greenbooks · June 19, 1972

Greenbook/Tealbook

Prefatory Note

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Content last modified 6/05/2009.

CONFIDENTIAL (FR)

SUPPLEMENT CURRENT ECONOMIC AND FINANCIAL CONDITIONS

Prepared for the Federal Open Market Committee

June 16, 1972

By the Staff Board of Governors of the Federal Reserve System

SUPPLEMENTAL NOTES The Domestic Economy Housing starts.

Seasonally adjusted private housing starts

rose 11 per cent in May to an annual rate of 2.3 million units--nearly equaling the March rate.

The rise in May was concentrated primarily

in single-family units and in the North Central States.

Building

permits edged up 3 per cent in May to a seasonally adjusted annual rate of 2.0 million units. PRIVATE HOUSING STARTS AND PERMITS (Seasonally adjusted annual rates, in millions of units)

Starts 1-family 2-or-more family Permits

1971 QIV

1972 Apr.(p)

May(p)

2.24

2.51

2.10

2.32

1.25 .99

1.35 1.16

1.16 .94

1.33 .99

2.12

2.04

1.93

1.99

.51

.57

.63

n.a.

MEMORANDUM: Mobile home shipments p/ Preliminary. n.a. - Not available.

Sales of new domestic-type autos in the first 10 days of June were at an annual rate of 8.6 million units, somewhat below the first 10 days of May but 16 per cent above a year ago.

-2

Personal income increased by nearly $5 billion to $915.9 billion annual rate in May, somewhat less than the upward revised $5.5 billion rise in the previous month.

Wage and salary disburse-

ments increased by about $3 billion, with manufacturing and service payrolls accounting for much of the increase in private disbursements --primarily due to gains in employment in these industries.

Govern-

ment payrolls rose by $500 million--the same as last month.

Increases

in transfer payments and personal interest income accounted for the rise in nonwage income.

Compared to a year ago, personal income was

up by 7.9 per cent, and wage and salary disbursements by 8.6 per cent.

PERSONAL INCOME (Billions of dollars; seasonally adjusted, annual rates)

1972

Total Wage and salary disbursements Government Private Manufacturing Distributive Services Other Nonwage income Less:

Personal contributions for social insurance

Net change

April 1972May 1972

March

1972 April

May

905.6

911.1

915.9

4.8

613.2 132.3 480.9

618.3 132.9 485.4

621.3 133.4 487.9

3.0 .5 2.5

171.6

173.4 150.1 114.3 47.7

174.8 150.4 115.1 47.6

1.4 .3 .8 -.1

327.3

329.2

1.9

34.6

148.6

113.5 47.2 326.8

34.4

34.5

CORRECTION: Section 1-21, line 4 above the table should read unusually small April to May....(not usually).

-3Domestic Financial INTEREST RATES

1972 Highs

Lows

May 22

June 15

Short-Term Rates Federal funds (wkly. avg.) 3-month Treasury bills (bid) Comm. paper (90-119 day) Bankers' acceptances Euro-dollars CD's (prime NYC) Most often quoted new Secondary market

4.48 (6/7)

3.94 4.62 4.50 5.94

(3/15) (4/21) (4/20) (3/27)

3.18 (3/1) 2.99 3.75 3.38 4.62

(2/11) (2/29) (2/23) (3/8)

4.32 (5/17)

4.46 (6/14)

3.79 4.38 4.25 4.75

3.90 4.50 4.38 4.81

4.50 (6/14) 4.75 (4/19)

3.50 (2/23) 3.50 (2/16)

4.38 (5/17) 4.39 (5/17)

4.50 (6/14) 4.60 (6/14)

4.44 (4/4) 4.62 (6/15) 4.76 (4/13)

3.35 (1/10) 3.88 (3/3) 3.79 (2/17)

4.26 4.50 4.58

4.34 4.62 4.68

4.75 (4/26) 5.25 (4/12)

3.88 (2/23) 3.70 (2/2)

4.62 (5/17) 4.68 (5/17)

4.62 (6/14)

4.86 (4/4) 5.32 (4/14)

3.57 (1/8) 4.32 (1/17)

4.53 4.96

4.65 4.99

5.12 (6/14) 3.15 (4/13)

4.62 (1/19) 2.35 (1/12)

5.12 (5/17) 5.12 (6/14) 2.85 (5/17) 3.00

Treasury coupon issues 5-years 20-years

6.28 (4/13) 6.22 (4/14)

5.47 (1/13)

5.95 (1/14)

5.81 6.01

5.87 6.00

Corporate Seasoned Aaa Baa

7.37 (4/24) 8.29 (1/3)

7.14 (1/17) 8.17 (1/19)

7.31 8.26

7.23 8.20

7.42 (4/14)

6.86 (1/14)

7.25

(5/19)

7.26

5.54 (4/13)

4.99 (1/13)

4.65 (1/13)

5.29 (5/18) 5.15 (5/18)

5.36

5.25 (4/13)

7.63 (5/15)

7.54 (3/20)

7.63 (5/15)

7.62 (6/12)

6-month Treasury bills (bid) Comm. paper (4-6 mo.) Federal agencies CD's (prime NYC) Most often quoted new Secondary market 1-Year Treasury bills (bid) Federal agencies CD's (prime NYC) Most often quoted new Prime municipals

4.95 (6/14)

Intermediate and Long-Term

New Issue Aaa Municipal Bond Buyer Index Moody's Aaa Mortgage-implicit yield in FNMA auction 1/ 1/

5. 10

Yield on short-term forward commitment after allowance for commitment fee and required purchase and holding of FNMA stock. Assumes discount on 30-year loan amortized over 15 years.

