Full text of Federal Reserve Bulletin : July 1987
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VOLUME 73 •
NUMBER 7 •
JULY 1987
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, WASHINGTON, D . C .
PUBLICATIONS COMMITTEE
Joseph R. Coyne, Chairman • Michael Bradfield • S. David Frost
• Griffith L. Garwood • James L. Kichline • 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.
Table of Contents
on budget developments in 1987, and says
that the Board believes the Federal Reserve's budget processes have worked well
in controlling expenses, before the Subcommittee on Domestic Monetary Policy of the
House Committee on Banking, Finance and
Urban Affairs, May 6, 1987.
523 TURNING THE CORNER
ON TROUBLED FARM DEBT
Farmland values probably are near the end
of their adjustment to this decade's less
exuberant expectations for farm income; if
so, financial stress in the farm sector has
entered the final stages, and the remaining
troubled debt incurred during the boom of
the 1970s will be worked out.
537 THE PROFITABILITY OF
U.S.-CHARTERED
INSURED
COMMERCIAL BANKS IN 1986
Asset-quality problems continued to dog
U.S.-chartered commercial banks in 1986,
and escalating loan losses cut into profits.
552 TREASURY AND FEDERAL
RESERVE
FOREIGN EXCHANGE
OPERATIONS
The dollar traded rather steadily in February and early March and then moved lower
through the end of April.
558 INDUSTRIAL
PRODUCTION
Industrial production declined an estimated
0.4 percent in April.
560 STATEMENTS
TO
CONGRESS
Martha R. Seger, Member, Board of Governors, discusses the efforts being taken to
enlist the cooperation of foreign authorities
in eliminating the use of the international
banking system by criminal elements, before the Subcommittee on Financial Institutions Supervision, Regulation, and Insurance of the House Committee on Banking,
Finance and Urban Affairs, May 6, 1987.
563 Wayne D. Angell, Member, Board of Governors, reviews the expenses and budget of
the Federal Reserve System, with emphasis
569 E. Gerald Corrigan, President, Federal Reserve Bank of New York, discusses recent
and prospective developments regarding
the globalization of financial markets and
institutions, with particular emphasis on
developments in New York, London, and
Tokyo; and says that if we are to restore
balanced growth here at home and in the
world more generally, we must avoid any
renewed outburst of inflation, which would
undermine prospects on all fronts, before
the Senate Committee on the Budget,
May 6, 1987.
577 Manuel H. Johnson, Vice Chairman, Board
of Governors, presents the views of the
Board on conditions in the banking system
and what supervisory steps should be taken
to address these conditions, before the Senate Committee on Banking, Housing, and
Urban Affairs, May 21, 1987.
588
ANNOUNCEMENTS
Retirement of Paul A. Volcker as Chairman
of the Board of Governors and nomination
of Alan Greenspan to succeed him.
Appointment of Edward W. Kelley, Jr. as a
member of the Board of Governors.
Adoption of forms for use by government
securities brokers and dealers.
First-quarter financial results available for
priced service operations.
Publication of the Seventy-Third Annual
Report of the Board of Governors.
Comment period extended on proposal to
amend Capital Guidelines.
Errata in
BULLETIN
table.
Change in Board staff.
Admission of one state bank to membership
in the Federal Reserve System.
590 RECORD OF POLICY ACTIONS OF THE
FEDERAL OPEN MARKET COMMITTEE
At its meeting on March 31, 1987, all of the
members of the Committee indicated that
they favored or could accept a directive that
called for no change in the degree of pressure on reserve positions in the immediate
future. There was a consensus in favor of
allowing for possible limited adjustments
during the intermeeting period toward some
firming of reserve conditions, with excessive weakness in the dollar recognized as
the potential development most likely to
make such an adjustment appropriate. In
particular, the members agreed that somewhat greater reserve restraint might be acceptable depending on the performance of
the dollar in foreign exchange markets, but
also taking into account the behavior of the
monetary aggregates, the strength of the
business expansion, progress against inflation, and conditions in credit markets. This
approach to policy implementation was expected to be consistent with growth in M2
and M3 at annual rates of around 6 percent
or less over the three-month period from
March to June. Over the same period,
growth in Ml was expected to remain substantially below its pace in 1986. Because
the behavior of Ml remained subject to
unusual uncertainty, the Committee decided to continue its practice of not specifying
a numerical expectation for its growth. The
members agreed that the intermeeting range
for the federal funds rate, which provides a
mechanism for initiating consultation of the
Committee when its boundaries are persistently exceeded, should be left unchanged
at 4 to 8 percent.
597 LEGAL
DEVELOPMENTS
Various bank holding company, bank service corporation, and bank merger orders;
and pending cases.
631 MEMBERSHIP OF THE BOARD OF
GOVERNORS OF THE FEDERAL
RESERVE SYSTEM,
1913-87
List of appointive and ex officio members.
AI FINANCIAL AND BUSINESS
STATISTICS
A3 Domestic Financial Statistics
A44 Domestic Nonfinancial Statistics
A53 International Statistics
A69 GUIDE TO TABULAR PRESENTATION,
STATISTICAL RELEASES, AND SPECIAL
TABLES
A82 BOARD OF GOVERNORS AND STAFF
A84 FEDERAL OPEN MARKET COMMITTEE
AND STAFF, ADVISORY COUNCILS
A86 FEDERAL RESERVE
PUBLICATIONS
BOARD
A89 INDEX TO STATISTICAL
TABLES
A9i FEDERAL RESERVE BANKS,
AND OFFICES
BRANCHES,
A92 MAP OF FEDERAL RESERVE
SYSTEM
Turning the Corner on Troubled Farm Debt
Emanuel Melichar, of the Board's Division of
Research and Statistics, prepared this article.
Farmland values probably are near the end of
their adjustment to this decade's less exuberant
expectations for farm income. If so, financial
stress in the farm sector has entered its final
stages, and the remaining troubled debt incurred
during the boom of the 1970s will be worked out.
During that boom, farmers as a group enjoyed a
massive increase in real wealth, and some farmers borrowed heavily to increase their participation in those gains. In the bust of the 1980s, the
entire increase in real wealth disappeared, and
many heavily indebted farmers have been unable
to service or to repay their debt. Their personal
financial crises are being managed through the
restructuring of their obligations or are ending in
the liquidation of their assets; that is, their excess debt is being forgiven or proceeds from sale
or foreclosure of their assets are being applied to
the indebtedness. In either event, such borrowers have lost their equity and their lenders have
lost part of the funds they lent.
But the movement of farm assets from overly
indebted or bankrupt farmers into stronger hands
tends to improve the financial condition of the
sector. While land prices were falling rapidly,
problems associated with large amounts of newly
troubled debt overshadowed the effects of debt
restructuring and liquidation. But now the reverse is true. The amount of delinquent farm
loans, which had been increasing through early
1986, is now declining. Charge-offs of farm loans
appear to be past their peak among several major
lender groups—individuals, banks, and life insurance companies—and may be peaking now at the
large federally sponsored lender, the Farm Credit System.
At this stage of the boom-bust cycle, how
much problem debt remains at various lender
groups, and how large are the losses yet to
come? Much depends on whether prices of farm
land have completed their downward adjustment. Therefore, the first section of this article
reviews past and current relationships among
aggregate income, assets, and debt. The boom's
legacy of troubled debt and probable losses are
then assessed. The last section concentrates on
agricultural banks, more than 200 of which have
failed since the onset of farm loan problems. The
recent experience of these institutions reflects
the losses attending the resolution of farm loan
delinquencies as well as the consequent improvement in the financial condition of the farm sector.
FARM INCOME AND LAND
PRICES
Changes in farm income and in expectations of
farm income triggered both the boom and the
bust. In 1972-73, an extraordinary rise in farm
income brought instant prosperity to the farm
sector but also set off a chain of events that
eventually was to bring sorrow to many. In
acting on expectations that farm income would
continue to rise, buyers and sellers of farmland
priced it at a relatively high multiple of its
earnings at the time. When, in the 1980s, it
became evident that the likely income trend
would instead be flat—and then only with the
help of government programs and payments—
land prices fell to produce the lower priceearnings ratio appropriate for assets with less
exciting prospects; that is, land prices fell sharply even though income was maintained.
Income from
Assets
Data on the earnings of farm capital, which are
fundamental to the study of these events and
relationships, are difficult to obtain. Most farm
businesses are family enterprises, and the operators do not separately calculate the returns to
capital and to labor and management. Conse-
524
Federal Reserve Bulletin • July 1987
quently, the reports of farm income that are most
widely known and used are not suitable for the
analysis of returns on assets. Fortunately, the
U.S. Department of Agriculture has recently
provided improved estimates of annual net income attributable to assets alone, derived as
shown in table 1 and plotted, in constant dollars,
in chart 1. As the chart shows, income from
assets has differed materially from income that
includes the earnings of labor and management.
The boom of the 1970s was preceded by two
decades of slow but significant growth in income
from assets and thus in asset values as well.
During those years, farmers became accustomed
to recording much of their individual financial
progress through price appreciation of their real
1. Farm income, returns, assets, and debts of operators and landlords, 1970-86'
Annual average
Boom,
Recession,
Boom,
Recession,
1972-75
1976-77
1978-79
1980-83
Asset
revaluation,
MEMO:
1986
1984-86
Billions of 1986 dollars
Derivation of net income and total returns
Gross income
LESS: Wages and perquisites paid to
hired labor
LESS: Other operating expenses,
excluding interest
LESS: Depreciation allowances and
accidental damage
EQUALS: Net income from assets and
operators' work
149
191
176
200
2
174
160
149
11
12
14
13
11
10
10
73
87
90
104
93
78
71
16
18
22
23
23
18
17
49
73
49
59
46
54
51
LESS: Income imputed to operators'
work
EQUALS: Net income from assets
27
22
30
44
30
20
30
29
27
20
24
29
21
30
PLUS: Real capital gain on assets 3
EQUALS: Total return from assets
8
30
55
99
66
86
82
111
-57
-38
-103
-73
-66
-35
LESS: Interest paid
PLUS: Real capital gain on debt 3
EQUALS: Total return from equity
9
6
27
11
10
99
13
9
82
17
16
110
23
13
-47
18
6
-86
15
4
-47
751
132
619
960
159
801
1,088
183
905
1,274
208
1,065
1,020
206
814
684
155
530
684
155
530
Balance sheet (end of period)
Assets
LESS: D e b t
EQUALS: E q u i t y
Percent
Rates of return and interest rates
Income return on assets
PLUS: Real capital gain on assets 3
EQUALS: Total return on assets
3.0
1.1
4.1
5.0
6.4
11.4
1.9
6.4
8.3
2.4
6.9
9.3
1.7
-4.9
-3.2
3.5
-12.3
-8.8
4.1
-9.0
-4.9
Interest paid
LESS: Real capital gain on debt 3
EQUALS: Real cost of debt
6.7
4.3
2.4
7.2
6.8
.4
7.8
5.6
2.3
8.7
8.3
.4
10.8
6.2
4.6
9.9
3.1
6.8
9.1
2.3
6.8
Income return on equity
PLUS: Real capital gain on equity
EQUALS: Total return on equity
2.2
2.2
4.4
4.6
9.0
13.6
.8
8.7
9.5
1.2
9.8
11.0
-.3
-4.6
-5.0
1.7
-15.0
-13.3
2.7
-11.0
-8.3
1. Data are for the farm sector excluding farm households (operators' dwellings, household equipment and furnishings, and all financial
assets except cash, checkable bank deposits, and stock in farmers'
cooperatives). Bank deposits are estimated by the author. Outstanding loans from the Commodity Credit Corporation are excluded from
debt, and a corresponding amount is subtracted from the value of
stored crops when computing total assets (proceeds of CCC loans are
included in gross farm income). Data for 1986 reflect revised preliminary estimates in Agricultural Outlook, U.S. Department of Agriculture, June 1987, while earlier data are mainly from Economic Indicators of the Farm Sector: National Financial Summary, 1985, U.S.
Department of Agriculture, November 1986.
2. Data are adjusted for general price inflation by the implicit price
deflator for personal consumption expenditures (1986 average = 1.00).
3. Real capital gain (loss) on farm assets is the amount by which the
annual increase in total market value of assets is greater (less) than the
sum of net investment and of the change in general purchasing power
of the total funds tied up in these assets. Real capital gain (loss) on
debt is the decrease (increase) in general purchasing power of the
funds owed. Changes in general purchasing power are measured by
the implicit price deflator for personal consumption expenditures.
SOURCE. Agricultural Finance Databook, Statistical Release E.15,
Board of Governors of the Federal Reserve System, June 1987.
Turning the Corner on Troubled Farm Debt
1. Farm income
525
2. Farm assets and income from assets
Ratio scale, billions of 1986 dollars
Ratio
scale,_
Ratio scale,
billions of 1986 dollars
Net income from assets
and from operators' work
Net income from assets
Percent
margin
income and assets are defined in table 1.
ments was required to keep income from falling.
In response, land prices began to decline toward
a lower multiple of those earnings.
Income series are defined in table 1. Profit margin is net income
from assets as a percentage of gross income.
Land
estate. Then income surged and the expectation
spread that food scarcity would persist and push
commodity prices and farm income ever higher.
Farmers responded by further bidding up land
prices and by increasing their investments in
machinery and in land development projects
such as irrigation facilities and permanent plantings.
Asset values continued to rise during the rest
of the 1970s, even though, as chart 2 shows,
income from assets fell back toward the preboom level. Optimistic expectations were
refueled by the income rebound of 1978-79.
Even as late as 1980 and 1981, prominent analysts and forecasting firms expected steep upward trends in commodity prices and farm income. The realization of these expectations
would have validated, at least temporarily, the
high multiple of earnings to which farmland
prices had by then risen. Instead, on average, an
expansion of government programs and pay-
Most of the rise and subsequent fall in the total
value of farm assets consisted of changes in the
price of farmland. Chart 3 shows the enormous
changes in the value of farm real estate (excluding operators' dwellings). Measured in 1986 dollars, real capital gains on farmland during the
1970s totaled about $500 billion. Real capital
losses during 1980-86 were about $450 billion.
For many years, the real capital gains and
losses experienced by owners of farmland have
overshadowed current income in determining the
total return on farm assets (chart 4). A positive
total return will be restored when land prices
stop falling, and they will do so when enough
potential buyers, finding that current and projected income returns are more attractive, think
that prices are bottoming. Recent reports on land
prices suggest that this point may be at hand. For
example, surveys of rural banks conducted by
five of the Federal Reserve Banks on April 1
indicated that prices of farmland were relatively
Prices
526
Federal Reserve Bulletin • July 1987
3. Real capital gains on farm real estate
Billions of 1986 dollars
1955
l l l H l f i H I I I H I I I
1960
1965
1970
1975
1980
1985
their individual financial progress—experience
that helped to erase more cautious attitudes
formed in depression years. Initial earnings from
land priced to reflect expectations of rising earnings often fell short of servicing the debt incurred
to purchase it; however, farmers found that
growth in earnings and capital appreciation later
rewarded them handsomely for coping with their
initial "cash flow problem." During the boom,
farmers continued to make about the same relative use of debt; that is, debt rose at roughly the
same pace as farm asset values. Farm debt
(excluding household debt and commodity price
support loans from the federal Commodity Cred5. Total real return on farm assets
and real cost of farm debt
Percent
Real capital gain is defined in table 1.
stable in major midwestera farming areas during
the first quarter of 1987. In the Chicago Federal
Reserve District, where bankers were asked
about their near-term expectations, most thought
that prices of farmland would remain stable in the
second quarter.
FARM
DEBT
• iiiatiiBHEBiiiaiiiBiiiBiiiRiiiaiitRnfiiMaiHiiiiainaHia
Percentage points
For several decades before the boom, farmers
had favorable experience with the use of debt to
leverage their holdings and thereby accelerate
Spread
Total real return minus real cost of debt
4. Rates of return on farm assets
Percent
•••••••••••••••••••••••IHBMH
1915
1955
1960
1965
1970
1975
1980
1985
Returns and assets are defined in table 1. Total return on assets is
the sum of the income return and real capital gain.
1925
1935
1945
1955
1965
1975
1985
Returns, assets, and debt are defined in table 1. Total return on
assets is the sum of the income return and real capital gain. Real cost
of debt is the average interest rate on outstanding farm debt less the
general inflation rate as measured by the deflator for personal consumption expenditures.
Turning the Corner on Troubled Farm Debt
The major contribution to this large and swift
decline was the liquidation or restructuring of
troubled loans, which involved write-offs by
lenders and the transfer of assets from heavily
indebted owners to buyers for cash or, temporarily, to the lenders. Ironically, another contribution to the large reduction in debt came from
farmers who were not financially stressed but
who instead had liquid assets, such as bank
deposits, on which yields had recently fallen far
below the interest rate on their farm debt and
which they now saw fit to use to pay down or
eliminate their debt. Finally, farmers in general
have been paring the amount of debt used to
finance operating expenses and purchases of
machinery and livestock. Such expenses continued to be reduced by factors such as lower fuel
prices and cutbacks in crop acreage required by
government programs. Cost-consciousness and
low debt are now prevalent and mutually reinforcing themes among farmers, who are reacting
both to the relatively high real cost of borrowing
and to the financial misery they have been witnessing.
it Corporation) rose from $53 billion at the beginning of 1972 to $150 billion at the beginning of
1980 and then increased further to a cyclical peak
approaching $200 billion in the summer of 1984.
During the boom, use of debt was highly
profitable. As chart 5 indicates, the total real
return on farm assets during the 1970s far exceeded the real cost of farm debt (interest rate
less the general inflation rate). Although the low
real cost of borrowing during these years was an
incentive to increase borrowing, the impetus
came mostly from the increase in profitability of
owning farm assets. Even a somewhat higher
real cost of debt probably would not have deterred substantial additional borrowing, given
the extraordinary total real returns on assets
during those years.
Reduction
of Farm
527
Debt
Only 27 months after its peak in September 1984,
farm debt had fallen more than 20 percent, to an
estimated $157 billion at the end of 1986 (table 2).
2. Change in farm debt outstanding, 1980-86
Percent change during year
MEMO:
Type of debt and lender
Total debt
Banks
Farm Credit System
Life insurance companies
Farmers Home
Administration
Individuals and others
Real estate debt
Banks
Federal Land Banks
Life insurance companies
Farmers Home
Administration
Individuals and others
Non-real-estate debt
Banks
Production credit
associations 2
Farmers Home
Administration
Individuals and others
1
1980
1981
1982
1983
1984
1985
1986
Outstanding,
year-end
1986 (billions of
dollars)
10
2
17
6
9
3
16
1
4
8
5
-2
2
9
0
-1
-1
3
-2
-2
-8
-6
-13
-5
-10
-6
-18
-7
157.3
41.3
45.5
10.2
21
8
19
6
3
2
1
-1
7
-6
6
-11
-1
-10
23.9
36.3
12
0
21
6
11
-2
21
1
4
1
9
-2
3
11
2
-1
-1
10
1
-2
-5
12
-9
-5
-8
12
-16
-7
89.4
11.7
35.0
10.2
9
8
13
5
4
1
4
1
6
-7
4
-9
-1
-8
9.5
23.1
8
2
8
4
4
10
1
8
-1
1
-11
-10
-12
-12
67.8
29.6
9
8
-3
-6
-7
-23
-24
10.6
31
7
23
6
2
4
-1
-3
7
-5
7
-15
-2
-12
14.4
13.2
1. Loans from the Commodity Credit Corporation are excluded.
See table 1, note 1.
2. Includes loans from Federal Intermediate Credit Banks to agri-
cultural credit corporations and similar "other financing institutions,"
which totaled $275 million on December 31, 1986.
SOURCE. Agricultural Finance Databook, June 1987.
528
Federal Reserve Bulletin • July 1987
Farm Financial
Stress
At the end of the 1970s, a majority of farmers and
farm landlords were not heavily indebted (chart
6). The farmers with little or no debt were not
affected directly by the large rise in interest rates
that ensued. Although the drop in land prices
eliminated much of the increase in net worth
these farmers had enjoyed during the boom, their
net income on average did not drop, and they
were not financially threatened.
Farmers who had relatively heavy debt at the
start of the 1980s—a position that, in general,
resulted from relatively large recent investments
in land or machinery—fared much differently.
First, their interest rates rose—rapidly, to very
high levels, on short-term debt and more slowly
on long-term debt with variable rates. Therefore,
debt service began to absorb much more of their
income than they had expected when they incurred the debts. As interest rates rose far above
the average income return on assets, surveys
indicated, farmers with debt-asset ratios above
40 percent were likely to be financially stressed.
On commercial-size farms, about one-third of the
6. Farm assets and debt
Ratio scale, billions of 1986 dollars
Assets and debt are defined in table 1.
operators were indebted to this extent, and they
owed nearly two-thirds of total farm debt. These
farmers began to take actions to ease their debt
burden; however, their ability to extricate themselves from their predicament was drastically
reduced when prices of land and machinery
began to fall sharply. The drop in asset values
exhausted the equity of many of the more heavily
indebted farmers, and, as it continued, lenders
could not recover the full amount of the funds
loaned to those farmers.
Experience
of Farm
Lenders
Information on the delinquent loans and loan
losses of farm lenders varies greatly. Little is
known, for example, about the experience of one
of the more important groups—individuals who
themselves provided financing when they sold
their farms. Anecdotes and press accounts indicate that many of the borrowers either have
defaulted and returned the collateral to the sellers or have forced renegotiation of the sale price
or terms as an alternative to default. More authoritative data are available for non-real-estate
loans at commercial banks; reporting of delinquencies on such loans started in December
1982, and reporting of charge-offs started in 1984.
Recently, detailed information on the past and
expected experience of the Farm Credit System
has also become available.
Delinquent Loans. As financially stressed
farmers started to miss loan payments, farm loan
delinquencies began to rise from the very low
level of the boom years. The Farmers Home
Administration (FmHA) was the first of the
major farm lenders to encounter a large increase
in delinquent loans; that increase occurred primarily among the "emergency" loans it had
made to farmers with drought or flood losses and
among the "economic emergency" loans of
1978-82 (table 3). Delinquencies of FmHA loans
also reached their highest level much earlier than
at other lenders. As of September 1986, about
$12 billion, or 43 percent, of FmHA farm loans
were delinquent, a level essentially unchanged
since 1983.
At the other reporting lenders, delinquent farm
loans continued to rise until 1986. As described
Turning the Corner on Troubled Farm Debt
below, such delinquencies at commercial banks
likely reached a cyclical peak in March 1986.
Similarly, the cyclical peak among life insurance
companies probably occurred in mid-1986: delinquent loans fell 18 percent in the second half of
that year, after having risen almost steadily since
1979. Several companies have noted that the
incidence of new delinquencies declined markedly during the second half of 1986. At the Farm
Credit System, nonaccrual loans were at a high
of $8 billion in September 1986 and subsequently
declined to less than $7 billion in March 1987.
The proportion of farm loans in nonaccrual
status at small commercial banks had risen
steadily each quarter from 0.3 percent in December 1982 to 5.7 percent in March 1986. During the
rest of 1986, these nonaccrual loans declined in
each quarter, down to 4.6 percent at the end of
the year. At all banks, delinquency rates have
dropped considerably since March 1986, and the
rates at the end of 1986 were below those of a
year earlier (chart 7). Because the volume of
outstanding loans has been dropping sharply
during the past two years, however, the dollar
amount of delinquent loans has actually dropped
more significantly than is revealed by the decline
in the delinquency rates. And, in these circumstances, the drops in the dollar amounts are the
529
7. Delinquency rates on non-real-estate farm loans at
insured commercial banks
Percent
End-of-quarter data. Delinquent loans are defined in table 4.
more meaningful indicator of the trend in the
magnitude of the problem posed by these loans.
At commercial banks, past-due and nonaccrual
loans at the end of 1986 totaled $2.9 billion, not
only down sharply from $3.6 billion a year earlier
but also somewhat below the total delinquencies
two years earlier (table 4).
Charge-ojfs of Farm Loans. As delinquencies
increased, loan losses at lenders began to rise
also. Data on charge-offs of farm loans are available only for banks, the Farm Credit System, and
3. Delinquent farm loans, December 31, 1980-86
Lender
1980
1981
1982
1983
1984
1985
1986
Billions of dollars
2
Banks'
Farm Credit System 3
Life insurance companies' *
Farmers Home Administration 5
n.a.
n.a.
.3
.3
3.6
.4
.5
5.8
.9
.7
.8
9.5
1.5
1.3
1.1
11.0
2.1
2.1
1.2
12.1
2.6
5.3
1.8
11.9
2.2
7.1
1.9
12.1
7.3
8.7
15.1
41.5
7.0
14.4
17.0
42.9
Percentage of outstanding loans
2
Banks'
Farm Credit System'
Life insurance companies1-4
Farmers Home Administration 5
n.a.
n.a.
.5
2.0
18.2
.5
3.7
24.1
1. Delinquencies were reported by institutions holding the most
farm loans in this lender group. Data shown are estimates obtained by
assuming that the remaining institutions in the group experienced the
same delinquency rate.
2. Farm non-real-estate loans past due 90 days or more or in
nonaccrual status.
3. Nonaccrual loans. The Farm Credit System also reports "other
high-risk loans," but not all such loans are delinquent.
4. Loans with interest in arrears more than 90 days.
5. Past due 15 days or more. Data shown are for September 30; thus
they avoid the year-end seasonal peak in very short term delinquencies and are more comparable with those shown for other lenders. The
data shown reflect the total outstanding amount of these loans, rather
2.5
1.1
6.4
37.9
3.8
1.8
8.3
43.9
5.2
3.3
9.6
45.9
than the smaller amount of delinquent payments that is often reported
as FmHA "delinquencies."
n.a. Not available.
SOURCE. Data for commercial banks are from their year-end reports
of condition; for the Farm Credit System, from Farm Credit System
Annual Information Statement—1986, Federal Farm Credit Banks
Funding Corporation, March 6, 1987, and, for years before 1985, from
Farm Credit Administration Financial Forecast of the Farm Credit
System, Appendix B, Farm Credit Administration, May 1987; for life
insurance companies, from Investment Bulletin, American Council of
Life Insurance, March 20, 1987; and for the Farmers Home Administration, from Report 616, selected issues.
530
Federal Reserve Bulletin • July 1987
4. Delinquent non-real-estate farm loans at insured
commercial banks, December 31, 1982-86
Billions of dollars
Class of
delinquent loan 1
Past due 30 to 89 days
and still accruing .
Nonperforming
Past due 90 days or
more and still
accruing
Nonaccrual
Total
MEMO: Restructured
loans in
compliance with
modified t e r m s 2 . . .
1982
1983
1984
1985
1986
.9
.9
1.0
1.5
1.0
2.1
1.0
2.6
.8
2.2
.4
.5
.4
1.1
.4
1.6
.4
2.2
.3
1.9
1.9
2.5
3.1
3.6
2.9
.1
.1
.2
.4
*
1. For nonaccrual loans, banks can record interest as income only
when it is actually received; for other loans, banks record interest as it
is earned. Thus, a loan can be past due and still accruing interest.
Loans are in nonaccrual status if (1) they are maintained on a cash
basis because of deterioration in the financial position of the borrower, (2) payment in full of interest or principal is not expected, or (3)
principal or interest has been in default for a period of 90 days or more
unless the obligation is both well secured and in the process of
collection.
2. For 1982-85, data shown are renegotiated "troubled" debt.
* Less than $50 million.
the Farmers Home Administration (table 5). In
1984, when commercial banks were first asked to
report such losses, they reported charging off
nearly $1 billion, more than double the chargeoffs of the Farm Credit System that year. Annual
bank charge-offs probably peaked in 1985, however, whereas charge-offs at the Farm Credit
System were at a high in 1986 and may go slightly
higher in 1987. At the Farmers Home Administration, charge-offs have been very low in relation to the huge amount of delinquent loans,
many of which have been delinquent for several
years. As a government agency, the FmHA can
exercise such forbearance toward borrowers, but
the public then bears the cost of the forgone
interest and any increase in the eventual loss that
results from extended delinquency.
A crude estimate of total charge-offs of all farm
loans in 1986 can be obtained by assuming that
all private farm lenders had the same relative
charge-off experience as commercial banks and
the Farm Credit System, whose loans that year
represented about 56 percent of all private farm
loans. As shown in table 5, charge-offs at the
banks and Farm Credit System totaled $2.6 billion in 1986; therefore, on all farm debt other
than FmHA loans, charge-offs may have totaled
about $4.6 billion. With the FmHA included,
charge-offs of farm loans in 1986 may have
totaled about $5 billion. Thus, charge-offs alone
probably accounted for more than one-fourth of
the $18 billion reduction in total farm debt during
1986. Moreover, the $5 billion in charge-offs may
have involved perhaps $15 billion in loans being
liquidated or restructured, if one assumes a recovery rate in the range often mentioned by farm
lenders. Another portion of such debt came off
the books as ownership of the collateral passed
to the lenders or to less-indebted farmers.
Currently Troubled
Debt
and Potential
Losses
In January 1984, the U.S. Department of Agriculture began a program to collect extensive
5. Annual net charge-offs of farm loans, 1980-86
Lender
1980
1981
1982
1983
1984
1985
1986
.9
.4
.1
1.3
1.1
.3
1.2
1.4
.4
Billions of dollars
Banks 1
Farm Credit System 2
Farmers Home Administration
n.a.
*
n.a.
n.a.
n.a.
.1
*
.2
*
.3
.1
Percentage of loans outstanding at start of year
1
Banks
Farm Credit System 2
Farmers Home Administration
n.a.
n.a.
n.a.
n.a.
.1
.1
.1
.1
.3
.1
.4
.3
1. Non-real-estate loans only.
2. Includes a relatively small amount of charge-offs at the Banks for
Cooperatives.
n.a. Not available.
* Less than $50 million.
2.3
.6
.5
3.3
1.6
1.0
3.4
2.5
1.6
SOURCE. Data for commercial banks are from their year-end reports
of condition; for the Farm Credit System, from Farm Credit System
Annual Information Statement—1986 and, for years before 1985, from
Farm Credit Administration Financial Forecast; and for the Farmers
Home Administration, from the public information office.
Turning the Corner on Troubled Farm Debt
financial data from a large national sample of
farmers at the beginning of each year. The latest
available survey, for January 1986, shows that
operators of 670,000 commercial-size farms covered by the survey reported total farm business
debt of $94 billion, excluding loans from the
Commodity Credit Corporation (CCC). From
other financial data also reported, analysts at the
Department of Agriculture estimated that problem debt accounted for $30.5 billion of this
amount and that eventual lender losses might be
$8.1 billion. One can extend these results to the
total farm debt of $188 billion outstanding at the
beginning of 1986 (including household debt but
excluding CCC loans) by assuming that the rest
of the debt owed to each lender group was
troubled to the same extent as the debt surveyed.
This rough procedure yields a total problem debt
of $60 billion and puts lender losses after 1985 at
$16 billion. Of these amounts, the Farm Credit
System would have a post-1985 loss of $4 billion
on problem debt of $17 billion. Results for the
Farm Credit System are of special interest because it is the only lender that has published an
531
estimate of its total problem loans and a forecast
of its charge-offs. Subtracting estimated 1986
charge-offs of $5 billion among all lenders and
$1.4 billion at the Farm Credit System leaves
estimated post-1986 losses of $11 billion among
all lenders and $2.6 billion at the Farm Credit
System.
In another study of the survey data, analysts at
the Department of Agriculture used three different approaches to estimate the proportion of
troubled debt at each farm lender group. Calculating the average of these proportions for each
group and applying it to that group's farm loans
puts problem debt at $52 billion as of January
1986. If recoveries on such problem loans average two-thirds, post-1985 losses would be $17
billion. The Farm Credit System has $15 billion
of the estimated problem debt and $5.1 billion of
the losses. Subtracting 1986 charge-offs, this
approach puts losses after 1986 at $12 billion for
all lenders and $3.7 billion for the Farm Credit
System.
