239 0 1,179 0 31 0 6 0 5 Currency and coin (U.S. and foreign) 23 n.a. 17 n.a. 2 n.a. 1 n.a. 6 Balances with depository institutions in United States .. 77,547 58,934 64,952 48,690 4,701 4,105 77,,009911 55,,990066 7 U.S. branches and agencies of other foreign banks (including their IBFs) 67,493 54,809 56,643 44,966 4,117 3,915 6,314 55,,772244 8 Other depository institutions in United States (including their IBFs) 10,054 4,125 8,309 3,724 584 190 777 183 9 Balances with banks in foreign countries and with foreign central banks 66,013 65,297 54,892 54,329 3,497 3,378 6,649 6,637 10 Foreign branches of U.S. banks 2,552 2,4% 2,069 2,014 183 183 279 279 U Other banks in foreign countries and foreign central banks 63,461 62,801 52,823 52,315 3,314 3,1% 6,371 6,359 12 Balances with Federal Reserve Banks 862 n.a. 661 n.a. 89 n.a. 58 n.a. 13 Total securities and loans 298,766 77,180 201,590 58,994 52,864 11,234 26,954 3,020 14 Total securities, book value 37,676 12,262 31,%9 10,144 3,760 1,496 1,162 539 15 U.S. Treasury 6,140 n.a. 5,882 n.a. 80 n.a. 116 n.a. 16 Obligations of U.S. government agencies and corporations 5,016 n.a. 4,838 n.a. 115 n.a. 0 n.a. 17 Other bonds, notes, debentures and corporate stock (including state and local securities) 26,520 12,262 21,249 10,144 3,565 1,496 1,045 539 18 Federal funds sold and securities purchased under agreements to resell 20,253 4,520 17,803 3,764 914 508 991 107 19 U.S. branches and agencies of other foreign banks 11,964 2,834 10,407 2,523 406 108 899 100 20 Commercial banks in United States 4,438 1 4,109 0 98 0 44 0 21 Other 3,851 1,685 3,287 1,241 410 400 49 7 22 Total loans, gross 261,273 64,951 169,739 48,880 49,148 9,740 25,806 22,,448822 23 Less: Unearned income on loans 183 33 118 30 44 1 14 11 24 Equals: Loans, net 261,090 64,918 169,621 48,849 49,104 9,739 25,792 2,481 Total loans, gross, by category 25 Real estate loans 30,207 272 16,741 176 7,868 90 3,254 0 26 Loans to depository institutions 61,431 31,508 43,785 20,511 10,864 7,109 4,546 2,070 27 Commercial banks in United States (including IBFs) 38,376 11,152 26,850 5,984 7,642 4,001 3,561 1,102 28 U.S. branches and agencies of other foreign banks ... 33,713 10,545 23,267 5,624 7,142 3,764 3,003 1,092 29 Other commercial banks in United States 4,663 607 3,583 360 500 237 558 10 30 Other depository institutions in United States (including IBFs) 209 141 166 141 42 0 0 0 31 Banks in foreign countries 22,845 20,215 16,769 14,386 3,180 3,108 985 968 32 Foreign branches of U.S. banks 586 585 498 497 65 65 18 18 33 Other banks in foreign countries 22,259 19,630 16,271 13,889 3,115 3,043 %7 949 34 Other financial institutions 7,726 885 5,409 677 1,149 170 480 23 35 Commercial and industrial loans 138,218 15,966 84,552 13,706 27,279 1,640 17,119 310 36 U.S. addressees (domicile) 117,491 289 68,300 175 24,587 104 16,655 10 37 Non-U.S. addressees (domicile) 20,727 15,677 16,252 13,531 2,692 1,535 463 300 38 Acceptances of other banks 1,237 45 702 45 352 0 114 0 39 U.S. banks 279 0 141 0 85 0 4 0 40 Foreign banks 958 45 561 45 267 0 110 0 41 Loans to foreign governments and official institutions (including foreign central banks) 17,113 15,888 14,412 13,395 784 731 102 79 42 Loans for purchasing or carrying securities (secured and unsecured) 2,850 52 2,050 52 800 0 0 0 43 All other loans 2,490 335 2,087 319 52 0 192 0 44 All other assets 55,014 8,211 41,775 6,510 10,583 1,188 1,988 409 45 Customers' liability on acceptances outstanding 33,412 n.a. 24,491 n.a. 7,910 n.a. 792 n.a. 46 U.S. addressees (domicile) 22,832 n.a. 15,149 n.a. 6,865 n.a. 787 n.a. 47 Non-U.S. addressees (domicile) 10,581 n.a. 9,342 n.a. 1,045 n.a. 6 n.a. 48 Other assets including other claims on nonrelated parties 21,602 8,211 17,284 6,510 2,674 1,188 1,196 409 49 Net due from related depository institutions 59,794 62,418 45,924 49,723 6,098 77,,111177 404 %7 50 Net due from head office and other related depository institutions 59,794 n.a. 45,924 n.a. 6,098 n.a. 404 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions n.a. 62,418 n.a. 49,723 n.a. 7,117 n.a. %7 52 Total liabilities4 579,512 276,560 428,794 222,011 78,779 27,531 44,143 17,046 53 Liabilities to nonrelated parties 504,776 246,0% 388,000 201,095 72,129 25,673 28,177 11,518 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A79 4.30—Continued Millions of dollars All states2 New York California Illinois Item ex I T c B l o u F t d a s i l n g I o B nl F y s ex I T c B l o u F t d a 's i l n g I o B n F ly 's 3 ex I T c B l o u F t d a 's i l n g I o B nl F y ' s ex I T c B l o u F t d a 's i l n g I o B nl F y ' 3 s 54 Total deposits and credit balances 77,581 192,071 64,206 171,280 3,573 9,407 3,429 4,801 55 Individuals, partnerships, and corporations 62,845 16,023 51,072 9,950 2,785 434 2,897 40 56 U.S. addressees (domicile) 48,850 684 42,267 683 1,044 0 2,083 0 57 Non-U.S. addressees (domicile) 13,996 15,340 8,805 9,267 1,742 434 815 40 58 Commercial banks in United States (including IBFs). 10,398 60,068 9,211 52,057 642 5,064 514 2,639 59 U.S. branches and agencies of other foreign banks 5,069 51,526 4,560 44,872 6 4,258 482 2,125 60 Other commercial banks in United States 5,329 8,541 4,651 7,184 637 806 32 514 61 Banks in foreign countries 1,571 106,118 1,450 99,813 29 3,801 3 2,102 62 Foreign branches of U.S. banks 159 9,248 139 8,245 20 573 0 369 63 Other banks in foreign countries 1,412 96,870 1,311 91,568 9 3,229 3 1,733 64 Foreign governments and official institutions (including foreign central banks) 998 9,662 875 9,267 24 102 2 20 65 All other deposits and credit balances 1,376 200 1,284 194 58 6 2 0 66 Certified and official checks 392 n.a. 314 n.a. 35 n.a. 11 n.a. 67 Transaction accounts and credit balances (excluding IBFs) 7,336 6,212 307 223 68 Individuals, partnerships, and corporations 4,995 4,057 260 206 69 U.S. addressees (domicile) 3,641 3,073 217 203 70 Non-U.S. addressees (domicile) 1,354 984 43 4 71 Commercial banks in United States (including IBFs). 273 267 1 0 72 U.S. branches and agencies of other foreign banks 61 60 0 0 73 Other commercial banks in United States 211 n.a. 207 n.a. 0 n.a. 0 n.a. 74 Banks in foreign countries 1,001 931 9 3 75 Foreign branches of U.S. banks 30 30 0 0 76 Other banks in foreign countries 971 902 9 3 77 Foreign governments and official institutions (including foreign central banks) 386 361 2 1 78 All other deposits and credit balances 289 282 2 1 79 Certified and official checks 392 314 35 11 80 Demand deposits (included in transaction accounts and credit balances) 6,312 5,446 218 211 81 Individuals, partnerships, and corporations 4,338 3,648 172 194 82 U.S. addressees (domicile) 3,210 2,770 146 191 83 Non-U.S. addressees (domicile) 1,127 878 26 4 84 Commercial banks in United States (including IBF)s. 132 127 0 0 85 U.S. branches and agencies of other foreign banks 60 59 0 0 86 Other commercial banks in United States 71 n.a. 67 n.a. 0 n.a. 0 n.a. 87 Banks in foreign countries 881 817 9 3 88 Foreign branches of U.S. banks 30 30 0 0 89 Other banks in foreign countries 851 788 9 3 90 Foreign governments and official institutions (including foreign central banks) 330 305 2 1 91 All other deposits and credit balances 239 234 0 1 92 Certified and official checks 392 314 35 11 93 Non-transaction accounts (including MMDAs, excluding IBFs) 70,245 57,994 3,266 3,206 94 Individuals, partnerships, and corporations 57,850 47,016 2,525 2,691 95 U.S. addressees (domicile) 45,208 39,194 826 1,880 96 Non-U.S. addressees (domicile) 12,642 7,822 1,699 811 97 Commercial banks in United States (including IBFs). 10,126 8,944 642 514 98 U.S. branches and agencies of other foreign banks 5,008 4,500 6 482 99 Other commercial banks in United States 5,118 n.a. 4,444 n.a. 636 n.a. 32 n.a. 100 Banks in foreign countries 570 519 20 0 101 Foreign branches of U.S. banks 130 110 20 0 102 Other banks in foreign countries 441 409 0 0 103 Foreign governments and official institutions (including foreign central banks) 612 514 22 1 104 All other deposits and credit balances 1,087 1,002 56 1 105 IBF deposit liabilities 192,071 171,280 9,407 4,801 106 Individuals, partnerships, and corporations 16,023 9,950 434 40 107 U.S. addressees (domicile) 684 683 0 0 108 Non-U .S. addressees (domicile) 15,340 9,267 434 40 109 Commercial banks in United States (including IBFs). 