A - 1 SUPPLEMENTAL APPENDIX A

QUARTERLY SURVEY OF BANK LENDING PRACTICES* Results of the May 15 Survey of Bank Lending Practices are consistent with the general improvement in the economy which has occurred since early in the year. Businesses' demands for bank financings increased significantly with bankers expressing considerable optimism that the momentum of business expansion would continue through the summer. In the current survey, the 125 participants noted two major alterations in loan markets since mid-February. (See Table 1.) First, a significant strengthening in business loan demand was reported by nearly 60 per cent of the respondents, whereas in the February survey, less than a fifth had recorded any pick-up in loan demand. Moreover, in the current survey, nearly 75 percent expressed confidence that this uptrend in loan demand would be sustained through August. The second reported change in lending practices was in higher interest rates on business loans in line with the stepped-up demand for these loans. More than a third of the panel reported firmer interest rate policies, reflecting the general increases in prime lending rates. Most other terms on business lending were unchanged from February, but it is worth noting that more than 10 per cent of the participants reported placing greater emphasis on a loan applicant's potential value as a depositor or source of collateral business. Changes in lending terms to finance companies were not quite as striking as those on business loans--less than a fourth of the banks reported firmer interest rates. The firmer interest rates policies, moreover, were partly offset by a slight increase in willingness to establish or enlarge credit lines. Regarding other portions of the loan portfolio, bankers' interest in consumer instalment loans and in single-family mortgages increased further; willingness to extend term loans to businesses increased as well.

Prepared by Marilyn Barron, Research Assistant, Banking Section, Division of Research and Statistics.

A-2

A breakdown of responses by size of banks shows that a somewhat higher percentage of smaller banks (with deposits of less than $1 billion) Large banks, on the (See Table 2.) reported firmer interest rates. other hand, expressed a greater desire to extend multi-family and commercial mortgages and to make broker loans. Variations in responses by regions were negligible. (See Table 3.)

NOT FOR QUOTATION OR PUBLICATION

TABLE

PAGE 01

QUARTERLY SURVEY OF CHANGES IN BANK LENDING PRACTICES AT SELECTED LARGE BANKS IN THE U.S. 1/ (STATUS OF POLICY ON MAY 15, 1972 COMPARED TO THREE MONTHS EARLIER) (NUMBER OF BANKS & PERCENT OF TOTAL BANKS REPORTING) MUCH STRONGER

TOTAL BANKS

PCT

BANKS

PCT

MODERATELY STRONGER BANKS

PCT

ESSENTIALLY UNCHANGED

MODERATELY WEAKER

BANKS

PCT

MUCH WEAKER BANKS

PCT

STRENGTH OF DEMAND FOR COMMERCIAL AND INDUSTRIAL LOANS (AFTER ALLOWANCE FOR BANK'S USUAL SEASONAL VARIATION) COMPARED TO THREE MONTHS AGO

125

100.0

56.8

35.2

ANTICIPATED DEMAND IN NEXT 3 MONTHS

125

100.0

74.4

24.8

MUCH FIRMER POLICY

ANSWERING QUESTION BANKS

PCT

BANKS

PCT

MODERATELY FIRMER POLICY

BANKS

PCT

ESSENTIALLY UNCHANGEO POLICY

MODERATELY

BANKS

PCT

EASIER POLICY PCT

LENDING TO NCNFINANCIAL BUSINESSES TERMS AND CONDITIONS: INTEREST RATES CHARGED

100.0

36.0

61.6

1.6

COMPENSATING OR SUPPORTING BALANCES

100.0

6.4

90.4

3.2

STANDARDS OF CREDIT WORTHINESS

100.0

4.8

92 .8

6.s

MATURITY OF TERM LOANS

100.0

6.4

80.8

ESTABLISHED CUSTOMERS

100.0

3.2

94.4

NEW CUSTOMERS

100.0

4.8

85.6

LOCAL SERVICE AREA CUSTOMERS

100.0

2.4

93.6

NONLOCAL SERVICF AREA CUSTOMERS

100.0

8.O

qn.B

12.0

REVIEWING CAECIT LINES CR LOAN APPLICATIONS

SUVFY OF AS (F

LENDING PRACTICES AT MAY 15. 1972.