These two estimates do not differ greatly. The
second estimate of post-1986 charge-offs at the
6. Loan-loss experience and forecasts of the Farm Credit System, 1980-94'
Billions of dollars
Year
Allowance
for losses,
beginning
of year
LESS:
Net
charge-offs
*
1980
1981
1982
1983
1984
1985
1986
1.1
1.2
1.4
1.4
1.4
1.3
3.2
Projection made by Farm Credit System
1987
1988
1989
3.6
2.8
2.0
1.6
1.2
3.6
3.0
2.7
2.4
2.2
2.1
2.0
2.0
1.4
.8
.6
.4
Forecast made by Farm Credit
1987
1988
1989
1990
1991
1992
.7
EQUALS:
MEMO:
Allowance
for losses,
end of year
Nonaccrual
loans, end
of year
.2
.2
.2
.2
1.2
1.4
1.4
1.4
.3
1.3
1.3
2.1
3.0
1.8
3.2
3.6
5.3
7.1
.8
2.8
2.0
1.7
6.2
4.4
2.6
3.0
2.7
2.4
2.2
5.6
3.8
2.3
1.6
1.1
.8
.6
.6
.5
.3
.3
.4
.7
Administration
1994
1. The allowance for loan losses is an asset item that has been
accumulated through earlier annual provisions for loan losses (which
are annual expense items). During each year, the allowance is
depleted by charge-offs of uncollectible loans and is replenished by
further provision for losses.
* Less than $50 million.
.1
.2
.3
.4
1.1
1.4
PLUS:
Annual
provision
for losses
.3
.2
.2
.2
.9
.5
.3
.2
.2
.2
.2
.2
2.1
2.0
2.0
2.0
SOURCE. Experience in 1985-86 is from Farm Credit System Annual
Information Statement—1986, and experience in 1980-84 is from
Farm Credit Administration Financial Forecast. The forecast shown
for the Farm Credit Administration is the "most likely scenario" in
Appendix C of that publication. The projection made by the Farm
Credit System is from Summary of Combined Financial Projections,
1987-1989, Farm Credit Corporation of America, May 1987.
532
Federal Reserve Bulletin • July 1987
Farm Credit System is very close to the system's
own forecast made this spring and to that of its
regulator, the Farm Credit Administration. The
Farm Credit System projected charge-offs totaling $3.5 billion during 1987-89, at the end of
which period nonaccrual loans would have
dropped to $2.6 billion (table 6). Its regulator, the
Farm Credit Administration, forecast the chargeoffs at $4.1 billion for 1987-94, after which time
nonaccrual loans would be well under $1 billion
and the boom-bust episode would be over. Most
or all of the projected charge-offs have already
been provided for in the loan-loss allowance of
the Farm Credit System, which stood at $3.6
billion at the end of 1986. (In addition to these
future charge-offs of loans, which it has anticipated and expensed through loan-loss provisions
made in 1985 and 1986, the Farm Credit System
is experiencing unique problems beyond the
scope of this article, including operating losses as
a result of the relatively high interest rates on its
own old borrowings and difficulties in implementing loss-sharing arrangements among its
many entities.)
The projections for the Farm Credit System
indicate that, aside from the Farmers Home
Administration, the current pace of debt restructuring and liquidation will work out most of the
farm sector's troubled debt within the next few
years.
AGRICULTURAL
BANKS
The experience of agricultural banks—commercial banks with relatively heavy involvement in
farm lending—mirrored financial developments
in the farm economy. Before 1986, most measures of performance and condition at such
banks had been steadily deteriorating; during the
year, virtually all of these indicators either
stopped falling or reversed course. The amount
of delinquent loans began to drop last spring, and
in turn charge-offs declined toward year-end.
The downward spiral in profitability thus slowed,
halting the drift toward a more vulnerable financial condition.
At the end of 1986, about one-third of all banks
could be regarded as "agricultural banks" in that
the ratio of farm loans to total loans in each of
their portfolios was above the unweighted mean
of such ratios at all banks (15.7 percent). In the
aggregate, farm loans averaged 2.9 percent of
total loans at all banks and 35 percent at the 4,700
agricultural banks. This concentration in farm
lending ties the fortune of the typical agricultural
bank closely to that of farmers. But in this
decade of great variation in the financial experience of individual farmers, the condition of their
banks also has exhibited striking variability.
Analyses must consider the range as well as the
average of bank experiences and conditions.
Loan
Problems
Loan delinquencies and losses have been at the
heart of problems encountered by agricultural
banks during the past few years. Differences in
the magnitude of loan problems account for
much of the variation in income among those
banks; in general, banks that have avoided significant loan problems have continued to thrive.
Thus, factors such as the deregulation of interest
rates or of banking structure appear to have had
relatively little effect so far on the performance
of agricultural banks.
When, in early 1986, national average delinquency rates on farm loans at banks peaked, so
did average delinquency rates on all loans at
agricultural banks (chart 8). The level of delinquencies of total loans has remained below that
of farm loans at those banks during recent years,
indicating that even the limited diversification of
their loans has been advantageous. Although the
proportion of loans past due or nonperforming
rose seasonally to a new peak above 8 percent in
March 1986, it dropped to 6.4 percent by the end
of the year, well below its level of 6.9 percent a
year earlier. Where seasonality is minor, as in
the proportion of nonaccrual loans, the reversal
in trend is more evident. Between December
1982, when these data were first collected, and
last summer, the percentage of loans in nonaccrual status rose in each quarter; since then, the
percentage has been falling.
The decline in the share of nonaccrual loans
did not derive from an acceleration of charge-offs
by banks. By the fourth quarter of 1986, the
charge-off rate was below its level of a year
Turning the Corner on Troubled Farm Debt
8. Delinquency rates on loans at agricultural banks
End-of-quarter data. Delinquent loans are defined in table 4.
Agricultural banks are defined in table 7, note 1.
earlier, the first such decline since 1982. For the
year as a whole, net charge-offs of loans at
agricultural banks averaged 2.2 percent of total
loans outstanding at year-end, only slightly
above the rate of 2.1 percent in 1985.
Profitability
With loan charge-offs leveling out and delinquencies falling, the long uptrend in the average
annual provision for loan losses made by agricultural banks ended in 1986. Consequently, the
income statement for agricultural banks as a
group last year resembled that of 1985 in most
respects (table 7). The net interest margin declined somewhat in 1986 as interest income
dropped more than interest expense (all data are
expressed and discussed as a percentage of total
assets). However, noninterest income was bol-
533
stered by capital gains on investments (equal to
0.2 percent of assets), leaving net income before
provision for loan losses roughly unchanged
from that of recent years. The provision for loan
losses declined slightly in 1986 after rising sharply since 1980. Thus, the pronounced decline in
net income, which had resulted mainly from the
need to cover greater loan losses, was nearly
halted last year.
In spite of declining net income, agricultural
banks as a group continued to pay dividends to
their stockholders at the advanced level first
reached in 1981—about double the relative level
of dividend payouts in the mid-1970s—and did so
again last year. As a result, retained earnings
provided only small additions to capital in 1985
and 1986.
Role of Interest Rates. The reduced interest
margin at agricultural banks in 1986 may surprise
observers who have noted—along with borrowers—that farm loan interest rates at those banks
have declined more slowly than the prime rate
has since 1981. Since mid-1982, the average
interest rate on farm loans at smaller banks has
been noticeably higher than either the national
prime rate on business loans or the average rate
on farm loans at larger banks (chart 9). In recent
years, however, interest income at agricultural
banks has dropped more rapidly than interest
expense has (table 7). Factors underlying that
7. Income, expenses, and profits of agricultural banks, 1978-86'
Percentage of total assets at year-end
Item
1979
1978
1980
1981
1982
1983
1984
1985
1986
Interest income
LESS: Interest expense
EQUALS: Net interest margin .
7.0
3.6
3.5
PLUS: Noninterest income 2
LESS: Noninterest expense,
excluding loan losses
EQUALS: Net income before
loan losses
.4
.4
.4
.5
.5
.5
.5
.5
.7
2.3
2.3
2.4
2.5
2.6
2.6
2.6
2.7
2.7
1.6
1.8
2.0
1.9
1.8
1.7
1.6
1.7
1.6
.2
.2
.2
.3
.4
.6
.8
1.2
1.1
LESS: Provision for loan losses
EQUALS: Net income before
taxes
LESS: Income taxes
EQUALS: N e t i n c o m e
LESS: Cash dividends
EQUALS: Retained earnings , . .
7.8
4.1
3.7
9.3
5.3
4.0
11.4
7.5
3.9
10.3
6.5
3.8
10.6
6.9
3.7
10.0
6.2
3.8
9.0
5.4
3.6
1.5
1.7
1.6
1.4
1.1
.8
.6
.5
.3
1.1
.3
1.2
.4
1.3
.4
1.2
.3
1.1
.2
1.0
.1
.7
.0
.5
.4
.3
.8
.3
.9
.3
.9
.4
.8
.4
.7
.4
.6
.4
.3
.4
.1
.4
.1
1.4
.
1. For banks in operation at the end of the year. Agricultural banks
are insured commercial banks at which the ratio of total farm loans to
total loans is above the unweighted average of such ratios at all banks
11.0
7.1
4.0
on the date specified (15.7 percent at the end of 1986).
2. Includes capital gain or loss on investments,
.1
534
Federal Reserve Bulletin • July 1987
9. Average effective interest rates on non-real-estate
farm loans made by commercial banks
Percent
In recent quarters, most "large banks" had total assets of $600
million or more. Farm loan rate is an estimate of the effective rate on
loans made in the first full week of the second month of each quarter.
Prime rate shown is the average effective national prime rate at large
banks during the week for which the farm loan rate is estimated,
assuming a loan maturity of six months.
SOURCE. Current data on farm loan rates are in "Survey of Terms of
Bank Lending," Statistical Release E.2, and historical series are in
Agricultural Finance Databook, Statistical Release E.15, both published by Board of Governors of the Federal Reserve System.
experience include the increase in nonperforming loans, a fall in the loan-deposit ratio resulting
from a reduction in loan demand from creditworthy borrowers, and a lag in the response of
interest expense to the fall in current interest
rates as longer-term certificates of deposit remain outstanding at the old rates.
Variability of Profits. During the 1970s, when
loan losses at agricultural banks were very low,
only 1 percent of those banks reported negative
earnings in any given year, and the average
return on equity of the group hovered between 14
and 16 percent. After 1980, as loan losses began
their climb, the proportion of agricultural banks
reporting negative earnings rose as well, reaching 20 percent in 1986 (table 8). The average
return on equity fell from 16 percent in 1980 to 5
percent last year.
The return on equity at agricultural banks in
1986 varied inversely with provisions for loan
losses. Two-fifths of all agricultural banks earned
10 percent or more on equity last year, but nearly
two-thirds of agricultural banks making low provision for losses (under 1 percent of loan volume)
were this profitable. The distribution of the latter
banks by return on equity in 1986 (table 9, first
column) resembles that of all agricultural banks
in earlier years of low loan losses (table 8).
Variability
of Problem-Loan
Levels
Variability in the relative level of loan losses in
turn reflects the uneven distribution of loan
delinquencies among agricultural banks. A majority of agricultural banks have a relatively low
level of problem loans, while a small proportion
of those banks have very high levels that are
pulling up the average (table 10). At the end of
1986, more than three-fifths of the banks had a
proportion of nonperforming loans below the
agricultural-bank average of 4 percent. At twofifths of the banks, nonperforming loans were
less than 2 percent of total loans.
8. Distribution of agricultural banks, by return on equity, 1978-86
Percent
Net income as a percentage
of average equity at bank 1
Negative income
0 to 4
5 to 9
10 to 14
15 to 19
20 to 24
25 or more
Total
1978
1979
1980
1981
1982
1983
1984
1985
1986
1
3
14
46
28
6
1
100
1
2
8
36
38
12
3
100
1
2
9
33
35
14
5
100
2
3
12
33
32
13
6
100
4
5
15
33
28
11
4
100
7
7
18
36
24
7
2
100
13
9
23
36
15
3
1
100
18
11
22
33
13
3
1
100
100
14
15
16
15
14
11
8
6
5
20
14
27
28
9
2
1
MEMO
Average return on equity
Net charge-offs as a percentage
of total loans
Average capital ratio,
December 312
.2
.2
.3
.4
.7
.9
1.2
2.1
2.2
8.9
9.0
9.2
9.2
9.3
9.4
9.5
9.6
9.5
1. Net income after taxes as a percentage of the average of equity at
the beginning and end of the year.
2. Total primary and secondary capital (items available in bank
reports as of the date specified) as a percentage of total assets.
Turning the Corner on Troubled Farm Debt
535
9. Distribution of agricultural banks, by return on equity and loan-loss provision class, 1986
Percent
Provision for loan losses as a percentage of total loans
Net income as a percentage
of average equity at bank1
Less than
1.0
2
6
26
43
17
4
Negative income
0 to 4
5 to 9
10 to 14
15 to 19
20 to 24
25 or more
Total
MEMO: Number of banks
5.0 to
7.4
7.5 or
more
6
15
36
32
8
30
27
27
72
17
9
2
92
5
2
13
1
1
All
banks
20
14
27
28
9
2
*
»
*
*
1
100
100
0
100
0
100
0
0
100
1,656
1,511
876
322
331
1
100
4,6%
* Less than 0.5 percent.
Furthermore, as table 10 shows, during 1986
the distribution of agricultural banks shifted toward the low end of the delinquency-rate scale.
This shift suggests that the decline last year in
the proportion of nonperforming loans was widespread among agricultural banks, rather than
merely a result of, say, the failure of banks and
the assumption of such loans by the Federal
Deposit Insurance Corporation.
Banks
In recent years, a large majority of the banks that
failed had earlier reported a relatively high level
of delinquent loans. The ratio of nonperforming
loans to total capital is a particularly appropriate
indicator of vulnerability, although, of course,
Nonperforming
loans as a
percentage of total
loans at bank 1
1982
1983
1984
1985
1986
Less than 2.0
2.0 to 4.9
5.0 to 9.9
10.0 to 14.9
15.0 to 19.9
20 or more
Total
58.7
29.5
10.0
1.4
.3
.1
100
52.8
31.9
12.3
2.3
.6
.2
100
44.7
33.4
16.4
3.9
1.1
.5
100
36.4
33.1
21.6
5.6
2.1
1.2
100
39.6
32.2
19.8
5.5
1.9
1.0
100
MEMO: A v e r a g e
2.7
3.4
1. Nonperforming loans are defined in table 4.
4.2
11. Distribution of agricultural banks, by
nonperforming ioans as a percentage of total
capital, December 31, 1982-86
Nonperforming
loans as a
percentage of total
capital of bank1
Percent
2.4
the ultimate outcome depends on what proportion of the nonperforming loans can be collected.
Before 1986, agricultural banks had been moving
into more vulnerable positions, according to this
ratio (table 11). For the most part, further deterioration was avoided in 1986.
The level of delinquent loans at most agricultural banks does not pose a threat of failure. At
nearly three-fourths of agricultural banks, nonperforming loans were less than 25 percent of
total capital at the end of 1986. Banks at which
nonperforming loans exceed total capital are
here called vulnerable banks because many of
the banks that failed in recent years were in this
position. At the end of 1986, only 152, or 3.2
Percent
10. Distribution of agricultural banks, by
nonperforming loans as a percentage of total
loans, December 31, 1982-86
percentage of
nonperforming
loans
2.5 to
4.9
1
1
1. See table 8, note 1.
Vulnerable
MEMO:
1.0 to
2.4
4.0
Less than 25
25 to 49
50 to 74
75 to 99
100 to 124
125 to 149
150 to 174
175 to 199
200 or more2
Total
1982
1983
1984
1985
1986
85.6
11.2
2.2
.7
.3
82.2
13.0
3.0
1.0
.3
.2
.1
75.3
16.3
4.6
1.9
.9
.3
.2
.1
.3
100
70.2
18.7
5.6
2.6
1.1
.6
.3
.2
.6
100
72.3
16.6
5.4
2.3
1.1
.5
.3
.3
1.1
100
18.9
21.7
19.6
*
»
.1
.1
100
*
.2
100
MEMO: A v e r a g e
percentage of
nonperforming
loans
13.0
15.1
1. Nonperforming loans are defined in table 4.
2. Includes banks with negative capital.
* Less than 0.05 percent.
536
Federal Reserve Bulletin • July 1987
10. Vulnerable banks and bank failures
Number of banks
VULNERABLE BANKS
400
•
•
Nonagricuitural banks
Agricultural banks
200
BANK FAILURES
I
Iill. I m
1983
1984
1985
1986
Vulnerable banks are counted at the end of the quarter and are
defined as having nonperforming loans greater than total capital. Bank
failures are counted for the whole quarter.
percent, of the agricultural banks were vulnerable, down from a peak of about 200 banks in the
spring of that year and only slightly above the
year-earlier level of 141 banks (chart 10). A
continued decline in the number of such vulnerable agricultural banks foreshadows a downturn in
the number of failures.
With the number of vulnerable agricultural
banks up only slightly during 1986 and with
delinquencies among nonfarm loans rising, agricultural banks have become a less important
component of all vulnerable banks. By the end of
the year, agricultural banks constituted only twofifths of all vulnerable banks, compared with a
peak share of three-fifths in March 1985. The
agricultural-bank share of the total loans at vulnerable banks, which had peaked at 39 percent in
March 1985, declined to 12 percent by December
1986. From a slightly different point of view, the
farm-loan share of total loans at vulnerable banks
fell to 6 percent, compared with 15 percent a year
earlier and a peak proportion of 19 percent in
March 1985.
In short, severe financial difficulties at some
agricultural banks have derived primarily from
the legacy of problem loans left by the farm
boom. With farm asset values completing their
adjustment to post-boom conditions, restructurings and liquidations are exceeding additions to
the number of problem loans. The improvement
in loan portfolios in turn has stemmed the deterioration in the condition of the agricultural
banks.
•
537
The Profitability of U.S.-Chartered Insured
Commercial Banks in 1986
Deborah J. Danker and Mary M. McLaughlin of
the Board's Division of Research and Statistics
prepared this article. Rachel Valcour and Linda
Rosenberg provided research
assistance.
Asset-quality problems continued to dog U n chartered commercial banks in 1986. Escalating
loan losses cut into profits, as the banking industry's return on assets dropped to 0.64 percent
and its return on equity fell to 10.23 percent. As
shown in chart 1, last year's decline in these
profit measures, which reflect banks' foreign and
domestic operations on a fully consolidated basis, extended the downtrend—interrupted only in
1985—that has been evident since 1980. In 1985,
lower market interest rates had contributed to a
wider net interest margin and had allowed banks
to realize substantial capital gains by selling
investment-account securities. The wider margin
and the capital gains in turn offset the continuing
drag on earnings from growing loan losses. Despite a further drop in rates last year, the industry's interest margin returned to its 1984 level,
and an additional hike in securities gains proved
insufficient to prevent a renewed erosion of
profitability (see table 1).
Problems in credit quality during the 1980s have
not been unique to commercial banks. A variety of
lenders have suffered losses that, rather than abat1. Net income after taxes
ing, have persisted as the economic expansion has
continued. In many cases, these losses have reflected broad economic strains associated with
disinflation and with the deterioration in the nation's trade performance; but in some of the most
severe cases, the losses have reflected the special problems of such troubled sectors as energy
and agriculture. In 1986, the depressed level of
world oil prices caused pronounced dislocations
and economic distress in energy-producing areas
of the country, and these conditions were reflected in the poor performance of banks in those
areas. Farm banks' profits also were under pressure last year, although the deterioration was
slight compared with that in the previous few
years. For the first time in six years, the average
profitability of farm banks eroded at a rate no
faster than that of the rest of the banking industry.
In many areas of the country, by contrast,
economic conditions in 1986 were favorable, and
banks did relatively well. In the Northeast, commercial bank profitability climbed and was well
above its 1980 level. The lower level of interest
rates, which allowed banks to realize substantial
gains by selling securities, also left banks with
unrealized capital gains in their investment accounts, which at the end of the year amounted to
nearly four times those realized gains. Bank
balance sheets were further strengthened by additions to loss reserves and capital, which boosted the industry's primary capital to 7.57 percent
of assets. As a result, banks were in a better
position to meet the continuing challenges of the
1980s, including, importantly, the threat to overall asset quality from the debt of developing
countries.
TRENDS IN PROFITABILITY
AND
CAPITAL
The decline in profitability last year was accompanied by an increase in the dispersion of bank
538
Federal Reserve Bulletin • July 1987
1. Income and expense as a percentage of average net assets, all insured commercial banks, 1981-86 12
Item
Gross interest income
Gross interest expense
Net interest margin
Noninterest income
Loss provision
Other noninterest expense
Securities gains (losses)
Income before tax
Taxes 4
Extraordinary items
Net income
Cash dividends declared
Net retained earnings
1981
1982
1983
1984
1985
1986 3
11.93
8.77
3.17
.90
.26
2.77
-.08
.96
.20
.00
.76
.30
.46
11.36
8.07
3.28
.96
.40
2.93
-.06
.85
.14
.00
.71
.31
.40
9.63
6.38
3.25
1.03
.47
2.96
.00
.85
.18
.00
.67
.33
.34
10.23
6.97
3.26
1.19
.57
3.05
-.01
.83
.19
.01
.64
.32
.33
9.44
6.06
3.38
1.32
.67
3.19
.06
.90
.21
.01
.70
.33
.37
8.38
5.10
3.28
1.40
.77
3.22
.14
.82
.19
.01
.64
.33
.31
3.53
3.66
3.60
3.73
3.77
3.68
MEMO
Net interest margin, taxable equivalent 5
1. Before 1984, data are based on averages for call dates in
December of the preceding year and in June and December of the
current year. In 1984, data are based on averages for call dates at the
beginning and end of the year only. After 1984, data are based on
averages of the call date in December of the preceding year and all
four call dates in the current year.
2. Assets are fully consolidated and net of loss reserves.
3. Some of the income and expense items in this table appear to be
understated a bit in 1986 because of the increased importance of
merger activity within the banking industry last year. In the most
common type of merger, the income statement for the consolidated
bank at the end of the year would not include the income and expenses
of the acquired bank in the period before the merger. Thus the income
and expense figures presented in this article apparently are biased
downward slightly. In the case of interest income and interest expense
as a share of assets, we have estimated this bias to be roughly 10 basis
points. Over the income statement as a whole, the omitted data appear
to be just offsetting and would not affect the net income figure.
4. Includes all taxes estimated to be due on income, extraordinary
gains, and securities gains.
5. For each bank with profits before tax greater than zero, income
from state and local obligations was increased by [//(l—/)] times the
lesser of profits before tax or interest earned on state and local
obligations (r is the marginal federal income tax rate). This adjustment
approximates the equivalent pretax return on state and local obligations.
earnings. Chart 2 illustrates this growing dispersion in the widening gap between those banks
with relatively high net incomes and those with
relatively low net incomes. As may be seen by
the 95th percentile line in that chart, many banks
continued to do well in 1986: 5 percent of all
banks earned returns on assets in excess of 1.8
percent. However, the banks that did poorly did
very poorly: the bottom 5 percent of commercial
banks posted losses equivalent to at least 2.5
percent of assets. Calculating the standard deviation of bank returns on assets confirms the
increase in dispersion: the standard deviation
more than doubled between 1980 and 1986.
Most of the banks experiencing large losses
last year were in the southwestern and plains
states; two-thirds of the banks posting losses in
excess of 2.5 percent of assets were located in
the Kansas City or Dallas Federal Reserve Districts. Similarly, two-thirds of the 136 U.S.
commercial banks that failed in 1986 were headquartered in these two Districts. The poor performance of commercial banks in these Districts
is evident in chart 3. The worst case was the
Dallas region, which recorded an overall net loss
for the year. This net loss highlights the current
difficulties of banks heavily involved in energyrelated lending and, compared with the figure for
1980, illustrates the sharp reversals suffered in
both energy and agricultural lending.
When the industry is disaggregated by size of
bank rather than by location or lending specialty,
small and medium banks appear to have been the
predominant sources of the decline in overall
profitability last year. Moreover, these two
groups of banks, which together account for onethird of bank assets, have been primarily responsible for the cumulative drop in the industry's
profitability since 1980. The average return on
assets at banks with under $100 million in assets
has fallen by more than one-half, and medium
2. Dispersion of bank earnings
Return on assets, percent
The Profitability of U.S.-Chartered
Insured Commercial Banks in 1986
539
3. Return o n assets, b y Federal Reserve District
Percent
banks (those with assets of $100 million to $1
billion) have posted a drop of more than onequarter. As a result, the average return on assets
at small banks, which had been well above the
industrywide figure, dropped to the average for
all banks in 1985 and fell significantly below the
average, to 0.53 percent, in 1986 (see table 2). At
medium banks the decline was not so severe, and
the average return on assets for these banks, at
0.71 percent, remained above the industry average—albeit by a reduced margin.
After eroding somewhat from its earlier highs,
the aggregate return on assets at the nation's nine
largest banks held steady from 1985 to 1986,
despite the large loss reported by Bank of America. As a result of additions to equity capital,
however, the money center banks' average re-
turn on equity edged lower. Additions to equity
also were apparent in the decline last year in the
average return on equity at other banks with
assets of at least $1 billion. Nevertheless, at
12.61 percent, the return on equity at these banks
remained well in excess of the industrywide figure and almost matched the level for this group in
1980. The return on assets for these other large
banks, while declining marginally last year, remained significantly above the 1980 level.
Although in recent years mounting loan losses
have affected the profitability of these large
banks nearly as much as they have that of other
banks, the large banks have managed to overcome the losses through strong growth in net
interest margins and securities gains. These
banks increased their interest margins through
2. Profit rates, all insured commercial banks, 1981-86 1
Percent
Type of return and size of bank 2
1981
1982
1983
1984
1985
1986
.76
1.14
.91
.71
1.07
.84
.67
.96
.84
.64
.81
.88
.70
.70
.84
.64
.53
.71
.53
.66
.53
.60
.54
.54
.52
.53
.45
.78
.46
.75
13.09
13.39
12.78
12.10
12.45
11.74
11.24
11.12
11.86
10.60
9.50
12.41
11.32
8.18
11.69
10.23
6.24
9.87
13.57
12.80
13.27
11.42
12.57
10.15
11.42
9.66
9.60
13.69
9.50
12.61
3
Return on assets
All banks
Less than $100 million
$100 million to $1 billion
$1 billion or more
Money center banks
Others
Return on equity4
All banks
Less than $100 million
$100 million to $1 billion
$1 billion or more
Money center banks
Others
1. See table 1, note 1.
2. Size categories are based on year-end fully consolidated assets.
3. Net income as a percentage of average fully consolidated assets
net of loss reserves.
4. Net income as a percentage of average equity capital.
540
Federal Reserve Bulletin • July 1987
their relative success in replacing more expensive wholesale liabilities with deregulated retail
deposits, as well as by shifting the other side of
their balance sheets toward higher-yielding types
of assets. By comparison, small banks experienced a less favorable shift in balance-sheet
composition and a narrowing net interest margin,
which offset the swing toward sizable securities
gains and allowed the sharp rise in their loss
provisions since 1980 to feed through directly to
the bottom line. (Additional data on balancesheet composition, earnings, and rates paid and
earned are displayed in appendix table A . l ,
disaggregated by bank size.)
to 52 percent as retained earnings shrank and
large banks issued additional common and preferred stock. Banks also bolstered their primary
capital positions last year by increasing their
reserves for losses and expanding their issuance
of securities eligible for primary capital treatment. In the aggregate, primary capital grew IOV2
percent in 1986, while assets measured according
to the appropriate regulatory definition rose VA
percent, lifting the resultant capital-asset ratio to
7.57 percent. While the ratio of primary capital to
assets at small banks remained—at 9.19 percent—the highest in the industry, only this group
of banks experienced a decline in its ratio. In
general, the larger the bank, the lower its primary capital ratio and the larger the increase in
that ratio last year. For example, the nation's
nine largest banks raised their primary capital by
9^4 percent on average, while keeping the increase in their assets under 5 percent for the fifth
straight year.
As shown in appendix table A.2, while earnings of the overall banking industry declined $184
million last year, cash dividends rose more than
$700 million, as the dividend payout rate was
lifted to more than one-half. On average, institutions have changed their dividend payments only
sluggishly in response to movements in profitability in recent years; moreover, in many cases
these changes have been in opposite directions.
For example, in 1980, when small banks were
earning a return on assets of 1.19 percent, they
were paying out dividends of 0.32 percent of
assets. In 1986, with profitability at less than half
that earlier level, small banks declared cash
dividends of 0.38 percent of assets. In part, the
figures for small banks reflect the actions of
small energy banks, which on average paid dividends out of equity last year, registering "retained earnings" of —0.87 percent of assets.
As shown in table 3, the portion of new equity
derived from retained earnings in 1986 dropped
LOAN
LOSSES
The downturn in the overall profitability of commercial banks in the 1980s has been primarily an
asset-quality phenomenon. What is perhaps remarkable is the extent to which the banking
system has been able to offset the adverse effect
of loan losses on its net income. Since the
beginning of the 1980s, loss provisions have
more than tripled, to 0.77 percent of assets in
1986. At the same time, nearly three-fourths of
this deterioration has been counterbalanced by
3. Sources of increases in total equity capital, all insured commercial banks, 1981-86
Millions of dollars, except as noted
Item
Retained earnings'
All banks
Large banks 2
Net increase in equity capital
All banks
Large banks
1981
1982
1983
1984
1985
1986
8,848
4,104
8,284
4,051
7,653
3,621
7,824
4,090
9,455
6,368
8,539
6,476
11,163
5,465
9,374
4,578
10,739
5,625
14,958
9,415
14,720
9,402
16,502
11,846
79
75
88
88
71
64
52
43
64
68
52
55
Percentage of net increase in equity capital
from retained earnings
All banks
Large banks
1. Net income less cash dividends declared on preferred and
common stock.
2. Banks with fully consolidated assets of $1 billion or more at yearend.
The Profitability of U.S.-Chartered
an upturn in securities gains, a widening in
interest margins, and—to a lesser degree—a reduction in tax burdens. Loss provisions, which
generally move in close alignment with sameperiod charge-offs of bad loans, represent current revenues that are diverted from profits to
raise or to replenish loss reserves. Those loss
reserves, in turn, are balance-sheet items that
must be maintained at a level adequate to absorb
anticipated losses and may not dip below zero
when charge-offs occur.
As shown in table 4, loss provisions in recent
years have increased with net charge-offs but
have exceeded them and thus have allowed expansion in reserves for losses. In 1986, these
reserves ranged from an average of 1.02 percent
of assets at the money center banks to 0.76
percent of assets at small banks. These figures
translate into 1.70 percent and 1.48 percent,
respectively, of loans at those institutions.
The increases in loss reserves are particularly
striking since, for the industry as a whole, net
charge-offs extinguished a full 1 percent of total
loans, with small and medium banks experiencing higher than average losses. Detailed data
available only for banks with at least $300 million
in assets indicate that charge-off rates were higher for every major category of loans last year—
including real estate, business, and consumer
loans. The rise in charge-off rates was particularly pronounced at energy banks and relatively
mild at farm banks; nevertheless, both of these
Insured Commercial Banks in 1986
groups continued to charge off between 2 percent
and 3 percent of their loans. 1 Despite the higher
overall level of charge-offs, nonaccrual loans
edged up over the year, to 2.27 percent of loans.
As noted above, the groups of banks have not
been equally successful in reducing the effect of
higher loss provisions on their profitability in
recent years. Specifically, in 1986 the rise in loss
provisions as a share of assets at small banks was
just 5 basis points—one-half the industrywide
average. Nevertheless, these banks posted the
largest decline in profits of any size group. The
nine money center banks also hiked their loss
provisions 5 basis points, to 0.79 percent of
assets, but suffered no erosion of profitability in
1986. Medium and large (non-money-center)
banks raised their loss provisions 14 basis points.