60,068 52,057 5,064 2,639 110 U.S. branches and agencies of other foreign banks 51,526 44,872 4,258 2,125 111 Other commercial banks in United States n.a. 8,541 n. a. 7,184 n.a. 806 n.a. 514 112 Banks in foreign countries 106,118 99,813 3,801 2,102 113 Foreign branches of U.S. banks 9,248 8,245 573 369 114 Other banks in foreign countries 96,870 91,568 3,229 1,733 115 Foreign governments and official institutions (including foreign central banks) 9,662 9,267 102 20 116 All other deposits and credit balances 200 194 6 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A80 Special Tables • September 1990 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, December 31, 1989'—Continued Millions of dollars All states2 New York California Illinois IItteemm in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 in I c T B l o u F t d a ' i s l n g I o B nl F y 's 3 in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 in I c T B l o u t F d a s i l n g I o B n F ly 's 3 117 Federal funds purchased and securities sold under agreements to repurchase 51,661 6,264 37,175 3,697 10,064 2,129 3,825 365 118 U.S. branches and agencies of other foreign banks .... 12,247 1,827 6,977 362 4,054 1,284 971 181 119 Other commercial banks in United States 14,380 563 8,529 490 3,669 48 1,9% 25 170 Other 25,033 3,874 21,670 2,845 2,341 797 859 159 121 Other borrowed money 129,838 40,295 75,441 20,076 38,207 13,133 14,019 6,052 122 Owed to nonrelated commercial banks in United States (including IBFs) 80,314 15,272 42,743 4,687 28,195 7,%1 7,969 2,030 123 Owed to U.S. offices of nonrelated U.S. banks 35,529 2,050 22,046 832 9,456 874 3,551 174 124 Owed to U.S. branches and agencies of nonrelated foreign banks 44,785 13,222 20,698 3,855 18,739 7,087 4,418 1,856 125 Owed to nonrelated banks in foreign countries 23,842 23,119 14,105 13,490 5,217 5,167 4,057 4,022 126 Owed to foreign branches of nonrelated U.S. banks ... 2,724 2,678 1,151 1,104 989 989 498 498 127 Owed to foreign offices of nonrelated foreign banks 21,118 20,441 12,955 12,386 4,228 4,178 3,559 3,524 128 Owed to others 25,682 1,903 18,592 1, S98 4,795 3 1,993 0 129 All other liabilites 53,625 7,466 39,897 6,042 10,878 1,004 2,102 300 130 Branch or agency liability on acceptances executed and outstanding 34,688 n.a. 24,528 n.a. 8,485 n. a. 1,222 n.a. 131 Other liabilities to nonrelated parties 18,937 7,466 15,369 6,042 2,394 1,004 880 300 132 Net due to related depository institutions5 74,737 30,464 40,794 20,916 6,649 1,858 15,966 5,528 133 Net due to head office and other related depository institutions5 74,737 n.a. 40,794 n.a. 6,649 n. a. 15,966 n.a. 134 Net due to establishing entity, head office, and other related depository institutions n.a. 30,464 n.a. 20,916 n.a. 1,858 n.a. 5,528 MEMO 135 Non-interest bearing balances with commercial banks in United States 2,170 1 1,905 1 98 0 80 0 136 Holding of commercial paper included in total loans 909 670 217 15 137 Holding of own acceptances included in commercial and industrial loans 2,142 1,365 501 113 138 Commercial and industrial loans with remaining maturity of one year or less 73,121 42,921 14,876 9,418 139 Predetermined interest rates 41,600 n.a. 22,912 n.a. 9,861 n.a. 5,461 n.a. 140 Floating interest rates 31,522 20,009 5,016 3,957 141 Commercial and industrial loans with remaining maturity of more than one year 65,0% 41,631 12,403 7,700 142 Predetermined interest rates 24,836 17,577 4,158 2,447 143 Floating interest rates 40,260 24,054 8,245 5,253 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A81 4.30—Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l n g o IB nl F y s 3 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ttttoooottttaaaallll ddddeeeeppppoooossssiiiittttssss aaaannnndddd CCCCrrrreeeeddddiiiitttt bbbbaaaallllaaaannnncccceeeessss ooooffff nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnnaaaallll aaaaccccccccoooouuuunnnnttttssss,,,, iiiinnnncccclllluuuuddddiiiinnnngggg IIIIBBBBFFFFssss 84,892 t 72,766 t 3,358 t 3,340 t 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 48,973 40,632 2,146 1,812 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 13,758 n.a. 11,920 n1.a. 648 n.\a . 1,082 n.a. 111144447777 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee \ \ wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss ........ 22,161 20,214 563 446 All states2 New York California Illinois inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 3 inc T IB l o u F t d a s i l n g o IB nl F y s 3 inc T I l B o u t F d a s i l n g o IB nl F y s 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 37,262 11,489 31,882 9,583 3,482 1,284 1,160 539 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 72,624 n.a. 42,766 n.a. 24,366 n.a. 4,431 n.a. 111155550000 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 548 0 255 0 128 0 55 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, IBF asset or liability or because that level of detail is not reported for IBFs. From "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign December 1981 through September 1985, IBF data were included in all applicable Banks." Details may not add to totals because of rounding. This form was first items reported. used for reporting data as of June 30, 1980, and was revised as of December 31, 4. Total assets and total liabilities include net balances, if any, due from or due 1985. From November 1972 through May 1980, U.S. branches and agencies of to related banking institutions in the United States and in foreign countries (see foreign banks had filed a monthly FR 886a report. Aggregate data from that report footnote 5). On the former monthly branch and agencyu report, available through were available through the Federal Reserve statistical release G. 11, last issued on the G. 11 statistical release, gross balances were included in total assets and total July 10, 1980. Data in this table and in the G.ll tables are not strictly comparable liabilities. Therefopre, total asset and total liability figures in this table are not because of differences in reporting panels and in definitions of balance sheet comparable to those in the G.ll tables. items. 5. "Related banking institutions" includes the foreign head office and other 2. Includes the District of Columbia. U.S. and foreign branches and agencies of the bank, the bank's parent holding 3. Effective December 1981, the Federal Reserve Board amended Regulations company, and majority-owned banking subsidiaries of the bank and of its parent D and Q to permit banking offices located in the United States to operate holding company (including subsidiaries owned both directly and indirectly). International Banking Facilities (IBFs). As of December 31, 1985 data for IBFs 6. In some cases two or more offices of a foreign bank within the same are reported in a separate column. These data are either included in or excluded metropolitan area file a consolidated report. from the total columns as indicated in the headings. The notation "n.a." indicates NOTE. Revised data for December 1988, mislabeled December 1989, were that no IBF data re reported for that item, either because the item is not an eligible inadvertently published in the June 1990 Bulletin. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A82 Special Tables • September 1990 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 19901 Millions of dollars All states2 New York California Illinois IItteemm in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 in I T c B l o u F t d a ' i s l n g I o B n F ly ' s in I T c B l o u F t d a ' i s l n g I o B n F ly 's 3 in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 1 Total assets4 564,966 258,730 415,206 208,445 80,013 25,513 41,200 14,710 2 Claims on nonrelated parties 505,133 201,519 370,122 162,852 72,986 19,595 40,820 13,794 3 Cash and balances due from depository institutions 138,322 115,425 117,323 97,265 8,433 7,453 10,854 9,668 4 Cash items in process of collection and unposted debits 1,279 0 1,203 0 52 00 5 00 5 Currency and coin (U.S. and foreign) 22 n.a. 16 n.a. 2 n.a. 11 n.a. 6 Balances with depository institutions in United States .. 