125

LARGE BANKS

REPORTING IN

THE FEDERAL

RESERVE

OUARTFRLY

INTEREST RATF

SURVFY

MUCH EASIER POLICY BANKS

PCT

NOT

FOR QUOTATION OR PUBLICATION

TABLE

ANSWERING QUESTION BANKS

PCT

MODERATELY EASIER POLICY

MUCH

MODERATELY FIRMER POLICY

ESSENTIALLY UNCHANGED POLICY

PCT

BANKS

PCT

BANKS

9.6

108

86.4

2.4

0.0

0.8

121

96.8

0.8

0.0

22.4

73.6

2.4

MUCH FIRMER POLICY BANKS

PAGE 02

fCONTINUEDI

PCT

BANKS

PCT

EASIER POLICY BANKS

PCT

FACTORS RELATING TO APPLICANT 2/ VALUE AS DEPOSITOR OR SOURCE OF CCLLATERAL BUSINESS

125

100.0

1.6

INTENDED USE OF

125

100.0

1.6

125

100.0

COMPENSATING OR SUPPORTING BALANCES

125

100.0

3.2

116

92.8

3.2

ENFORCEMENT OF BALANCE REQUIREMENTS

125

100.0

4.0

114

91.2

2.4

ESTABLISHING NEW OR LARGER CREDIT LINES

125

100.0

8.8

74.4

15.2

THE LOAN

LENDING TO "NCNCAPTIVE"

FINANCE COMPANIES

TERMS AND CONDITIONS: INTEREST RATES

CHARGED

ANSWERING QUESTION BANKS

PCT

CONSIDERABLY LESS WILLING BANKS

PCT

MODERATELY LESS WILLING BANKS

PCT

ESSENTIALLY UNCHANGED

MODERATELY MORE MILLING

BANKS

PCT

CONSIDERABLY MORF WILLING BANKS

PCT

MWlLINGNESS TO MAKE OTHER TYPES OF LOANS TERN LOANS TO BUSINESSES

126

100.0

100

W.7

1*6.

CONSUMER INSTALMENT LOANS

123

100.0

69.4

27.4

SINGLE FAMILY MORTGAGE LOANS

123

100.0

T8.1

18.7

MULTI-FAMILY MORTGAGE LOANS

123

100.0

102

S2.,

12.

ALL OTHER MORTGAGE LOANS

123

100.0

100

81.3

12.2

PARTICIPATION LOANS WITH CORRESPONDENT BANKS

123

100.0

0.0

2.4

107

8T7.

10.6

LOANS TO BROKERS

122

100.0

1.6

2.9

102

83.6

10.7

1.6

9.8

2/ FOR THESE FACTORS* FIRMER MEANS THE FACTORS WERE CONSIDERED MORE IMPORTANT IN MAKING DECISIONS FOR APPROVING CREDIT REQUESTS. AND EASIER MEANS THEY WERE LESS IMPORTANT.

NOT FOR QUOTATION OR PUBLICATION

PAGE 03

TABLE 2

COMPARISON OF QUARTERLY CHANGES IN BANK LENDING PRACTICES AT BANKS GROUPED BY SIZE OF TOTAL DEPOSITS (STATUS OF POLICY ON MAY 15, 1972, COMPARED TO THREE MONTHS EARLIER) (NUMBER OF BANKS IN EACH COLUMN AS PER CENT OF TOTAL BANKS ANSWERING QUESTION)

SIZE

TOTAL $1 C OVER

UNDER $1

100

OF BANK

MUCH STRONGER $1 & OVER

UNDER $1

TOTAL DEPOSITS IN BILLIONS

MODERATELY STRONGER

ESSENTIALLY UNCHANGED

MODERATELY WEAKER

$1 & OVER

S1 & OVER

UNDER $1

MUCH WEAKER $1 6 OVER

UNDER $1

STRENGTH OF DEMAND FOR COMMERCIAL AND INDUSTRIAL LOANS (AFTER ALLOWANCE FOR BANK'S USUAL SEASONAL VARIATION) COMPARED TO THREE

MONTHS AGO

ANTICIPATED DEMAND IN NEXT 3 MONTHS

TOTAL $1 & OVER LENDING TO NCNFINANCIAL

UNDER $1

MUCH FIRMER $1 C OVER

UNDER $1

MODERATELY FIRMER

ESSENTIALLY UNCHANGED

MODERATFLY EASIER

$1 C OVER

$1 & OVER

UNDER $1

MUCH

EASIlR $1 E OVER

BUSINESSES

TERMS AND CCNOITICNS: INTEREST RATES CHARGED

100

COMPENSATING OR SUPPORTING BALANCES

100

STANDARDS CF CREDIT WORTHINESS

100

MATURITY OF TERM LOANS

100

ESTARLISHFC CUSTOMEgS

100

NFw CUSTOMERS

100

LOCAL SERVICE AREA CUSTOMERS

100

NCNLOCAL SERVICF AREA CUSTOMERS

100

to1

RFVIFWING CREDIT LINES CR LCAN APPLICATIONS

54 LARGF BANKS (DEPOSITS OF $1 BILLION OR MORE) AND SURVFY OF LENDING PRACTICES AT St RILLICN) RFPORTING IN THE FEDERAL RESERVE QUARTERLY INTEREST RATE SURVFY AS OF