At medium banks this increase translated into an
equivalent hit to profits; but the large banks were
able to offset the bulk of the increase by holding
constant their net interest margin, boosting their
securities gains, and reducing their noninterest
expenses.
The relatively minor increase in loss provisions at small banks resulted to an extent from
the importance of agricultural banks in this
group. Farm banks continued to add to loss
1. Farm banks are defined as those at which the ratio of
total agricultural loans to total loans is above the unweighted
average of such ratios at all banks. Energy banks include
generally those with energy loans and leases in e x c e s s of 25
percent of primary capital.
4. Loan losses and recoveries, all insured commercial banks, 1985-86
Millions of dollars, except as noted
Net charge-offs
Year and size of bank1
1985
All banks
Less than $100 million
$100 million to $1 billion
$1 billion or more
Money center banks
Others
1986
All banks
Less than $100 million
$100 million to $1 billion
$1 billion or more
Money center banks
Others
Losses
charged
Recoveries
15,519
3,271
2,841
Loss
provision
Amount
Percentage
of loans2
2,694
453
461
12,825
2,818
2,380
.86
1.38
.83
16,965
3,318
3,099
3,864
5,543
557
1,223
3,307
4,320
.86
.70
4,605
5,943
19,091
3,609
3,699
3,028
526
534
16,063
3,083
3,165
1.00
1.56
1.05
21,194
3,500
4,054
4,395
7,388
700
1,267
3,695
6,121
.94
.85
5,124
8,516
1. Size categories are based on fully consolidated assets at year-end.
541
2. See table 1, note 1.
542
Federal Reserve Bulletin • July 1987
ment securities, what growth there was came
from higher-yielding federally related mortgagebacked securities; Treasury securities fell sharply relative to assets. As shown in table 5, for the
fourth year in a row, interest-bearing deposits as
a share of assets posted a decline, largely reflecting the pullback by U.S. banks from the Eurointerbank market. While concern over capitalasset ratios has limited banks' interest in placing
funds in the interbank markets, the spreading use
of off-balance-sheet hedging devices, such as
interest rate futures, has provided banks with
alternative means to manage their exposures and
has lessened the need for access to interbank
deposit markets.
The portion of bank assets made up of loans
declined in 1986, despite bouyant growth of
consumer and real estate loans. The sizable
decline in average corporate bond rates prompted nonfinancial corporations to issue a record
amount in the long-term market and stunted
business demand for C&I loans. In addition,
much of the new C&I lending by major U.S.
banks was sold into the secondary market and
often ended up on the books of foreign banks. As
a result of these influences, C&I loans dropped
to less than 21 percent of assets at U.S. commercial banks. In contrast to their restraining effect
on C&I lending, lower long-term rates greatly
boosted real estate loans, leading to sometimes
frantic mortgage origination activity. Real estate
lending was given further impetus just before the
end of the year by the impending effective date of
tax reform, which ended the favorable tax treatment of capital gains realized in real estate (and
other) transactions.
Securities—other than U.S. government is-
reserves at a rate well in excess of the industry
average, but at 1.16 percent of assets their loss
provisions were 8 basis points below those taken
in 1985. Average loss provisions at small banks,
however, were inflated a bit by the 309 energy
banks, which registered provisions of 1.78 percent of assets. Loss provisions of IV2 percent or
more of assets were not uncommon in some
areas of the nation last year. For example, average provisions for all banks in the Dallas Federal
Reserve District rose from less than 1 percent of
assets in 1985 to 1.62 percent in 1986.
NET INTEREST
MARGIN
The industry's net interest margin, while remaining at a relatively high level, narrowed somewhat
in 1986 as the decline in market interest rates
brought down interest income faster than interest
expense. With market rates dropping and the
yield curve flattening, interest income fell 1.06
percentage points to 8.38 percent of net assets,
and interest expense declined nearly 1 percentage point to 5.10 percent—both to their lowest
levels since 1978.
In the aggregate, the effect of declining market
rates on interest income was moderated by the
persistence of older, fixed-rate assets and by
some shifts in the composition of assets. While
the various groups of banks succeeded to differing degrees in redirecting their portfolios away
from lower-yielding assets, the industry as a
whole reduced the share of its assets held in the
forms of U.S. government securities, interbank
deposits, and commercial and industrial (C&I)
loans. Even within the category of U.S. govern-
5. Selected portfolio items as a percentage of total assets, all insured commercial banks, 1981-86'
Item
Interest-earning assets
Loans
Securities
U.S. government
State and local government
Other bonds and stocks
Gross federal funds sold and reverse
repurchase agreements
Interest-bearing deposits
1981
1982
1983
1984
1985
1986
84.59
55.91
17.00
8.63
7.62
.75
85.87
56.82
16.56
8.59
7.25
.73
85.96
56.46
17.47
9.79
6.84
.83
85.74
57.67
17.58
9.89
6.76
.93
86.00
58.38
17.64
9.53
7.02
1.09
86.02
57.86
18.29
9.25
7.49
1.55
3.99
7.69
4.41
8.06
4.34
7.69
4.17
6.33
4.44
5.54
4.72
5.15
.55
1,940
.59
2,101
.63
2,259
.70
2,418
.80
2,562
.92
2,779
MEMO
Loss reserves
Average assets (billions of dollars)
1. See table 1, note 1.
The Profitability of U.S.-Chartered
sues—rose strongly as a share of assets. Private
taxable securities remained a tiny share of commercial bank assets but rose rapidly, to \Vi
percent in 1986 from just over 1 percent of assets
in 1985. Acquisitions of collateralized mortgage
obligations likely contributed to this rise. Taxexempt securities also increased substantially
last year; 1985 and 1986 were the only times in
the past 15 years that tax-exempt obligations
increased faster than the overall portfolio. These
comparisons refer to annual average levels. In
contrast, when measured from year-end 1985 to
year-end 1986, tax-exempt securities declined,
both as a share of bank assets and in dollar
terms. Anticipation of tax reform, which has
made tax-exempt securities far less attractive to
commercial banks by ending the 80 percent deductibility of carrying costs on most newly acquired obligations, led to a surge in purchases of
tax-exempt securities at the end of 1985 and
again in the third quarter of 1986 and sharply
boosted the average level for last year. Table 6
shows why state and local government issues
were popular during most of 1986: on a taxableequivalent basis, the rate of return on tax-exempt
securities greatly exceeded that of taxable securities or loans. This rate relationship was attributable partly to the long average maturity of state
and local government securities but also to the
huge supplies of issues as tax-exempt borrowers
rushed both to take advantage of lower interest
rates and to beat anticipated tax-reform deadlines. During one notable, extended period last
year, yields on municipal revenue bonds were
appreciably above comparable-maturity Treasury rates, even before the adjustment for their
tax status. Despite the high yields, small banks
as a group ran off tax-exempt securities last year,
probably because deteriorating profits left these
banks with less need for tax shelters. Large
banks (excluding the money center banks)
showed the largest increase in holdings of municipals.
The comparison of these and other changes in
the balance sheets of these two groups of banks
illustrates how important compositional shifts
are in influencing the course of interest income.
Although the rates of return on each category of
assets at small banks decreased less than did
those of the industry as a whole, the drop in
interest income per dollar of assets at small
Insured Commercial Banks in 1986
543
6. Rates of return on fully consolidated portfolios,
all insured commercial banks, 1981-86'
Percent
Item
Securities, total
State and local
government....
Loans, gross
Net of loss
provision
Taxable equivalent2
Total securities
State and local
government....
Total securities and
gross loans
1981
1982
1983
1984
1985
1986
9.28
9.96
9.83
9.95
9.27
8.34
6.74
16.32
7.20
15.17
7.04
12.69
7.51
13.65
7.43
12.06
7.20
10.84
15.59
14.17
11.59
12.54
10.90
9.48
11.65
12.43
12.06
12.18
11.46
10.53
11.96
12.81
12.58
13.45
13.08
12.53
15.07
14.39
12.41
13.31
11.92
10.77
1. Calculated as described in the "Technical Note," Federal Reserve Bulletin, vol. 65 (September 1979), p. 704, for years through
1984. For more recent years, rates of return are derived from income
items and quarterly average balance sheet data.
2. See table 1, note 4.
banks uncharacteristically was about as large as
the industry average, as these banks shifted their
portfolios toward relatively liquid, but loweryielding, assets.
Loans declined more than 1 Vi percentage
points as a share of assets at small banks last
year, owing importantly to agricultural and energy banks, which registered declines of twice that
size because creditworthy borrowers became
scarcer and many farmers repaid their debts.
Among the types of loans, not only C&I and farm
loans but also consumer loans decreased at small
banks. These influences were offset in part by
real estate loans, which grew as a share of small
banks' assets by about the same amount as for
the rest of the industry. Besides running off taxexempt securities, small banks decreased somewhat their holdings of U.S. government issues—
although farm and energy banks acquired U.S.
government securities on balance, presumably in
lieu of lending their available funds. The strongest increases in assets at small banks last year
were in the relatively low-yielding categories of
federal funds and interbank deposits, which together rose by 2 percentage points at small
banks, to IOV2 percent of assets.
By contrast, the large banks (other than the
money center banks) reduced the portion of their
portfolio devoted to federal funds and interestbearing deposits IV4 percentage points, to 9lA
percent of assets. Instead, these banks increased
their holdings of consumer and real estate loans
and of all types of securities—including tax-
The Profitability of U.S.-Chartered
Insured Commercial Banks in 1986
545
8. Selected liabilities as a percentage of total assets, all insured commercial banks, 1981-86 1
Item
Deposit liabilities
In foreign offices
In domestic offices
Demand deposits
Other checkable deposits
Large time deposits2
Other deposits3
Gross federal funds purchased and repurchase agreements
Other borrowings
1981
1982
1983
1984
1985
1986
78.61
15.93
62.68
20.76
2.43
14.12
25.37
7.54
2.62
77.61
15.79
61.82
17.35
3.43
14.61
26.44
7.99
2.64
77.68
14.71
62.97
16.53
4.03
12.15
30.26
7.81
2.84
77.93
12.94
64.99
16.47
4.34
12.22
31.95
7.51
2.87
77.47
12.65
64.83
15.69
4.58
11.42
33.14
7.62
3.33
76.72
11.61
65.11
16.04
5.21
10.75
33.12
8.26
4.00
40.21
1,940
41.03
2,101
37.51
2,259
35.55
2,418
35.01
2,562
34.61
2,779
MEMO
Money market liabilities4
Average assets (billions of dollars)
1. See table 1, note 1.
2. Deposits of $100,000 and over.
3. Including savings, small time deposits, and MMDAs.
come and expenses over the past few years. In
1986, trading account profits and commissions,
trust fees, and sales of assets were major contributors to income. As off-balance-sheet activities
have become more important, income from
them, which is part of the undifferentiated "other
noninterest income" category, has soared. In
1986, the bulk of the increase in noninterest
income occurred in this category, as the notional
value of interest rate swaps outstanding almost
doubled and loan sales rose by half, generating
additional fee income. Standby letters of credit,
however, shrank slightly, as foreign-chartered
banks supplied a larger share of the market and
U.S. banks anticipated risk-based capital requirements that would raise the implicit cost of
issuing standby letters of credit. Salaries and
benefits accounted for more than half of the rise
in noninterest expenses last year as the money
center banks expanded into new products and
new markets.
For the banking industry as a whole, the
noninterest margin was supported last year by
restraint on expenses. Only the money center
banks posted a significant increase in noninterest
expenses (scaled by assets), and they made up
for that increase with a parallel hike in income.
Other large banks managed to lower their noninterest expenses relative to assets by 6 basis
points as a result of slower growth in wages and
salaries.
For the second year in a row, the commercial
banking industry benefited significantly from
capital gains on the sale of investment account
securities, which accounted for one-sixth of pretax earnings last year. Without the improvement
4. Large time deposits issued by domestic offices, deposits issued
by foreign offices, repurchase agreements, gross federal funds purchased, and other borrowings.
in this area, the decline in overall profitability
would have been about twice as large. Banks
took advantage of market rates at 9-year lows to
realize nearly $4 billion in securities gains during
1986. While banks of all sizes took these gains
last year, small banks registered the largest capital gains (scaled by assets). This pattern is consistent with small banks holding more securities
relative to assets than do other banks and having
been under more earnings pressure than the rest
of the industry.
Despite the large realized capital gains, the
decline in interest rates left banks with a much
larger reservoir of unrealized securities gains at
the end of 1986 than they had had a year earlier.
The market value of investment-account securities held by the banking industry exceeded their
book value by $141/2 billion at the end of December. About $3 billion of that excess was at small
banks, $4 billion at medium banks, $2 billion at
money center banks, and $5V2 billion at other
large banks. Chart 4 shows the rise in this pool of
potential gains over the past three years and the
4. U n r e a l i z e d capital g a i n s o n securities
Percent
Billions of dollars
546
Federal Reserve Bulletin • July 1987
decline in interest rates (illustrated by the 10year Treasury note rate).
EARLY
1987
Although call report data for the first quarter of
1987 were not available when this article was
prepared, other sources of information on the
performance of large banks indicate that the
downward trend in profitability is continuing in
1987. Again the driving force is asset quality. In
February, Brazil declared a moratorium on debt
service payments to commercial banks, and
many banks placed these loans on nonaccrual
status. At the nine money center banks this latter
action raised the pool of nonperforming assets
almost $14 billion and decreased earnings more
than $200 million for the first quarter alone. In
the second quarter, the banking industry is likely
to show an overall net loss as a result of the
decisions first by Citibank and then by others to
make huge additions to loan loss reserves in
recognition of problems with developing-country
debt.
In the first five months of 1987, insured banks
failed at their fastest rate ever; 83 commercial
banks were closed, and the FDIC estimated that
failures would run at about that rate throughout
the year. But the incipient improvement in the
farm sector, the stabilization of oil prices, and
the movement by many banks to put problems
with their international loans behind them are all
positive developments for the U.S. banking industry over the longer term.
The Profitability
of U.S.-Chartered
Insured
Commercial
Banks
in 1986
547
A . l . Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-86 1
A. Banks with less than $100 million in assets
Item
1981
1983
1982
1984
1985
1986
Balance sheet items as a percentage
of average consolidated assets
Interest-earning assets
Loans
Commercial and industrial
Real estate
Consumer
Securities
U.S. government
State and local government
Other bonds and stocks
Gross federal funds sold and reverse repurchase
agreements
Interest-bearing deposits
Deposit liabilities
Demand deposits
Other checkable deposits
Large time deposits
Other deposits
Gross federal funds purchased and repurchase
agreements
Other borrowings
90.84
53.72
12.26
19.60
13.97
29.35
17.38
11.50
.46
91.10
52.55
12.91
18.37
12.91
29.61
18.25
10.94
.41
91.02
51.49
12.88
17.98
12.28
31.00
20.52
10.01
.46
90.77
52.26
12.90
18.88
12.36
30.39
20.85
9.01
.54
91.00
53.15
13.53
19.83
12.50
29.32
20.17
8.55
.60
90.91
51.51
12.67
20.77
11.73
28.90
19.65
8.27
.98
5.87
1.90
87.56
22.52
4.01
10.03
51.00
6.35
2.60
87.17
19.04
6.14
10.67
51.32
5.96
2.57
87.83
17.01
7.55
9.80
53.46
5.53
2.59
88.18
16.10
8.14
10.23
53.71
5.78
2.75
88.23
14.62
8.53
10.98
54.10
7.22
3.28
88.54
14.10
9.49
10.96
53.95
1.41
.52
1.68
.48
1.21
.41
1.01
.35
.85
.34
.73
.29
11.96
.51
12.83
.51
11.42
.52
11.59
.58
12.18
.67
12.02
.76
MEMO
Money market liabilities
Loss reserves
Effective interest rate (percent)
Rates earned
Securities
State and local government
Loans, gross
Net of loss provision
Taxable equivalent
Securities
Securities and gross loans
Rates paid
Interest-bearing deposits
Large certificates of deposit
Other deposits
All interest-bearing liabilities
9.69
6.45
14.91
14.27
10.82
7.24
15.34
14.39
10.58
7.47
13.70
12.55
10.66
7.84
14.16
12.80
9.83
7.87
12.71
11.06
8.86
7.70
11.73
9.92
11.70
13.75
12.95
14.46
12.53
13.24
12.23
13.45
11.42
12.25
10.38
11.24
11.21
15.14
10.56
11.31
10.96
13.74
10.51
9.15
9.20
9.15
9.11
9.54
10.84
9.34
9.54
7.99
8.74
7.86
8.00
6.96
7.39
6.88
6.96
11.01
Income and expenses as a percentage
of average net consolidated assets
Gross interest income
Gross interest expense
Net interest margin
Taxable equivalent
Noninterest income
Loss provision
Other noninterest expense
Securities gains or losses ( - )
Income before tax
Taxes
Extraordinary items
Net income
Cash dividends declared
Net retained earnings
11.55
7.15
4.39
4.93
.68
.29
3.24
-.10
11.75
7.35
4.40
4.96
.67
.42
3.31
-.02
10.60
6.32
4.28
4.82
.69
.51
3.29
.01
10.89
6.73
4.17
4.66
.74
.63
3.28
-.01
10.33
6.06
4.28
4.75
.77
.87
3.38
.08
9.32
5.28
4.04
4.48
.77
.92
3.39
.16
1.45
.31
.00
1.14
.35
.79
1.31
.24
.00
1.07
.39
.67
1.18
.23
.00
.96
.38
.58
.99
.19
.01
.81
.39
.41
.88
.19
.01
.70
.41
.29
.66
.15
.02
.53
.38
.16
352
12,353
365
12,081
373
11,811
383
11,554
385
11,332
384
11,011
MEMO
Average assets (billions of dollars)
Number of banks
1. See notes to tables in the text.
548
F e d e r a l R e s e r v e Bulletin • J u l y 1987
A . l . Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-86 1
—Continued
B. Banks with $100 million to $1 billion in assets
Item
1981
1982
1983
1984
1985
1986
Balance sheet items as a percentage
of average consolidated assets
Interest-earning assets
Loans
Commercial and industrial
Real estate
Consumer
Securities
U.S. government
State and local government
Other bonds and stocks
Gross federal funds sold and reverse repurchase
agreements
Interest-bearing deposits
Deposit liabilities
In foreign offices
In domestic offices
Demand deposits
Other checkable deposits
Large time deposits
Other deposits
Gross federal funds purchased and repurchase
agreements
Other borrowings
88.37
54.40
16.34
20.02
14.00
25.68
13.15
11.88
.65
89.34
53.71
16.88
19.38
13.16
25.30
13.48
11.16
.66
89.65
52.98
16.84
18.89
12.86
26.51
15.34
10.29
.87
89.58
54.41
17.51
19.61
13.14
26.18
15.46
9.77
.95
90.02
56.26
17.96
21.07
13.54
25.60
14.76
9.86
.98
89.88
55.94
16.76
22.34
13.61
25.05
13.60
10.09
1.36
5.46
2.84
83.18
.24
82.94
24.97
3.62
14.98
39.37
5.91
4.42
82.89
.24
82.66
21.31
5.21
15.35
40.79
5.59
4.58
84.34
.22
84.12
19.51
6.10
12.94
45.57
5.41
3.58
85.14
.27
84.87
18.71
6.44
12.95
46.76
5.33
2.84
85.51
.28
85.23
17.31
6.80
13.22
47.89
6.37
2.51
85.74
.39
85.35
16.94
7.73
12.53
48.15
6.08
1.28
6.47
1.15
5.21
1.21
4.59
1.04
4.13
1.01
3.70
1.28
22.58
.58
23.20
.59
19.57
.61
18.86
.65
18.65
.72
17.90
.81
MEMO
Money market liabilities
Loss reserves
Effective interest rate (percent)
Rates earned
Securities
U.S. government
State and local government
Other bonds and stocks
Net of loss provision
Taxable equivalent
Securities
Securities and gross loans
Rates paid
Interest-bearing deposits
Large certificates of deposit
Deposits in foreign offices
Other deposits
All interest-bearing liabilities
9.15
11.55
6.52
10.15
15.23
14.56
9.96
12.41
7.03
10.52
14.70
13.71
9.89
11.86
7.03
11.31
12.78
11.81
9.97
10.35
7.43
10.39
13.61
12.65
9.22
10.40
7.44
9.39
12.16
11.04
8.34
9.17
7.32
7.95
11.20
9.82
11.37
13.90
12.27
13.84
12.08
12.50
12.15
13.13
11.33
11.90
10.43
10.96
11.47
16.05
15.84
9.99
11.98
10.67
13.91
14.48
9.71
10.98
8.83
8.90
9.23
8.82
8.80
9.33
10.88
15.80
8.95
9.39
7.80
8.56
8.45
7.63
7.79
6.81
7.20
7.76
6.72
6.80
Income and expenses as a percentage
of average net consolidated assets
Gross interest income
Gross interest expense
Net interest margin
Taxable equivalent
Noninterest income
Other noninterest expense
Securities gains or losses ( - )
Income before tax
Taxes
Extraordinary items
Cash dividends declared
Net retained earnings
11.37
7.44
3.94
4.46
.83
.27
3.37
-.10
11.18
7.19
4.00
4.53
.86
.42
3.45
-.07
9.92
6.02
3.90
4.42
.90
.43
3.39
-.01
10.39
6.50
3.89
4.42
.97
.46
3.33
-.01
9.81
5.79
4.02
4.57
.98
.61
3.42
.06
8.91
5.04
3.87
4.40
1.02
.76
3.41
.14
1.03
.13
.01
.91
.39
.52
.92
.09
.00
.84
.40
.44
.98
.14
.00
.84
.42
.42
1.06
.19
.01
.88
.43
.44
1.03
.20
.01
.84
.45
.39
.86
.17
.01
.71
.43
.27
382
1,651
413
1,813
454
2,012
488
2,135
508
2,259
539
2,398
MEMO
Average assets (billions of dollars)
Number of banks
1. See notes to tables in the text.
The Profitability
of U.S.-Chartered
Insured
Commercial
Banks
in 1986
549
A . l . Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-86'
—Continued
C. Money center banks
Item
1981
1983
1982
1984
1985
1986
Balance sheet items as a percentage
of average consolidated assets
Interest-earning assets
Loans
Commercial and industrial
Real estate
Consumer
Securities
U.S. government
State and local government
Other bonds and stocks
Gross federal funds sold and reverse repurchase
agreements
Interest-bearing deposits
Deposit liabilities
In foreign offices
In domestic offices
Demand deposits
Other checkable deposits
Large time deposits
Other deposits
Gross federal funds purchased and repurchase
agreements
Other borrowings
MEMO
Money market liabilities
Loss reserves
80.63
59.14
30.21
8.62
4.50
6.48
2.77
2.39
1.32
82.19
62.27
32.34
9.16
4.61
5.96
2.37
2.37
1.23
81.56
62.93
32.31
9.22
4.72
6.39
2.60
2.49
1.30
81.14
63.66
31.78
9.82
5.28
6.68
2.33
2.90
1.45
80.56
61.91
29.46
10.49
5.78
7.15
2.31
3.02
1.82
80.09
60.07
26.49
11.45
6.13
8.49
2.28
3.48
2.73
2.11
12.90
75.37
39.86
35.51
15.06
.83
12.95
6.68
2.50
11.43
73.69
39.99
33.70
11.28
1.06
13.75
7.61
2.52
9.72
72.18
37.93
34.25
11.43
1.19
10.55
11.08
2.51
8.29
72.08
35.21
36.88
11.83
1.24
10.62
13.20
3.54
7.95
70.74
35.86
34.88
11.51
1.30
8.18
13.89
3.62
7.91
69.92
34.64
35.28
12.46
1.63
7.30
13.88
7.23
4.54
7.27
4.75
7.86
5.12
7.42
5.34
7.66
6.51
8.17
7.95
64.58
.49
65.76
.54
61.46
.59
58.58
.69
58.21
.83
58.07
1.02
Effective interest rate (percent)
Rates earned
Securities
U.S. government
State and local government
Other bonds and stocks
Loans, gross
Net of loss provision
Taxable equivalent
Securities
Securities and gross loans
Rates paid
Interest-bearing deposits
Large certificates of deposit
Deposits in foreign offices
Other deposits
All interest-bearing liabilities
9.89
10.97
7.55
11.99
17.32
16.62
9.73
10.81
7.46
11.93
15.47
14.63
9.56
11.92
6.33
11.46
12.64
11.75
9.72
11.58
7.61
11.10
13.85
12.97
9.41
10.51
7.24
11.45
12.08
10.85
8.51
9.07
7.09
9.79
10.53
9.18
12.46
16.56
12.36
14.94
11.86
12.32
12.58
13.73
11.75
12.05
10.89
10.58
15.94
16.64
17.12
9.97
16.06
13.95
14.47
14.89
10.15
13.84
10.23
8.96
10.77
10.02
10.56
11.06
10.70
12.90
7.83
11.53
8.91
9.07
9.59
7.43
9.16
7.41
7.45
7.88
6.47
7.57
Income and expenses as a percentage
of average net consolidated assets
Gross interest income
Gross interest expense
Net interest margin
Taxable equivalent
Noninterest income
Loss provision
Other noninterest expense
Securities gains or losses ( - )
Income before tax
Taxes
Extraordinary items
Net income
Cash dividends declared
Net retained earnings
12.55
10.45
2.10
2.25
.98
.21
1.99
-.05
11.63
9.29
2.34
2.49
1.05
.30
2.25
-.06
9.40
7.00
2.40
2.53
1.12
.36
2.34
.01
10.22
7.84
2.38
2.83
1.42
.50
2.54
.02
9.10
6.74
2.36
2.53
1.75
.75
2.71
.06
7.85
5.57
2.28
2.49
2.02
.79
2.96
.13
.83
.30
.00
.53
.22
.31
.77
.24
.01
.53
.23
.30
.84
.30
.00
.54
.27
.26
.78
.26
.00
.52
.24
.29
.71
.26
.00
.45
.25
.21
.68
.22
.00
.46
.21
.25
538
9
564
9
582
9
594
9
623
9
652
9
MEMO
Average assets (billions of dollars)
Number of banks
1. See notes to tables in the text.
550
F e d e r a l R e s e r v e Bulletin • J u l y 1987
A . l . Portfolio composition, interest rates, and income and expenses, insured commercial banks, 1981-86'
—Continued
D. Large banks other than money center banks
Item
1981
1983
1982
1984
1985
1986
Balance sheet items as a percentage
of average consolidated assets
Interest-earning assets
Loans
Commercial and industrial
Real estate
Consumer
Securities
U.S. government
State and local government
Other bonds and stocks
Gross federal funds sold and reverse repurchase
agreements
Interest-bearing deposits
Deposit liabilities
In foreign offices
In domestic offices
Demand deposits
Other checkable deposits
Large time deposits
Other deposits
Gross federal funds purchased and repurchase
agreements
Other borrowings
MEMO
Money market liabilities
Loss reserves
82.33
55.33
22.42
13.02
9.02
14.00
6.14
7.35
.51
84.19
56.52
23.70
13.25
8.68
13.43
5.91
6.97
.54
84.77
56.07
23.15
13.25
8.88
14.28
7.04
6.58
.66
84.62
57.78
23.19
13.74
10.31
14.81
7.35
6.71
.75
85.45
59.23
23.17
14.74
11.58
15.72
7.38
7.46
.89
85.95
59.56
22.47
15.73
12.43
17.19
7.76
8.25
1.18
3.68
9.32
73.89
14.01
59.89
22.02
2.21
16.75
18.90
4.09
10.15
73.07
13.85
59.22
18.89
2.92
16.75
20.66
4.20
10.21
73.43
13.03
60.40
18.21
3.33
13.84
25.02
4.01
8.02
73.77
10.77
62.99
18.37
3.68
13.65
27.29
4.04
6.45
73.63
9.49
64.14
17.79
4.00
12.63
29.73
3.78
5.42
72.59
7.85
64.74
18.18
4.64
11.75
30.17
11.84
2.94
12.39
2.92
12.05
3.23
11.68
3.29
11.79
3.66
12.74
4.27
45.53
.60
45.91
.65
42.16
.70
39.39
.78
37.56
.86
36.61
.97
Effective interest rate (percent)
Rates earned
Securities
U.S. government
State and local government
Other bonds and stocks
Loans, gross
Net of loss provision
Taxable equivalent
8.74
10.64
6.96
12.11
16.80
15.98
9.17
11.12
7.24
12.66
15.08
13.92
9.16
11.18
6.95
10.84
12.29
10.99
9.42
11.13
7.36
11.46
13.37
12.11
8.89
10.27
7.28
10.49
11.78
10.80
8.01
9.01
6.99
8.79
10.61
9.37
Securities and gross loans
11.60
15.55
12.09
14.31
11.66
12.00
12.06
13.10
11.51
11.73
10.58
10.61
Rates paid
Interest-bearing deposits
Large certificates of deposit
Deposits in foreign offices
Other deposits
All interest-bearing liabilities
13.92
16.88
17.98
9.54
14.55
12.20
14.17
14.84
9.66
12.28
9.09
8.83
9.48
9.08
9.24
9.73
10.52
12.04
8.71
10.04
8.12
8.71
9.25
7.62
8.13
6.84
7.30
7.54
6.56
6.82
Income and expenses as a percentage
of average net consolidated assets
Gross interest income
Gross interest expense
Net interest margin
Taxable equivalent
.29
2.79
-.10
11.06
8.00
3.06
3.42
1.09
.46
2.97
-.07
9.19
6.17
3.02
3.35
1.19
.56
3.01
-.01
9.89
6.76
3.13
3.56
1.34
.64
3.14
-.02
9.13
5.79
3.34
3.75
1.43
.57
3.29
.05
8.13
4.82
3.31
3.76
1.44
.71
3.23
.13
.76
.10
.00
.66
.30
.37
.65
.05
.00
.60
.29
.31
.63
.10
.00
.54
.29
.25
.67
.16
.01
.53
.27
.25
.96
.20
.02
.78
.29
.49
.94
.20
.01
.75
.34
.41
668
195
759
220
850
243
953
263
1,047
290
1,204
321
11.95
9.02
2.94
3.31
1.00
Loss provision
Other noninterest expense
Securities gains or losses ( - )
Extraordinary items
Cash dividends declared
Net retained earnings
MEMO
Average assets (billions of dollars)
Number of banks
1. See notes to tables in the text.
The Profitability of U.S.-Chartered
Insured Commercial
Banks in 1986
551
A.2. Report of income, all insured commercial banks, 1981-86
Millions of dollars
1984
1985
1986
239,264
274,273
273,461
269,292
216,059
153,323
16,739
245,640
181,873
16,557
239,952
175,679
13,590
230,702
168,429
11,132
11,309
33,398
10,648
22,749
9,198
36,799
10,620
26,179
10,464
36,746
11,817
24,929
9,352
41,331
12,820
28,511
8,922
42,219
14,956
27,263
3,892
13,538
4,584
15,517
5,399
17,806
6,512
22,121
7,280
26,229
7,902
30,689
Operating expense, total
227,490
238,274
220,236
254,273
252,057
250,399
Interest, total
Deposits
Large certificates of deposit
Deposits in foreign offices
Other deposits
Gross federal funds purchased and
repurchase agreements
Other borrowed money 2
169,078
138,830
38,896
46,696
53,238
168,651
141,185
37,366
41,754
62,065
143,215
119,843
22,523
29,021
68,299
167,335
139,331
25,761
35,781
77,789
154,094
128,837
22,472
30,013
76,352
140,467
115,889
19,257
24,440
72,192
23,752
6,496
20,628
6,838
16,438
6,934
19,323
8,682
16,236
9,020
15,766
8,812
Salaries, wages, and employee benefits . . . .