73,298 53,619 62,572 45,176 4,160 3,433 55,,889955 4,759 7 U.S. branches and agencies of other foreign banks (including their IBFs) 63,725 50,165 54,571 42,074 3,504 3,283 5,176 44,,557733 8 Other depository institutions in United States (including their IBFs) 9,573 3,454 8,001 3,102 656 151 719 118866 9 Balances with banks in foreign countries and with foreign central banks 62,819 61,806 52,790 52,089 4,158 4,019 4,910 4,908 10 Foreign branches of U.S. banks 968 895 815 743 78 77 70 70 11 Other banks in foreign countries and foreign central banks 61,851 60,910 51,974 51,346 4,081 3,942 44,,884400 44,,883388 12 Balances with Federal Reserve Banks 904 n.a. 743 n.a. 61 n.a. 43 n.a. 13 Total securities and loans 298,443 73,541 198,923 55,561 53,714 10,273 27,382 3,612 14 Total securities, book value 41,638 12,521 36,074 10,464 3,605 1,454 1,212 521 15 U.S. Treasury 8,546 n.a. 8,254 n.a. 57 n.a. 172 n.a. 16 Obligations of U.S. government agencies and corporations 55,,771166 n.a. 55,,449966 n.a. 113388 n.a. 1122 n.a. 17 Other bonds, notes, debentures and corporate stock (including state and local securities) 27,376 12,521 22,324 10,464 3,409 1,454 1,028 552211 18 Federal funds sold and securities purchased under agreements to resell 17,134 4,348 15,053 3,503 1,160 806 589 0 19 U.S. branches and agencies of other foreign banks 9,992 3,276 8,482 2,563 873 696 512 0 70 Commercial banks in United States 4,039 12 3,634 10 175 0 45 0 21 Other 3,103 1,060 2,938 930 112 110 32 0 77 Total loans, gross 257,013 61,058 162,985 45,132 50,164 8,821 26,181 3,091 73 Less: Unearned income on loans 207 38 137 35 55 2 10 0 24 Equals: Loans, net 256,805 61,020 162,848 45,097 50,109 8,819 26,171 3,091 Total loans, gross, by category 75 Real estate loans 34,664 336 1199,,334411 117788 88,,990000 111177 33,,991122 3355 76 Loans to depository institutions 58,863 30,498 41,829 19,525 9,964 6,619 4,957 2,651 77 Commercial banks in United States (including IBFs) 37,852 11,608 26,307 5,913 7,242 3,967 3,860 1,562 78 U.S. branches and agencies of other foreign banks ... 32,727 11,094 22,258 5,595 6,789 3,795 3,316 1,537 79 Other commercial banks in United States 5,126 515 4,049 318 453 172 544 25 30 Other depository institutions in United States (including IBFs) 215 108 207 110088 7 00 00 00 31 Banks in foreign countries 20,796 18,781 15,315 13,505 2,716 2,652 1,096 1,088 37 Foreign branches of U.S. banks 276 245 252 221 15 15 9 9 33 Other banks in foreign countries 20,520 18,537 15,063 13,284 2,701 2,637 1,088 1,079 34 Other financial institutions 7,250 936 5,207 735 1,001 162 482 28 35 Commercial and industrial loans 134,415 14,687 78,841 12,538 28,901 1,475 16,434 288 36 U.S. addressees (domicile) 115,288 219 63,932 135 26,302 74 16,039 10 37 Non-U.S. addressees (domicile) 19,127 14,468 14,910 12,403 2,599 1,402 395 278 38 Acceptances of other banks 1,357 37 996 37 189 0 100 0 39 U.S. banks 610 0 471 0 66 0 2 0 40 Foreign banks 747 37 524 37 122 0 98 0 41 Loans to foreign governments and official institutions (including foreign central banks) 15,338 14,167 1122,,770066 1111,,774411 550044 444488 110011 9911 42 Loans for purchasing or carrying securities (secured and unsecured) 2,430 45 1,798 4455 663300 00 00 00 43 All other loans 2,697 351 2,267 331 75 0 195 0 44 All other assets 51,234 8,205 38,822 6,523 9,679 1,064 1,994 514 45 Customers' liability on acceptances outstanding 29,068 n.a. 20,918 n.a. 7,181 n.a. 696 n.a. 46 U.S. addressees (domicile) 20,319 n.a. 13,090 n.a. 6,459 n.a. 680 n.a. 47 Non-U.S. addressees (domicile) 8,749 n.a. 7,828 n.a. 722 n.a. 15 n.a. 48 Other assets including other claims on nonrelated parties 22,166 8,205 17,904 6,523 2,498 1,064 1,298 514 49 Net due from related depository institutions 59,833 57,211 45,084 45,593 7,027 5,918 381 916 50 Net due from head office and other related depository institutions 59,833 n.a. 45,084 n.a. 7,027 n.a. 381 n.a. 51 Net due from establishing entity, head offices, and other related depository institutions n.a. 57,211 n.a. 45,593 n.a. 5,918 n.a. 916 52 Total liabilities4 564,966 258,730 415,206 208,445 80,013 25,513 41,200 14,710 53 Liabilities to nonrelated parties 491,844 226,015 374,850 184,172 73,057 23,303 28,223 11,169 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A83 4.30—Continued Millions of dollars All states2 New York California Illinois ex I T c B l o u F t d a 's i l n g I o B nl F y ' s ex I T c B l o u F t d a 's i l n g I o B n F ly 's 3 ex I T c B l o u F t d a 's i l n g I o B n F ly 's 3 ex I T c B l o u F t d a 's i l n g I o B n F ly 's 3 54 Total deposits and credit balances 76,322 175,354 63,240 155,847 3,919 8,673 3,069 4,287 55 Individuals, partnerships, and corporations 60,965 16,490 49,569 10,506 3,060 364 2,469 65 56 U.S. addressees (domicile) 46,600 371 40,692 367 1,224 0 1,664 3 57 Non-U.S. addressees (domicile) 14,365 16,119 8,877 10,138 1,837 364 805 62 58 Commercial banks in United States (including IBFs). 10,624 56,277 9,244 49,899 768 4,357 579 1,768 59 U.S. branches and agencies of other foreign banks 5,207 48,709 4,695 43,046 16 3,935 472 1,502 60 Other commercial banks in United States 5,416 7,568 4,548 6,853 752 422 107 266 61 Banks in foreign countries 1,743 92,579 1,624 85,714 29 3,861 2 2,432 62 Foreign branches of U.S. banks 242 6,718 222 6,072 20 415 0 220 63 Other banks in foreign countries 1,500 85,861 1,401 79,642 9 3,446 2 2,213 64 Foreign governments and official institutions (including foreign central banks) 1,148 9,905 1,057 9,630 20 91 5 21 65 All other deposits and credit balances 1,501 103 1,463 98 19 0 1 0 66 Certified and official checks 342 n. a. 284 n.a. 23 n a. 12 n.a. 67 Transaction accounts and credit balances (excluding IBFs) 7.334 6,044 442 260 68 Individuals, partnerships, and corporations 5. 380 3,950 404 244 69 U.S. addressees (domicile) 3,695 2,966 367 240 70 Non-U.S. addressees (domicile) 1,385 984 37 4 71 Commercial banks in United States (including IBFs). 118 113 1 0 72 U.S. branches and agencies of other foreign banks 40 39 0 0 73 Other commercial banks in United States 79 n. a. 74 n. a. 1 n.a. 0 n.a. 74 Banks in foreign countries 1,035 972 9 2 75 Foreign branches of U.S. banks 53 53 0 0 76 Other banks in foreign countries 982 919 9 2 77 Foreign governments and official institutions (including foreign central banks) 403 385 2 2 78 All other deposits and credit balances 355 340 3 0 79 Certified and official checks 342 284 23 12 80 Demand deposits (included in transaction accounts and credit balances) 6,126 5,240 231 235 81 Individuals, partnerships, and corporations 4,265 3,529 196 218 82 U.S. addressees (domicile) 3,108 2,640 171 215 83 Non-U.S. addressees (domicile) 1,157 888 26 4 84 Commercial banks in United States (including IBF)s. 50 45 1 0 85 U.S. branches and agencies of other foreign banks 6 5 0 0 86 Other commercial banks in United States 45 n.a. 41 n. a. 1 n.a. 0 n.a. 87 Banks in foreign countries 806 750 8 2 88 Foreign branches of U.S. banks 17 17 0 0 89 Other banks in foreign countries 790 733 8 2 90 Foreign governments and official institutions (including foreign central banks) 346 328 2 2 91 All other deposits and credit balances 317 305 1 0 92 Certified and official checks 342 284 23 12 93 Non-transaction accounts (including MMDAs, excluding IBFs) 68,989 57,196 3,477 2,809 94 Individuals, partnerships, and corporations 55,885 45,619 2,656 2,226 95 U.S. addressees (domicile) 42,904 37,726 857 1,424 96 Non-U.S. addressees (domicile) 12,980 7,893 1,799 02 97 Commercial banks in United States (including IBFs). 10,505 9,131 767 579 98 U.S. branches and agencies of other foreign banks 5,168 4,657 16 472 99 Other commercial banks in United States 5,338 n a. 4,474 n.a. 751 n a. 107 n.a. 100 Banks in foreign countries 708 652 20 0 101 Foreign branches of U.S. banks 190 170 20 0 102 Other banks in foreign countries 518 482 0 0 1 1 0 0 3 4 A Fo ll r ( e o i i n t g h c n e l u r g d o d in v e g p e o r f n s o m i r t e s e i n g a t n n s d c a e c n n r d e t r d o a i f l t f i b b c a a i n a la l k n i s n c ) e st s i tutions 1,1 7 4 4 6 5 1, 6 1 7 2 2 3 1 1 8 6 4 1 105 IBF deposit liabilities 175,354 155,847 8,673 4,287 106 Individuals, partnerships, and corporations 16.490 10,506 364 65 107 U.S. addressees (domicile) 371 367 0 3 108 Non-U.S. addressees (domicile) 16,119 10,138 364 62 109 Commercial banks in United States (including IBFs). 56,277 49,899 4,357 1,768 110 U.S. branches and agencies of other foreign banks 48,709 43,046 3,935 1,502 111 Other commercial banks in United States n.a. 7,568 n.a. 6,853 n.a. 422 n.a. 266 112 Banks in foreign countries 92,579 85,714 3,861 2,432 113 Foreign branches of U. S. banks 6,718 6,072 415 220 114 Other banks in foreign countries 85,861 79,642 3,446 2,213 115 Foreign governments and official institutions (including foreign central banks) 9,905 9,630 91 21 116 All other deposits and credit balances 103 98 0 0 For notes see end of table. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A84 Special Tables • September 1990 4.30 ASSETS AND LIABILITIES of U.S. Branches and Agencies of Foreign Banks, March 31, 19901—Continued Millions of dollars All states2 New York California Illinois IItteemm in I c T B l o u F t d a ' i s l n g I o B n F ly ' s in I c T B l o u F t d a ' i s l n g I o B n F ly 's in I c T B l o u F t d a ' i s l n g I o B n F ly 's 3 in I c T B l o u F t d a ' i s l n g I o B nl F y ' s 117 Federal funds purchased and securities sold under agreements to repurchase 64,171 6, m 44,153 4,039 14,591 2,457 44,,884444 333 118 U.S. branches and agencies of other foreign banks .... 13,075 3,111 7,785 1,053 4,197 1,832 1,034 220 119 Other commercial banks in United States 25,201 864 15,831 814 5,959 50 3,054 0 170 Other 25,895 2,933 20,538 2,172 4,435 575 755 113 121 Other borrowed money 124,499 36,724 72,811 18,711 35,983 11,190 14,013 6,173 177 Owed to nonrelated commercial banks in United States (including IBFs) 75,242 14,699 39,798 4,077 25,887 7,389 8,292 2,737 m Owed to U.S. offices of nonrelated U.S. banks 31,927 2,112 18,011 994 9,569 662 3,813 262 124 Owed to U.S. branches and agencies of nonrelated foreign banks 43,315 12,588 21,787 3,083 16,317 6,727 4,478 2,476 125 Owed to nonrelated banks in foreign countries 20,643 20,155 13,104 12,799 3,889 3,767 3,493 3,436 126 Owed to foreign branches of nonrelated U.S. banks ... 1,976 1,907 939 911 511 471 446 446 127 Owed to foreign offices of nonrelated foreign banks 18,667 18,248 12,165 11, S88 3,378 3,296 3,047 2,990 128 Owed to others 28,614 1,870 19,909 1,835 6,207 35 2,229 0 129 All other liabilites 51,498 7,029 38,798 5,574 9,892 983 2,011 377 130 Branch or agency liability on acceptances executed and outstanding 32,526 n. a. 23,260 n.a. 77,,771188 n.a. 11,,001199 n.a. 131 Other liabilities to nonrelated parties 18,972 7,029 15,538 5,574 2,174 983 992 377 132 Net due to related depository institutions5 73,122 32,715 40,355 24,274 6,956 2,210 12,977 3,541 133 Net due to head office and other related depository institutions 73,122 n.a. 40,355 n. a. 66,,995566 n.a. 1122,,997777 n.a. 134 Net due to establishing entity, head office, and other related depository institutions5 n.a. 32,715 n.a. 24,274 n.a. 2,210 n.a. 3,541 MEMO 135 Non-interest bearing balances with commercial banks in United States 1,772 / 1,516 7 110033 00 7799 00 136 Holding of commercial paper included in total loans 811 616 172 15 137 Holding of own acceptances included in commercial and industrial loans 1,995 1,348 405 9944 138 Commercial and industrial loans with remaining maturity of one year or less 70,767 39,223 16,139 9,411 139 Predetermined interest rates 42,462 n.a. 21,440 n.a. 11,236 n. a. 5,603 n a. 140 Floating interest rates 28,305 17,783 4,902 3,808 141 Commercial and industrial loans with remaining maturity of more than one year 63,648 39,618 12,762 7,023 142 Predetermined interest rates 21,103 13,800 3,937 2,403 143 Floating interest rates 42,544 25,818 8,825 4,619 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

U.S. Branches and Agencies A85 4.30—Continued Millions of dollars All states2 New York California Illinois IItteemm ex T c IB l o u F t d a s i l n g o IB nl F y s 3 ex T c IB l o u t F d a s i l n g o IB nl F y s ex T c IB l o u t F d a s i l n g o IB nl F y s 3 ex T c IB l o u F t d a s i l n g o IB nl F y s 3 111144444444 CCCCoooommmmppppoooonnnneeeennnnttttssss ooooffff ttttoooottttaaaallll nnnnoooonnnnttttrrrraaaannnnssssaaaaccccttttiiiioooonnnn aaaaccccccccoooouuuunnnnttttssss,,,, i n i n i n i n nnnn oooo cccc nnnn llll tttt uuuu rrrr dddd aaaa eeee nnnn dddd ssss aaaa iiii cccc nnnn tttt iiii tttt oooo oooo nnnn ttttaaaa aaaa llll llll dddd aaaa eeee cccc pppp cccc oooo oooo ssss uuuu iiii nnnn ttttssss tttt ssss aaaa ,,,, nnnn iiii dddd nnnn cccc cccc lllluuuu rrrreeee dddd dddd iiiinnnn iiiitttt gggg bbbb IIII aaaa BBBB llllaaaa FFFF nnnn ssss cccc eeeessss ooooffff 86,033 t 74,472 1 3,696 t 2,834 ! 111144445555 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 49,019 41,162 2,447 1,447 111144446666 OOOOtttthhhheeeerrrr ttttiiiimmmmeeee ddddeeeeppppoooossssiiiittttssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee 14,762 n.a. 12,741 705 n.a. 1,158 n.a. 111144447777 TTTTiiiimmmmeeee CCCCDDDDssss iiiinnnn ddddeeeennnnoooommmmiiiinnnnaaaattttiiiioooonnnnssss ooooffff $$$$111100000000,,,,000000000000 oooorrrr mmmmoooorrrreeee \ n \ .a . \ * wwwwiiiitttthhhh rrrreeeemmmmaaaaiiiinnnniiiinnnngggg mmmmaaaattttuuuurrrriiiittttyyyy ooooffff mmmmoooorrrreeee tttthhhhaaaannnn 11112222 mmmmoooonnnntttthhhhssss ........ 22,253 20,568 543 228 All states2 New York California Illinois inc T I l B o u t F d a s i l n g o IB nl F y s 3 in T c I l B o u t F d a s i l n g o IB nl F y s inc T I l B o u t F d a s i l n g o IB nl F y s inc T IB l o u F t d a s i l n g o IB nl F y s 3 111144448888 MMMMaaaarrrrkkkkeeeetttt vvvvaaaalllluuuueeee ooooffff sssseeeeccccuuuurrrriiiittttiiiieeeessss hhhheeeelllldddd 39,703 12,014 34,340 9,982 3,468 1,432 1,203 518 111144449999 IIIImmmmmmmmeeeeddddiiiiaaaatttteeeellllyyyy aaaavvvvaaaaiiiillllaaaabbbblllleeee ffffuuuunnnnddddssss wwwwiiiitttthhhh aaaa mmmmaaaattttuuuurrrriiiittttyyyy ggggrrrreeeeaaaatttteeeerrrr tttthhhhaaaannnn oooonnnneeee ddddaaaayyyy iiiinnnncccclllluuuuddddeeeedddd iiiinnnn ooootttthhhheeeerrrr bbbboooorrrrrrrroooowwwweeeedddd mmmmoooonnnneeeeyyyy 70,042 n.a. 40,937 n.a. 22,573 n.a. 5,391 n.a. 111155550000 NNNNuuuummmmbbbbeeeerrrr ooooffff rrrreeeeppppoooorrrrttttssss ffffiiiilllleeeedddd6666 550 0 254 0 130 0 54 0 1. Data are aggregates of categories reported on the quarterly form FFIEC 002, that no IBF data re reported for that item, either because the item is not an eligible "Report of Assets and Liabilities of U.S. Branches and Agencies of Foreign IBF asset or liability or because that level of detail is not reported for IBFs. From Banks." Details may not add to totals because of rounding. This form was first December 1981 through September 1985, IBF data were included in all applicable used for reporting data as of June 30, 1980, and was revised as of December 31, items reported. 1985. From November 1972 through May 1980, U.S. branches and agencies of 4. Total assets and total liabilities include net balances, if any, due from or due foreign banks had filed a monthly FR 886a report. Aggregate data from that report to related banking institutions in the United States and in foreign countries (see were available through the Federal Reserve statistical release G. 11, last issued on footnote 5). On the former monthly branch and agencyu report, available through July 10, 1980. Data in this table and in the G.ll tables are not strictly comparable the G.ll statistical release, gross balances were included in total assets and total because of differences in reporting panels and in definitions of balance sheet liabilities. Therefopre, total asset and total liability figures in this table are not items. comparable to those in the G.ll tables. 2. Includes the District of Columbia. 5. "Related banking institutions" includes the foreign head office and other 3. Effective December 1981, the Federal Reserve Board amended Regulations U.S. and foreign branches and agencies of the bank, the bank's parent holding D and Q to permit banking offices located in the United States to operate company, and majority-owned banking subsidiaries of the bank and of its parent International Banking Facilities (IBFs). As of December 31, 1985 data for IBFs holding company (including subsidiaries owned both directly and indirectly). are reported in a separate column. These data are either included in or excluded 6. In some cases two or more offices of a foreign bank within the same from the total columns as indicated in the headings. The notation "n.a." indicates metropolitan area file a consolidated report. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A86 Special Tables • September 1990 4.31 Pro forma balance sheet for priced services of the Federal Reserve System1 Millions of dollars Item March 31, 1990 March 31, 1989 Short-term assets2 Imputed reserve requirement on clearing balances 204.7 217.9 Investment in marketable securities 1,501.3 1.598.1 Receivables 61.9 61.2 Materials and supplies 6.5 6.3 Prepaid expenses 28.0 23.4 Items in process of collection 2,872.3 3.509.2 Total short-term assets 4,674.6 5,416.2 Long-term assets3 Premises 291.7 275.8 Furniture and equipment 125.5 123.9 Leases and leasehold improvements 6.0 6.2 Prepaid pension costs 55.8 41.1 Total long-term assets 479.0 447.0 Total assets 5,153.6 5,863.2 Short-term liabilities Clearing balances and balances arising from early credit of uncollected items 2,114.3 2,219.5 Deferred availability items 2,464.0 3,105.7 Short-term debt 96.3 90.9 Total short-term liabilities 4,674.6 5,416.2 Long-term liabilities Obligations under capital leases 1.2 1.2 Long-term debt 134.2 128.7 Total long-term liabilities 135.4 129.9 Total liabilities 4,810.0 5,546.1 Equity 343.6 317.1 Total liabilities and equity4 5,153.6 5,863.2 1. Details may not sum to totals because of rounding. collected for government agencies; and items associated with providing fixed 2. The imputed reserve requirement on clearing balances and investment in availability or credit prior to receipt and processing of items. The cost base for marketable securities reflect the Federal Reserve's treatment of clearing balances providing services that must be recovered under the Monetary Control Act maintained on deposit with Reserve Banks by depository institutions. For includes the cost of float (the difference between the value of gross CIPC and the presentation of the balance sheet and the income statement, clearing balances are value of deferred availability items) incurred by the Federal Reserve during the reported in a manner comparable to the way correspondent banks report period, valued at the federal funds rate. The amount of float, or net CIPC, compensating balances held with them by respondent institutions. That is, represents the portion of gross CIPC that involves a financing cost. respondent balances held with a correspondent are subject to a reserve require- 3. Long-term assets on the balance sheet have been allocated to priced services ment established by the Federal Reserve. This reserve requirement must be with the direct determination method, which uses the Federal Reserve's Planning satisfied with either vault cash or with nonearning balances maintained at a and Control System (PACS) to ascertain directly the value of assets used solely in Reserve Bank. Following this model, clearing balances maintained with Reserve priced services operations and to apportion the value of jointly used assets Banks for priced service purposes are subjected to imputed reserve requirements. between priced services and nonpriced services. Also, long-term assets include an Therefore, a portion of the clearing balances held with the Federal Reserve is estimate of the assets of the Board of Governors directly involved in the classified on the asset side of the balance sheet as required reserves and is development of priced services. reflected in a manner similar to vault cash and due from bank balances normally Long-term assets include amounts for capital leases and leasehold improveshown on a correspondent bank's balance sheet. The remainder of clearing ments and for prepaid pension costs associated with priced services. Effective balances is assumed to be available for investment. For these purposes, the January 1, 1987, the Federal Reserve Banks implemented Financial Accounting Federal Reserve assumes that all such balances are invested in three-month Standards Board Statement No. 87, Employer's Accounting for Pensions. Treasury bills. 4. A matched-book capital structure has been used for those assets that are not The account "items in the process of collection" (CIPC) represents the gross "self-financing" in determining liability and equity amounts. Short-term assets amount of Federal Reserve CIPC as of the balance sheet date, stated on a basis are financed with short-term debt. Long-term assets are financed with long-term comparable with a commercial bank. Adjustments have been made for intra- debt and equity in a proportion equal to the ratio of long-term debt to equity for System items that would otherwise be double-counted on a consolidated Federal the bank holding companies used in the model for the private sector adjustment Reserve balance sheet; items associated with nonpriced items, such as items factor (PSAF). Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

Bank Reported Data A87 4.32 Pro forma income statement for priced services of the Federal Reserve System1 Millions of dollars Quarter ending March 31 IItteemm 1990 1989 Income services provided to depository institutions2 181.9 177.1 Production expenses3 145.8 138.2 Income from operations 36.1 38.9 Imputed costs4 Interest on float 8.4 14.3 Interest on debt 4.2 4.2 Sales taxes 1.8 1.8 FDIC insurance 1.2 15.6 .4 20.8 Income from operations after imputed costs 20.5 18.1 Other income and expenses5 Investment income 37.6 41.1 Earnings credits 32.9 4.8 34.4 6.7 Income before income taxes 25.2 24.8 Imputed income taxes6 7.0 5.1 Net income 18.2 19.7 MEMO Targeted return on equity6 8.4 8.2 1. The income statement reflects income and expenses for priced services. through adjustments to the institution's reserve or clearing balance or by valuing Included in these amounts are the imputed costs of float, imputed financing costs, the float at the federal funds rate and billing the institution directly. and the income related to clearing balances. Float recovered through per-item fees is valued at the federal funds rate and has Details may not add to totals because of rounding. been added to the cost base subject to recovery in the first quarter of 1990 2. Income represents charges to depository institutions for priced services. Total float 772.0 This income is realized through one of two methods: direct charges to an Unrecovered float (8.0) institution's account or charges against accumulated earnings credits. Income Float subject to recovery 780.0 includes charges for per-item fees, fixed fees, package fees, explicitly priced float, Sources of float recovery account maintenance fees, shipping and insurance fees, and surcharges. Income on clearing balances 93.6 3. Production expenses include direct, indirect, and other general administra- As of adjustments 383.1 tive expenses of the Federal Reserve Banks for providing priced services. Also Direct charges 130.1 included are the expenses of staff members of the Board of Governors working Per-item fees 173.0 directly on the development of priced services, which amounted to $0.4 million in Also included in imputed costs is the interest on debt assumed necessary to the first quarter for both 1990 and 1989. finance priced-service assets and the sales taxes and FDIC insurance assessment 4. Imputed float costs represent the value of float to be recovered, either that the Federal Reserve would have paid had it been a private-sector firm. explicitly or through per-item fees, during the period. Float costs include those for 5. Other income and expenses consist of income on clearing balances and the checks, book-entry securities, noncash collection, ACH, and wire transfers. cost of earnings credits granted to depository institutions on their clearing The following table depicts the daily average recovery of float by the Federal balances. Income on clearing balances represents the average coupon-equivalent Reserve Banks for the first quarter of 1990. In the table, unrecovered float yield on three-month Treasury bills applied to the total clearing balance mainincludes that generated by services to government agencies or by other central tained, adjusted for the effect of reserve requirements on clearing balances. bank services. Expenses for earnings credits are derived by applying the average federal funds Float recovered through income on clearing balances represents increased rate to the required portion of the clearing balances, adjusted for the net effect of investable clearing balances as a result of reducing imputed reserve requirements reserve requirements on clearing balances. through the use of a deduction for float for cash items in process of collection 6. Imputed income taxes are calculated at the effective tax rate derived from a when calculating the reserve requirement. This income then reduces the float model consisting of the 50 largest bank holding companies. The targeted return on required to be recovered through other means. equity represents the after-tax rate of return on equity that the Federal Reserve As-of adjustments and direct charges refer to midweek closing float and would have earned had it been a private business firm, based on the bank holding interterritory check float, which may be recovered from depositing institutions company model. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A88 Federal Reserve Board of Governors ALAN GREENSPAN, Chairman MARTHA R. SEGER 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 DALE W. HENDERSON, Assistant Director PETER HOOPER III, Assistant Director J. VIRGIL MATTINGLY, JR., General Counsel KAREN H. JOHNSON, Assistant Director RICHARD M. ASHTON, Associate General Counsel RALPH W. SMITH, JR., Assistant Director OLIVER IRELAND, Associate General Counsel RICKI R. TIGERT, Associate General Counsel SCOTT G. ALVAREZ, Assistant General Counsel DIVISION OF RESEARCH AND STATISTICS MARYELLEN A. BROWN, Assistant to the General Counsel MICHAEL J. PRELL, Director EDWARD C. ETTIN, Deputy Director OFFICE OF THE SECRETARY THOMAS D. SIMPSON, Associate Director LAWRENCE SLIFMAN, Associate Director WILLIAM W. WILES, Secretary DAVID J. STOCKTON, Associate Director JENNIFER J. JOHNSON, Associate Secretary MARTHA BETHEA, Deputy Associate Director BARBARA R. LOWREY, Associate Secretary PETER A. TINSLEY, Deputy Associate Director MYRON L. KWAST, Assistant Director PATRICK M. PARKINSON, Assistant Director DIVISION OF CONSUMER MARTHA S. SCANLON, Assistant Director AND COMMUNITY AFFAIRS JOYCE K. ZICKLER, Assistant Director LEVON H. GARABEDIAN, Assistant Director (Administration) GRIFFITH L. GARWOOD, Director GLENN E. LONEY, Assistant Director ELLEN MALAND, Assistant Director DIVISION OF MONETARY AFFAIRS DOLORES S. SMITH, Assistant Director DONALD L. KOHN, Director DAVID E. LINDSEY, Deputy Director DIVISION OF BANKING BRIAN F. MADIGAN, Assistant Director SUPERVISION AND REGULATION RICHARD D. PORTER, Assistant Director NORMAND R.V. BERNARD, Special Assistant to the Board WILLIAM TAYLOR, Staff Director DON E. KLINE, Associate Director FREDERICK M. STRUBLE, Associate Director OFFICE OF THE INSPECTOR GENERAL WILLIAM A. RYBACK, Deputy Associate Director STEPHEN C. SCHEMERING, Deputy Associate Director BRENT L. BOWEN, Inspector General RICHARD SPILLENKOTHEN, Deputy Associate Director BARRY R. SNYDER, Assistant Inspector General 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

A89 and Official Staff EDWARD W. KELLEY, JR. DAVID W. MULLINS, 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 WILLIAM SCHNEIDER, Special Assignment: Project THEODORE E. ALLISON, Staff Director Director, National Information Center PORTIA W. THOMPSON, Equal Employment Opportunity DIVISION OF FEDERAL RESERVE Programs Officer BANK OPERATIONS DIVISION OF HUMAN RESOURCES MANAGEMENT CLYDE H. FARNSWORTH, JR., Director DAVID L. ROBINSON, 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 EDWARD T. MULRENIN, Assistant Director for Special Projects 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

A90 Federal Reserve Bulletin • September 1990 Federal Open Market Committee FEDERAL OPEN MARKET COMMITTEE MEMBERS ALAN GREENSPAN, Chairman E. GERALD CORRIGAN, Vice Chairman WAYNE D. ANGELL W. LEE HOSKINS DAVID W. MULLINS, JR. EDWARD G. BOEHNE EDWARD W. KELLEY, JR. MARTHA R. SEGER ROBERT H. BOYKIN JOHN P. LA WARE 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 VACANCY, 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

A91 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

A92 Federal Reserve Board Publications For ordering assistance, write PUBLICATIONS SER- Each Handbook, $90.00 per year. VICES, MS-138, Board of Governors of the Federal Reserve THE U.S. ECONOMY IN AN INTERDEPENDENT WORLD: A System, Washington, D.C. 20551 or telephone (202) 452-3244 MULTICOUNTRY MODEL, May 1984. 590 pp. $14.50 each. or FAX (202) 452-3102. When a charge is indicated, payment WELCOME TO THE FEDERAL RESERVE. March 1989. 14 pp. should accompany request and be made payable to the Board INDUSTRIAL PRODUCTION—1986 EDITION. December 1986. of Governors of the Federal Reserve System. Payment from 440 pp. $9.00 each. foreign residents should be drawn on a U.S. bank. FINANCIAL FUTURES AND OPTIONS IN THE U.S. ECONOMY. December 1986. 264 pp. $10.00 each. THE FEDERAL RESERVE SYSTEM—PURPOSES AND FUNC- FINANCIAL SECTORS IN OPEN ECONOMIES: EMPIRICAL TIONS. 1984. 120 pp. ANALYSIS AND POLICY ISSUES. August 1990. 608 pp. ANNUAL REPORT. $25.00 each. ANNUAL REPORT: BUDGET REVIEW, 1988-89. FEDERAL RESERVE BULLETIN.Monthly. $25.00 per year or $2.50 each in the United States, its possessions, Canada, and CONSUMER EDUCATION PAMPHLETS Mexico. Elsewhere, $35.00 per year or $3.00 each. Short pamphlets suitable for classroom use. Multiple copies BANKING AND MONETARY STATISTICS. 1914-1941. (Reprint are available without charge. of Part I only) 1976. 682 pp. $5.00. ANNUAL STATISTICAL DIGEST Consumer Handbook on Adjustable Rate Mortgages 1974-78. 1980. 305 pp. $10.00 per copy. Consumer Handbook to Credit Protection Laws 1981. 1982. 239 pp. $ 6.50 per copy. Federal Reserve Glossary 1982. 1983. 266 pp. $ 7.50 per copy. A Guide to Business Credit and the Equal Credit Opportunity 1983. 1984. 264 pp. $11.50 per copy. Act 1984. 1985. 254 pp. $12.50 per copy. How to File A Consumer Credit Complaint 1985. 1986. 231 pp. $15.00 per copy. Series on the Structure of the Federal Reserve System 1986. 1987. 288 pp. $15.00 per copy. The Board of Governors of the Federal Reserve System 1987. 1988. 272 pp. $15.00 per copy. The Federal Open Market Committee 1988. 1989. 256 pp. $25.00 per copy. Federal Reserve Bank Board of Directors SELECTED INTEREST AND EXCHANGE RATES—WEEKLY SE- Federal Reserve Banks RIES OF CHARTS. Weekly. $30.00 per year or $.70 each in Organization and Advisory Committees the United States, its possessions, Canada, and Mexico. Elsewhere, $35.00 per year or $.80 each. A Consumer's Guide to Mortgage Lock-Ins THE FEDERAL RESERVE ACT and other statutory provisions A Consumer's Guide to Mortgage Settlement Costs affecting the Federal Reserve System, as amended A Consumer's Guide to Mortgage Refinancing through August 1988. 608 pp. $10.00. Making Deposits: When Will Your Money Be Available? REGULATIONS OF THE BOARD OF GOVERNORS OF THE FED- When Your Home is on the Line: What You Should Know ERAL RESERVE SYSTEM. About Home Equity Lines of Credit ANNUAL PERCENTAGE RATE TABLES (Truth in Lending— Regulation Z) Vol. I (Regular Transactions). 1969. 100 pp. Vol. II (Irregular Transactions). 1969. 116 pp. Each PAMPHLETS FOR FINANCIAL INSTITUTIONS volume $2.25; 10 or more of same volume to one address, $2.00 each. Short pamphlets on regulatory compliance, primarily suit- INTRODUCTION TO FLOW OF FUNDS. 1980.68 pp. $1.50 each; able for banks, bank holding companies, and creditors. 10 or more to one address, $1.25 each. FEDERAL RESERVE REGULATORY SERVICE. Looseleaf; up- Limit of 50 copies dated at least monthly. (Requests must be prepaid.) Consumer and Community Affairs Handbook. $75.00 per The Board of Directors' Opportunities in Community Reinyear. vestment Monetary Policy and Reserve Requirements Handbook. The Board of Directors' Role in Consumer Law Compliance $75.00 per year. Combined Construction/Permanent Loan Disclosure and Securities Credit Transactions Handbook. $75.00 per year. Regulation Z The Payment System Handbook. $75.00 per year. Community Development Corporations and the Federal Re- Federal Reserve Regulatory Service. 3 vols. (Contains all serve three Handbooks plus substantial additional material.) Construction Loan Disclosures and Regulation Z $200.00 per year. Finance Charges Under Regulation Z Rates for subscribers outside the United States are as How to Determine the Credit Needs of Your Community follows and include additional air mail costs: Regulation Z: The Right of Rescission Federal Reserve Regulatory Service, $250.00 per year. The Right to Financial Privacy Act Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A93 Signature Rules in Community Property States: Regulation B 158. THE ADEQUACY AND CONSISTENCY OF MARGIN REQUIRE- Signature Rules: Regulation B MENTS IN THE MARKETS FOR STOCKS AND DERIVATIVE PROD- Timing Requirements for Adverse Action Notices: Regula- UCTS, by Mark J. Warshawsky with the assistance of tion B Dietrich Earnhart. September 1989. 