71 SMALL BANKS ( DEPOSITS OF MAY 1S, 1t72.

LESS THAN

UNDER $1

NOT FOR

QUOTATION OR PUBLICATION

TABLE 2

SIZE

OF BANK MUCH FIRMER POLICY

NUMBER ANSWERING QUESTION St1 OVER

UNDER $1

$1 & OVER

PAGF 04

(CONTINUED)

UNDER SI

TOTAL DEPOSITS IN BILLIONS -MODERATFLY ESSENTIALLY MODERATELY EASIER UNCHANGED FIRMER POLICY POLICY POLICY $1 & OVER

UNDER $1

Sl E OVER

UNDER $1

$1 C OVER

UNDER St

MUCH EASIER POLICY S1 C OVER

UNDER $1

FACTORS RELATING TO APPLICANT 2/ VALUE AS DEPOSITOR OR SOURCE OF COLLATERAL BUSINESS

100

INTENDED

100

L00

USE

THE LCAN

LENDING TO "NONCAPTIVE" TERMS

FINANCE

COMPANIES

AND CONDITIONS:

INTEREST RATES CHARGED COMPENSATING OR

SUPPORTING BALANCES

ENFORCEMENT OF BALANCE

REQUIREMENTS

ESTABLISHING NEW OR LARGER CREDIT LINES

NUMBER ANSWERING QUESTION $1 & OVER WILLINGNESS TO MAKE OTHER

UNDER S1

CONSIDERABLY LESS WILLING S1 & OVER

UNDER $1

MODERATELY LESS WILLING

ESSENTIALLY UNCHANGED

$1 & OVER

S C OVER

UNDER $l

UNDER S$

MODERATELY MORE WILLING $1 & OVER

UNDER St

TYPES OF LOANS

TERM LOANS TO BUSINESSES CONSUMER INSTALMENT LOANS SINGLE FAMILY MORTGAGE LOANS MULTI-FAMILY MORTGAGE LOANS ALL OTHER

MORTGAGE LOANS

PARTICIPATION LOANS WITH CORRESPONDENT BANKS

100

LOANS TO BROKERS

100

2/ FOR THESE FACTORS, FIRMER MEANS THE FACTORS WERE CONSIDERED CREDIT REQUESTS, AND EASIER MEANS THEY WERE LESS IMPORTANT.

IMPORTANT

IN MAKING DECISIONS FOR APPROVING

CONSIDERABLY MORE WILLING St 8 OVER

UNDER S1

NOT FOR QUOTATION OR

PUBLICATION

PAGF '5

TABLE 3

QUARTERLY SURVEY OF CHANGES IN BANK LENDING PRACTICES AT SELECTED LARGE BANKS IN THE U.S. STATUS OF POLICY ON MAY 15, 1972 COMPARED TO THREE MONTHS EARLIER (NUMBER OF BANKS)

ALL DSTS

NEW YORK BOSTOTAL CITY OUTSIDE TON

PHILADEL.

CLEVE- RICHMOND LAND

DALLAS

SAN FRAN

ST. ATLAN- CHICLOUtS AGO TA

MINNEAPOLIS

KANS. CITY

0 3 4 2 0

STRENGTH OF DEMAND FOR COMMERCIAL AND INDLSTRIAL LCANS (AFTER ALLOWANCE FOR BANK'S USUAL SEASONAL VARIATION) COMPARED

TO 3 MCNTHS

AGO

125

MUCH STRONGER MODERATELY STRONGER ESSENTIALLY UNCHANGED MODERATELY WEAKER MUCH WEAKER

2 71 44 8 0

ANTICIPATED DEMAND NEXT THREE MONTHS

0 5 2 1 0

0 10 8 2 0

0 3 4 2 0

0 7 4 0 0

0 4 2 0 0

0 7 3 1 0

1 8 3 0 0

0 7 3 0 0

1 10 4 0 0

0 5 4 0 0

0 3 0 0

0 4 3 2 0

0 6 2 0 0

0 13 7 0 0

0 7 2 0 0

0 6 5 0 0

0 6 0 0 0

0 9 1 1 0

0 11 1 0 0

0 8 2 0 0

0 12 3 0 0

0 6 3 0 0

0 2 1 0 0

0 8 1 0 0

0 4 5 0 0

0 8 5 0

0 4 4 0 0

0 6 12 2 0

0 1 8 0 0

0 5 4 2 0

0 3 3 0 0

0 2 9 0 0

0 5 7 0 0

0 3 7 0 0

0 2 13 0 0

0 4 5 0 0

.0 1 2 0 0

1 5 3 0 0

0 4 5 0 0

0 6 7 0 0

0 0 8 0 0

0 1 17 2 0

0 0 8 1 0

0 1 5 1 0

0 0

0 1 9 1 0

0 1 11 0 0

0 2 8 0 0

0 0 15 0 0

0 0 9 0 0

0 1 2 0 0

0 2

0 0 9 0 0

0 0 13 0 0

8 5 0

125 0 93 31 1 0

MUCH STRCNGER MODERATFLY STRONGER ESSENTIALLY UNCHANGED MODERATELY WEAKER MUCH WEAKER

LENDING TO NONFINANCIAL BUSINESSES TERMS AND CONDITIONS INTEREST RATES CHARGED

125

MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY COMPENSATING BALANCES

125

MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY

1I SURVEY AS OF

OF LENDING PRACTICES MAY 15. 1972.