Occupancy expense 3
Loss provision
Other operating expense
27,901
8,558
5,080
16,873
31,244
9,975
8,429
19,975
33,637
11,101
10,621
21,662
36,463
12,092
13,690
24,694
39,338
13,407
16,965
28,254
42,258
14,551
21,194
31,929
Securities gains or losses ( - )
-1,595
-1,282
-30
-142
1,504
3,773
Income before tax
Taxes
Extraordinary items
Net income
Cash dividends declared
18,491
3,859
57
14,689
5,841
17,737
2,976
64
14,826
6,542
18,998
4,076
70
14,992
7,338
19,858
4,665
217
15,409
7,585
22,908
5,369
318
17,858
8,402
22,665
5,261
271
17,674
9,135
1981
1982
1983
Operating income, total
247,577
257,293
Interest, total
Loans
Balances with banks
Gross federal funds sold and reverse
repurchase agreements
Securities (excluding trading accounts) . .
State and local government
Other
230,148
164,715
23,905
237,193
168,619
23,867
12,183
29,345
9,704
19,641
Item
Service charges on deposits
Other operating income'
1. Includes income from assets held in trading accounts.
2. Includes interest paid on U.S. Treasury tax and loan account
balances and on subordinated notes and debentures.
3. Occupancy expense for bank premises net of any rental income
plus furniture and equipment expenses,
552
Treasury and Federal Reserve
Foreign Exchange Operations
This quarterly report, covering the period February through April 1987, provides information on
Treasury and System foreign exchange operations. It was prepared by Sam Y. Cross, Manager of Foreign Operations of the System Open
Market Account and Executive Vice President in
charge of the Foreign Group of the Federal
Reserve Bank of New York.'
The dollar traded rather steadily in February and
early March, and then moved lower through the
end of April. It closed the period down more than
8 percent against both the Japanese yen and the
British pound, down roughly 2 percent against
the German mark and most other continental
currencies, and unchanged on balance against
the Canadian dollar. The U.S. authorities intervened in the market at various times during the
three-month period under review.
After declining almost continuously for nearly
two years, the dollar steadied as the period
opened. Market participants were reassured by a
coordinated U.S.-Japanese intervention operation undertaken in late January following a joint
statement by Secretary Baker and Finance Minister Miyazawa in which they reaffirmed their
willingness to cooperate on exchange rate issues.
Talk that the financial authorities of the major
industrial countries would soon meet encouraged
expectations that multilateral efforts might be
forthcoming to prevent the dollar from declining
further. In addition, reports of extensive Japanese participation in the February refunding operations of the U.S. Treasury reassured the
exchange markets by seeming to suggest that
Japanese investors would continue to make sub-
1. The charts for the report are available on request from
Publications Services, Board of Governors of the Federal
Reserve System, Washington, D.C. 20551.
stantial investments in dollar-denominated assets.
Meanwhile, economic statistics being released
suggested that the underlying economic fundamentals were clearly moving in directions that
would lead to adjustment of external imbalances.
To be sure, there were still few signs that the
dollar's two-year decline had reduced the nominal U.S. trade deficit. However, data on gross
national product for the fourth quarter of 1986,
together with information becoming available on
export and import volumes, showed that the
nation's trade deficit was declining in volume
terms and that the nation's external sector was
beginning to contribute to economic growth.
Japan's trade surplus, though still high in nominal terms, had been declining in volume terms
since the beginning of 1986. As for Germany,
weak export volumes and strong import volume
gains carried a similar indication that earlier
1. Federal Reserve reciprocal currency arrangements
Millions of dollars
Institution
Amount of
facility,
April 30, 1987
Austrian National Bank
National Bank of Belgium
Bank of Canada
National Bank of Denmark
Bank of England
Bank of France
German Federal Bank
Bank of Italy
Bank of Japan
250
1,000
2,000
250
3,000
2,000
6,000
3,000
5,000
Bank of Mexico
Netherlands Bank
Bank of Norway
Bank of Sweden
Swiss National Bank
700
500
250
300
4,000
Bank for International Settlements
Dollars against Swiss francs
Dollars against other authorized European
currencies
1,250
Total
600
30,100
553
exchange rate movements were working to reduce external imbalances. In these circumstances, the dollar rose from its lows of late
January to trade within a narrow range through
mid-February against both the yen and the mark,
around ¥153 and DM1.82 respectively.
Then on February 22, following meetings held
at the Louvre in Paris, finance ministers and
central bank governors of six major industrial
countries stated that, given the economic policy
commitments they were making, their currencies
were now "within ranges broadly consistent with
underlying economic fundamentals." In the announcement, the authorities of Germany and
Japan stated that they would provide greater
stimulus to their economies, and the U.S. government said that it would resist protectionism
and substantially reduce the budget deficit for
the fiscal year 1988. The statement noted that
"further substantial exchange rate shifts among
their currencies could damage growth and adjustment prospects in their countries." The officials
of the six major industrial countries also announced that they had agreed "in current circumstances to cooperate closely to foster stability of exchange rates around current levels."
Although many market participants regarded
previous promises of domestic policy actions by
the major industrial nations with skepticism, the
prospect of increased cooperation and the more
explicit association of the U.S. Treasury with a
call for greater exchange rate stability reassured
the market about the near-term outlook for the
dollar. Remarks by some foreign officials attending the Paris meeting suggested that there had
also been an agreement for coordinated intervention in the exchange market.
During the first several weeks following the
Paris agreement, the dollar strengthened, especially against the German mark and other continental currencies. Although many market professionals expressed doubt, given the continuing
pressures of large international trade imbalances,
that further declines in the dollar could be avoided over time, there was less sense of downside
risk in holding dollars in the near term. As a
result, some corporations began to unwind costly
hedges against their dollar positions. This commercial demand gave the dollar buoyancy that
some market professionals suspected was the
result of central bank intervention, an impression
that added to the dollar's firmness.
The dollar continued to trade narrowly against
the yen at around ¥153 after the Paris meeting.
Japanese exporters took advantage of any firming of the dollar against the yen to convert export
proceeds into yen—an activity that accelerated
ahead of Japan's fiscal year-end in March. Japanese investors took advantage of any easing of
the dollar against the yen to increase their holdings of U.S. and other foreign assets. They
perceived relatively little near-term exchange
rate risk in investing abroad, expecting the authorities to prevent any significant further appreciation of the yen against the dollar.
Meanwhile, greater stability in dollar exchange
rates in February, together with the subsequent
Paris commitment to foster exchange rate stability, was seen in the market as reducing exchange
rate risk more generally and thereby enhancing
the relative attractiveness of assets denominated
in currencies with relatively high interest rates.
Sterling, which also benefited from several other
economic and political developments, rose
strongly against all major currencies in February
and early March, amid reports of strong demand
by foreign investors. There were also signs of
increased investor interest in the Australian and
Canadian dollars, the Swedish krone, the French
franc, and the Italian lira to take advantage of the
high interest rates available in those currencies.
In that environment, investors found that a
number of currencies offered more attractive
investment opportunities than did the German
mark. Traders viewed economic activity as
somewhat stronger in the United States and
somewhat weaker in Germany than previously
thought. Also, expectations persisted that shortterm interest rate differentials would continue to
favor the dollar relative to the mark. Moreover,
market participants were aware that there remained outstanding large positions, long of
marks and short of dollars; any generalized move
to trim these positions was expected to result in
considerable bidding for dollars. In these circumstances, the dollar continued to rise gradually
against the mark in late February and early
March.
Around mid-March, speculative buying started
to push the dollar up more rapidly against the
554
Federal Reserve Bulletin • July 1987
mark. A number of stop-loss orders to buy
dollars and sell marks were triggered, and the
resulting bidding for dollars in otherwise thin
trading propelled the dollar rate up as high as
DM1.8745 on March 11 in New York. Under
these circumstances, the Trading Desk at the
Federal Reserve Bank of New York entered the
exchange market, selling $30 million against
marks. The intervention operation, which was
undertaken to foster greater exchange rate stability as envisaged in the Paris agreement was
quickly talked about in the markets. Dealers
imagined that the Desk had sold a much larger
amount and interpreted the action as signaling
that major countries would seek to limit any
significant rise in the dollar, as well as any
significant decline. As a result, market participants calculated that there was little need to
protect themselves against the possibility that
the dollar might continue to advance. In view of
their long-standing expectation that the dollar
would decline over time, bidding for dollars
quickly subsided, and dollar rates started to drift
down.
As the dollar started to decline after midMarch, the focus of market attention shifted
from the mark to the yen. The expectation that
short-term interest rate differentials would move
in favor of the dollar against the mark and fear of
central bank intervention limited the dollar's
decline against the mark. But against the yen, the
dollar was trading only slightly above the ¥150
level that many market participants, especially in
Japan, believed represented at least an important
psychological benchmark and perhaps constituted the lower limit of the range for the yen-dollar
exchange rate they thought had been agreed to in
conjunction with the Paris agreement. Although
Japanese economic growth was weaker than it
had been in many years, market participants
evidently judged that the Japanese government,
embroiled in a debate concerning tax reform,
would not take early and significant policy actions to spur domestic demand and reduce its
trade surplus as promised in the Paris agreement.
Moreover, the announcement that the United
States would impose trade sanctions on selected
Japanese products following a dispute over semiconductor products fueled fears of protectionism. In Europe, concern was growing that the
Japanese were diverting their exports from other
markets to Europe. With the weakness of the
German economy seemingly confirmed by figures then becoming available, market participants were sensitive to the possibility that trade
friction between Japan and Europe was also
intensifying. Market concerns increased that
there might be renewed calls for a lower dollar as
a response to these trade problems. A clear
bearish sentiment reemerged toward the dollar
against the yen.
On March 23, the dollar moved below ¥150.
Japanese investment houses, insurance companies, and corporations sold dollars aggressively,
stop-loss orders were activated, and the dollar
began to move down sharply. To restrain the
dollar's decline, the Desk made daily purchases
of dollars against yen in a series of operations
between March 23 and April 6, purchasing a total
of $3,007.7 million. The operations by the U.S.
authorities were coordinated with operations by
the Bank of Japan and several European central
banks.
By the end of March, the dollar appeared to be
settling in a range around ¥147. But concern
over the stability of the dollar had spread from
the foreign exchange to other financial markets.
The dollar's depreciation precipitated sharp declines in prices of U.S. bonds and equities. It
contributed to sharp increases in the prices of
gold and silver. And as investors sought alternatives to dollar-denominated assets, the prices of
bonds denominated in other currencies rose. As
a result of the divergent forces in the world's
bond markets, long-term interest rate differentials moved strongly in favor of the dollar.
Meanwhile, market participants came to believe that new incentives would be needed to
maintain the credibility of official efforts to stabilize exchange rates and halt the dollar's decline.
As a result, they looked forward to a scheduled
meeting of the Group of Seven (G-7) finance
ministers and central bank governors in Washington on April 8 for evidence that the authorities
were firmly committed to exchange rate stability.
The G-7 ministers and governors welcomed
the proposals announced by the governing party
in Japan for substantial measures to stimulate
Japan's economy. But some market participants
were disappointed that additional new initiatives
Foreign Exchange Operations
were not announced. Also, U.S. trade statistics
for February, released on April 14, left the
impression that the adjustment in the world's
trade imbalances, at least in nominal terms, was
still disappointingly small. Under these circumstances, sentiment toward the dollar remained
bearish. Market participants questioned whether
interest rate differentials favoring the dollar were
sufficient to maintain foreign investors' appetite
for dollar-denominated assets. As a result, the
dollar was again heavily offered in early April,
especially against the yen but also against other
currencies that provided attractive capital market outlets for foreign investors. The U.S. authorities continued to intervene on occasion,
buying U.S. dollars at times to foster exchange
rate stability. They operated on three of the nine
business days between April 7 and April 17,
buying $532 million against yen. As before, these
operations in yen were closely coordinated with
those undertaken by the Bank of Japan and
several European central banks.
Statements by U.S. and Japanese officials in
mid-April were interpreted as indicating that the
officials were genuinely concerned about the
risks of further sharp downward movements in
dollar rates and that other action might be forthcoming to enhance efforts to stabilize exchange
rates. Comments by Bank of Japan Governor
Sumita and other Japanese officials suggested
that new arrangements were under consideration
to finance concerted intervention operations. In
a speech before the Japan Society in New York,
Treasury Secretary Baker, making specific reference to the dollar-yen rate, said that U.S. and
other authorities intended to cooperate closely to
foster exchange rate stability despite trade difficulties and that a further decline of the dollar
against other major currencies could be counterproductive. Also around mid-April, U.S. shortterm interest rates firmed, and this was taken by
some market participants as an indication that
U.S. monetary policy might be tightening somewhat to ease the pressures on the dollar.
Even so, many in the market continued to
doubt that the authorities were sufficiently committed to exchange rate stability to make major
adjustments to domestic economic policies.
Thus, the dollar again came under strong selling
pressure during the last full week of April as
555
2. Drawings and repayments by foreign central
banks under regular reciprocal currency
arrangements'
Millions of dollars; drawings or repayments ( - )
Central bank
drawing on
the Federal
Reserve
System
Outstanding,
February
1, 1987
February
March
April
Outstanding,
April
30, 1987
Bank of
Mexico . . .
61.4
-61.4
0
0
0
I. Data are on a value-date basis.
hopes of more economic policy convergence
faded. In Japan, official comments suggested that
there would be no further easing of credit policy,
and there seemed to be little evidence of movement toward a more expansionary budget.
Doubts developed that the Federal Reserve had
much scope to tighten monetary policy, given the
decline in U.S. final domestic demand as reported in the first-quarter data on gross national
product. Moreover, reports emerged from U.S.Japanese trade negotiations indicating little progress, and toward the end of the month the U.S.
House of Representatives added to its trade bill a
provision calling for mandatory restrictions on
U.S. imports from countries with large trade
surpluses.
Thus, the dollar was again subject to episodes
of intense selling pressure in the third week of
April. Against the yen it declined below ¥140,
reaching a 40-year low of ¥137.25 on April 27.
The dollar also declined against the European
currencies, easing below DM1.80 to trade as low
as DM1.7710 against the German mark. The
Desk intervened on three more occasions in late
April, both in yen and marks, purchasing $424.9
million against yen and $99 million against
marks.
In the final days of April, comments by Chairman Volcker and by Prime Minister Nakasone
during his visit to Washington indicated that the
central banks of the two countries were making
more adjustments in their monetary policies. Mr.
Nakasone announced that the Bank of Japan
would act to ease short-term market rates, and
Mr. Volcker stated that the Federal Reserve had
"snugged u p " monetary policy in light of the
exchange rate pressure. With the market per-
556
Federal Reserve Bulletin • July 1987
3. Drawings and repayments by foreign central banks under special swap arrangement with the U.S. Treasury 1
Millions of dollars; drawings or repayments ( —)
Amount of
facility
Outstanding,
February 1,
1987
February
March
April
Outstanding,
April 30,
1987
Bank of Mexico
273.0
61.6
-61.6
(-)
(2)
(2)
Central Bank of Argentina
225.0
0
0
225.0
0
225.0
Central bank drawing
on the U.S. Treasury
1. Data are on a value-date basis.
2. No facility.
ceiving that monetary authorities were acting to
widen interest rate differentials in favor of the
dollar, the currency recovered from its lows
against the yen and the mark to close the period
at ¥140.85 and DM1.7925 respectively. At these
levels, the dollar was down 83/s percent against
the yen from both its opening in February and its
level in mid-March. Against the mark, the dollar
closed the period down 2'/s percent from its
opening in February and down 43/s percent from
its highs in mid-March. On a trade-weighted
basis, as measured by the Federal Reserve Board
index, the dollar declined 37/s percent against all
G-10 currencies between the opening in February and the end of April.
For the three-month period as a whole, intervention dollar purchases by the U.S. monetary
authorities totaled $4,063.6 million, while dollar
sales totaled $30 million. All intervention was
financed out of foreign currency balances. The
bulk of the authorities' dollar purchases, or
$3,964.6 million, was against sales of yen, of
which $1,962.3 million equivalent was drawn
from the Treasury's balances and $2,002.3 million equivalent was drawn from the Federal
Reserve. In addition, the Federal Reserve and
the Treasury each sold $49.5 million equivalent
of German marks. On one occasion in the period,
as indicated above, the Federal Reserve and the
Treasury each sold $15 million equivalent of
German marks.
During the three-month period, foreign central
banks also bought dollars in extraordinary
amounts in the exchange markets. In part, these
purchases reflected operations of the Bank of
Japan, the Bundesbank, and several other European central banks, which purchased dollars
against yen and other currencies in accordance
with the understandings of the Paris Accord and
the April G-7 statement to foster exchange rate
stability. But in part, these transactions reflected
the purchases of a number of European central
banks that took advantage of the relative firmness of their currencies against the mark, the
dollar, or both, to replenish official reserves by
purchasing dollars.
During the three-month period, the Treasury
Department through the Exchange Stabilization
Fund (ESF) joined with other central banks to
provide a multilateral short-term credit facility
totaling $500 million for the Central Bank of the
Argentine Republic in support of Argentina's
economic program to achieve sustainable growth
and a viable balance of payments position. The
ESF's portion of the facility was $225 million.
The facility was established on March 5, and the
full amount was drawn by the Central Bank of
the Argentine Republic on March 9.
Meanwhile, Mexico fully repaid on February
13 the $61.6 million drawing on the E S F and a
$61.4 million drawing on the Federal Reserve
that were outstanding under a two-tranche multilateral near-term contingency support facility of
$1.1 billion provided jointly by the U.S. monetary authorities, the Bank for International Settlements (acting for certain central banks), and
the central banks of Argentina, Brazil, Colombia, and Uruguay. The facility has now lapsed.
As noted in previous reports, the first tranche of
$850 million had been made available to Mexico
on August 29, 1986, with the Federal Reserve
providing $211.0 million. On December 8, after
Mexico had become eligible to draw the second
tranche of $250.0 million, Mexico had drawn
$61.8 million from the Federal Reserve and $62.0
million from the ESF. Drawings on the first
tranche were fully repaid in the previous reporting period.
Foreign Exchange Operations
4. Net profits or losses ( - ) on U.S. Treasury and
Federal Reserve current foreign exchange
operations 1
Millions of dollars
Period
February 1, 1987April 30, 1987
Valuation profits and
losses on outstanding
assets and liabilities
as of April 30, 1987
Federal
Reserve
U.S. Treasury
Exchange
Stabilization
Fund
688.1
571.9
1,981.3
1,809.8
1. Data are on a value-date basis.
In the period from February 1 through April
30, the Federal Reserve and the E S F realized
profits of $688.1 million and $571.9 million respectively on sales of foreign currency balances.
As of April 30, cumulative bookkeeping or valuation gains during the period on outstanding for-
557
eign currency balances were $1,981.3 million for
the Federal Reserve and $1,809.8 million for the
Treasury's ESF. These valuation gains represent
the increase in the dollar value of outstanding
currency assets valued at end-of-period exchange rates, compared with the rates prevailing
at the time the foreign currencies were acquired.
The Federal Reserve and the ESF invest foreign currency balances acquired in the market as
a result of their foreign operations in a variety of
instruments that yield market-related rates of
return and that have a high degree of quality and
liquidity. As of April 30, 1987, under the authority provided by the Monetary Control Act of
1980, the Federal Reserve held investments totalling $1,091.1 million equivalent of its foreign
currency holdings in securities issued by foreign
governments. In addition, as of the same date,
the Treasury held the equivalent of $2,566.1
million in such securities.
558
Industrial Production
Released for publication May 15
index in April was 1.3 percent above that of a
year earlier.
In market groupings, output of consumer
goods declined 0.9 percent in April after having
decreased 0.4 percent in March. A large part of
the April decline resulted from a sharp reduction
in output of durable consumer goods, primarily
motor vehicles. In April, autos were assembled
at an annual rate of 7.2 million units as compared
Industrial production declined an estimated 0.4
percent in April, after having fallen a revised 0.2
percent in March. Output of motor vehicles
dropped sharply, and much of the April decline
in total production was related to the cuts in this
industry; however, smaller declines were widespread. At 126.3 percent of the 1977 average, the
Ratio scale, 1977= 100
Products
140
TOTAL INDEX
120
/
100
J
80
MANUFACTURING
140
Durable
120
Nondurable
—
MATERIALS
Nondurable -js
I
Durable
^
s
/
1
Materials
—
1
1
1
1
1
100
160
_
Energy
1
80
CONSUMER GOODS
^
——
1
1
1
1
1
INTERMEDIATE P R O D U C T S
140
Nondurable
Business supplies
120
100
80
— Construction supplies
I
140
I
L
FINAL PRODUCTS
MOTOR VEHICLES AND PARTS
Defense and space
120
100
80
Consumer goods
60
1981
1983
1985
All series are seasonally adjusted. Latest figures: April.
1987
1981
1983
1985
1987
559
1977 = 100
Group
1987
Mar.
Percentage change from preceding month
1986
Apr.
Dec.
1987
Jan.
Feb.
Mar.
Apr.
Percentage
change,
Apr. 1986
to Apr.
1987
Major market groups
Total industrial production
126.8
126.3
.5
-.1
.4
-.2
-.4
1.3
Products, total
Final products
Consumer goods
Durable
Nondurable
Business equipment..
Defense and s p a c e . . .
Intermediate p r o d u c t s . .
Construction supplies
Materials
135.6
134.4
127.0
121.3
129.1
139.6
186.7
139.7
128.1
114.8
134.9
133.5
125.9
118.3
128.7
139.0
186.6
139.5
127.9
114.7
.4
.4
1.3
2.7
.8
-1.1
.5
.4
.8
.8
-.1
.0
-.4
-1.2
-.1
.7
-.3
-.4
.3
.0
.8
1.0
.6
1.9
.2
1.9
.7
.2
-.3
-.2
-.3
-.5
-.4
-.9
-.3
-.8
.1
.3
.2
-.1
-.5
-.6
-.9
-2.5
-.3
-.4
- .1
-.1
-.2
-.1
1.7
1.0
1.1
2.1
.8
.3
4.8
3.7
3.5
.8
-.2
-.3
.0
-.6
.4
-.4
-.7
-.1
.2
.3
1.9
.7
3.6
-5.7
1.0
Major industry groups
Manufacturing
Durable
Nondurable
Mining
Utilities
131.7
129.9
134.3
95.0
110.2
131.1
128.9
134.3
95.2
110.5
.6
.5
.8
-.7
-.6
.1
-.1
.3
.5
-1.0
.6
1.0
.1
-1.7
.3
NOTE. Indexes are seasonally adjusted.
with rates of 7.9 million in March and 8.3 million
in February. Moreover, the output of home
goods, which was very strong in the last quarter
of 1986, fell for the fourth consecutive month.
The production of nondurable consumer goods
dropped in April and has been weak throughout
this year. Production of business equipment decreased 0.4 percent in April led by weakness in
transit equipment, particularly in motor vehicles;
output in all other major business equipment
areas declined with the exception of commercial
equipment, which rose. Production of defense
and space equipment was little changed again in
April. The production of both construction and
business supplies, which was quite strong during
the second half of last year, has been, on average, little changed since December. Output of
materials was about unchanged in April, with
declines in durable and nondurable goods materials, but a small rise occurred in energy materials.
In industry groupings, manufacturing production decreased 0.4 percent in April, with most of
the decline concentrated in durables. Iron and
steel output, however, continued to rise following gains in February and March. Output of
nondurables has been flat, on balance, since
January. Production at both mines and utilities
increased in April.
560
Statements to Congress
Statement by Martha R. Seger, Member, Board
of Governors of the Federal Reserve
System,
before the Subcommittee
on Financial Institutions Supervision, Regulation and Insurance of
the Committee on Banking, Finance and Urban
Affairs, U.S. House of Representatives,
May 6,
1987.
I appreciate the opportunity to appear before the
subcommittee on behalf of the Federal Reserve.
The subcommittee asked the Board to discuss
the efforts being taken to enlist the cooperation
of foreign authorities in eliminating the use of the
international banking system by criminal elements.
Before I begin to discuss this topic, however,
the chairman of the subcommittee requested that
I familiarize the subcommittee members with the
duties and responsibilities of the Federal Reserve
in enforcing the Bank Secrecy Act of 1970 and
the Money Laundering Control Act of 1986. I
will also take this opportunity to inform the
subcommittee about the enhancements to the
Federal Reserve's procedures on examining for
compliance with provisions of the acts and efforts taken to date to educate the banking system
on our procedures and the acts in general.
$10,000. During 1986 the Federal Reserve conducted 844 examinations of state member banks
and Edge act corporation offices for compliance.
These compliance reviews found violations of
the Bank Secrecy Act at 153 banks or offices.
These violations included incomplete or inaccurate currency transaction reports, failure to file
reports, and failure to maintain exemption lists
with the required information.
The vast majority of these violations were
found to be technical in nature. The violations
resulted primarily from procedural problems or
misinterpretations of the reporting requirements.
When it appears that an institution has willfully avoided the Bank Secrecy Act's reporting
requirements, however, then the matter is referred immediately to the Department of the
Treasury. The staff members of the Department
of the Treasury review each report to determine
if a criminal investigation is warranted or whether civil money penalties should be assessed. Of
course, every violation discovered by bank regulatory agencies is reported to the Department of
the Treasury on a quarterly basis.
COMPLIANCE
OF 1986
RESPONSIBILITIES
OF THE FEDERAL
RESERVE UNDER THE BANK SECRECY
ACT
The Federal Reserve, in conjunction with the
other banking supervisory agencies, has the responsibility for monitoring financial institutions
to determine their compliance with the recordkeeping and reporting requirements of the Bank
Secrecy Act. This authority is delegated to the
Federal Reserve by the Department of the Treasury.
Among other requirements, the Bank Secrecy
Act orders financial institutions to report currency transactions of certain customers that exceed
WITH ANTI-DRUG
ABUSE
ACT
Section 1359 of the Anti-Drug Abuse Act of 1986
required the federal banking agencies to develop
regulations requiring insured banks to establish
and maintain the necessary procedures that
would ensure compliance with the Bank Secrecy
Act. On January 21, 1987, the Board amended
Regulation H to require state member banks to
establish a program that would assure compliance with the recordkeeping and reporting requirements of the Bank Secrecy Act. The regulation requires that a written compliance program
that is approved by the bank's board of directors
be established. The compliance program must, at
a minimum, include four elements: (1) a system
561
of internal controls; (2) independent testing for
compliance; (3) designation of individual(s) to be
responsible for compliance; and (4) appropriate
training of employees. The regulations were published in the Federal Register on January 27,
1987, and required banks to have a program
implemented by April 27, 1987.
Besides formulating the required regulations,
the Federal Reserve also has the responsibility
for ensuring compliance through the examination
of its regulated banks. During an on-site examination, a state member bank's written procedures are carefully scrutinized to ensure that all
of the Bank Secrecy Act's recordkeeping and
reporting requirements are addressed. Ceaseand-desist proceedings are required if a bank
does not have a written compliance program or
has not corrected previously cited problems.
Written documentation is reviewed to ensure
that, among other considerations, the bank has
adopted the appropriate measures for establishing and maintaining the list of customers who
have been exempted from the reporting requirements of the Bank Secrecy Act. Also, the documentation must provide for review procedures to
make certain that each Currency Transaction
Report is filled out completely and accurately
before the time that it is forwarded to the Internal
Revenue Service.
Board staff is presently in the process of
strengthening the procedures followed by the
Federal Reserve in enforcing the Bank Secrecy
Act. Procedures designed to help detect violation
of the law, developed by the Bank Secrecy Act
Interagency Working Group chaired by the Treasury Department, are being incorporated into our
examination instructions. In addition, the staff is
revising the Currency and Foreign Transactions
Reporting Manual, which includes the examination procedures, to reflect the recent amendments to the Bank Secrecy Act and to include
exemption and reporting data recently developed
by the Internal Revenue Service.
Board staff has provided assistance to state
member banks in meeting the new requirements
of Regulation H by issuing guidelines for establishing policies and procedures for maintaining
compliance with the Bank Secrecy Act. We also
provide sample documentation that will serve as
a reference for banks that rarely conduct large
cash transactions with their customers and do
not have complex or sophisticated internal operations.
Also, Board staff members were active participants in the recent seminars conducted by the
American Bankers Association and a teleconference by the Bank Administration Institute.
These programs provided a forum for more than
7,000 bankers to discuss the fight against drug
trafficking and money laundering. They also provided the opportunity to update the industry on
the 1986 amendments to the Bank Secrecy Act.
The Anti-Drug Abuse Act of 1986 also amended the Change in Bank Control Act. The Change
in Bank Control Act requires persons seeking to
acquire control of a bank or a bank holding
company to provide the appropriate federal
banking agency with notice of the proposed
acquisition at least 60 days before the transaction. During the 60-day period the Federal Reserve has the responsibility to conduct investigations of competence, experience, and financial
ability of each notificant and to make an independent determination of the accuracy and completeness of the information provided. The
Board must also perform a competitive analysis
of the proposal. The amendments to the Change
in Bank Control Act require the federal banking
agencies to publish the name of each party
seeking to acquire control of a bank or a bank
holding company and the name of the target
institutions and to solicit public comment on the
proposed acquisition, in particular from persons
in the geographic area in which the bank to be
acquired is located.
In addition, the amendments permit the federal
banking agencies to extend the period of agency
review of proposed acquisitions. The agencies
may extend the 60-day review period for 30 days
at the agency's discretion. Two additional 45-day
extension periods are permitted if the agency
determines that additional time is necessary to
investigate a notificant's compliance with the
Bank Secrecy Act. The extension period is also
available if the agency is unable to complete its
review of the notice because the notificant has
not provided all relevant information, has provided information that is substantially inaccurate, or has delayed in providing appropriate
information.
The Board recently proposed amending its
regulations regarding the Change in Bank Con-
562
Federal Reserve Bulletin • July 1987
trol Act to implement the amendments to the act
made by the Anti-Drug Abuse Act of 1986. The
comment period for the proposal expired March
6, 1987, and the Board is following the procedures in the proposal pending final issuance of
the regulation.
INTERNATIONAL
COOPERATIVE
EFFORT
Besides concentrating on enhancing its domestic
oversight of the Bank Secrecy Act, the Federal
Reserve has also been working to obtain the
cooperation of the international regulatory community in implementing policies aimed at eliminating criminal elements in the international
banking system. The Federal Reserve is also
collecting information on how U.S. banks police
their own activities to ensure that procedures are
in place to ascertain if criminal elements are
using the international payments system.
Bank supervisory authorities agree that it is
important to cooperate in attempting to eliminate, to the extent possible, the use of the
international banking system by criminal elements. However, they often point out that while
their role as information providers can be enhanced, a more effective force for deterrence
may be the law enforcement agencies. Nevertheless, bank supervisors recognize that it is increasingly important to protect the banking system against criminal exploitation.
It is also interesting to note that countries
besides the United States are becoming more
active in this area. Switzerland, for example,
often described as a preferred haven for money
laundering, has recently published proposals for
making money laundering a crime. The proposal
was introduced by the Federal Justice and Police
Department, which is illustrative of the critical
role of law enforcement authorities in developing
approaches to hinder criminal use of the banking
system.
The Federal Reserve is continuing its efforts to
heighten the sensitivity of foreign bank supervisory authorities to the problems of money laundering and, more generally, to educate those
authorities about U.S. laws. The need for
strengthened international cooperation in this
area has been raised by the Federal Reserve in a
number of meetings with the Basle Committee on
Bank Regulation and Supervisory Practices. 1 As
a result of these discussions, the committee has
asked the Federal Reserve and the Office of the
Comptroller of the Currency to develop jointly a
Code of Conduct. This code, and ensuing discussions of it, may eventually evolve into a viable
document to promote international agreement on
the role that banks should play in helping to
eliminate criminal elements from the international banking system. Several countries have indicated a desire to work with the U.S. authorities
in preparing this paper. A first draft of the code
will be completed shortly. The Federal Reserve
will then begin a series of bilateral discussions
aimed at securing general agreement with the
code and soliciting opinions on the degree to
which individual countries can ensure compliance by their banks.
The Federal Reserve is also working with
officials from the Department of the Treasury to
initiate an educational program on U.S. laws.