23 pp. What An Adverse Action Notice Must Contain: Regulation B 159. NEW DATA ON THE PERFORMANCE OF NONBANK SUBSIDIAR- Understanding Prepaid Finance Charges: Regulation Z IES OF BANK HOLDING COMPANIES, by Nellie Liang and Donald Savage. February 1990. 12 pp. STAFF STUDIES: Summaries Only Printed in the Bulletin REPRINTS OF Bulletin ARTICLES Studies and papers on economic and financial subjects that Most of the articles reprinted do not exceed 12 pages. are of general interest. Requests to obtain single copies of the full text or to be added to the mailing list for the series Limit of 10 copies may be sent to Publications Services. Foreign Experience with Targets for Money Growth. 10/83. Staff Studies 114-145 are out of print. Intervention in Foreign Exchange Markets: A Summary of Ten Staff Studies. 11/83. 146. THE ROLE OF THE PRIME RATE IN THE PRICING OF A Financial Perspective on Agriculture. 1/84. BUSINESS LOANS BY COMMERCIAL BANKS, 1977-84, by Survey of Consumer Finances, 1983. 9/84. Thomas F. Brady. November 1985. 25 pp. Bank Lending to Developing Countries. 10/84. 147. REVISIONS IN THE MONETARY SERVICES (DIVISIA) IN- Survey of Consumer Finances, 1983: A Second Report. DEXES OF THE MONETARY AGGREGATES, by Helen T. 12/84. Farr and Deborah Johnson. December 1985. 42 pp. Union Settlements and Aggregate Wage Behavior in the 148. THE MACROECONOMIC AND SECTORAL EFFECTS OF THE 1980s. 12/84. ECONOMIC RECOVERY TAX ACT: SOME SIMULATION The Thrift Industry in Transition. 3/85. RESULTS, by Flint Bray ton and Peter B. Clark. Decem- A Revision of the Index of Industrial Production. 7/85. ber 1985. 17 pp. Financial Innovation and Deregulation in Foreign Industrial 149. THE OPERATING PERFORMANCE OF ACQUIRED FIRMS IN Countries. 10/85. BANKING BEFORE AND AFTER ACQUISITION, by Stephen Recent Developments in the Bankers Acceptance Market. A. Rhoades. April 1986. 32 pp. 1/86. 150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: The Use of Cash and Transaction Accounts by American A REEXAMINATION AND AN APPLICATION, by John T. Families. 2/86. Rose and John D. Wolken. May 1986. 13 pp. Financial Characteristics of High-Income Families. 3/86. 151. RESPONSES TO DEREGULATION: RETAIL DEPOSIT PRIC- Prices, Profit Margins, and Exchange Rates. 6/86. ING FROM 1983 THROUGH 1985, by Patrick I. Mahoney, Agricultural Banks under Stress. 7/86. Alice P. White, Paul F. O'Brien, and Mary M. Foreign Lending by Banks: A Guide to International and McLaughlin. January 1987. 30 pp. U.S. Statistics. 10/86. 152. DETERMINANTS OF CORPORATE MERGER ACTIVITY: A Recent Developments in Corporate Finance. 11/86. REVIEW OF THE LITERATURE, by Mark J. Warshawsky. Measuring the Foreign-Exchange Value of the Dollar. 6/87. April 1987. 18 pp. Changes in Consumer Installment Debt: Evidence from the 153. STOCK MARKET VOLATILITY, by Carolyn D. Davis and 1983 and 1986 Surveys of Consumer Finances. 10/87. Alice P. White. September 1987. 14 pp. Home Equity Lines of Credit. 6/88. 154. THE EFFECTS ON CONSUMERS AND CREDITORS OF PRO- Mutual Recognition: Integration of the Financial Sector in the POSED CEILINGS ON CREDIT CARD INTEREST RATES, by European Community. 9/89. Glenn B. Canner and James T. Fergus. October 1987. The Activities of Japanese Banks in the United Kingdom and 26 pp. in the United States, 1980-88. 2/90. 155. THE FUNDING OF PRIVATE PENSION PLANS, by Mark J. Industrial Production: 1989 Developments and Historical Warshawsky. November 1987. 25 pp. Revision. 4/90. 156. INTERNATIONAL TRENDS FOR U.S. BANKS AND BANK- U.S. International Transactions in 1989. 5/90. ING MARKETS, by James V. Houpt. May 1988. 47 pp. Recent Developments in Industrial Capacity and Utilization. 157. M2 PER UNIT OF POTENTIAL GNP AS AN ANCHOR FOR 6/90. THE PRICE LEVEL, by Jeffrey J. Hallman, Richard D. Developments Affecting the Profitability of Commercial Porter, and David H. Small. April 1989. 28 pp. Banks. 7/90. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A94 Index to Statistical Tables References are to pages A3-A87 although the c "A" is omitted in this index ACCEPTANCES, bankers (See Bankers acceptances) Depository institutions Agricultural loans, commercial banks, 19, 20, 76 Reserve requirements, 8 Assets and liabilities (See also Foreigners) Reserves and related items, 3, 4, 5, 12 Banks, by classes, 18-20 Deposits (See also specific types) Domestic finance companies, 36 Banks, by classes, 3, 18-20, 21 Federal Reserve Banks, 10 Federal Reserve Banks, 4, 10 Financial institutions, 26 Turnover, 15 Foreign banks, U.S. branches and agencies, 21, 78-85 Discount rates at Reserve Banks and at foreign central Automobiles banks and foreign countries (See Interest rates) Consumer installment credit, 39, 40 Discounts and advances by Reserve Banks (See Loans) Production, 49, 50 Dividends, corporate, 35 BANKERS acceptances, 9, 23, 24 EMPLOYMENT, 47 Bankers balances, 18-20 (See also Foreigners) Eurodollars, 24 Bonds (See also U.S. government securities) New issues, 34 Rates, 24 FARM mortgage loans, 38 Branch banks, 21, 57, 78-85 Federal agency obligations, 4, 9, 10, 11, 31, 32 Business activity, nonfinancial, 46 Federal credit agencies, 33 Business expenditures on new plant and equipment, 35 Federal finance Business loans (See Commercial and industrial loans) Debt subject to statutory limitation, and types and ownership of gross debt, 30 CAPACITY utilization, 48 Receipts and outlays, 28, 29 Capital accounts Treasury financing of surplus, or deficit, 28 Banks, by classes, 18 Treasury operating balance, 28 Federal Reserve Banks, 10 Federal Financing Bank, 28, 33 Central banks, discount rates, 69 Federal funds, 6, 17, 19, 20, 21, 24, 28 Certificates of deposit, 24 Federal Home Loan Banks, 33 Commercial and industrial loans Federal Home Loan Mortgage Corporation, 33, 37, 38 Commercial banks, 16, 19, 73-77, 78-79, 82-83 Federal Housing Administration, 33, 37, 38 Weekly reporting banks, 19-21 Federal Land Banks, 38 Commercial banks Federal National Mortgage Association, 33, 37, 38 Assets and liabilities, 18-20, 73-77 Federal Reserve Banks Commercial and industrial loans, 16,18,19, 20, 21, 73-77 Condition statement, 10 Consumer loans held, by type and terms, 39, 40 Discount rates (See Interest rates) Loans sold outright, 19 U.S. government securities held, 4, 10, 11, 30 Nondeposit funds, 17 Federal Reserve credit, 4, 5, 10, 11 Real estate mortgages held, by holder and property, 38 Federal Reserve notes, 10 Terms of lending 73-77 Federal Reserve System Time and savings deposits, 3 Balance sheet for priced services, 86 Commercial paper, 23, 24, 36 Condition statement for priced services, 87 Condition statements (See Assets and liabilities) Federal Savings and Loan Insurance Corporation insured Construction, 46, 51 institutions, 26 Consumer installment credit, 39, 40 Federally sponsored credit agencies, 33 Consumer prices, 46, 48 Finance companies Consumption expenditures, 53, 54 Assets and liabilities, 36 Corporations Business credit, 36 Nonfinancial, assets and liabilities, 35 Loans, 39, 40 Profits and their distribution, 35 Paper, 23, 24 Security issues, 34, 67 Financial institutions Cost of living (See Consumer prices) Loans to, 19, 20, 21 Credit unions, 27, 39. (See also Thrift institutions) Selected assets and liabilities, 26 Currency and coin, 18 Float, 4, 87 Currency in circulation, 4, 13 Flow of funds, 41, 43, 44, 45 Customer credit, stock market, 25 Foreign banks, assets and liabilities of U.S. branches and agencies, 21, 78-85 DEBITS to deposit accounts, 15 Foreign currency operations, 10 Debt (See specific types of debt or securities) Foreign deposits in U.S. banks, 4, 10, 19, 20 Demand deposits Foreign exchange rates, 70 Banks, by classes, 18-21 Foreign trade, 56 Ownership by individuals, partnerships, and corpora- Foreigners tions, 22 Claims on, 57, 59, 62, 63, 64, 66 Turnover, 15 Liabilities to, 20, 56, 57, 59, 60, 65, 67, 68 Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A95 GOLD REAL estate loans Certificate account, 10 Banks, by classes, 16, 19, 20, 38 Stock, 4, 56 Financial institutions, 26 Government National Mortgage Association, 33, 37, 38 Terms, yields, and activity, 37 Gross national product, 53 Type of holder and property mortgaged, 38 Repurchase agreements, 6, 17, 19, 20, 21 HOUSING, new