1 45 77 2 0

0 8 113 4 0

AT 125 LARGE BANKS REPORTING

1 0

THE

FEDERAL RESERVE

QUARTERLY INTEREST

RATE SURVEY

? 0 0

NOT FOR QUOTATION OR PUBLICATION

PAGE 06

TABLE 3 ICONTINUEDI ALL DSTS

NEM YORK BOSTON TOTAL CITY OUTSIDE

PHILADEL.

CLEVE- RICHLAND MONO

ST. ATLAN- CHICAGO LOUIS TA

MINE- KANS. CITY APOLIS

OALLAS

SAN FRAN

LENDING TO NONFINANCIAL BUSINESSES TERMS AND CONDITIONS STANDARDS OF CREDIT WORTHINESS MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY

MATURITY OF TERM LOANS MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGFO POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY

125 0 2 to 0

1 0 9 0

0 0 4 2 0

0 0 10 1 0

0 1 10 1 0

1 0 7 2 o

0 1 13 1 0

0 1 10 0 0

0 0 6 0 0

0 0 10 1 0

0 0 11 1 0

1 0 9 0 0

0 0 15 0 0

0 0 9

0 1 5

0 0 10

0 0 11

1 1 7

0 0 15

1 3

0 0

O 0

8 0

19 1

10 1

' 11 1

1 0

117 4

0 10 1

9 O 0

14 1

2 6 116 1

0 0 8 0

0 0 20 0

0 0 9 0

0 0 11 0

0 1 5 0

0 0 t1 0

0 0 6 2 0

0 0 17 3 0

0 0 6 3 0

0 0 11 0 0

0 0 8 0 0

0 1 19 0 0

0 0 9 0 0

3 6 107

0 0 8

0 0 18

0 0 14 1

0 0 4 0 0

0 1 2 0 0

1 1 7 0

0 0 9 0

0 1 12 0

0 1 2

0 2 5 2

1 11 1

0 2 7 0O 0

0 0 3 0 0

0 2 7 0 0

125 1 8 101 15 0

0 9 0 0

REVIEWING CREDIT LINFS OR LOANS ESTABLISHEC CUSTOMERS

MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY

1 4 118 2 0

0 0

0 1 12 0 0

o 1 8

0 0 9 0

125

NEW CUSTOMERS

MUCH FIRMER POLICY MODERATFLY FIRMFR POLICY FSSFNTIALLY UNCHANGEC POLICY MODERATELY

125

FASTR

PnLICY

MUCH EASIFR POLICY LOCAL SERVICF AREA CUSTOMERS UICH FIRMFP Pr)LICY MpnFRATELY FIRMFN POLICY

FSSFNTIALLY UNCHANGEO POLICY PODFRATELY EASIER POLICY lJUCHEASIER PCLICY

0 0

' 1 5

' 9

0 7

7 "

125 1

PAGE 07

TABLE 3 (CONTINUED)

NOT FOR QUOTATION OR PUBLICATION

ALL OSTS

NEW YORK BOSTOTAL CITY OUTSIDE TON

PHILADEL.

CLEVE- RICHMONO LAND

ATLAN- CHICAGO TA

ST. LOUIS

MINNE- KANS. CITY APOLIS

DALLAS

SAN FRAN

LFNOING TO NONFINANCIAL BUSINESSES REVIEWING NONLOCAL

CREDIT

LINES OR LOANS

SERVICE

AREA CUST

MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY

125 2 10 101 12 0

0 0 9 2 0

0 0 6 0 0

0 0 9 2 0

0 2 8 2 0

0 3 7 0 0

0 1 14 0 0

0 1 7 1 0

0 0 3 0 0

2 1 4 2 0

0 1 7 1 0

0 1 10 2 0

0 0 3 0 n

1 1 7 1 0

0 0 Q 0 0

2 0 7 0 n

0 m 9 ^

0 1 11

0 5

1 3 5

0 0

0 0 18s 2 0

0 0 8 0 0

0 0 20 0 0

0 0 9 0 0

0 0 11 0 0

0 2 4 0 0

0 0 9 2 0

0 2 10 0 0

1 3 6 0 0

0 4 11 0 0

0 0 9

0 0 8 0 0

0 0 20 0 0

0 0 9 0 0

0 0 11 0 0

0 0 6 0 0

0 0 11 0 0

0 0 12 0 0

0 0 n1 0 0

0 0 15 0 n

0 2 6 0 0

0 2 15 3 0

0 1 7 1 0

0 1 8 2

0 2 4 0 0

0 3 8 0 0

0 2 10 0 0

1 0 9 0 0"