This program would focus on the commitment of
our government to eliminate the use of the banking system by criminal elements. Our support for
this effort is wholehearted because we believe
that an important step in the process of securing
international cooperation is educating the principal parties, both in bank supervision and in the
area of law enforcement, to the commitments
made by the United States concerning money
laundering.
The Federal Reserve has also initiated efforts
to determine the extent to which overseas
branches of U.S. banks have in place proper
procedures to implement safeguards against
money laundering. Examiners are being instructed to question management at each branch being
examined as to what internal control measures
the bank has taken to prevent money laundering
activities. Besides providing information for the
report required by Section 1363 of the 1986 act,
this effort will serve as a basis for discussions
1. The Basle Committee was established at the end of 1974
by the central bank governors of the Group of Ten industrialized countries, with the objective of strengthening collaboration among national authorities in their prudential supervision
of international banking. The committee, whose members are
officials of the central banks and supervisory agencies, meets
four times a year at the Bank for International Settlements in
Basle, Switzerland. It is sometimes referred to as the Basle
Supervisors' Committee or Cooke Committee, after its current chairman, W.P. Cooke.
Statements
with individual banks regarding compliance with
the spirit of the Money Laundering Control Act.
The efforts just described are obviously initial
steps being taken to set the groundwork for
further work in this area. Progress is being made,
and the Federal Reserve believes that efforts
undertaken to date have been generally well
received. The members of the Basle Committee
appear to be more receptive to dealing with the
issue of money laundering now than in the past.
The efforts of the United States, and now Switzerland, may serve as role models to other
countries in focusing their attention on these
issues. The Federal Reserve will continue to
focus its attention in this area and to assist the
Statement by Wayne D. Angell, Board of Governors of the Federal Reserve System, before the
Subcommittee on Domestic Monetary Policy of
the Committee on Banking, Finance and Urban
Affairs, U.S. House of Representatives,
May 6,
1987.
I appreciate this opportunity to discuss and review the Federal Reserve System's expenses and
budget with this subcommittee. In 1986 Chairman Volcker testified twice on Federal Reserve
budget matters. In January he focused on budget
policy and the issue of Federal Reserve budgetary independence, and in June he concentrated
on our expense and budget performance over the
past 10 years and on the 1986 budget. This
testimony continues that series with emphasis on
budget developments in 1987.
We have recently made available to the public
and to this subcommittee copies of our publication entitled Annual Report: Budget
Review,
1986-87. This document presents detailed—but
readable and convenient—information about
spending plans for 1987 and comparisons with
expenditures in 1985 and 1986. Also included is
information about the budget and accounting
processes in the Federal Reserve System. The
Budget Review is in its second year of publication and is a companion document to the Board's
73rd Annual Report, 1986.
Much of the material in this testimony has
been taken from the budget document. The attached tables have been updated for actual expe
to Congress
563
Department of the Treasury in carrying out the
requirements of Subtitle H of the Anti-Drug
Abuse Act of 1986 and the Bank Secrecy Act.
IRAN-CONTRA
INVESTIGATION
The letter inviting the Board to testify requested
information regarding any role the Federal Reserve is undertaking in the Iran-Contra investigation. The Federal Reserve has not been asked to
play any specific role in this investigation although our staff did respond orally to a request
for technical information about the operation of
the international payment systems.
•
rience in 1986 and therefore, small variations
exist from data in that document. 1
Before getting to the substance of our 1987
budget, I would remind the subcommittee of two
aspects of Federal Reserve System operations
that affect our budget in unusual ways. First,
about 40 percent of the Reserve Bank expenses
arise from services provided to depository institutions for which, by law, we charge fees adequate to cover costs, imputed taxes, and imputed
return on capital that would have been paid had
the services been furnished by a private business
firm. In fact, since fees cover actual costs plus
these imputed costs (what we call the private
sector adjustment factor) plus the imputed cost
of float, our revenue from the priced services
amounts to about 50 percent of all our spending.
Priced services are subject to the competitive
discipline of the marketplace; yet we neither
price on the basis of what the market can bear
nor limit our provisions of particular services to
"profitable" customers or geographic areas; nor
do we rely on variable cost pricing to maintain
market share. Second, many fiscal agency operations are reimbursable from the Treasury Department. Altogether, about 57 percent of our total
expenses are either recovered through pricing or
are reimbursable.
1. The attachments to this statement are available on
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.
564
Federal Reserve Bulletin • July 1987
A 10-YEAR
OVERVIEW
Let me put the 1987 budget in further perspective
by sketching briefly the 10-year history of System expenses. In the 10-year period from 1977 to
1987, Federal Reserve expenses increased at an
average annual rate of 6.7 percent in nominal
terms and 0.9 percent in constant dollars while
System employment decreased by 1,129, or 4.4
percent. In the measured services (chiefly those
subject to pricing), volume increased about 40
percent through 1986; unit costs, adjusted for
inflation, decreased more than 25 percent. Labor
productivity showed an average gain of more
than 5 percent per year.
Any discussion of operational trends during
this period should mention the impact of the
Monetary Control Act (MCA) on System resources. The MCA, which created the pricing
system described earlier, also extended reserve
requirements to all nonmember banks and thrift
institutions, thus requiring us to create and maintain new data collection and account maintenance systems. With the transition to pricing,
new billing and pricing systems had to be established and access to our services had to be
provided to all depository institutions. If the 10year period is divided into three distinct periods—pre-MCA, transition to MCA, and postMCA—performance stands out more clearly:
• Pre-MCA, from 1977 to 1979, nominal expenses increased at an annual rate of 5.4 percent.
If a broad-based measure of inflation is used, an
annual rate of decrease in real expenses of 2.4
percent is implied.
• During the MCA implementation phase from
1980 to 1982, nominal expenses increased at an
annual rate of 11.7 percent because of the large
outlays required for the Monetary Control Act—
an annual rate of increase of 3.1 percent is
implied in real terms.
• Post-MCA, from 1983 to 1987, nominal expenses increased at 4.3 percent on average—an
annual rate of increase of 1.0 percent is implied
in real terms.
The past 10 years have also seen rapid changes
in the banking industry that have required additional resources to strengthen examinations of
member banks and inspections of bank holding
companies. The period has also been marked by
rapid developments in automation of Reserve
Bank operations, significant increases in volumes of electronic payments, and steady increases in volumes of paper-based payments.
On the productivity front, real unit costs,
1977-86, have decreased at an annual rate of
about 3.5 percent per year. For priced services—
primarily check processing, which accounts for
about 75 percent of priced service expenses—
there were sharp losses in volume during the
MCA transition period. Because of substantial
elements of fixed costs, real expenses could not
be cut at the same rate as volume decreased;
thus, real unit costs increased. However, since
1983 unit costs have again declined in almost
every area, bringing real unit costs substantially
lower than they were in the 1970s. The decline
has been particularly sharp in electronic payment
areas in which equipment is more readily substituted for human resources and in which volume
growth has been more rapid.
Gains in productivity have also been made in
nonpriced service areas, which are comprised
principally of fiscal agency operations performed
for governmental units and cash operations involving distribution of currency and coin. In
these services, volumes have increased and real
unit costs have declined or risen only slightly
during the same time periods.
This 10-year period of expenditure control and
productivity gain was concluded by additional
expense reduction actions in 1986 and 1987 in the
spirit of Gramm-Rudman-Hollings.
GRAMM-R
UDMAN-HOLLINGS
As Chairman Volcker indicated in testimony
before this subcommittee last year, even though
the System is not covered by the Gramm-Rudman-Hollings legislation, the Board decided to
reduce System budgeted expenses for 1986 in a
manner consistent with the spirit of the legislation. The Board determined that a reduction of
$18 million in the System's (Reserve Bank and
Board of Governors) approved budget was appropriate. I am pleased to be able to report that
the System achieved the reduction targeted by
the Board and further reduced expenses $53
million.
The Federal Reserve System is continuing in
1987 to make special efforts to limit the growth of
Statements
expenses. The Reserve Banks have reduced previously planned growth in expenses $21.1 million. As a result, 1987 Reserve Bank budgeted
expenditures are only 1.3 percent more than
those in the original 1986 budget. At the Board,
savings in personnel costs related to a selfimposed staff reduction project, which 1 will
discuss later, and to Gramm-Rudman-Hollings
combined to hold expenses well below the level
to which they would otherwise have risen.
As you may know, the budgets for the Reserve
Banks and the budget for the Board of Governors
are approved through separate processes although all must be approved by the Board of
Governors. Reserve Bank budgets must first be
reviewed by the Committee on Federal Reserve
Bank Activities; the Board budget must be reviewed by the Administrative Governor. Also,
service and expense object categories are different in some respects between the Reserve Banks
and the Board. Therefore, it is appropriate that I
discuss the Reserve Bank budgets and the Board
budget in separate sections.
RESERVE
BANK BUDGETS FOR 1987
Planning for 1987 Reserve Bank budgets (93.2
percent of System expenses) began early in 1986,
when the staff developed the budget objective
based on forecasts of Reserve Bank workloads
and productivity. This annual budget objective,
which was approved by the Board in the spring,
was used by the Reserve Banks in developing
their plans and budgets. At each of the 12 Reserve Banks, the proposed 1987 budget was
given rigorous review (with the budget objective
as guidance) by a committee of the respective
Bank's senior officials, First Vice President, and
President. The budget, as modified by these
reviews, was also reviewed and approved by the
Reserve Bank's Board of Directors, many of
whom are responsible in their private capacity
for managing large organizations. In the fall,
Reserve Bank budgets were submitted to the
Board of Governors where they were analyzed
and reviewed by the Committee on Federal Reserve Bank Activities, which held separate meetings with each Reserve Bank President on the
proposed budget.
to Congress
565
As a result of the review process, the total
budgeted expense of the Reserve Banks—both
priced and nonpriced—was held to an increase of
2.9 percent over estimated 1986. (Over actual
1986, the increase is expected to be 3.1 percent
since actual expenses were less than estimated.)
The Reserve Banks' 1987 budgets are affected by
five initiatives, which we believe to be of high
priority. These are the initiatives:
1. The Board of Governors decided in 1985 to
intensify System supervisory oversight of state
member banks and of bank holding companies
and to strengthen the procedures for reporting to
bank management. These efforts will cost $6.7
million more in 1987 than they did in 1986. The
impact of this program is seen in the employment
growth in supervision and regulation of 175 in
1986 over 1985 and of 94 in 1987 over 1986. The
program enhancement will be in place in 1987.
2. A computer contingency center will provide
emergency data processing for the New York
Reserve Bank's electronic transfers of largedollar funds and securities. The center is budgeted at $3.9 million in 1987 and is needed to reduce
the possibility of financial crises should existing
facilities fail. (These expenses are partially recovered through pricing and reimbursement.)
3. Several Districts are improving their electronic delivery and receipt of payment information and their check-clearing services at a cost of
$3.5 million. (These expenses are recovered
through pricing.)
4. One-time expenses will be incurred in moving into a new branch building and renovating
four head-office buildings at a cost of $4.9 million.
5. Several initiatives for the U.S. Treasury will
increase expenses $4.8 million. Treasury Direct,
a book-entry system for the safekeeping of marketable Treasury securities for individuals and
small investors, is expected to reduce staff at the
Treasury Department resulting in a net reduction
of federal resources. A full year of operations of
the Treasury Direct System will increase reimbursable expenses $4.4 million in 1987 and increase staff at the central site in Philadelphia by
24 employees (bringing total staff there to 69).
The Federal Reserve is also continuing the development of a Public Debt Accounting and Reporting System and two savings bond projects.
The total increase in expenses for these major
566
Federal Reserve Bulletin • July 1987
initiatives is $24 million in 1987. If we were to
exclude costs for these projects, the 1987 budget
for Reserve Banks would be only 0.9 percent
greater than estimated expenses for 1986. Budgeting for these initiatives and at the same time
keeping bottom line expense growth low (2.9
percent) was achieved by restrained growth or
decreases in other areas. Indeed, staff increases
for these initiatives were more than offset by
decreases in other services, producing a 1987
budgeted decrease in total staff of 220.
For a look at 1987 budgeted expenses on a
program basis, I will discuss our four service
lines in the order of their size.
Expenses for services to financial institutions
and the public total $799 million and account for
almost two-thirds of the Reserve Banks' 1987
budgets. Expenses are budgeted to increase 3.8
percent over actual 1986. While increases in
volume are expected in all major operations,
employment is budgeted to decline by 77 persons, or 0.8 percent, from 1986.
Almost half of the expenses in this operational
area is related to commercial check processing.
The budget increase for this area, $14.2 million,
accounts for most of the increase for the service
line as a whole and results from growth in
volume and in the cost of new services. In 1987
the System expects to process 14.8 billion commercial checks, 330 million more than in 1986.
As a result of continuing improvements in efficiency, the commercial checks staff is budgeted
to decline by 67. System initiatives focus on
offering new or improved services such as notification of the return of large-dollar checks; truncation (under which checks are not returned to
the writer); and the accelerated availability of
funds through the development of new products,
the enhancement of existing ones, and the expansion of check-clearing zones. The budget projections do not, however, reflect the potential impact of legislation being considered in the Senate
and the House of Representatives that would
mandate certain availability limits on funds deposited by check. Passage could require an increase of 20 to 35 percent in return items staff
and an increase in equipment. Overall expenses
could approach $50 million over several years.
Expenses for currency processing are expected to increase $0.9 million, or 0.8 percent. Highspeed processing of more than 14 billion notes is
expected next year (an increase of 4.7 percent).
Reserve Banks are taking steps to improve further the technology of high-speed currency processing. It is anticipated that newly designed
second-generation equipment will improve efficiency of operations in future years.
Expenses in the funds transfer service are
projected to increase $3.3 million, or 5.7 percent,
largely because of the implementation of new
software and the expansion of electronic networks in several Districts to improve services to
the public. The System expects to process 85
million funds transfers in 1987, a rise of 6.2
percent over 1986.
An increase of $5.3 million, or 9.5 percent, is
expected for the automated clearinghouse service because of the growth in workload (21
percent) and higher costs associated with expanding the electronic networks. A staff reduction of 13 is planned for noncash collection as
volume continues to decline.
Expenses for supervision
and
regulation,
which total $172 million, constitute 14 percent of
the Reserve Banks' 1987 budgets and are budgeted to increase $7.8 million, or 4.7 percent over
actual 1986. A major factor in the increase is the
continuation of a program instituted in 1985 to
strengthen the supervision of financial institutions and to improve communications with their
management and directors. The supervision service, which includes the examination activities,
is budgeted to increase $6.5 million, or 7.0 percent. The enhanced supervisory program will be
fully implemented by the end of 1987. Employment is expected to increase 94, or 4.5 percent
(mostly bank examiners).
To accomplish the enhanced supervisory program cost effectively, the Reserve Banks are
shifting resources from other supervisory areas.
For example, the Reserve Banks will reduce the
frequency of examinations of smaller banking
organizations with satisfactory ratings; they will
reduce the frequency of trust examinations and
examinations for compliance with consumer regulations; and they will be better integrated with
state examinations. Also, the Reserve Banks are
improving productivity through continued use of
automation, including the use of portable personal computers in the field, and in-house analysis in
certain cases.
Even without the enhanced supervisory pro-
Statements
gram, the workload in supervision and regulation
would be expanding as a consequence of the
normal growth in the formation of new state
member banks and bank holding companies.
Moreover, in the current environment, the growing number of mergers in some Districts, the
continued expansion of investment banking activities by multinational banking organizations,
the number of problem banks, and the Board's
payment system risk reduction program are all
placing additional demands on Reserve Bank
resources.
Expenses for services to the U.S. Treasury and
other government agencies—the next service line
in order of size—are budgeted at $136 million for
1987 (11 percent of all Reserve Bank expenses).
Expenses are expected to decline $0.9 million, or
0.6 percent, from 1986 levels, primarily as a consequence of accounting changes and lower workloads. Partially offsetting these factors is the increased expense of $4.4 million in 1987 for
Treasury Direct, a book-entry system for the safekeeping of marketable Treasury securities for individuals and small investors. In addition, the Federal Reserve is developing a "public debt accounting
and reporting system" for the U.S. Treasury at a
cost of $483,000 in 1987, $285,000 more than in
1986; and the Pittsburgh Branch will serve as the
System's central site for processing payroll bonds
and book-entry savings bonds at a cost of $97,000
in 1987.
Expenses for monetary and economic policy,
which total $91 million and account for about 8
percent of the 1987 budget, are expected to
increase only $232,000 or 0.3 percent in 1987.
Employment is expected to be 780, a decline of
11 from 1986 levels. Factors tending to decrease
expenses include the completion of a major
banking statistics project, which will enhance the
System's capacity to process and analyze financial data from depository institutions, and a
reduction in staff for economic policy determination. Factors increasing expenses include expanded office automation, initiatives in open
market trading at New York (two additional staff
members and software), and analysis of the
financial problems of developing countries.
A brief review of Reserve Bank expenses on
an object-of-expense basis might be useful to the
subcommittee. Total personnel expenses, which
include all salaries and related benefits expenses,
to Congress
567
account for 62 percent of total expenses and are
expected to increase only 1.3 percent over actual
levels in 1986. A major factor contributing to this
low rate of increase is the decline of $13.9 million
in retirement and other benefits in 1987—owing
to a cessation of contributions to the overfunded
retirement plan in 1987, and a decline in the cost
of group life insurance. A negative expense adjustment resulting from 1987 implementation of a
recently adopted GAAP (generally accepted accounting principles) standard is not included.
These decreases are partially offset by increases
in expenses of other benefits. Another significant
factor is a major decrease in the expected use of
contract computer programmers in 1987 due to
the completion of several important program
applications. Increases in salaries of officers and
employees result from merit pay increases, promotions and reclassifications, and changes in the
number of employees.
Equipment expenses, which make up 14 percent of total expenses, are budgeted to increase
7.5 percent over 1986. Equipment costs have
risen more rapidly than personnel costs in recent
years as capital has been substituted for labor to
improve productivity. In summary, the increase
budgeted for equipment results from replacements and upgrades to ensure compatibility with
the System's long-range automation plan and
with automation and communication initiatives.
Building expenses, which constitute 9 percent
of total expenses, are expected to increase 11.9
percent in 1987. The increase results from anticipated increases in local tax rates and assessments, increases in utility rates and consumption, renovations and refurbishments, higher
rentals in some Districts, and the full-year effect
of new buildings at two branch locations.
Shipping costs, 7 percent of total expenses,
are budgeted to increase 3.5 percent because of
higher costs for the interdistrict transportation
system and anticipated increases in courier rates.
Other objects of expense, constituting the remaining 8 percent of total expenses, are expected
to increase only 1.4 percent.
The plans of the Reserve Banks for capital
spending in 1987 are also shown. By their nature,
capital outlays vary greatly from year to year.
Outlays for buildings and for data processing and
communications equipment continue to dominate Reserve Bank capital budgets.
568
Federal Reserve Bulletin • July 1987
BOARD
BUDGET
The budget of the Board of Governors is a
relatively small part of the total System budget,
amounting to about 6.8 percent of the whole.
Each division director met with the appropriate
Oversight Committee, composed of Board Members, early in the process. These meetings provided a high-level forum for planning budget
initiatives and reviewing programs to find offsetting reductions. The result of the process was a
guideline limiting the 1987 budget to an increase
of only 2.7 percent over 1986 estimated expenses.
As a result of the intensive management review, the Board's 1987 operating budget totals
$86.3 million, an increase of $2.3 million or 2.7
percent over actual 1986 expenses. The 1987
budget is, however, 0.3 percent less than the
original 1986 budget. This relatively low rate of
growth can be attributed to three major factors:
1. Program Improvement Project. This staff
reduction project was initiated in mid-1984 to
reduce expenses by scaling back lower-priority
functions and by improving productivity. The
incremental 1987 savings as a result of the staff
reduction project are $2.2 million; the annual rate
of savings from this program since its inception
totals $5.6 million.
2. Gramm-Rudman-Hollings.
The Board in its
voluntary compliance with the spirit of this legislation, adopted measures in 1986 that reduced its
operating budget $1.4 million. The reductions
were accomplished, and the revised 1986 budget
was underexpended at year-end. Some of the
reductions made in 1986 to comply with GrammRudman-Hollings were carried forward into
1987.
3. Income. The Board adopted a policy to
reduce the costs associated with Board publications. This policy reduced expenses $0.1 million
in 1986 and will save $0.5 million per year
beginning in 1987.
The Board's operations are categorized into
four major functional areas: Monetary and Economic Policy, Supervision and Regulation, Services to Financial Institutions and the Public,
and System Policy Direction and Oversight.
Expenses in the Board's largest functional
area, Monetary and Economic Policy, are budgeted to increase 4.8 percent to $46 million in
1987. This increase is attributed to relatively low
data processing costs in 1986 and to higher-thannormal vacancy rates in 1986 due to budgetary
restraints. The installation of a microcomputer
network in 1987 will increase expenses but will
also foster more efficient collection and analysis
of data in conjunction with the present Board
mainframe configuration.
The Supervision and Regulation area has been
subject to the same factors that have affected this
area at the Reserve Banks, and consequently,
expenses have grown sharply in the past two
years. Although expenses are budgeted to increase only 1.6 percent above 1986 expenses,
this increase follows an increase of 12.8 percent
in 1986. This level of increase has been necessary
because the state of the nation's banking industry has required intensified supervision, surveillance, and enforcement. Additional resources
have been required in spite of impressive productivity gains of staff working in the supervisory
areas. Examples of the increase in workload
from 1982 through 1986 include the following: an
increase of 25 percent in the number of bank
holding companies monitored; an increase of 132
percent in the number of bank holding company
examination reports analyzed; and an increase of
278 percent in the number of formal enforcement
actions.
In the area of Services to Financial Institutions
and the Public, the 1987 budget of $2 million is
16.1 percent less than 1986 expenses. This decrease is the result of the completion of portions
of the development work associated with the
daylight overdraft project. The project is intended to minimize risk in the payments
mechanism.
The 1987 budget for System Policy Direction
and Oversight is $16.2 million, which is 1.6
percent higher than 1986 expenses. This increase
is partially due to the reinstatement of a program
to perform operations reviews that had been held
in abeyance during the Program Improvement
Project. The 1987 budget for the oversight portion of this category was increased to include
funds to improve the ability of the Board to
perform electronic data processing audits at the
Federal Reserve Banks. This improvement helps
the Board to comply with the Federal Reserve
Statements
to Congress
569
Act requirement to examine each Reserve Bank
annually.
Again, a brief review of expenses on an objectof-expense basis is useful. Seventy percent, or
$60.1 million of the Board's $86.3 million budget,
is for salaries, retirement, and insurance expenses. This amount represents a $0.7 million, or
a 1.2 percent increase over 1986 expenses. A
general pay increase, of 3.0 percent, routine
salary actions, and changes in insurance rates
account for an increase of $3.3 million, which is
partially offset by the savings of $2.2 million
associated with the Program Improvement Project. Further savings of $0.4 million resulted
from a reduction of 22 positions in centralized
data processing and an increase in the vacancy
rate throughout the Board.
The remaining 30 percent of the Board's 1987
operating budget is for goods and services, and
depreciation. These expenses total $26 million,
an increase of $1.5 million or 6.2 percent over
1986 expenses. This increase can be attributed
primarily to depreciation, which reflects capital
investments of approximately $17.4 million by
the Board in 1986, including the purchase of a
new mainframe computer and disk access devices for $12 million. This equipment was necessary to handle increases in the volume of data
processed at the Board, to support increased
analysis and modeling, and to support enhancements in supervision.
Statement by E. Gerald Corrigan,
President,
Federal Reserve Bank of New York, before the
Committee on the Budget, U.S. Senate, May 6,
1987.
deed, reflecting its very large domestic saving
rate and its massive current account surplus,
Japan has assumed a unique financial position in
the world's community of nations. But Japan's
financial position relative to the United States or
to the rest of the world did not develop in a
vacuum. Thus, before turning to the specific
questions raised by the committee, allow me to
comment briefly on the general economic and
financial environment within which we must
seek to address the points of stress and tension
that are so apparent.
That broader perspective should include at
least four major points of reference, as follows:
I am pleased to be able to appear today to discuss
with the committee recent and prospective developments regarding the globalization of financial markets and institutions, with particular emphasis on developments in the three major
financial centers of the world: New York, London, and Tokyo. Within that broad framework, I
will devote particular attention to a series of
issues pertaining to access of U.S. firms to
money and securities markets in Japan.
BACKGROUND
Legend has it that Willie Sutton once said that he
robbed banks because that's where the money
was. The analogy is poor, but there can be no
doubt that much of the current interest in Japanese financial markets stems from that same
consideration: That's where the money is! In
CONCLUSION
In closing, I would like to emphasize that the
Board believes the Federal Reserve's budget
processes have worked well in controlling expenses. I would welcome any comments you
may have on our presentation of budget information, and I am prepared to address any questions
you may have on our budget.
•
1. The dramatic rise in Japan's external surplus over the decade of the 1980s and the corresponding increase in the external deficit of the
United States are primarily the result of macroeconomic considerations including the following:
(1) the persistent and very large domestic savings
gap in the United States—growing importantly
out of the huge budget deficits—coupled with
Japan's extraordinarily high internal savings
rate; and (2) considerably more rapid growth in
domestic demand in the U.S. economy, especial-
570
Federal Reserve Bulletin • July 1987
ly during the earlier stages of the current expansion. There is also the related issue of apparent
differences in the ability of U.S. firms, perhaps
especially manufacturing firms, to compete effectively in the external marketplace or with
external competitors. All three of the factors,
together with associated swings in exchange
rates—swings that in my view tend to be exaggerated by the marketplace—lie at the heart of
the severe imbalances in the world economy.
The relative openness, or lack thereof, of Japanese financial markets is at most a marginal
factor insofar as the underlying causes of trade
current account imbalances are concerned.
2. Reversing the imbalances that have developed over the past five years will not be easy and
will take time. Moreover, if that adjustment is to
take place in a context of growth rather than in a
framework of contraction, we must deal with the
fundamentals. More open external markets for
U.S. products and services are an important part
of the agenda for adjustment, but absent underlying changes in economic policies and performance here in the United States as well as elsewhere in the world, more open financial markets
simply will not materially help the adjustment
process along.
3. Under the best of circumstances, the United
States will be dependent on capital inflows from
abroad for several years to come. That is, and to
use a purely hypothetical example, even if our
budget and trade deficits move lower at roughly
the same speed as they increased, the United
States would still have relatively large—and cumulating—current account deficits for the next
few years. This situation, of course, implies that
our external indebtedness will continue to grow,
even if at a slower rate, such that net capital
inflows will be needed. To the extent that these
necessary capital flows are impeded—for whatever reason—the implications for interest rates
and exchange rates, and therefore domestic economic activity, are almost certain to be detrimental here and elsewhere. To put it more directly,
we must take care to conduct our affairs in such a
way that our foreign creditors will be willing to
acquire and hold the needed amounts of dollardenominated assets at interest rates and exchange rates that are otherwise consistent with
noninflationary growth in the U.S. and world
economy.
4. Whether we like it or not, the globalization
of financial markets and institutions is a reality.
Since that reality has been brought about importantly by technology and innovation, it cannot be
reversed in any material way by regulation or
legislation. Moreover, while this process of globalization and innovation is producing important
benefits to suppliers and users of financial services, it also produces anomalous results. To cite
an example or two, Japanese securities companies—whether owned by Japanese or foreign
firms—cannot generally engage in foreign exchange trading and position-taking in Tokyo, but
they do it in London and New York; U.S.
banking companies cannot underwrite corporate
debt and equity securities in the United States,
but they do it in London or elsewhere.
More generally, national systems of supervision and regulation—to say nothing of tax and
accounting policies—that were created many
years ago were not designed for a marketplace of
worldwide dimensions in which firms with differing charters and national origins compete head to
head with each other around the clock and
around the world. This situation is one of the
reasons why I believe the Congress must get on
with the task of fundamental reform of the structure of our banking and financial system—a task
that is already well under way in several other
countries.
A more rational structure at home—including
a structure that works in the direction of
strengthening the banking and financial system—
would help encourage a more rational structure
internationally. Both now and in the future, this
is probably more important to the prospects for
U.S. financial firms and the U.S. national interests than are the relatively narrow issues of
immediate dispute in particular markets.
In short, there are important and legitimate
concerns that must be dealt with pertaining to
access of U.S. firms to foreign financial markets.
However, in seeking constructive solutions to
those problems, we must be sensitive to the
larger picture, and we must recognize that the
solutions to these larger problems are not to be
found in the relatively narrow context of specific
equity and access issues pertaining to the activities of U.S. financial firms abroad, as important
as those issues are for other reasons.
Statements
MAJOR INTERNATIONAL
FINANCIAL
MARKETS, AN OVERVIEW
At the risk of injuring the sensitivities of our
friends in Frankfurt, Zurich, or Hong Kong—to
say nothing of Chicago or San Francisco—it is
probably fair to say that there are three dominant
financial centers in the world today: London,
Tokyo, and New York. Accordingly, and to
provide some further perspective, Exhibit I attempts to categorize the scope of activities available to various classes of domestic and foreign
institutions in each of these markets. 1
As the exhibit indicates, there are important
differences from one market to the other, but as a
general matter, these differences do not reflect
strictly legal distinctions based on the national
origin of the firm in question. To put it differently, all three markets have de jure conditions of
broad national treatment insofar as the general
range of banking and financial activities are
concerned even though there are important differences between the centers and, as noted later,
important de facto distinctions in terms of competitiveness of foreign versus domestic concerns.
For example:
• As mentioned earlier, banks, domestic or
foreign, cannot as a general matter underwrite
corporate securites in New York or Tokyo, but
they may do so in London.
• Securities companies, domestic or foreign,
may not as a general matter deal in foreign
exchange in Tokyo, but they may in London and
New York.
• In two instances, there is a small tilt in favor
of U.S. banks in that as of March of this year,
U.S. banks in Tokyo may have a securities
affiliate whereas domestic Japanese banks may
not, and U.S. banks were permitted in 1986 to
own trust banks in Tokyo whereas Japanese city
banks may not. By the same token, there are a
number of foreign banks (none of which is Japanese) that have grandfathered securities subsidiaries in the United States.
In short, looking at broad classes of financial
activities in the three major centers does not
1. The attachments to this statement are available on
request from Publications Services, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551.
to Congress
571
suggest that there are systematic patterns of
discrimination against foreign participants in any
of the centers that are rooted in law. However,
the simple " y e s e s " and " n o s " in Exhibit I do
not even begin to tell the whole story. Thus, the
balance of this section will look at the individual
markets in somewhat greater detail.
BANKING
MARKETS
For several decades, foreign banking institutions
have had a major presence in the United States.
This presence reflected several key factors including the following: (1) the multinational population base of the United States; (2) the size and
importance of U.S. markets; and (3) the role of
the U.S. dollar as a reserve currency and an
international medium of exchange.
Typically, foreign banks operating in the U.S.
market concentrate their activities heavily on the
so-called wholesale market. While there are
some important exceptions, foreign banks are
generally not major factors in retail banking
markets. In addition, most of the foreign banks
that have a sizable presence in the United States
are affiliated with well-known major banks
abroad, many of which have Triple-A credit
ratings. Needless to say, the prominent names of
some of these institutions, together with their
credit ratings, give them important recognition in
their activities here in the United States.
As of year-end 1986, there were more than 250
foreign banks that had some kind of presence in
the United States. In the aggregate, the assets of
such foreign banks exceeded $500 billion at yearend 1986 and constituted almost 20 percent of
total U.S. banking assets. To an extent, this
figure is inflated by virtue of the fact that some
foreign banks—notably the Japanese—book
most of their Western Hemisphere loans in U.S.
offices. While not shown in the exhibit, foreign
banks also account for about 20 percent of all
commercial and industrial loans outstanding to
U.S. addressees. In both instances, Japanese
banks are by far the most dominant group of
foreign banks, accounting for nearly half of the
total assets and commercial loans outstanding at
foreign banks in the United States. In certain
markets, such as standby letters of credit and
standbys associated with U.S. municipal bond
572
Federal Reserve Bulletin • July 1987
offerings, Japanese banks now account for between one-quarter and one-half of the total U.S.
market.