and existing units, 51 Reserve requirements, 8 Reserves INCOME and expenses, Federal Reserve System, 86-87 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 Commercial banks, 73-77 SAVING Consumer installment credit, 40 Flow of funds, 41,43,44,45 Federal Reserve Banks, 7 National income accounts, 53 Foreign central banks and foreign countries, 69 Savings and loan associations, 26, 38, 39, 41. (See also Money and capital markets, 24 Thrift institutions) Mortgages, 37 Savings banks, 26, 38, 39 Prime rate, 23 Savings deposits (See Time and savings deposits) International capital transactions of United States, 55-69 Securities (See also specific types) International organizations, 59, 60, 62, 65, 66 Federal and federally sponsored credit agencies, 33 Inventories, 53 Foreign transactions, 67 Investment companies, issues and assets, 35 New issues, 34 Investments (See also specific types) Prices, 25 Banks, by classes, 18, 19, 20, 21, 26 Special drawing rights, 4, 10, 55, 56 Commercial banks, 3, 16, 18-20, 38 State and local governments Federal Reserve Banks, 10, 11 Deposits, 19, 20 Financial institutions, 26, 38 Holdings of U.S. government securities, 30 New security issues, 34 LABOR force, 47 Ownership of securities issued by, 19, 20, 26 Life insurance companies (See Insurance companies) Rates on securities, 24 Loans (See also specific types) Stock market, selected statistics, 25 Banks, by classes, 18-20 Stocks (See also Securities) Commercial banks, 3, 16, 18-20 New issues, 34 Federal Reserve Banks, 4, 5, 7, 10, 11 Prices, 25 Federal Reserve System, 86-87 Financial institutions, 26, 38 Student Loan Marketing Association, 33 Insured or guaranteed by United States, 37, 38 TAX receipts, federal, 29 MANUFACTURING Thrift institutions, 3. (See also Credit unions and Savings Capacity utilization, 48 and loan associations) Production, 48, 50 Time and savings deposits, 3, 13, 17, 18, 19, 20, 21 Margin requirements, 25 Trade, foreign, 56 Member banks (See also Depository institutions) Treasury cash, Treasury currency, 4 Federal funds and repurchase agreements, 6 Treasury deposits, 4, 10, 28 Reserve requirements, 8 Treasury operating balance, 28 Mining production, 50 UNEMPLOYMENT, 47 Mobile homes shipped, 51 U.S. government balances Monetary and credit aggregates, 3, 12 Commercial bank holdings, 18, 19, 20 Money and capital market rates, 24 Treasury deposits at Reserve Banks, 4, 10, 28 Money stock measures and components, 3, 13 U.S. government securities Mortgages (See Real estate loans) Bank holdings, 18-20, 21, 30 Mutual funds, 35 Dealer transactions, positions, and financing, 32 Mutual savings banks (See Thrift institutions) Federal Reserve Bank holdings, 4, 10, 11, 30 Foreign and international holdings and transactions, 10, NATIONAL defense outlays, 29 30, 68 National income, 53 Open market transactions, 9 Outstanding, by type and holder, 26, 30 OPEN market transactions, 9 Rates, 24 U.S. international transactions, 55-69 PERSONAL income, 54 Utilities, production, 50 Prices Consumer and producer, 46, 52 VETERANS Administration, 37, 38 Stock market, 25 Prime rate, 23 WEEKLY reporting banks, 19-21 Producer prices, 46, 52 Wholesale (producer) prices, 46, 52 Production, 46, 49 Profits, corporate, 35 YIELDS (See Interest rates) Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A96 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.1 Charlotte 28230 William E. Masters Albert D. Tinkelenberg1 Culpeper Communications John G. Stoides1 and Records Center 22701 ATLANTA 30303 Larry L. Prince Robert P. Forrestal Edwin A. Huston Jack Guynn Donald E. Nelson Birmingham 35283 A. G. Trammell Fred R. Herr1 Jacksonville 32231 Lana Jane Lewis-Brent James D. Hawkins1 Miami 33152 Robert D. Apelgren James T. Curry III Nashville 37203 Victoria B. Jackson Melvyn K. Purcell New Orleans 70161 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 Karl W. Ashman 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. Digitized for FR1A. SSEenRio r Vice President. 2. Executive Vice President. http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

A97 The Federal Reserve System Boundaries of Federal Reserve Districts and Their Branch Territories i-w Minneapolis^ I ^ ©1 \ DETROI3S~CSf^ / \S"'Lake a^' — / I Denv f -harlot"/ iklakoma Cir impkisNashj^ !J-OSA ige/es • \ / 1 \ ^ •'lie lock Birmingkai*^S>laiit^ Dallas® " ' © Pa si jacksoniM* Orleuu San Antonio (Mi*"1 April 1984 i i / ALASKA < i i i © t j yp 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 FEDERAL RESERVE REGULATORY SERVICE subscription requests must be accompanied by a check or money order payable to the Board of Governors of To promote public understanding of its regulatory the Federal Reserve System. Orders should be adfunctions, the Board publishes the Federal Reserve dressed to Publications Services, mail stop 138, Board Regulatory Service, a three-volume looseleaf service of Governors of the Federal Reserve System, Washcontaining all Board regulations and related statutes, ington, D.C. 20551. interpretations, policy statements, rulings, and staff opinions. For those with a more specialized interest in the Board's regulations, parts of this service are pub- U.S. MONETARY POLICY AND FINANCIAL lished separately as handbooks pertaining to monetary MARKETS policy, securities credit, consumer affairs, and the payment system. U.S. Monetary Policy and Financial Markets by These publications are designed to help those who Ann-Marie Meulendyke offers an in-depth descripmust frequently refer to the Board's regulatory mate- tion of the way monetary policy is developed by the rials. They are updated at least monthly, and each Federal Open Market Committee and the techniques contains citation indexes and a subject index. employed to implement policy at the Open Market The Monetary Policy and Reserve Requirements Trading Desk. Written from her perspective as a Handbook contains Regulations A, D, and Q plus senior economist in the Open Market Function at the related materials. For convenient reference, it also Federal Reserve Bank of New York, Ann-Marie contains the rules of the Depository Institutions De- Meulendyke describes the tools and the setting of regulation Committee. policy, including many of the complexities that dif- The Securities Credit Transactions Handbook con- ferentiate the process from simpler textbook models. tains Regulations G, T, U, and X, dealing with exten- Included is an account of a day at the Trading Desk, sions of credit for the purchase of securities, together from morning information-gathering through daily with all related statutes, Board interpretations, rul- decisionmaking and the execution of an open market ings, and staff opinions. Also included is the Board's operation. list of OTC margin stocks. The book also places monetary policy in a broader The Consumer and Community Affairs Handbook context, examining first the evolution of Federal Recontains Regulations B, C, E, M, Z, AA, and BB and serve monetary policy procedures from their beginassociated materials. nings in 1914 to the end of the 1980s. It indicates how The Payment System Handbook deals with expe- policy operates most directly through the banking dited funds availability, check collection, wire trans- system and the financial markets and describes key fers, and risk-reduction policy. It includes Regulation features of both. Finally, the book turns its attention to CC, Regulation J, the Expedited Funds Availability the transmittal of monetary policy actions to the U.S. Act and related statutes, official Board commentary on economy and throughout the world. Regulation CC, and policy statements on risk reduc- The book is $5.00 a copy for U.S. purchasers and tion in the payment system. $10.00 for purchasers outside the United States. Cop- For domestic subscribers, the annual rate is $200 for ies are available from the Public Information Departthe Federal Reserve Regulatory Service and $75 for ment, Federal Reserve Bank of New York, 33 Liberty each Handbook. For subscribers outside the United Street, New York, N.Y. 10045. Checks must accom- States, the price including additional air mail costs is pany orders and should be payable to the Federal $250 for the Service and $90 for each Handbook. All Reserve Bank of New York in U.S. dollars. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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