0 3 12 0

0 ? 7 n

0 0

0 0 9 2

FACTORS RELATING TO APPLICANT 2/ VALUE AS DEPOSITOR OR SOURCE OF COLLATERAL BUSINESS MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY INTENDED USE OF LOAN MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASTER POLICY

125 2 12 108 3 0

0 12 1 0

125 2 1 121 1 0

9 0 0

LFNDING TO "NCNCAPTIVE" FINANCE COMPANIES TERMS AND CONDITIONS INTEREST RATES CHARGED MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGEO POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY

125 2 28 92 3 0

2/ FOR THESE FACTORS, FIRMER MEANS THE FACTORS AND EASIER MEANS THEY WERE CRFDIT REQUESTS.

WERE CONSIDERED LESS IMPORTANT.

IMPORTANT

MAKING

DECISIONS

FnR APPROVIN,

7 "

NOT FOR

QUOTATION OR PUBLICATION

TABLE

ALL DSTS

NEW YORK BOSTON TOTAL CITY OUTSIDE

PAGF ^"

3 (CONTINUED)

PHILADEL.

CLEVE- RICHLAND MOND

ST. ATLAN- CHICAGO LOUTS TA

MINNFAPnLTS

SAN FRAN

KANS. CITY

n0lLAS

1 I 7

3 n 0

17 I

LENDING TO "NCNCAPTIVE" FINANCE COMPANIES TERMS AND CONOITIONS: SI7E OF COMPENSATING BALANCES MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY ENFORCEMENT OF BALANCE REOUIRFMENT MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY ESTABLISHING NEW OR LARGER CREDIT LINES MUCH FIRMER POLICY MODERATELY FIRMER POLICY ESSENTIALLY UNCHANGED POLICY MODERATELY EASIER POLICY MUCH EASIER POLICY

125 1 4 116 4 0

0 0 7 1 0

0 1 18 1 0

0 1 7 1 0

0 0 11 0 0

0 1 5 0 0

0 0 10 1 0

0 C 12 0 0

0 0 1 0 0

0 0 7 1 0

0 0 20 0 0

0 0 9 0 0

0 0 11 0 0

0 1 5 0 0

0 0 11 0 0

0 1 11 0 0

1 1 8 0 0

0 n 15 0 0

0 0 9

0 8 0 0

0 13 7 0

0 0 8 1 0

0 0 5 6 0

0 1 4 1 0

0 1 9 1 0

0 0 10 2 0

0 1 9 0

0 2 12 1

0 1 5 3

0 0 7 1 0

0 0 18 2 0

0 0 8 1

0 0 10 1 00

0 0 5 1 0

0 0 9 2 0

0 0 10 2 0

1 0 7 2 0

0 0 7 2

0 0 7 1 0

0 0 13 6 0

0 0 7 1 0

0 0 6 5 0

0 1 3 2 0

0 0 8 3 0

0 0 1I 1 0

0 0 5 4

1 9

9q 0 0

n 3 m 0

125 2 6 114 3 0

0 3 0

1 1 7

1 7 I 1 0

0 I 11 0

125 2 11 93 19 0

0 0 3

2 n 65 2

" 3

3 n 0

0 1 4 4 0

0 0 8 0

0 2 9 2 0

0 0 3 0 0

0 0 6 2 1

0 0 5 4 0

0 0 10 3 0

1 n0

2 10 1 0

WILLINGNESS TO MAKE OTHER TYPES OF LOANS TERM LOANS TO BUSINESSES CONSIDERABLY LESS WILLING MODERATELY LESS WILLING ESSENTIALLY UNCHANGED MODERATELY MORE WILLING CONSIDERABLY MORE WILLING CONSUMER INSTALMENT LOANS CONSIDERABLY LESS WILLING MODERATELY LESS WILLING ESSENTIALLY UNCHANGED MODERATELY MORE MILLING CONSIDERABLY MORE WILLING

124 1 3 100 20 0

6 13 2 0

124 0 2 86 34 2

0 1 9 5 0

0 0 6 3 0

NOT FOR

QUOTATION OR PUBLICATION

PAGE

TABLE 3 (CONTINUED)

ALL OSTS

BOSTON

NEW YORK TOTAL CITY OUTSIDE

PHILADEL.