Measured in terms of numbers of institutions,
the U.S. banking presence in Japan is similar to
that of Japanese banks in the United States.
However, in terms of asset size, in either absolute or relative terms, U.S. banks are much
smaller in Japan, with total assets in Japan of
something short of $20 billion, than are Japanese
banks here. As in the United States, most foreign
banking activities in Japan are concentrated in
the wholesale markets and in activities such as
foreign exchange trading. In the recent past,
however, at least one U.S. bank has demonstrated some interest in selective aspects of the
Japanese retail banking markets.
The reasons for the relatively small U.S. banking presence reflect a variety of factors. Historical and strategic considerations probably play a
role. It is also true that U.S. banks find it more
attractive to book Asian loans in Hong Kong or
Singapore rather than in Tokyo. Finally, the
historical rigidities of the local funding markets
in Japan make it difficult to build up a large
banking operation in Japan, especially in the face
of lingering uncertainties as to the receptivity of
Japan to a broad-based presence of major foreign
banks.
While the size of the U.S. banking presence in
Japan is small, the same cannot be said for
London. Indeed, the U.S. banking presence in
London is more than six times the U.S. presence
in Japan. And, U.S. banking assets in the United
Kingdom are roughly three times greater than
U.K. banking assets in the United States. To a
considerable extent, the size of U.S. banking
operations in London reflects the long history of
the importance of the London market, its openness to foreigners, and its association with the
Eurocurrency markets that are so important to
U.S. companies—financial and nonfinancial
alike. In short, the London market has, for many
years, sought out and welcomed foreign banks in
part by maintaining a "friendly" regulatory environment.
SECURITIES
MARKETS
The comparative nature and scope of securities
markets activities by foreign firms in the three
major markets are distorted somewhat because
the United Kingdom does not require strict separation of commercial and investment banking,
whereas both Japan and the United States make
such a distinction. In addition, data on relative
size and importance of securities market activities are not as readily available as are data in
banking. However, these limitations notwithstanding, some approximations of size and importance are possible.
In terms of numbers of firms and employment
levels, the presence of U.S. securities firms in
Japan and Japanese securities firms' presence in
the United States are very roughly equivalent,
and both have been growing quite rapidly in
recent years. The activities of U.S. securities
firms in Japan and Japanese firms in the United
States also tend to be quite similar in that both
are concentrated in trading-type activities. Both
classes of institutions are engaged in underwriting activities in each others' markets but, to date,
virtually all such underwriting by the foreign
participants in both markets takes place as syndicate members, not as syndicate leaders or managers. In the United States, four Japanese securities houses (the "big four") are members of the
New York Stock Exchange, while in Japan three
U.S. securities houses—and one securities company that is owned by a U.S. bank through its
London merchant bank—are members of the
Tokyo Stock Exchange.
In short, in many respects, the relative size
and importance of U.S. securities firms in Japan
and Japanese securities companies in the United
States are quite similar and, as noted earlier,
both are growing rapidly. However, despite
these broad similarities, there are particular
points of tension regarding the treatment of U.S.
financial firms in Japan that are not generally in
evidence with regard to the treatment of Japanese financial firms in the United States.
JAPANESE INITIATIVES:
FINANCIAL
DEREGULATION AND ACCESS
The postwar Japanese financial system was, in
many respects, modeled after the U.S. system.
Not surprisingly, therefore, several features of
the Japanese system that are the subject of
controversy today—including interest rate ceil-
Statements
ings on deposits and legal barriers separating
classes of financial institutions including commercial and investment banks—are precisely the
same issues that have provoked, and continue to
provoke, controversy in the United States. In
Japan, as in the United States, pressures for
sweeping change in the structure and regulation
of financial markets were largely muted until the
late 1970s and early 1980s. Similarly, while U.S.
financial firms have, for some time, had a minor
presence in Japan, it was not until fairly recently
that pressures for greater access built in a major
way. These mounting pressures for deregulation
and more open access reflected the interaction of
a powerful set of macroeconomic forces as well
as the wave of change and innovation that is
rapidly transforming financial markets and institutions around the world.
In response to these forces, the Japanese authorities—under prodding from the United States
and other governments—have, over the past
several years, made major changes in the structure and regulation of financial markets, including important reductions in barriers to foreign
presence in the Tokyo markets. Taken as a
whole, the actions by the Japanese over the past
several years are noteworthy, especially in the
relatively short time frame involved. Indeed, I
believe a case can be made that the Japanese
record of the past several years is better than
some observers suggest and is good enough to
warrant confidence that further progress will be
made in the future.
Having said that, I would hasten to add that
despite this progress, the situation in Japan is
still one in which barriers—visible and invisible—to open and effective competition between
U.S. and Japanese financial firms remain important factors limiting the activities and competitive effectiveness of U.S. firms in Japan. It is
also true that as the strategic importance of the
Tokyo marketplace continues to grow and competitive pressures mount, concerns about those
barriers have received increasing attention.
However, in a number of important instances,
specific issues raised by U.S. firms have little or
nothing to do with national treatment considerations.
At the risk of a great oversimplification, the
points of immediate concern to U.S. firms can be
classified as follows:
to Congress
573
Equal Treatment Issues. While purely legal
barriers to national treatment of U.S. firms in
Japanese markets have been eliminated, certain
distinctions between the treatment of U.S. and
Japanese firms are seen as having important
competitive implications even though the basis
for the distinction is not to be found in law.
Concerns about practices for issuing government
debt and limitations on seats on the Tokyo Stock
Exchange would fit in this category.
Regulatory Policies. There are several areas of
regulatory policy that are viewed by some U.S.
firms as especially troublesome. These areas
would include remaining regulatory and administrative rigidities in the money market, prohibitions on certain activities such as foreign exchange trading by securities companies, and
other miscellaneous matters such as withholding
taxes on interest income to foreigners and limitations on the ability to engage in short selling.
While all of these policies apply equally to U.S.
and Japanese firms, certain U.S. firms allege
that, in practice, they are more binding on U.S.
firms since they impinge on activities in which
U.S. firms have special expertise.
There is, however, another important area of
regulatory policy that results in important differences in treatment and that relates to capital
adequacy standards for banks, a subject that is
covered in greater detail later in this statement.
Limitations on Acquisitions. In most foreign
countries, acquisitions of banks or other financial concerns by U.S. firms are either limited by
law or regulation or are very difficult to achieve
as a matter of practice. In Japan, the most
significant current barrier to acquisition may be
price, but whatever the reason, it is easier for
foreign entities to acquire U.S. banking and
financial institutions than is the reverse.
Invisible Barriers. There are a host of considerations ranging from language to custom to
relationships with bureaucrats, which can be
barriers to market participants in any foreign
center, and Japan is certainly no exception.
Indeed, some observers would contend that socalled invisible barriers in Japan are more of a
problem than is the case in other international
financial centers.
574
Federal Reserve Bulletin • July 1987
THE RECORD OF THE PAST SIX
MONTHS
Over the past several months, Japanese authorities have implemented several important policy
changes in furtherance of the goal of more open
and more competitive financial markets in Japan.
These steps included the following:
Deposit Deregulation. Effective April 6, 1987,
the Ministry of Finance accomplished the following: (1) reduced the minimum size of time deposits that are free of interest rate ceilings from 300
million yen (about $2 million) to 100 million yen
(about $700,000); and (2) reduced the minimum
size of money market certificates from 30 million
yen (about $200,000) to 20 million yen (about
$150,000). Both the new and the old regulations
apply equally to domestic and foreign institutions.
In the area of deposit deregulation and greater
money market flexibility, national treatment considerations are not the central issue since Japanese institutions operate under the same rules as
foreign institutions. Rather, the money market
issues are more a matter of greater market efficiencies in a setting in which firms with special
market expertise—Japanese or others—can take
full advantage of those skills. While the extent of
money market deregulation achieved is important, further steps are needed. This area will be
one of those considered at the next round of socalled yen-dollar discussions between the U.S.
Treasury and Japanese authorities planned for
the near future.
Securities Affiliates of U.S. Banks. In March
1987, the Ministry of Finance formally advised
that it had amended its regulations to permit U.S.
banking organizations to have securities affiliates
in Japan, subject to the same terms and conditions that apply to securities affiliates of European universal banks. What is particularly significant about this action is that it provides access to
Japanese securities markets for U.S. banks even
though such access is not available to Japanese
banks. It would also permit these U.S. bank
affiliates in Japan a wider range of securities
activities than is permissible here in the United
States.
At present, there are three U.S. banks with
securities affiliates in Japan through their U.K.
merchant banks, and I know of four U.S. banking organizations that are seeking to obtain licenses for securities affiliates under the arrangements noted above. The requests are in the
advanced stage of review such that formal applications will soon be filed with final approvals
expected in the near term. Of course, these
arrangements would also be subject to approval
of U.S. bank regulatory authorities.
Access to the Government Securities Market.
Before 1978, all Japanese government debt was
sold by the so-called syndicate method, whereby
the terms of such debt issues were negotiated by
the government and a syndicate of financial
companies. Each member of the syndicate, in
turn, received a predetermined share of the securities issue. The syndicate method of issuing
government debt is still the dominant method of
debt issuance in a number of countries, including
a few major industrial countries. It is also the
general procedure followed by federal government agencies here in the United States as well
as the prevailing method for issuing most corporate and municipal debt.
Because most Japanese government debt was
issued in this fashion and because U.S. firms
were generally not part of the syndicate, U.S.
firms did not have meaningful direct access to
new issues of Japanese government securities.
De facto limits on access to new issues of government securities placed U.S. firms at a competitive disadvantage not just in the government
market itself but in other markets as well because
of the important linkages between government
securities and other securities.
In response to this situation, the Japanese
authorities have taken several steps. First, for a
number of short- and intermediate-term issues,
they have fully adopted the auction method such
that about 35 percent of new issues in 1986 were
auctioned. In addition, the Japanese authorities
have eliminated the requirement of having an
account at the Bank of Japan to be eligible to bid
in such auctions. However, the 10- and 20-year
maturities are still issued by the syndicate method—a fact that is especially important in the case
of the 10-year bond that is the largest and most
important of the issues, especially in terms of
secondary market trading.
In these circumstances, effective April 1, 1987,
Statements
the syndicate has agreed to increase the total
share of the new issues available to foreign
securities firms from 1.19 percent to 5.725 percent of the share available to securities houses,
and it has raised the shares available to individual foreign companies from 0.70 percent to a
maximum of 1 percent. While still small, we
understand that these shares for the foreign
group as a whole are commensurate with the
overall size of secondary market trading by foreign securities firms in yen government bonds.
Finally, as discussed below, the Ministry of
Finance apparently is considering additional
steps that would further open the market for
Japanese government debt to foreign market
participants.
Taken in the context of measures initiated by
the Japanese authorities over the past several
years and taken in the context of further steps
that may be under consideration at present (see
below), these latest initiatives by the Japanese
strike me as helpful and as reflective of continued good-faith efforts to move ahead with financial market liberalization. To be sure, further
effort on a variety of fronts is needed.
LOOKING
TO THE
FUTURE
In looking to the future, there is a clear need to
reduce both the specific points of friction referred to in this statement and, more importantly, to deal with the underlying problems that are
at the heart of current tensions in international
economic and the financial arena.
Insofar as particular problems relating to the
activities of U.S. banks and securities companies
in Japan are concerned, I would hope, and
expect, that the Japanese would continue to
move forward with efforts to liberalize their
domestic financial markets, thereby providing
greater competitive opportunities for U.S. firms
in the Japanese marketplace. As I see it, there
are four specific areas that warrant particular
attention:
1. Greater access to the Japanese
government
securities market. In this area, I believe that the
Japanese authorities may be considering one or
more possible further steps including the following: (1) the offering through auction of new
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575
maturities of intermediate and longer-term issues
that would work in the direction of increasing the
percentage of issues sold through auction; (2)
shifting the 20-year issue from a syndicate to an
auction; and (3) the use of something like the
U.S. noncompetitive tender system in the 10year maturity that could provide larger shares to
U.S. market participants while still preserving
the syndicate framework for that issue. Needless
to say, I would welcome initiatives along these
lines, which could pave the way to the day in
which the auction method of issuing debt was the
general practice. In turn, this method would be
an important step in the direction of establishing
market practices in the Japanese government
securities markets that are more in line with
practices here and in London.
2. Increased representation in the Tokyo Stock
Exchange. As I understand it, plans are now
under way to expand the number of seats—
including seats held by foreigners—on the Tokyo
Stock Exchange next spring when new facilities
and computer capabilities will be in place. Procedurally, this will entail the establishment of a
membership committee within the exchange in
the near term. I am led to believe that the
committee's deliberations should be completed
and its recommendations made to the full exchange membership late this year. Here too, I
expect that the result of these deliberations
would be some added representation of U.S.
firms in the exchange. I would also hope that the
time schedule for this process could be accelerated, but I do understand the practical problems
involved.
3. Money market liberalization. As noted earlier, the next round of discussions between the
Japanese authorities and U.S. Treasury representatives is scheduled to take place shortly.
Those discussions will, among other things, focus on what further steps might be taken to
reduce rigidities in the Japanese money market,
which, in turn, can make it easier for U.S.
institutions to compete in the market and thereby
more easily fund Japanese-based lending and
securities market activities in the local currency.
4. Bank Capital Standards. While the areas
mentioned above are important, the single item
on which I place greatest emphasis relates to
bank capital adequacy standards and specifically
to the goal of moving Japanese bank capital
576
Federal Reserve Bulletin • July 1987
standards into closer alignment with emerging
international standards.
Efforts to establish international standards for
bank capital adequacy have been under way
within the Bank for International Settlements for
about three years. This effort was undertaken by
the Group of Ten central bank governors in
recognition of the fact that both competitive and
prudential considerations pointed to the need for
such standards as the globalization of banking
was proceeding very rapidly. While efforts are
proceeding in the Bank for International Settlements and through other multinational channels,
the United States and the United Kingdom reached
agreement earlier this year on a joint approach to
capital standards in our respective countries.
Such proposals were made available for public
comment in January, and final rules are expected
to be put in place sometime later this year.
Senior officials of both the Bank of Japan and
the Ministry of Finance have indicated that they
agree in principle that Japanese bank capital
standards should, in due course, be brought into
broad alignment with international standards.
And, preliminary discussions between senior
Federal Reserve, Bank of England, and Japanese
officials have been held on the subject. Further
discussions are scheduled in the near term.
Achieving the needed degree of convergence
in this area will be much more difficult in the case
of Japan than was true with the United Kingdom
because the starting points with Japan are much
further removed from prevailing practices in the
United States and the United Kingdom. Moreover, as we have seen with U.S. banks, even
relatively minor changes in this area can be
controversial. Thus, while achieving convergence with the Japanese will be a long and
difficult task, progress along those lines is important.
As I see it, the four areas I have mentioned
above are clear priorities. Given the progress
that has been made in the past, I am confident
that efforts to move ahead in these and other
areas will prove fruitful and mutually beneficial.
Partly for this reason, I am opposed to legislative
efforts along the lines of the so-called primary
dealer amendment that was incorporated into the
trade bill passed by the House of Representatives or as recently proposed by Senators Proxmire and Riegle. As I see it, such legislation
could have the effect of stalling rather than
accelerating discussions and negotiations, while
possibly producing unintended adverse side effects—both in terms of general attitudes toward
market liberalization and attitudes regarding capital inflows to the United States. It would be one
thing to consider a legislative approach in an
environment in which progress and good-faith
discussions were not taking place. However, this
is not the current situation.
Taking a longer-term view of the situation,
Japan faces many of the same problems in the
financial area that we are so conscious of here in
the United States. Namely, much of its overall
banking and financial structure—as well as the
regulatory and supervisory apparatus associated
with that structure—were not designed for the
environment of the current international market.
The Japanese will have to come to grips with
these issues just as we and others will have to do
the same. In the case of the Japanese, coming to
grips with these larger issues could also yield a
situation in which constructive change on the
Japanese side is forthcoming at their initiative, as
a part of that larger process, rather than as a
result of time-consuming and, at times, difficult
discussions of specific points of concern and
friction. In this regard, the point should also be
stressed that problems of the nature discussed in
this statement—specific or generic—are by no
means limited to Japan.
In concluding, let me return briefly to where I
started—with the economic fundamentals. If we
are to be successful in winding down our external
imbalances in an orderly way, we in the United
States must live up to our responsibilities—
which means learning to live within our means.
To be sure, actions abroad are needed and needed badly. But, as we call on others to open their
markets and to stimulate their economies, let us
not lose sight of our end of the bargain. Our
federal budgetary affairs—despite the efforts of
this committee and others—are still in a state of
disarray and must be put in order; the need for
broad-based reform in our own financial structure must be addressed; pressing questions as to
the degree of underlying competitiveness of our
industrial sector must be answered; and, patterns
of savings and investment in our domestic economy must be brought into line with the longer-run
needs of rising productivity and standards of
Statements
to Congress
577
living. If we are to come full circle in restoring
balanced growth here at home and in the world
more generally, we must also avoid any renewed
outburst of inflation, which would undermine
prospects on all fronts. Moreover, balanced
growth in the world economy will also provide a
much more constructive environment within
which legitimate issues regarding financial market practices and evolution can be resolved here
and elsewhere.
•
Statement by Manuel H. Johnson, Vice Chairman, Board of Governors of the Federal Reserve
System, before the Committee on Banking,
Housing, and Urban Affairs, U.S. Senate, May
21, 1987.
back recessions in the early 1980s that left a
legacy of troubled loans, even as the economy
began to recover in late 1982. A second type of
economic transition—from a weak dollar to a
strong dollar—struck hard at another large segment of the banking industry's customer base:
manufacturers of internationally traded goods.
Finally, the transition from a period of low or
negative real interest rates and expanding export
markets to a period of high real interest rates and
declining export revenues, coupled with other
factors, left many borrowers in less developed
countries in weakened positions.
During this period, banks also have been confronted with competitive challenges from several
directions. Thrift institutions, foreign banks, and
even nondepository financial institutions have
emerged as formidable competitors in many
areas. The direct issuance of securities has
proved to be a less expensive and more efficient
form of financing than bank loans for many of the
banking industry's prime customers. And, the
deregulation of interest rates and the dismantling
of geographic barriers have placed pressure on
the margins of some institutions, although these
developments should lead to a more sound and
efficient banking system over time.
All of this procedure was compounded by the
inclination on the part of some depository institution managers to assume excessive risks with
federally insured deposits in the hope that the
expected high rewards would accrue to investors. By far the majority of banking organizations
are well managed; however, mismanagement,
improper lending practices, and other forms of
excessive risk-taking have contributed to financial problems and the failure of a number of
institutions.
Yet, despite these economic dislocations,
problems, and competitive challenges, most
banking organizations remain fundamentally
sound, and it is important not to lose sight of the
important elements of strength that underlie our
I am pleased to meet with this committee to
present the views of the Board of Governors on
the condition of the banking system and to
address the general areas covered in your letter
of invitation. The Federal Reserve staff has
worked with the regulatory agencies of other
depository institutions and members of your staff
to provide financial information and data on the
condition of U.S. banking organizations. It is not
my intent here to review all of these data in
detail; rather, I intend to discuss our views on
broad developments and conditions in the banking system and what supervisory steps we have
taken to address these conditions.
In looking at the financial condition of the
banking system, it is important to consider the
environment within which banking organizations
have been operating in recent years. Without
question, the environment has been a difficult
one—characterized by considerable financial
stress and volatility. As a consequence, many
institutions, many segments of the industry, and,
indeed, the industry as a whole have experienced
rising levels of loan charge-offs and classified
assets, and, of course, the number of problem
banks and failed banks has also increased significantly.
These problems are rooted in several causes.
One cause, undoubtedly, is the transition to a
less inflationary environment. As you know,
inflation rates have drifted from double-digit
levels in the late 1970s and early 1980s to low
single-digit levels in each of the past several
years. Unfortunately, inflationary expectations
support many farm, energy, and real estate loans
that, in hindsight, we now know were not viable.
This situation was aggravated by steep back-to
578
Federal Reserve Bulletin • July 1987
banking system. To be sure, asset quality problems remain and segments of the industry have
been weakened by troubled farm, energy, real
estate, and foreign loans. On the other hand,
many institutions continue to record favorable
operating results, and the industry as a whole
(and particularly the group of larger institutions)
continues to build its capital strength. Indeed, I
suspect that many institutions that have withstood the recent pressures on the industry may
emerge in a much stronger competitive position.
ASSET
QUALITY
Asset quality difficulties have contributed to the
prevailing unease about the health of the banking
system. Loan problems and loan losses have
increased during the past few years, despite
more than four full years of economic expansion.
This experience is especially troublesome and
contrary to that of recent decades. In past periods of recession and recovery, a consistent pattern was observed: loan losses increased during
the recession and immediately afterwards but
then improved as economic growth resumed.
The relatively high level of troubled assets at
some banks at this point in the recovery suggests
that any major unforeseen economic or financial
shocks could test the resiliency and solvency of
the most vulnerable institutions.
The failure of asset quality to improve during
the current economic expansion is due to special
national and international economic conditions
that have adversely affected particular borrowing
sectors. The most obvious examples domestically are the agricultural and energy sectors. In the
late 1970s and early 1980s, borrowers in these
sectors took on large amounts of debt that could
not be serviced when conditions subsequently
deteriorated. While the wringing out of inflation
had an important positive impact on the economy as a whole, the declines in the value of farm
property and the price of oil led to an increase in
the level of delinquencies and defaults on bank
loans.
Depressed conditions in these two sectors
have created serious problems in certain geographic areas. Particularly hard hit have been
banks in the farmbelt states of the Midwest and
the energy-dependent states in the Southwest.
Asset quality measures of banks in these areas
are generally lower than those of banks in other
parts of the country.
Nonetheless, there are some signs that conditions may be stabilizing. The price of oil has
recovered somewhat from very low levels, and in
some areas the decline in prices of farm assets
has leveled off. While adverse effects on banks
that lend heavily to these sectors will continue,
we have, I believe, begun to work through these
problems, and absent any unanticipated shocks,
the worst may be behind us in these sectors.
We need to maintain our vigilance, though,
over these and other areas of the loan portfolio.
In parts of our country that witnessed the energy
boom and bust, problems have spilled over into
the real estate industry. New construction, especially for downtown office buildings, has finally
slowed and even come to a virtual stop in some
energy-area markets, such as Houston. Nonetheless, these markets remain depressed, with a
large relative supply of available office space.
Moreover, while construction has slowed in
these markets, it has not done so in the aggregate. In 1986, real estate construction loans held
by banks grew nearly 20 percent, while total
loans grew less than 8 percent. Over the past
three years, construction loan growth averaged
21 percent, compared with an average growth of
total loans of 10 percent. Thus, the banking
industry remains highly exposed to conditions in
the real estate market. Although 1986 witnessed
some improvement in real estate vacancy rates,
they remain relatively high by historical standards.
One additional area of the domestic loan portfolio that bears continued attention in the future
is that of credit card loans. In recent years, many
banks have solicited new accounts in a very
aggressive fashion and have purchased existing
accounts. These methods of securing new accounts have resulted in historically high chargeoff rates. Although there is evidence that such
rates may be peaking, losses are expected to
remain high and many credit card portfolios
remain vulnerable to narrowing margins and possible increased delinquencies.
An important determinant of asset quality at
the major money center banks and some regional
institutions continues to be the debt problems of
the less developed countries. The adjustment
Statements
process they have undergone has been painful,
and the difficulties facing these borrowers remain
serious; nonetheless, some progress has been
made in dealing with this situation. Despite some
significant exceptions, most countries have been
able to service their indebtedness over the past
four and a half years. During this period, banks
have been able to significantly improve their
ability to absorb any losses from their loans to
countries with debt problems. Since 1982, the
capital of the 50 largest U.S. banking organizations has roughly doubled while exposure to
troubled developing-country borrowers has actually declined slightly. Thus, their exposure to the
heavily indebted countries relative to their capital bases has declined sharply.
At the same time, many borrowing countries
have made progress in strengthening their economies and their ability to service their external
obligations. Most of these economies now are
experiencing real growth, reducing their combined current account deficits considerably, and
instituting many needed economic reforms. In
the case of some countries, this development has
been achieved despite a significant decline in
commodity prices and export revenues. In my
view, the international debt problem has been
managed through an extraordinary cooperative
effort by borrowing countries, the international
banking community, multilateral financial institutions, and creditor governments. Moreover,
while banks have shown a willingness to work
with countries that undertake appropriate adjustment policies, this has been done without an
excessive buildup of additional debt. The external debts of heavily indebted developing countries have increased at an annual rate of only V/z
percent over the past four years, which, under
normal circumstances, would imply declining
debt burdens.
While I believe we are on a track that offers a
reasonable prospect of long-run success, this is
not to say, of course, that individual countries
will not experience renewed problems from time
to time. For example, Brazil is now facing a
resumption of serious inflationary pressures that,
with other factors, has led to a curtailment of
debt service. It will take, no doubt, the concerted
effort of Brazil and all of its creditors to manage
this situation. Nonetheless, despite the impact
that the international debt situation has had on
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579
bank earnings and asset quality, U.S. banks to
date have proved able to cope with the effects of
foreign debt problems and, in particular, with
Brazil's moratorium on interest rate payments.
It is important to note that events of recent
days underscore the prudence of wisdom of
efforts, over the last several years, to strengthen
the capital bases of our larger institutions. The
support of the Congress, as manifested in the
International Lending Supervision Act of 1983,
together with actions by both bankers and regulators in recent years, has resulted in significantly higher capital levels at most of our larger
banking organizations. This should enable banks
to withstand the pressures stemming from international lending difficulties of the type being
experienced by Brazil. Indeed, it is a fundamental function of capital to absorb losses stemming
from unanticipated shocks while maintaining
confidence in the banking system. Although the
difficulties facing many foreign borrowers are
significant, the problems in Brazil should not
obscure the progress made with other debtors.
During 1987, new lending agreements have been
signed, or tentatively agreed to with Mexico,
Chile, Venezuela, Argentina, and the Philippines.
Having generally reviewed those segments of
the loan portfolio that have been cause for concern in recent years, I would now like to address
briefly recent trends in certain broad indicators
of loan quality.
Overall, loan losses trended upward for most
of this decade. For all insured commercial banks,
the ratio of net charge-offs to average total loans
has increased steadily since 1981; by year-end
1986, it had reached nearly 1 percent, an unusually high level for the industry as a whole.
Looking at specific size classes of banks, we
find that the overall trend describes accurately
each size group. No size class has fully escaped
the general deterioration in asset quality, although some have done better than others. In
general, banks with assets of less than $100
million have the highest relative level of loan
losses. The problems experienced by smaller
banks largely reflect the relatively high concentration of agricultural credits in many of these institutions. The smaller regional banks, those with assets of between $1 billion and $5 billion, have had
the best performance, relatively speaking.
580
Federal Reserve Bulletin • July 1987
Nonperforming assets give some general idea
of the level of problems in the loan portfolio.
Nonperforming assets have increased or remained at relatively high levels in the last several
years despite the extraordinarily high level of
loan charge-offs over this same period. Among
the various size groups of banks, nonperforming
asset ratios are generally highest at the largest
and the smallest banks. At year-end 1986 for
example, nonperforming assets averaged 2.34
percent of total assets for the 25 largest banks, up
from 2.25 percent a year earlier.' For the smaller
banks, those with assets of less than $300 million, the nonperforming ratio stood at 2.09 percent, unchanged from the prior year-end level.
As I have already suggested, nonperforming assets are higher than we would like at this point in
the economic cycle.
In general, the difficult period of problems
with asset quality through which we are passing
firmly underscores, for both bankers and supervisors alike, the need for renewed attention to
sound and prudent lending standards and practices, as well as the need for continued efforts to
strengthen capital adequacy.
You have asked that we address the effect of
"securitization" on asset quality. Simply stated,
a securitized loan is one in which the originator is
not the ultimate investor. In a typical loan securitization, the originator sells a bundle of loans,
rather than individual loans, and the loans are
converted to securities backed by the loans. Of
course, depository institutions can act as both
buyers and sellers of securitized loans. Until
now, loan securitization has occurred mainly in
the residential mortgage market, where more
than half of all loans that are originated are
subsequently securitized. Other assets that have
been securitized on a much smaller scale include
automobile loans, credit card receivables, lease
receivables, and commercial real estate.
Securitization offers the potential benefits of
diversification of credit risk, improved control
over interest rate exposure, enhanced liquidity,
and increased efficiency. The question of how
securitization will affect asset quality, however,
is difficult to answer with precision. The answer
will no doubt lie ultimately in the quality of
1. The figures for year-end 1986 do not include the effects
of placing Brazilian debt in nonperforming status, which
occurred in the first quarter of 1987.
underwriting performed by those originating the
loans to be securitized. The quality of lending
could improve if securitization results in greater
specialization and standardization in lending and
if it is performed by the industry's most capable
lenders. On the other hand, there is always the
danger that too many insitutions will attempt to
participate in the securitization process and that
standards of credit underwriting will be compromised in the battle for market share. From a
supervisory standpoint, we expect banking organizations that purchase securitized assets to conduct proper credit analyses and to assure themselves of the quality of the assets they are taking
into their portfolios.
We sometimes hear that if banks securitize and
sell their highest quality assets, the overall quality of bank assets will decline as relatively weaker
assets that cannot be sold are retained in the
balance sheet. While I see no necessary reason
that banks that engage in this activity should
relax their credit standards in general, examiners
will, of course, continue to evaluate the condition of assets retained in selling bank portfolios,
and supervisors have the latitude to require
additional capital if an institution's credit profile
changes as a result of such transactions.
One supervisory concern regarding securitization relates to whether the selling institution
achieves a complete transfer of risk to the buyer
before removing the " s o l d " assets from its
books. Obviously, if the seller retains an explicit
or implicit obligation to repurchase the securities
with the aim of providing a credit guarantee or
liquidity support, then the transaction has not
reduced the risk to the selling institution. Moreover, if such obligations were in fact, retained in
connection with a large number of such " s a l e s , "
risk could be significantly increased. To deal
with this concern, we have generally recognized
transactions as true sales only if the seller retains
no risk of loss to its capital base. In general, if the
holder of the securities has recourse to the bank,
that is, if the bank is at risk, the transaction must
be kept on the bank's balance sheet and the risk
of loss must be backed by capital.
EARNINGS
AND
PROFITABILITY
The economic difficulties and imbalances that
have marked the 1980s inevitably have placed
Statements
downward pressure on the earnings and profitability of the banking industry. Aggregate aftertax earnings growth slowed from an annual rate
of about 11 percent in the 1970s to an annual rate
of about 5 percent in the first half of the 1980s,
and earnings actually declined about 1 percent
last year. Over this same period, asset and equity
growth also have slowed, but more moderately.
Consequently, key measures of aggregate industry profitability—return on assets and return on
equity—last year fell to the lowest levels since at
least 1970.
The deterioration in asset quality that I have
described has been the dominant factor underlying declining industry profitability. U.S. banks'
loan-loss expenses, measured as a percentage of
average assets, have tripled since 1981. Indeed,
this development accounts for much of the decline in profitability during this period. Declining
interest rates have allowed banks to offset a
substantial portion of their credit losses with
gains from the sale of investment securities.
Profits from the sale of investment securities
accounted for about one-sixth of total pretax
income for the banking industry last year. Some
of the very largest banking organizations have
cushioned the impact of credit quality problems
on profitability by achieving a very robust
growth in other noninterest income, reflecting
their increased emphasis on fee-based services,
such as investment banking, securities processing, and cash management. It is not clear, however, how much these activities have contributed
to the net income of these banks since data
necessary to allocate certain expenses are not
available. It is known that expansion of fee-based
services has required substantial noninterest expenses in the form of investments in technology
and the hiring of highly paid staff. Indeed, at
some of the largest banks, the growth of noninterest expense has outstripped that of noninterest income.
It is extremely important to realize, however,
that much of the U.S. banking industry remains
profitable. Earnings difficulties have been concentrated in the western half of the country,
where the problems in the energy and agricultural sectors have loomed large and at the major
multinational banks, which have been hurt by
foreign loans and, in some cases, by concentrations of energy, real estate, and shipping loans.
to Congress
581
The largest banks also have been adversely affected by the loss of many of their most creditworthy customers to the securities markets and
to foreign banks.
Those banks that have avoided the most serious asset quality problems generally have fared
quite well. Indeed, the return on assets was at or
near peak levels last year for many regional
banks located in Federal Reserve Districts in the
eastern half of the country. The resiliency of the
banking industry is evident in data on net interest
margins, that is, net interest income as a percentage of assets. Although the margins dipped
somewhat last year, they remained well above
the average for the 1970s. The deregulation of
deposit interest rates does appear to have contributed to a narrowing of margins at smaller
banks from the very high levels recorded early in
this decade, but even at these banks margins
generally compare favorably with historical levels. What is not clear, however, is the extent to
which the attempt to earn high margins has
induced banks to hold riskier loan portfolios.
CAPITAL
While trends in banking conditions over the past
few years may give rise to some uneasiness, our
nation's banks, fortunately, have made considerable progress in strengthening their capital positions. This development is particularly noteworthy because capital plays a central role in
fortifying the banking system. It acts as the
buffer that provides protection to depositors,
other creditors, and the deposit insurance fund
when an institution reports negative earnings.
The protection capital offers also serves to maintain confidence in the banking system as a whole.
It was only a few years ago that capital levels
in the banking industry caused considerable apprehension about the ability of some banks to
weather a difficult economic and financial environment. This apprehension was accentuated by
the buildup in problem loans and off-balancesheet exposures that in many instances accompanied the thinning of capital cushions. Against this
background, in December 1981, the three federal
bank regulatory agencies adopted formal minimum capital standards for banks and bank holding companies to halt the secular decline in
582
Federal Reserve Bulletin • July 1987
capital ratios that had occurred and to counterbalance the increase in risk-taking that became
evident during the 1970s. It is therefore comforting to note that since the adoption of the guidelines, the industry's capital base has been bolstered steadily by the issuance of common and
preferred stock and long-term debt, and by the
buildup of loan-loss reserves.
Currently, all banks and bank holding companies must meet a minimum primary capital requirement of 5.5 percent and a minimum total
capital requirement of 6.0 percent. 2 As these
levels are minimums, banks normally are expected to, and in fact do, operate above them.
From our perspective, the capital guidelines
have worked reasonably well. The long secular
decline in bank capital ratios has been reversed.
The larger banking institutions have made especially noteworthy improvement in their capital
positions since the end of 1981. Over this period,
the average primary capital ratio of the nation's
50 largest bank holding companies jumped from
4.7 percent to 7.1 percent—which is well above
the minimum guideline level of 5.5 percent. Of
course, a complete assessment of capital adequacy must take account of both the quality of a
banking organization's assets and the amount of
any off-balance-sheet exposure.
With regard to the latter, financial innovation
has given birth to a wide variety of financing
instruments that carry varying degrees of risk
and serve different purposes but that do not find
their way onto banks' balance sheets. Interest
rate swaps, financial futures and options, forward rate agreements, and foreign exchange contracts are among the off-balance-sheet instruments that banks use either to capitalize on or to
hedge against interest rate and foreign exchange
risks. Another group of off-balance-sheet items,
often referred to as "direct credit substitutes,"
includes financial guarantees and standby letters
of credit that back financial claims of third parties. A bank issuing such instruments bears essentially the same credit risk that it would have if
it made a direct extension of credit to the cus2. The principal components of primary capital are common stockholders' equity, perpetual preferred stock, loanloss reserves, and certain debt instruments that must convert
to stock. Total capital consists of primary capital plus secondary capital instruments—such as limited-life preferred
stock and certain qualifying long-term debt securities.
tomer. Commitments form yet another broad
group of off-balance-sheet exposures.
The total volume of the industry's off-balancesheet business is considerable. At year-end 1986,
standby letters of credit issued by insured commercial banks amounted to $170 billion, foreign
exchange commitments came to $893 billion,
loan commitments were $571 billion, and interest
rate and cross-currency swaps totaled $376 billion. The numbers appear staggering, as indeed
they are. However, it clearly would be inappropriate and misleading to relate the total volume
of off-balance-sheet exposures to the capital requirements of the banking industry. This is because in many cases the principal or face value of
the instruments is not an indicator of the amount
that is at risk, and because many of the assorted
off-balance-sheet activities are used by banking
institutions to reduce their exposure to risk.
Therefore, it is important to look at these activities on a risk-adjusted basis.
In an attempt to provide some insight into the
effect of the growth of off-balance-sheet items on
capital trends, we have looked at a number of
capital ratios adjusted for off-balance-sheet risks.
Based on our analysis, the capital ratios of the
largest banking institutions appear to have improved over the last several years—even when
off-balance-sheet activity is taken into consideration. For example, the ratio of primary capital
to total assets including adjustments for offbalance-sheet items for the 10 largest bank holding companies has climbed from 4.0 percent in
December 1981 to 6.2 percent by year-end 1986.
These results are not suprising given the huge
amounts of new capital banks have raised over
the past several years. These trends clearly demonstrate why capital, which long has been a sore
point for the banking industry, is becoming an
important selling point for major U.S. banking
institutions, which now are among the most
strongly capitalized in the world.
As you may know, we have recently proposed,
in conjunction with the other federal banking
agencies and the Bank of England, a risk-based
capital framework. Besides factoring off-balance-sheet risks into our analysis, other important objectives of this proposal are to recognize
that certain liquid, low-risk assets require less
capital backing than standard loans and to
achieve greater convergence in the assessment of
Statements
capital adequacy among countries with major
financial centers. We currently do not collect all
of the data necessary to calculate precisely the
ratio as proposed. However, estimates for the 10
largest bank holding companies averaged approximately 6.3 percent as of June 30, 1986; by
year-end this figure had increased 6.6 percent.
Capital ratios are, of course, lower if adjustment is made for problem assets. This is not
surprising since one of the major functions of
capital is to absorb losses resulting from problem
loans. Yet, even if capital is reduced by a percentage of classified loans, we find that there has
been an improvement over the 1982-86 interval.
For the 25 largest banks, for example, the average ratio of primary capital, adjusted for problem
assets, to total assets increased from 4.0 percent
at year-end 1982 and to 5.6 percent by year-end
1986. Some improvement in this ratio, albeit on a
more modest scale, was also reported for other
banks with assets of $1 billion or more. On the
other hand, we noted some deterioration in this
ratio for banks in the asset size category of less
than $300 million. The average for this group
declined from 8.0 percent in 1982 to 7.7 percent
by the end of 1986. This decline was in large part
due to the disproportionate share of problem
farm loans held by small banks.
An important goal of the recent joint proposal
of the U.S. federal banking agencies and the
Bank of England for the establishment of a riskbased capital framework was to reduce the competitive inequities that can arise when supervisory authorities in countries around the world
introduce different capital requirements. I cannot
emphasize strongly enough our interest in the
competitiveness of U.S. banks. Only a strong,
competitive, and profitable banking system can
remain healthy in the long run and fulfill the
strategic role banks play in our economic and
financial system. Thus, the Federal Reserve is
committed to working with supervisors from
other countries to encourage the development
and adoption of more consistent and broadly
accepted international capital standards of the
type set forth in the U . S . - U . K . proposal.
Another dimension of the issue is the competition from nonbank financial institutions, including thrift institutions. Again, as a matter of both
competitive equity and prudential concerns, it
would seem desirable to bring the capital require
to Congress
583
ments of competing institutions into closer alignment. For this reason, we strongly support the
efforts of the Federal Home Loan Bank Board to
encourage thrift institutions to strengthen their
capital positions.
You specifically asked that we address the
issue of "double leveraging." Double leveraging
refers to the practice of a parent company transforming debt that it issues into equity at the
subsidiary level. A bank holding company can
leverage itself by issuing long-term debt and can
then channel, or "downstream," the proceeds of
the offering to its bank or nonbank subsidiaries
by purchasing their equity securities. Double
leveraging is often used to increase the capital of
a subsidiary bank to satisfy regulatory capital
requirements. By using the parent as a centralized conduit for the capital financing of subsidiaries, an organization can reduce its cost of
raising funds.
An organization using double leveraging runs
the risk that its subsidiaries will not be able to
"upstream" the cash flow needed to service the
parent's debt. A bank subsidiary, for example,
may fail to earn sufficient income to pay dividends, the principal source of funds parent companies use to service their debt. The risks of
double leveraging are borne by a parent organization's shareholders and uninsured creditors.
A commonly used measure of double leverage
is the ratio of the parent company's equity investments in its subsidiaries to total parent company equity. Last year there was a significant
decline in levels of double leveraging in the
banking industry. The decline was particularly
pronounced among the largest holding companies, where as a group, the ratio for the 25 largest
dropped from 158 percent at year-end 1985 to 125
percent by year-end 1986. The decline in double
leveraging can be attributed, in part, to a heightened awareness on the part of holding company
creditors that the flow of funds from bank subsidiaries to the parent company cannot be assured,
and in part, to increased supervisory scrutiny of
parent company cash flow and its potential impact on the capital of subsidiary banks. In addition, since we apply our capital standards to
consolidated holding companies as well as to
their subsidiary banks, there is a limit on the
potential incentive for excessive double leveraging.
584
Federal Reserve Bulletin • July 1987
LIQUIDITY
Liquidity is a difficult concept to define with
precision, and judgments on liquidity require
consideration of a number of factors pertaining to
both the asset and liability side of the balance
sheet, as well as to off-balance-sheet commitments. However, one helpful measure of liquidity is the degree of reliance on volatile, purchased liabilities to fund assets. Reliance on such
liabilities has decreased in recent years, primarily because of the deregulation of interest rates
that has enabled banks to compete more effectively for retail accounts. This trend has been
offset to some degree by a decline in the holding
of certain liquid assets by banking institutions;
nonetheless, on net, liquidity appears generally
to have improved over the past several years.
Although dependence on managed liabilities has
changed little in recent years at smaller banks,
deregulation has removed the threat of deposit
disintermediation, which was perhaps the most
serious threat to their liquidity.
Brokered deposits generally have remained a
very small share of total deposits of banks, and
thus, for the most part, have not had a significant
impact on liquidity. Although brokered funds
have been abused in some specific cases, supervisors monitor the use of such funds closely,
particularly in connection with our review of the
overall use of purchased liabilities.
PROBLEM AND FAILED
INSTITUTIONS
It is a widely known fact that the number of
problem and failed banking organizations has
risen at an uncomfortably rapid pace over the
past several years. It is our expectation that,
absent unforeseen adverse economic or financial
developments, these numbers may begin to level
off. However, we do not expect these numbers to
decline in a significant way in the near term.
In data submitted to the committee staff, the
banking agencies have provided information on
the total number of problem and failed commercial banks, and their aggregate deposits, in some
detail. Therefore, I will touch briefly on the
situation with respect to institutions under the
jurisdiction of the Federal Reserve System.
At the end of March 1987, there were 85
problem state member banks and 510 problem
bank holding companies. These 85 state member
banks represented 7.7 percent of all state member banks, while the 510 bank holding companies
represented 7.9 percent of all bank holding companies and controlled approximately 8.5 percent
of total banking assets.
As of May 8, 1987, 74 commercial banks had
failed, compared with 41 over the same period in
1986. Of the 74 banks that failed, 5 were state
member banks with total assets of $243 million;
in all of 1986, 11 state member banks with total
assets of $147 million failed. Over the five-year
period, 1982 through 1986, the assets of failed
state member banks represented 5 percent of
total failed bank assets. To put this figure into
perspective, state member banks comprised 18
percent of total bank assets at year-end 1986.
SUPERVISOR
Y ACTIONS
Over the past several years, the Federal Reserve
has addressed the trends and conditions that I
have just described with a number of important
actions designed to strengthen our supervisory
policies, practices, and procedures. Our objectives have been threefold: (1) to implement supervisory policies that would improve the ability
of banking organizations to withstand financial
stress and adversity; (2) to enhance our ability to
identify in a timely manner financial and operating deficiencies that could weaken an organization's financial condition; and (3) to strengthen
our follow-up procedures, particularly by improving our techniques for communicating with
boards of directors and, when appropriate,
broadening our use of formal enforcement actions.
In carrying out our supervisory responsibilities, we attempt to balance the need to maintain
a fully adequate supervisory framework with our
desire to avoid impinging on the legitimate prerogatives of management or undercutting the
benefits from greater competition in our banking
and financial markets. While views may differ on
the best way to strike this balance, the crucial
public interest in the maintenance of a sound and
stable banking system, and the existence of the
Statements
federal "safety n e t , " underscore the critical importance of a strong and effective supervisory
and regulatory framework.
I have already noted the efforts that the Federal Reserve, together with the other federal banking agencies, has made over time to encourage
banking organizations to strengthen their capital
positions. The imposition of minimum capital
standards in 1981 and the strengthening of these
standards in 1983 and 1985 have played an important role in helping banking institutions to withstand the strains of the past several years.
In carrying out its day-to-day supervisory activities, the Federal Reserve has encouraged
banks to operate above the minimum capital
ratios established by regulatory rules. Banking
organizations undertaking significant expansion
are expected to maintain particularly strong capital positions that are well above minimum supervisory standards. In addition, within the past two
years, we have reiterated and strengthened our
policy on the payment of cash dividends to
shareholders when a banking organization is
experiencing financial problems. Accordingly,
we have intensified our review of dividend payments by banking organizations and, when appropriate, have encouraged them to conserve
their capital by adopting more prudent dividend
levels.
As I have stated, we are in the process of
further improving our capital adequacy policies
through adoption of risk-based capital standards.
A major objective of our risk-based capital proposal, as I have indicated, is to ensure that
capital is adequate to support off-balance-sheet
exposures. In addition, our adoption of a riskbased capital framework will help to match more
accurately an organization's capital requirements with its level of risk-taking and will contribute to broader international efforts to enhance capital standards for large multinational
banking institutions. Such efforts are aimed at
achieving stronger, more stable international
banking institutions and markets, and at reducing
the competitive inequities and distortions that
can result from vastly different prudential rules
among countries with important financial centers.
We have, as you may be aware, taken other
prudential actions. Over the past several years,
much time and effort has been devoted to height
to Congress
585
ening banking organizations' awareness of the
potential risks associated with daylight overdrafts in large dollar payment systems and to
giving bankers and examiners alike improved
analytical and supervisory tools to monitor and
control these risks. More recently, we have
reiterated as clearly as possible our long-standing
policy that bank holding companies should serve
as a source of financial and managerial strength
to their subsidiary banks. This is particularly
important since banks benefit from the ability to
issue federally insured deposits and to borrow
from the Federal Reserve discount window. In
light of subsidiary bank access to these "safetynet" protections, we expect their holding companies to stand ready to use available resources to
support their banks during periods of financial
stress or adversity, and we have underscored our
policy to use our enforcement authority, when
warranted and appropriate, to see that this is
done.
In addition, we have taken actions to improve
our ability to monitor the emergence of supervisory problems in banking organizations. In 1986,
we increased the frequency of examinations to
provide for at least an annual examination of
state member banks and most large bank holding
companies and semiannual examinations or onsite reviews for very large institutions and problem companies. This program has been supported by a significant boost in budgetary resources
devoted to supervision and regulation and by an
increase in the number of examiners from 835 in
1985 to 914 at the end of 1986. This more
frequent on-site examination program has also
been made possible, in part, through increased
cooperation with state banking departments in
the form of greater reliance on state examinations of certain institutions, and through increased operating efficiencies. We also have revised our reporting requirements for bank
holding companies to place greater emphasis on
such indicators as the level of nonperforming
loans and off-balance-sheet activities.
Taken together, those actions have strengthened our ability to monitor risk-taking and improved our capacity to take enforcement actions.
Indeed, since 1982, we have greatly increased
the number of enforcement actions such as cease
and desist orders, written agreements, and removal actions aimed at officers and directors. In
586
Federal Reserve Bulletin • July 1987
the period 1980-82, the Federal Reserve System
averaged 42 enforcement actions per year; from
1984-86, the average number of enforcement
actions had increased to 177. Such actions are
employed to require banks to improve their
lending policies and procedures, strengthen management, terminate unsafe and unsound practices, and adopt more prudent funding, dividend,
and capital strategies.
Enforcement actions are but one form of supervision. Equally, or perhaps more, important
are preventive actions such as our efforts to
improve communications with directors who, of
course, have primary responsibility to see that
their institutions are operated safely and in compliance with banking law and regulations. Toward this end, we have implemented a directors'
summary report to spell out more clearly and
effectively our supervisory assessment of an
organization's problems and have broadened the
involvement of senior Reserve Bank officials in
meetings with directors of large institutions and
those with significant problems.
Actions of the type that I have just reviewed,
of course, cannot deal with all of the problems
facing our depository institutions. Thus, the
Board continues to support legislation to recapitalize the Federal Savings and Loan Insurance
Corporation fund at an appropriate level. Moreover, while we are gratified by the actions taken
by some state legislatures to permit out-of-state
acquisitions of failed or failing banks, we do not
believe that these have alleviated the problem of
finding buyers for troubled institutions in certain
states. Thus, the Board continues to urge the
Congress to provide federal regulators with authority to arrange interstate acquisitions of failing
and failed institutions.
As you are aware, the Board has recently
approved the applications of certain bank holding companies to engage in underwriting commercial paper, 1- to 4-family mortgage-backed
securities, and municipal revenue bonds. We
have approved these applications subject to conditions to assure that the activity will be consistent with safe and sound banking practices and
avoid conflicts of interest, concentration of resources, and other possible adverse effects. It is
our hope that this action will provide banking
organizations with additional sources of income
and enhance in a meaningful way their ability to
compete effectively with other nonbank financial
institutions.
In the long run, of course, these activities
should result in real benefits to banking organizations by promoting greater efficiencies, more
competitive equity, and more diversified sources
of income. These benefits will also, I believe,
contribute to a stronger and more resilient banking system. In addition, a prudent expansion of
bank holding company powers should provide
significant benefits to customers in the form of
greater convenience and competition and additional alternatives for obtaining important financial services.
In approving these applications, the Board
acted under existing authority, applying a statute
adopted more than 50 years earlier in very different circumstances, to a financial marketplace
that technology and competitive forces have
altered in ways that the enacting Congress could
not have envisioned. Thus, we continue to urge
the Congress to recognize the competitive, technological, and international forces at work in
banking and financial markets by providing a
clear legislative framework for expanding the
authority of bank holding companies to provide
financial services, consistent with the need to
maintain a safe and sound banking system and
safeguards against conflicts of interest and selfdealing. We also believe that the Congress
should address the need for change in the current
prohibitions on corporate underwriting, recognizing that bank holding companies conduct such
activities abroad in substantial volume. As part
of more comprehensive legislation in the future,
we feel that it would also be desirable to consider
ways of encouraging more consistency in accounting, supervisory, and capital standards
among various types of depository institutions.
CONCLUSION
The recent trends in the performance and condition of our nations's banks, notably, the deterioration in asset quality, the slide in earnings and
profitability, and the growth in off-balance-sheet
exposures, explain much of the current unease
about banking. But the industry has been working to reverse these trends and much progress is
evident. Many banks have put in place cost-
Statements
cutting programs, strengthened their capital positions, adopted more conservative lending practices, and generated new sources of income. The
supervisory agencies, for their part, have implemented programs to help ensure that the banking
system remains on a sound footing and that
adequate safeguards are in place. All of these
efforts should have the effect of putting banking
organizations in a better position to withstand
any additional unanticipated pressures and
to Congress
587
strains within our economy or financial markets.
While there is some justification for the prevailing sense of unease over banking, I believe
that, on balance, much more is right in banking
today than is wrong. The problems, while significant, are manageable, and I can assure this
committee that the Board will do its utmost to
see that supervisory efforts will continue to be
directed toward maintaining the soundness of the
banking system.
•
588
Announcements
RETIREMENT
OF PAUL A.
VOLCKERAS
CHAIRMAN
OF THE BOARD OF
GOVERNORS.NOMINATION
OF ALAN
GREENSPAN
TO SUCCEED
HIM
convenient and consistent with an orderly transition.
Consequently, I do not desire reappointment as Chairman, and I plan to resign as Governor when a new
Chairman is prepared to assume office.
At a White House press briefing on June 2,
President Reagan made the following announcement:
I will be leaving with a sense of great appreciation for
your unfailing courtesy to me personally. More broadly, your consistent support of the work of the Federal
Reserve during a particularly challenging period for it,
for the financial system, and for the economy has been
critical to whatever success we have had.
I have a statement for you: Paul Volcker has advised
me of his decision not to accept a third term as a
member and Chairman of the Federal Reserve Board.
I accepted Mr. Volcker's decision with great reluctance and regret. He has served with distinction on the
Board of Governors and has been an historic chairman
during this time of economic recovery and expansion.
Therefore, it's my intention to nominate Dr. Alan
Greenspan to a 4-year term as Chairman of the Federal
Reserve. Mr. Volcker has indicated his strong support
for Dr. Greenspan.
And let me add, my dedication to our fight to hold
down the forces of inflation remains as strong as ever.
And I know that Dr. Greenspan shares that same
commitment.
Without doubt, strong challenges remain for all of
those involved in economic policy. In that effort, I
believe the nation will continue to be well served by a
strong Federal Reserve System—a system firmly dedicated to fostering economic and financial strength and
stability and able to bring to that effort a combination
of sound and independent professional judgment and
continuity beyond any partisan considerations.
May I add, too, my personal best wishes for the
remainder of your own term in office during which you
have done so much to restore a sense of confidence
and self-reliance among the American people.
Faithfully yours,
Paul A. Volcker
The letter from Chairman Volcker and his statement about Chairman-Elect Greenspan follow:
June 2, 1987
June 1, 1987
Statement of Paul A. Volcker, Chairman, Board of
Governors of the Federal Reserve System
The President
The White House
Washington, D.C.
Dear Mr. President:
As the end of my term as Chairman of the Federal
Reserve Board approaches, you naturally have to
consider an appropriate new appointment.
In that connection, you will recall that, upon my
reappointment as Chairman in 1983, I felt unable to
make a firm commitment to you or to the Congress to
remain in office for a second full four-year term.
Despite my reservations at the time, that term is in fact
now almost finished. However, I do think, after 8
years as Chairman, a natural time has now come for
me to return to private life as soon as reasonably
I have known Alan Greenspan for many years. I know
his talent and his experience—and not least his dedication. The President has made a natural and outstanding
choice. I am delighted that Alan has agreed to take on
the job. The Federal Reserve is a very special institution. Obviously, I leave with mixed feelings, but
Alan's appointment makes me feel very comfortable
about the continuing role of the Fed.
EDWARD W. KELLEY, JR.:
APPOINTMENT
AS A MEMBER OF THE BOARD OF
GOVERNORS
On January 21, 1987, President Reagan announced his intention to nominate Edward W.
589
Kelley, Jr., as a member of the Board of Governors. Mr. Kelley was subsequently confirmed by
the Senate on May 20 and took the oath of office,
administered by Chairman Volcker, on May 26.
The text of the White House announcement of
January 21 follows:
The President today announced his intention to nominate Edward W. Kelley, Jr., of Texas, District 11, to
be a Member of the Board of Governors of the Federal
Reserve System for the unexpired term of 14 years
from February 1, 1976. He would succeed Emmett
John Rice.
Since 1981, Mr. Kelley has been Chairman of the
Board, Investment Advisors Incorporated in Houston,
Texas. In addition, he currently is Chairman of the
Board of The Shoreline Companies, Inc. and Director
of Texas Industries, Inc. Previously, he was President
and CEO of Kelley Industries, Inc., 1959-81. Mr.
Kelley has served as a Director of the following banks:
Southern National Bank, 1961-72; Westwood Commerce Bank, 1974-82; and West Belt National Bank,
1982-84.
QUARTERLY FINANCIAL
RESULTS
AVAILABLE FOR
PRICED SERVICE
OPERATIONS
The Federal Reserve Board reported on May 19,
1987, financial results of Federal Reserve priced
service operations for the quarter ending March
31, 1987.
The Board issues a report on priced services
annually and a priced service balance sheet and
income statement quarterly. The financial statements are designed to reflect standard accounting practices, taking into account the nature of
the Federal Reserve's activities and its unique
position in this field. Beginning with the statements for the second quarter of 1987, this release
will be incorporated into the F E D E R A L R E S E R V E
BULLETIN.
ANNUAL
Mr. Kelley graduated from Rice University (B.A.,
1954) and Harvard Business School (M.B.A., 1959).
He is married, has three children and resides in
Houston, Texas. Mr. Kelley was born January 27,
1932, in Eugene, Oregon.
ADOPTION OF FORMS FOR USE BY
GOVERNMENT SECURITIES
BROKERS
AND DEALERS
The Federal Reserve Board announced adoption
on May 26, 1987, of forms to be used by financial
institutions acting as government securities brokers or as government securities dealers to report their status under the Government Securities Act of 1986.
The act requires all financial institutions that
act as government securities brokers or dealers
to notify their federal regulators of their brokerdealer activities. Institutions that currently act as
broker-dealers must file notice (form G-FIN) by
July 25, 1987. The second notice (form G-FINW)
would be used by institutions that terminate their
status as a government securities broker or dealer.
Under the act, the Board has the responsibility
to establish the form of these notices to be used
by commercial banks, foreign banks, savings
banks, and savings and loan associations.
REPORT:
PUBLICATION
The Seventy-Third Annual Report of the Board
of Governors of the Federal Reserve System,
covering operations for the calendar year 1986, is
available for distribution. Copies may be obtained on request to Publications Services,
Board of Governors of the Federal Reserve
System, Washington, D.C. 20551. A separately
printed companion document entitled Annual
Report: Budget Review, 1986-87, which describes the budgeted expenses of the Federal
Reserve System for 1987 and compares them
with expenses for 1985 and 1986, is also available
from Publications Services.
PROPOSED
ACTIONS
The Federal Reserve Board has extended the
period for comment on its proposals to amend its
Capital Guidelines to include a risk-based capital
measure and to incorporate into that risk-based
capital measure credit risks on off-balance-sheet
interest rate and exchange rate contracts. The
comment periods were extended from May 13
and May 22 respectively to June 1 because of the
significance and nature of the Board's proposals.
590
Federal Reserve Bulletin • July 1987
ERRATA: BULLETIN
TABLE
CHANGE IN BOARD STAFF
In table 4, " N e t profits or losses ( - ) on U.S.
Treasury and Federal Reserve current foreign
exchange operations," which appeared on page
333 of the May 1987 B U L L E T I N , the figures in the
last line, "Valuation profits and losses on outstanding assets and liabilities as of January 30,
1987," were inadvertently shown as negative
amounts. The corrected table appears below.
4. Net profits or losses ( - ) on U.S. Treasury and
Federal Reserve current foreign exchange
operations
Millions of dollars
Period1
November 1, 1986January 30, 1987
Valuation profits and
losses on outstanding
assets and liabilities as
of January 30, 1987
1. Data are on a value-date basis.
Federal
Reserve
U.S. Treasury
Exchange
Stabilization
Fund
8.0
6.6
2,322.8
1,975.0
Anne DeBeer, Assistant Director in the Division
of Federal Reserve Bank Operations, has resigned, effective June 30, 1987.
SYSTEM MEMBERSHIP:
ADMISSION OF STATE BANKS
The following state bank was admitted to membership in the Federal Reserve System during the
period May 1 through May 31, 1987:
Texas
Piano
First Bank of Piano
59 i
Record of Policy Actions of the
Federal Open Market Committee
MEETING
1. Domestic
HELD ON MARCH 31,
Policy
1987
Directive
The information reviewed at this meeting suggested that economic activity has risen at a faster
pace so far this year than in the fourth quarter of
1986, while the rate of price increase has accelerated slightly. The expansion in output apparently
has reflected a rebuilding of inventories and
some improvement in the external sector. Important components of domestic final demands seem
to have eased off in the early months of 1987 after
a surge late in 1986. The pickup in inflation
primarily has reflected a rebound in crude oil
prices; wage pressures have remained subdued.
Data on employment and production suggested a sizable advance in output in early 1987.
Total nonfarm payroll employment rose more
than 300,000 per month over the first two months
of the year, appreciably faster than in 1986; large
gains were reported in construction, trade, and
services. In addition, the average workweek has
lengthened, and total hours worked by production and nonsupervisory personnel have risen
sharply from the fourth quarter. The civilian
unemployment rate was 6.7 percent in February
for the third consecutive month as increases in
the labor force matched the strong expansion in
employment.
The index of industrial production rose 0.5
percent in February to a level about 1 percent
above its fourth-quarter 1986 average. Increased
production of motor vehicles accounted for most
of the gain, but output of defense and space
equipment, construction supplies, and nondurable materials also posted further appreciable
increases. Reflecting the recent strengthening in
the industrial sector, the capacity utilization rate
increased 0.2 percentage point in February to
79.8 percent.
On the demand side, both consumption and
business fixed investment have been relatively
weak. Purchases of automobiles, after a sharp
drop in January, have recovered somewhat over
the past two months, but are still well below the
fourth-quarter pace. Automakers have trimmed
assembly schedules and have renewed sales incentive programs, but dealer inventories have
been building up. Consumer spending on goods
other than autos has advanced at a moderate
rate. Business investment spending appears to
have weakened in recent months. Shipments of
nondefense capital goods fell on balance over the
first two months of the year after the tax-related
surge in equipment outlays late last year. New
orders also have moved lower and outlays for
nonresidential construction fell further in January, maintaining the downtrend that began early
last year.
The large fluctuations in final sales that occurred around the turn of the year have been
mirrored in changes in inventories. Stocks rose
sharply in January, after being drawn down late
last year. Notable swings in inventories occurred
for autos and machinery, where tax incentives
may have had a greater effect on the timing of
purchases than on production. In addition, some
stockbuilding was evident in manufacturing industries in which production has been relatively
strong.
Activity in the housing sector remained vigorous in January and February, with starts averaging more than 1.8 million units at an annual rate
in both months. The strength in starts appeared
to reflect unusually good weather in the Midwest. Single-family starts have been particularly
robust. Multifamily starts, by contrast, have
remained weak because of high vacancy rates
and a less favorable tax environment for construction of rental units.
Inflation picked up early this year, largely
592
Federal Reserve Bulletin • July 1987
reflecting the pass-through of higher crude oil
prices into prices of final energy products. The
CPI rose 0.4 percent in February, after a 0.7
percent increase a month earlier. Prices of gasoline and fuel oil posted further sizable increases
last month. Consumer food prices in February
continued to rise at the pace that has prevailed
since last September. Excluding food and energy, increases in consumer prices slowed a bit in
February. Spot prices for industrial materials
have essentially leveled off in recent weeks after
rising late last year. Wage increases have remained moderate so far this year.
Economic activity in major foreign industrial
countries remained generally weak in the fourth
quarter of 1986 and early 1987, except in the
United Kingdom. Debt-servicing problems beset
several important developing countries but progress was made in the negotiations of a number of
such countries with commercial banks.
The trade-weighted value of the dollar against
other G-10 currencies changed little in the period
following the February 10-11 meeting of the
Committee until mid-March. The stability apparently was fostered to a considerable extent by
the announcement that the major industrial countries at a meeting in Paris on February 22 had
agreed to support the prevailing structure of
exchange rates. Since mid-March, however, the
dollar has come under strong downward pressure, particularly against the Japanese yen, apparently triggered in part by intensified trade
frictions between the United States and Japan.
An improved fiscal picture for the United Kingdom contributed to a sharp rise in sterling. As a
result, the Bank of England cut its lending rates
around mid-March; several other European
countries also lowered official lending rates as
their currencies strengthened against the German
mark.