CLEVE- RICHMOND LAND

ATLANTA

ST. CHICAGO LOUIS

MTNNFAPOLIS

KANS. CITY

DAL-

SAN FRAN

LA-

WILLINGNESS TO MAKE OTHER TYPES CF LCANS SINGLE FAMILY MORTGAGF LOANS CONSIDERABLY LESS WILLING MODERATELY LESS WILLING FSSENTIALLY UNCHANGED MODERATELY MORE WILLING CONSTIERABLY MORE WILLING MULTIFAMILY MORTGAGE LOANS CONSIDERABLY LESS WILLING MODERATELY LESS WILLING ESSENTIALLY UNCHANGED MODERATELY MORE WILLING CONSIDERABLY MORE WILLING ALL CTHER MORTGAGE LOANS CONSIDERABLY LESS WILLING MODERATELY LESS WILLING ESSENTIALLY UNCHANGED MODERATELY MORE WILLING CONSIDERABLY MORE WILLING PARTICIPATICN LOANS WITH CORRESPONDENT BANKS CONSIDERABLY LESS WILLING MODERATELY LESS WILLING ESSENTIALLY UNCHANGED MODERATELY MORE WILLING CONSIDERABLY MORE WILLING LOANS

TO BROKERS

CONSIDERABLY LESS WILLING MODERATELY LESS WILLING ESSENTIALLY UNCHANGED MODERATELY MORE WILLING CONSIDERABLY MORE WILLING

NUMBER OF BANKS

123 0 2 96 23 2

0 0 7 1 0

0 0 15 4 0

0 O 7 1 0

0 0 8 3 0

0 0 5 1 0

0 0 7 4 0

0 0 8 0 0

0 1 17 1 0

0 0 7 1 0

0 1 10 0 0

0 0 5 1 0

0 0 9 2 0

0 0 7 1 0

0 1 15 3 0

0 0 7 1 0

0 1 8 2 0

0 0 5 1 0

0 0 7 1 0

0 0 18 2 0

0 0 8 1 0

0 0 10 1 0

0 0 8 0 0

0 0 16 4 0

0 0 6 3 0

0 0 10 1 0

0 0 7 2 "

13 2 0

0 10 2

0 9 0 0

0 2 12 1 0

0 0 9 2

0 0 10 2 0

0 1 4 1 0

0 0 9 2 0

1 0 5 0 0

0 0 7 4 0

0 to 2 0

1 5

2 1

123 1 8 102 12 0

1 1 7 1

0 O 3 1 0

? 5 2

9 2

A n

123 0 6 100 15 2

9 0 0

1 11 3 0

1 7 0 1

0 0 11 1 0

0 0 10

0 0 14

0 0 8 1

0 0 3 0 0

0 0 11 0 1

0 0 9 1 0

1 0 13 1 0

0 0 9 0 0

0 n 3 0 0

3 0 0

0 n 7 1 1

00 1 8

2 9 2

0 1 5 2

0 0 8 0 0

0 1 10 2 n

0 1 4 1 1

0 1 7 0 0

0 1 1n 2 0

123 0 3 107 13 0

122 2 3 102 13 2

125

B - 1

APPENDIX B:

CONGRESSIONAL DEVELOPMENTS RELATING TO THE SOCIAL SECURITY AND WELFARE REFORM BILL.*

The Senate Finance Committee has completed its work on the broad social security welfare reform bill. The Committee bill is somewhat more costly in the long run (perhaps $6.0 billion annually) than the Housepassed bill or the Administration proposals. There appears to be considerable opposition to the Senate committee bill, which is scheduled for debate in the Senate in July. Of course, the final outcome will not be known until differences are settled in the House-Senate conference committee. Staff projections incorporate the Administration's proposals for social security liberalization and welfare reform but the Staff estimate includes a 12.5 per cent social security boost projected rather than the 5 per cent increase proposed by the Administration. The Senate Committee bill includes a 10 per cent social security benefit hike, but many Senators are committed to a 20 per cent increase. There are substantial differences in the estimate of the cost of various welfare provisions of the House and Senate bills. HEW estimates that the first full year cost of the Senate Committee proposals for general welfare and workfare will be $12.7 billion compared to the Committee estimate of $6.7 billion. On the other hand the Senate Committee estimates that the cost of the welfare provisions of the House bill (essentially the Administration's family assistance plan) are underestimated by $2.0 billion. Table I below, shows the major provisions of the Senate Committee bill with alterative estimates of the first full year cost of the welfare provisions. While the cost of the various provisions of the Senate Committee bill are still not certain, the Staff has made a rough estimate of the effect the Committee bill would have on Staff estimates if enacted. These estimates are shown in Table II, below. The social security provisions of the Senate Committee bill are initially less costly than the Staff estimates. The Committee bill also includes the same wage base increase assumed in the Staff projections (from $9,000 to $10,200 beginning January 1973). However the Committee would increase the tax to 5.7 per cent instead of the 5.4 per cent expected by the Staff. The higher Committee rate would increase calendar 1973 receipts by $3.0 billion. There have been reports that even higher social security taxes will be enacted if a 20 per cent benefit increase is approved. *Prepared by William Beeman, Economist and Mary Ellen Stroupe, Economist, Government Finance Section.

B -2 Table 1.

PRINCIPAL PROVISIONS OF THE SENATE FINANCE COMMITTEE SOCIAL

SECURITY AND WELFARE BILL

Effective Date

First Full-Year Cost: Additions to Present Legislation (In Billions of $) Senate Finance H.E.W. Estimate Estimate

Retroactive to June 1, 1972 1/

$4.300

SOCIAL SECURITY CASH BENEFITS 1.

Provisions of House Bill Changed and New Provisions Added by the Committee A. 10% across-the-board benefit increase B. Special minimum benefits up to $400 per month C. Automatic cost-of-living increases D. Retirement delayed beyond age 65 E. Reduction in waiting period for disability benefits (to 4 months) F. Extension of coverage to dependent sisters and to dependent disabled brothers.

G. Disability benefits for individuals who are blind 2.

.300

Jan. 1973 Jan. 1975 Jan. 1973

n.e.

Jan.

1973

.250

Jan.

1973

.070

.180

Jan. 1973

.200

Jan. 1973

1.000

Jan. 1973 Jan. 1973

.650 .016

Jan. 1973

.018

Provisions of House Bill Not Changed by the Committee A. Increase in widow's and widower's benefits B. Allowable earnings increased to $2,000 per year C. Childhood disability benefits D. Continuation of child's benefits through the end of a semester

TOTAL SOCIAL SECURITY CASH BENEFITS

$6.984

MAJOR MEDICARE-MEDICAID PROVISIONS 1.

Medicare Medicare coverage for disabled beneJuly 1, 1973 ficiaries insurance Hospital 1) 2) Supplementary medical July 1, 1973 B. Coverage of drugs under medicare C. Cover chiropractic, limit premium, n.a. other changes n.a. D. Extended care definition, other changes A.

1/ Implies first cash payment retroactive to July 1 n.e.--Not Estimated n.a.--Not Available

1.500 .350 .700 .200 .200

n.a.

B -3

Effective Date 2.

(In billions of $) Senate Finance H.E.W. Estimate Estimate

Medicaid A. Mentally ill children B. Coverage of workfare participants C. Other changes

n.a. n.a. n.a.

TOTAL MEDICARE-MEDICAID PROVISIONS

.100 .200 -.300 $2.950

n.a.

2.2 2.6 .3 1.2

n.a.

3.7 1.8 .8 .4 .7 -7.0

3.2 1.8 1.5 .8 -7.0

$6.7

12.7 2/

WELFARE PROGRAMS 1. 2.

Additional Aid to the Aged, Blind and Disabled "Workfare": Government employment Wage supplement 10% work bonus General welfare provisions A. Welfare payments B. Food stamps C. Child care D. Services, training E. Administration F. Reduction In Existing Welfare program TOTAL WELFARE PROGRAMS 2/ Using Committee figure for line 1 n.a.--Not Available

upon enactment Jan. 1974 Jan. 1974 Jan. 1974 upon upon upon upon upon upon

enactment enactment enactment enactment enactment enactment

5.7 1.7 1.1

1.7

B - 4

The Committee bill has higher outlays for welfare reform and for medicare and medicaid. Medicare and medicaid provisions would increase Staff outlays in the second half of calendar 1973 by about $3.0 billion, annual rate. In regard to welfare the Staff projections assume that the Administration's welfare reform doesn't begin until Fiscal year 1974, although $.5 billion start up costs are provided in fiscal 1973. In the Committee bill "workfare" would not be effective until January 1974, but aid to the aged, blind and disabled as well as several other general welfare programs would begin upon enactment. Table II PRELIMINARY ESTIMATES OF ADDITIONAL COSTS OF SENATE FINANCE COMMITTEE SOCIAL SECURITY-WELFARE REFORM BILL AS COMPARED TO STAFF ASSUMPTIONS (Billions of dollars, annual rates)

Calendar

Social Security Benefits 1. 10% increase instead of 12.5% Widows benefit Outside earnings Other Total

2. 3. 4.

Calendar

1972 H-2

H-1

H-2

-1.0

- .8 - .6 --2.4

1973

-1.0

--1.0 --

- .4 - .3 .5 -1.2

--- 1.9 .7

--- --1.0 --

Medicare and Medicaid 1. 2.

For disabled Outpatient drugs

--- 3.

Other,net

3.0

1.5

. 2.2 -1 --

2.2 --

1.l-

Total

1.0 .3

Uelfare Reform 1. 2.

Aged, blind and disabled Uorkfare

General Welfare Provisions net Total

Grand Total

--- /

-1.0--

-2.4

1.0 3.-2

3.2

.51/

6.2

1.0~3-.

2.2

4.7

Effective upon enactment. Staff estimates. It is difficult to determine the pattern of net costs for general welfare provisions because the Committee reports total welfare costs, including a $7.0 billion reduction in existing costs. Some unspecified portion of this recoupment will occur only when "workfare" starts in January 1974.

Cite this document

APA

Federal Reserve (1972, June 19). Greenbook/Tealbook. Greenbooks, Federal Reserve. https://whenthefedspeaks.com/doc/greenbook_19720620_part1

BibTeX

@misc{wtfs_greenbook_19720620_part1,
  author = {Federal Reserve},
  title = {Greenbook/Tealbook},
  year = {1972},
  month = {Jun},
  howpublished = {Greenbooks, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/greenbook_19720620_part1},
  note = {Retrieved via When the Fed Speaks corpus}
}