At its meeting in February, the Committee
adopted a directive that called for maintaining
the existing degree of pressure on reserve positions. M2 and M3 were expected to grow at
annual rates of about 6 to 7 percent from January
through March, while growth in M l was expected to slow substantially from the high rates of
previous months. The members decided that
somewhat greater reserve restraint would, or
slightly lesser reserve restraint might, be accept
able depending on the behavior of the aggregates, taking into account developments in the
economy and in foreign exchange and domestic
credit markets. The intermeeting range for federal funds was left unchanged at 4 to 8 percent.
Growth of the monetary aggregates slowed
sharply in February and March, and over the two
months expansion in M2 and M3 was somewhat
below the Committee's expectations. In March,
these aggregates appeared to be around the lower
bounds of the 5!/2 to SVz percent ranges established by the Committee for the year. Some of
the slower growth in the aggregates so far this
year appears to be related to a reversal of the
bulge in deposits and bank lending associated
with the surge in transactions before year-end,
but a more general moderation in the expansion
of money balances also might be associated with
completion of portfolio adjustments to earlier
declines in interest rates. Total and nonborrowed
reserves fell slightly over the past two months, as
required reserves leveled off after the year-end
bulge in transaction deposits, and excess reserves edged lower in line with their usual seasonal pattern. In the three complete reserve
maintenance periods after the February FOMC
meeting, adjustment plus seasonal borrowing averaged about $280 million. At the same time, the
federal funds rate edged off from 6lA percent to
around 6 percent or a bit higher.
Other interest rates changed little over most of
the intermeeting period before firming somewhat
recently. Over the past few days concern about
the dollar contributed to some pressure on rates,
particularly in long-term markets in which Treasury bond yields have risen about 20 basis
points. On balance, private short-term rates rose
about 15 basis points over the intermeeting period, while Treasury bill rates were about unchanged to 20 basis points lower; the differential
probably reflected heightened concerns about
credit quality relating to debt-servicing problems
of developing countries and a pay down of bills
by the Treasury. Equity prices rose markedly
over the period.
As at other recent meetings the staff projections suggested that real GNP would grow at a
moderate rate through the end of 1987. The rise
in net exports remained critical to sustaining
growth. In response to the increased competi-
Record of Policy Actions of the FOMC
tiveness of U.S. goods, growth in exports was
expected to continue to boost demands on domestic production and growth of imports was
anticipated to slow. Gross domestic purchases
were expected to be sluggish, reflecting in part
the effects of a less expansive fiscal policy and
the influence of rising import prices on real
income growth and consumption. Business
equipment spending was projected to resume a
moderate uptrend; however, construction of single-family homes was expected to edge down
from the current pace, and activity in office
building and multifamily housing could weaken
substantially in response to overbuilding of such
structures in many areas and the effects of the
new tax law. Inflation was likely to pick up,
reflecting the effects of the recent rebound of
crude oil prices as well as the projected acceleration of import prices. However, remaining margins of slack in product and labor markets were
expected to limit overall inflationary pressures.
In their discussion of the economic situation
and outlook, Committee members generally
agreed that recent developments on the whole
were consistent with continuing expansion at a
moderate pace. Comments on business conditions in several parts of the country tended to
support a somewhat brighter picture than had
been reported at earlier meetings. Business confidence appeared to have improved in many
areas, buoyed by greater success in meeting
foreign competition. Overall, economic activity
seemed to have picked up in early 1987, though
the improvement was due importantly to a buildup of inventories. Domestic final demands were
expected to grow at a relatively slow pace over
the year, with business spending for equipment
and nonresidential construction likely to be retarding influences. Consumer spending on automobiles was mentioned as another potentially
weak area of the economy, and problems persisted in agriculture and energy. The members concluded as at previous meetings that the prospects
for sustaining a moderate rate of expansion
would depend to an important extent on the
achievement of significant gains in net exports.
The members saw encouraging signs that the
trade deficit was narrowing in real terms if not
yet in current dollar terms. Business contacts in
several parts of the country reported that the
593
dollar's depreciation was fostering growing demand for their products in export markets, although that experience was not shared by businesses in all areas. On the import side, many
domestic producers indicated an increased ability to compete with foreign goods. Nonetheless,
the outlook for foreign trade remained subject to
a great deal of uncertainty. Generally weak economic growth abroad was cited as a negative
factor. Members acknowledged that the dollar's
depreciation might help U.S. producers, but substantial further weakness in the dollar carried
considerable risks. A large additional decline
would tend to damp demands and economic
growth abroad, especially in the absence of stimulative policy actions in other major industrial
countries. It could lead to substantially greater
inflationary pressures in the United States, with
adverse impacts on credit markets. While a few
members were of the view that the dollar sooner
or later might need to decline somewhat further
to correct the nation's trade imbalance—and
such a decline should be accepted if it occurred—most expressed concern about the implications of continuing dollar depreciation under
prevailing circumstances.
Members already were anticipating that the
earlier depreciation of the dollar along with the
rebound in energy prices would be reflected in a
somewhat higher rate of inflation this year.
Tending to support that view were indications in
some parts of the country that prices of a number
of products and services were rising somewhat
more rapidly than earlier. Nevertheless, the still
ample availability of production resources in
most industries and continuing competition from
abroad were viewed as likely to limit price increases, assuming the absence of a substantial
further drop in the dollar. It also was noted that
recent labor contract settlements were generally
favorable in terms of their impact on business
costs.
At its meeting in February the Committee had
agreed on policy objectives that called for monetary growth ranges for the period from the fourth
quarter of 1986 to the fourth quarter of 1987 of
5VI to 8'/2 percent for both M2 and M3. The
associated range for growth in total domestic
nonfinancial debt was set at 8 to 11 percent. The
Committee anticipated that growth in Ml would
594
Federal Reserve Bulletin • July 1987
slow in 1987 from its very rapid pace in 1986, but
the members decided not to establish a numerical
target for the year; instead, the appropriateness
of Ml changes would be evaluated during the
year in the light of the behavior of Ml velocity,
developments in the economy and financial markets, and the nature of emerging price pressures.
In their discussion at this meeting, Committee
members agreed that domestic business and financial conditions and growth of the monetary
aggregates did not call for any change in the
current degree of pressure on reserve positions,
at least at the start of the intermeeting period.
With regard to the weeks ahead, a number of
members noted that, while other developments
in the economy and financial markets would
need to be taken into account, continuing weakness in the dollar would suggest the possibility
that some limited adjustment in policy implementation in a firming direction would be appropriate.
In the course of the Committee's discussion, a
good deal of attention was devoted to the implications for policy of the currently strong downward pressure on the dollar in foreign exchange
markets. Members agreed that the conduct of
open market operations needed to be especially
sensitive to any tendency for the dollar to weaken significantly further. Some commented that,
within the framework of basically unchanged
conditions of reserve availability, open market
operations should be conducted with special
caution to minimize unintended market impacts
at times when the dollar was under particular
downward pressure. Several also indicated that
if pressures increased enough so that intervention in the foreign exchange markets was not
effective in stabilizing the dollar, policy implementation might need to be adjusted to reduce
reserve availability somewhat during the intermeeting period. In appraising the need for some
firming, the Committee would be mindful of the
adverse effects that a further slide in the dollar
could have on domestic interest rates, on inflation expectations, and on the economy more
generally over the longer run. The members also
recognized that the problem was multilateral in
nature and that the effectiveness of any policy
steps in the United States would be greatly
enhanced by complementary actions abroad.
There was some divergence of views regarding
the circumstances under which any tendency for
the dollar to fall appreciably further should be
resisted through a reduced availability of reserves. Some members emphasized the desirability of relatively prompt, if limited, action to
enhance the prospects for more stable exchange
rates and also to reduce the need for stronger
measures in the future. If successful, that approach would minimize the rise in domestic
inflation and interest rates over time and perhaps
facilitate a reversal of interest rates. One member noted that the success of such an approach in
stabilizing the dollar might be realized more
promptly and certainly if the markets were alerted to any firming action the Federal Reserve
might undertake. Some other members preferred
to move with relative caution, if at all, in countering any further weakening in the dollar. These
members acknowledged that failure to arrest a
considerable further decline in the dollar might
result in substantial upward pressures on longerterm domestic interest rates, especially given
current market anxieties. At the same time, they
stressed the uncertainties surrounding the relationship between U.S. interest rates and the
behavior of the dollar and also the negative
impact that a firmer policy could have on a
possibly fragile economic expansion, not only in
the United States but around the world.
With regard to the monetary aggregates, the
members generally viewed the recent slowdown
in monetary growth as a welcome development
in light of the previously rapid expansion over an
extended period. In their assessment of the outlook for the months immediately ahead, the
members took account of an analysis, which
suggested some acceleration in the growth of M2
and M3 to rates approximating the expansion in
nominal income if interest rates remained around
current levels. Most of the members felt that
more restrained monetary growth would be acceptable, especially if it occurred against the
background of further downward pressures on
the dollar. While continued slow money growth
that held the broad aggregates below the lower
ends of their long-run ranges could be a basis for
concern, some shortfall in the growth of M2 and
M3 would not seem to call for a more generous
provision of reserves in the period immediately
Record of Policy Actions of the FOMC
ahead, given the earlier monetary expansion,
continuing moderate growth of the economy, and
weakness of the dollar in foreign exchange markets. On the other hand, the members would not
welcome a resumption of relatively rapid growth
under current conditions. Some members suggested that the Committee specify rates of acceptable growth of around 6 percent for M2 and
M3 from March to June. Other members, reflecting the Committee's discussion that some shortfall in monetary growth would be of less concern
than an overshoot under current circumstances,
suggested various ranges of growth for the
broader aggregates, with the ranges extending
further below than above 6 percent. All the
members were able to accept a specification of 6
percent or less on the understanding that the
Committee would need to reconsider its stance
should monetary growth be extremely weak,
especially in the context of a more sluggish
economy than was currently anticipated.
At the conclusion of the Committee's discussion, all of the members indicated that they
favored or could accept a directive that called for
no change in the degree of pressure on reserve
positions in the immediate future. There was a
consensus in favor of allowing for possible limited adjustments during the intermeeting period
toward some firming of reserve conditions, with
excessive weakness in the dollar recognized as
the potential development most likely to make
such an adjustment appropriate. In particular,
the members agreed that somewhat greater reserve restraint might be acceptable depending on
the performance of the dollar in foreign exchange
markets, but also taking into account the behavior of the monetary aggregates, the strength of
the business expansion, progress against inflation, and conditions in credit markets. This approach to policy implementation was expected to
be consistent with growth in M2 and M3 at
annual rates of around 6 percent or less over the
three-month period from March to June. Over
the same period growth in Ml was expected to
remain substantially below its pace in 1986.
Because the behavior of Ml remained subject to
unusual uncertainty, the Committee decided to
continue its practice of not specifying a numerical expectation for its growth. The members
agreed that the intermeeting range for the federal
595
funds rate, which provides a mechanism for
initiating consultation of the Committee when its
boundaries are persistently exceeded, should be
left unchanged at 4 to 8 percent.
At the conclusion of the meeting, the following
domestic policy directive was issued to the Federal Reserve Bank of New York:
The information reviewed at this meeting suggests
on balance that economic activity has been expanding
at a faster pace than in the fourth quarter, with output
apparently strengthened by a rebuilding of business
inventories and some improvement in foreign trade.
Total nonfarm payroll employment rose strongly again
in February. The civilian unemployment rate remained
at 6.7 percent for the third consecutive month. Industrial production also increased appreciably further in
February. Total retail sales have continued to fluctuate substantially from month to month, largely reflecting the uneven pattern of automobile sales, but on
balance overall consumer spending has been relatively
flat over the past several months. Housing starts
strengthened further in February after rising in December and January to their highest level since late
spring. Business capital spending appears to have
weakened in early 1987. Consumer and producer
prices rose more rapidly in early 1987, primarily
reflecting sizable increases in energy prices. Labor
cost increases have remained relatively moderate in
recent months.
Growth of M2 and M3 has slowed substantially from
the pace in December and January, and for 1987 to
date expansion of these two aggregates appears to
have been around the lower ends of their respective
ranges established by the Committee for the year.
Growth of Ml, after moderating in January from an
exceptionally rapid pace in late 1986, also has slowed
markedly further. Expansion in total domestic nonfinancial debt appears to have moderated appreciably
since year-end. Interest rates generally have fluctuated in a relatively narrow range since the February 1011 meeting of the Committee, although they have
firmed somewhat recently. At a meeting in the latter
part of February, the Finance Ministers and Central
Bank Governors of major industrial countries agreed
to cooperate closely to foster stability of exchange
rates around then-current levels. However, after midMarch, the trade-weighted value of the dollar against
the other G-10 currencies declined further on balance,
including a sizable decline against the yen.
The Federal Open Market Committee seeks monetary and financial conditions that will foster reasonable
price stability over time, promote growth in output on
a sustainable basis, and contribute to an improved
pattern of international transactions. In furtherance of
these objectives the Committee at its February meeting established growth ranges of 5l/z to 8V2 percent for
both M2 and M3, measured from the fourth quarter of
596
Federal Reserve Bulletin • July 1987
1986 to the fourth quarter of 1987. The associated
range for growth in total domestic nonfinancial debt
was set at 8 to 11 percent for 1987.
With respect to M l , the Committee recognized that,
based on experience, the behavior of that aggregate
must be judged in the light of other evidence relating to
economic activity and prices; fluctuations in Ml have
become much more sensitive in recent years to
changes in interest rates, among other factors. During
1987, the Committee anticipates that growth in Ml
should slow. However, in the light of its sensitivity to
a variety of influences, the Committee decided at the
February meeting not to establish a precise target for
its growth over the year as a whole. Instead, the
appropriateness of changes in Ml during the course of
the year will be evaluated in the light of the behavior of
its velocity, developments in the economy and financial markets, and the nature of emerging price pressures.
In that connection, the Committee believes that,
particularly in the light of the extraordinary expansion
of this aggregate in recent years, much slower monetary growth would be appropriate in the context of
continuing economic expansion accompanied by signs
of intensifying price pressures, perhaps related to
significant weakness of the dollar in exchange markets, and relatively strong growth in the broad monetary aggregates. Conversely, continuing sizable increases in Ml
could be accommodated in
circumstances characterized by sluggish business activity, maintenance of progress toward underlying
price stability, and progress toward international equilibrium. As this implies, the Committee in reaching
operational decisions during the year, might target
appropriate growth in Ml from time to time in the light
of circumstances then prevailing, including the rate of
growth of the broader aggregates.
In the implementation of policy for the immediate
future, the Committee seeks to maintain the existing
degree of pressure on reserve positions. Somewhat
greater reserve restraint might be acceptable depending on developments in foreign exchange markets,
taking into account the behavior of the aggregates, the
strength of the business expansion, progress against
inflation, and conditions in credit markets. This approach is expected to be consistent with growth in M2
and M3 over the period from March through June at
annual rates of around 6 percent or less. Growth in Ml
is expected to remain substantially below its pace in
1986. The Chairman may call for Committee consultation if it appears to the Manager for Domestic Operations that reserve conditions during the period before
the next meeting are likely to be associated with a
federal funds rate persistently outside a range of 4 to 8
percent.
Votes for this action: Messrs. Volcker, Corrigan,
Angell, Boehne, Boykin, Heller, Johnson, Keehn,
Ms. Seger, and Mr. Stern. Votes against this action: None.
2. Authorization
for Domestic
Market
Operations
Open
Effective April 22, 1987, the Committee approved a temporary increase of $3 billion, to $9
billion, in the limit between Committee meetings
on changes in System Account holdings of U.S.
government and federal agency securities specified in paragraph 1(a) of the Authorization for
Domestic Open Market Operations. Subsequently, effective May 6, 1987, the Committee approved a further increase of $2 billion, to $11
billion, in the intermeeting limit. These increases
were effective for the remainder of the intermeeting period ending with the close of business on
May 19, 1987.
Votes for the April 22 action: Messrs. Volcker,
Corrigan, Angell, Boehne, Boykin,
Heller,
Johnson, Keehn, Ms. Seger, and Mr. Stern. Votes
against this action: None.
Votes for the May 6 action: Messrs. Volcker,
Corrigan, Angell, Boehne, Boykin,
Heller,
Johnson, Keehn, and Ms. Seger. Votes against this
action: None. Absent and not voting: Mr. Stern.
The increases were approved on the recommendation of the Manager for Domestic Operations. The Manager had advised on April 22 that
outright purchases of securities in the intermeeting interval through April 21 had reduced the
leeway under the usual $6 billion limit to about
$1^4 billion. On May 6, the Manager advised that
the leeway had been reduced under the April 22
ceiling to a little over $100 million. Additional
purchases of securities in excess of these
leeways were necessary chiefly because of unusually steep increases in Treasury balances at
the Federal Reserve Banks.
597
Legal Developments
ORDERS ISSUED UNDER BANK HOLDING
COMPANY ACT, BANK MERGER ACT, BANK
SERVICE CORPORATION ACT, AND FEDERAL
RESERVE ACT
Orders Issued Under Section 3 of the Bank
Holding Company Act
Banks of Iowa, Inc.
Des Moines, Iowa
Order Approving
Acquisition
of a Bank
Banks of Iowa, Inc., Des Moines, Iowa, a bank
holding company within the meaning of the Bank
Holding Company Act (12 U.S.C. § 1841 et seq.)
("Act"), has applied for the Board's approval under
section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to
acquire Central Trust and Savings Bank ("Bank"),
Eldridge, Iowa.
Notice of the application, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act. The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3(c) of
the Act.
Applicant, the second largest commercial banking
organization in Iowa, controls 14 banks with deposits
of $1.77 billion, 1 representing 7.2 percent of total
deposits in commercial banking organizations in the
state. Bank, the 146th largest commercial banking
organization in the state, controls deposits of $45.4
million, representing 0.18 percent of total deposits in
commercial banking organizations in the state. Upon
consummation of this proposal, Applicant would remain the second largest commercial banking organization in Iowa, controlling deposits of $1.8 billion,
representing 7.38 percent of the total deposits in
commercial banking organizations in the state. Consummation of this proposal would not have any significant adverse effect upon the concentration of banking
resources in Iowa.
1. All banking data are as of December 31, 1985.
Applicant and Bank compete in the Davenport/Rock
Island banking market. 2 Applicant is the fourth largest
of 13 banking organizations in the market, controlling
$73.2 million in deposits, representing 5.7 percent of
the total deposits in commercial banking organizations
in the market. Bank is the seventh largest commercial
banking organization in the market, controlling deposits of $45.4 million, representing 3.5 percent of the
total deposits in commercial banking organizations in
the market. Upon consummation of the proposal,
Applicant will become the third largest commercial
banking organization in the market, with deposits of
$118.6 million, representing 9.2 percent of the total
deposits in commercial banking organizations in the
market.
The Davenport/Rock Island banking market is considered to be highly concentrated, with a HerfindahlHirschman Index ("HHI") of 3355. Upon consummation of the proposal, however, the HHI would increase
by only 40 points to 3395, and this acquisition would
not be subject to challenge by the Department of
Justice under its merger guidelines. 3 In view of the
small increase in market concentration and other facts
of record, the Board concludes that consummation of
this proposal is not likely to have any significant
adverse effect on existing competition in the Davenport/Rock Island banking market.
The financial and managerial resources of Applicant
and its banking subsidiaries are consistent with approval. Moreover, the Board has considered the fact
that Bank has experienced some financial difficulties
and consummation of this proposal will improve the
prospects of Bank by providing Bank with the financial and managerial resources to continue to serve the
2. The Davenport/Rock Island banking market is approximated by
Scott County and Farmington Township in Cedar County, Iowa; and
Rock Island County (except Drury and Buffalo Prarie Townships),
and Colona, Edford, Genesco, Hanna and Western Townships of
Henry County, Illinois.
3. Under the revised Department of Justice Merger Guidelines
(49 Federal Register 26,823 (June 29, 1984)), a market in which the
post-merger HHI is above 1800 is considered highly concentrated. In
such markets, the Department is likely to challenge a merger that
increases the HHI by more than 50 points. The Department has
informed the Board that a bank merger or acquisition generally will
not be challenged (in the absence of other factors indicating anticompetitive effects) unless the post-merger HHI is at least 1800 and the
merger increases the HHI by at least 200 points.
598
Federal Reserve Bulletin • July 1987
convenience and needs of the community. Considerations related to the convenience and needs of the
communities to be served also are consistent with
approval of the transaction.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The transaction shall not be
consummated before the thirtieth day following the
effective date of this Order, or later than three months
after the effective date of this Order, unless such
period is extended for good cause by the Board or by
the Federal Reserve Bank of Chicago, pursuant to
delegated authority.
By order of the Board of Governors, effective
May 26, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
CNB Bancorp, Inc.
Danville, Illinois
Order Approving Formation of a Bank Holding
Company
CNB Bancorp, Inc., Danville, Illinois, has applied for
the Board's approval under section 3 of the Bank
Holding Company Act of 1956, as amended ("Act")
(12 U.S.C. § 1841 et seq.), to acquire the City National Bank of Hoopeston, Hoopeston, Illinois ("Bank"),
and thereby to become a bank holding company.
Notice of the application, affording an opportunity
for interested persons to submit comments, has been
given in accordance with section 3(b) of the Act
(52 Federal Register 41,434 (1986)). The time for filing
comments has expired and the Board has considered
the application and all comments received, including a
protest submitted by the Lake Shore National Bank,
Danville, Illinois ("Protestant"), 1 in light of the fac-
1. Protestant, a competitor of Bank in the local banking market,
alleges in pertinent part that Applicant's proposal would have a
significantly adverse effect on competition in view of the numerous
existing providers of financial services; that Applicant has failed to
demonstrate how the proposal would serve the needs of the Danville
and Hoopeston, Illinois communities; that Applicant's principals
failed to rent to Protestant space in a shopping mall owned by the
principals; and that Applicant has failed to demonstrate that it has the
financial and managerial resources to serve as a source of strength to
Bank. The Board has carefully reviewed Protestant's comments,
Applicant's responses thereto, and all the facts of record, and has
concluded that financial, managerial and competitive factors, as well
as convenience and needs considerations, are consistent with approval of the application.
tors set forth in section 3(c) of the Act (12 U.S.C.
§ 1842(c)).
Applicant is a non-operating corporation formed for
the purpose of acquiring Bank. Bank is among the
smaller banking organizations in the state, 2 with total
domestic deposits of $40.6 million, representing less
than one percent of total deposits in commercial
banking organizations in the state. Consummation of
this proposal would not result in a concentration of
banking resources or in any significant adverse competitive effects in the state.
Bank operates in the Watseka, Illinois banking
market,3 where it is the 2nd largest commercial banking organization, controlling 11.3 percent of total deposits in commercial banking organizations in the
state. None of the principals of Applicant or Bank is
associated with any other financial institution located
within the relevant banking market. Accordingly, consummation of this transaction would not result in a
concentration of banking resources or in significant
adverse competitive effects in the relevant geographic
area.4 Competitive factors, therefore, are consistent
with approval of the application.
The Board has previously indicated that a bank
holding company should serve as a source of financial
and managerial strength for its subsidiary bank. Although Applicant will incur debt in connection with
this proposal, it appears that Applicant will be able to
service its debt and serve as a source of financial and
managerial strength to Bank, particularly in light of
certain commitments by Applicant's principals. Accordingly, the Board concludes that the financial and
managerial resources of Applicant and Bank are consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. The transaction shall not be
consummated before the thirtieth calendar day following the effective date of this Order or later than three
Protestant also has requested that a public meeting be held on this
application pursuant to section 262.25(d) of Regulation Y, 12 C.F.R.
§ 262.25(d). The Foard has carefully reviewed the issues raised by the
Protestant in light of the record before it, and has concluded that no
additional clarification of the issues presented therein is necessary for
the Board's disposition of this matter. The Board therefore concludes
that a public meeting would serve no useful purpose. Accordingly, the
request for a public meeting is denied.
2. Banking data are as of December 31, 1985.
3. The Watseka banking market includes all of Iroquois County,
Illinois, as well as Butler and Grant Townships in Vermilion County,
Illinois.
4. Upon consummation of the proposed transaction, Applicant
intends to apply to the Comptroller of the Currency for approval to
move Bank's main office a distance of 25 miles from its current
location in Hoopeston, Illinois, to Danville, Illinois, which also is
located within the Watseka banking market. Bank would be maintained as a separate facility and there would be no decrease in existing
banking services in the market.
Legal Developments
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Chicago, acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 6, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
Comerica Incorporated
Detroit, Michigan
Order Approving
Acquisition
of a Bank
Comerica Incorporated, Detroit, Michigan, a bank
holding company within the meaning of the Bank
Holding Company Act ("Act"), 12 U.S.C. § 1841
et seq., has applied pursuant to section 3(a)(3) of the
Act, 12 U.S.C. § 1843(a)(3) to acquire between 25.77
percent and 100 percent of the shares of the successor
by merger to MetroBanc, Federal Savings Bank,
Grand Rapids, Michigan ("Bank").
Notice of the application, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act,
51 Federal Register 45,177 (1986). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act.
Bank is a federal savings bank, the accounts of
which are insured by the Federal Savings and Loan
Insurance Corporation ("FSLIC"). Bank has adopted
a conversion plan by which it will convert to a state
chartered, federally insured savings bank and then will
convert to a national bank. Applicant proposes to
establish an interim national bank which will acquire
by merger the national bank into which Bank will be
converted.
Since Bank, at the time of acquisition by Applicant,
will be a national bank that will continue to accept
demand deposits and make commercial loans, Bank is
a "bank" for purposes of the Act, and Applicant
properly has applied to acquire Bank under section 3
of the Act, which governs the acquisition of banks by
bank holding companies.
Applicant, with deposits of $7.8 billion,1 is the
second largest commercial banking organization in
1. Market data are as of December 31, 1985. State data are as of
June 30, 1985.
599
Michigan, controlling 13.6 percent of the total deposits
of commercial banking organizations in the state.
After conversion Bank will control deposits of $281.7
million, representing 0.5 percent of the total deposits
in commercial banking organizations in the state.
Upon consummation of this proposal, Applicant will
continue to be the second largest commercial banking
organization in Michigan and control deposits of $8.1
billion, representing 14.1 percent of total deposits in
commercial banking organizations in the state. Consummation of this proposal would not have any significant adverse effect upon the concentration of banking
resources in the state.
Applicant competes directly with Bank in the Grand
Rapids banking market. 2 Applicant is the ninth largest
of 17 commercial banking organizations, with total
deposits of $52.5 million, representing 1.4 percent of
total deposits in commercial banks in the market.
Upon conversion Bank will be the fourth largest
commercial banking organization in the market, with
total deposits of $281.7 million, representing 7.6 percent of total deposits in commercial banking organizations in the market. After consummation of this proposal, Applicant would become the fourth largest
commercial banking organization and control 9.0 percent of total deposits in commercial banking organizations in the market. The share of deposits held by the
four largest commercial banking organizations in the
market would be 85.5 percent and the HerfindahlHirschman Index ("HHI") would increase by 21
points to 2494. 3
Although consummation of the proposal would eliminate some existing competition between Applicant
and Bank in the Grand Rapids banking market, numerous other commercial banking organizations would
remain as competitors in the market. Moreover, the
conversion of MetroBanc to a national bank introduces another full service competitor into the market.
Based upon the above considerations, the Board concludes that consummation of the proposal is not likely
2. The Grand Rapids banking market is approximated by Kent
County, except for Oakfield and Spencer townships; Thornapple
township in Barry County; Casnovia township in Muskegon County;
Salem, Dorr and Leighton townships in Allegan County; and Jamestown, Georgetown, Blendon, Allendale, Tallmadge, Polkton, Wright,
and Chester townships in Ottawa County, Michigan.
3. Under the revised Department of Justice Merger Guidelines (49
Federal Register 26,823 (June 29, 1984)), any market in which the
post-merger HHI is over 1800 is considered highly concentrated, and
the Department is likely to challenge a merger that increases the HHI
by more than 50 points unless other factors indicate that the merger
will not substantially lessen competition. The Department of Justice
has informed the Board that a bank merger or acquisition generally
will not be challenged (in the absence of other factors indicating an
anticompetitive effect) unless the post-merger HHI is at least 1800 and
the merger increases the HHI by at least 200 points.
600
Federal Reserve Bulletin • July 1987
to substantially lessen competition in the Grand Rapids banking market.
Based upon a review of all of the facts of record, the
Board has determined that the financial and managerial resources of Applicant and MetroBanc are consistent with approval. In its evaluation of Applicant's
managerial resources, the Board has considered certain violations by Applicant's lead bank, Comerica
Bank, Detroit, Michigan, of the Currency and Foreign
Transactions Reporting Act ("CFTRA") and the regulations thereunder. 4 With regard to CFTRA violations,
the Board notes that Applicant has cooperated with
law enforcement agencies and has taken remedial
action designed to correct violations and prevent their
recurrence. The sufficiency of Applicant's compliance
procedures has been reviewed by examiners from the
Office of the Comptroller of the Currency and the
Federal Reserve Bank of Chicago, and the Bank has
consulted with appropriate enforcement agencies.
For the foregoing reasons, the Board concludes that
the managerial resources of Applicant and its subsidiary banks are consistent with approval. Considerations relating to the convenience and needs of the
communities to be served are also consistent with
approval of the proposal.
The Board notes that this application involves the
acquisition of a bank that results from a conversion of
a non-failing FSLIC-insured federal savings bank. The
acquisition proposed here, however, does not fall
within the scope of the Board's policy and rulings
regarding acquisitions of thrift institutions under section 4 of the Act 5 or the provisions of the 1982 Garn-St
Germain Depository Institutions Act regarding acquisitions of thrift institutions. Bank, when acquired by
Applicant, will be a national bank chartered by the
Office of the Comptroller of the Currency. Bank will
function as a commercial bank, accepting demand
deposits and engaging in commercial lending, and will
be subject to all the banking standards of the Bank
Holding Company Act.
The Board expects that Applicant will comply with
all state and federal requirements necessary for consummation of the acquisition, and the Board's approval of this application under the Act is not intended to
preempt any such requirements. 6 The Board has previously stated that its approval of transactions under
section 3 of the Act does not relieve an applicant or the
bank involved of the responsibility to obtain approval
4. 31 U . S . C . § 5311 et seq.; 31 C . F . R . § 103.
5. D.H. Baldwin
Company,
6 3 FEDERAL RESERVE BULLETIN 2 8 0
(1977).
6. The Board may not approve an application that would result in a
violation of federal or state law. Whitney National Bank v. Bank of
New Orleans, 379 U.S. 411 (1964).
under other federal or state laws and regulations and
does not shield an applicant from the consequences of
violations of other laws. 7
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. This transaction shall not be
consummated before the thirtieth calendar day following the effective date of this Order, or later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Chicago, acting pursuant to delegated authority.
By order of the Board of Governors, effective
May 4, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Angell, and Heller. Abstaining from this action:
Governor Seger.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
First Chicago Corporation
Chicago, Illinois
Order Approving Acquisition
of a Bank
First Chicago Corporation, Chicago, Illinois, a bank
holding company within the meaning of the Bank
Holding Company Act (12 U.S.C. § 1841 et seq.) (the
"Act"), has applied for the Board's approval under
section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to
acquire all the voting shares of Beneficial National
Bank USA, Wilmington, Delaware ("Beneficial"), a
limited-purpose national bank that engages in credit
card operations.
Notice of the application, affording opportunity for
interested persons to submit comments, has been
published (52 Federal Register 15,381 (1987)). The
time for filing comments has expired, and the Board
has considered the application and all comments received in light of the factors set forth in section 3 of the
Act.
Applicant is the largest commercial banking organization in Illinois, operating 10 subsidiary banks with
total deposits of $27 billion.1 Beneficial is a national
banking association chartered in 1983 by the Comp-
7. Crocker National Corporation, 66 FEDERAL RESERVE BULLETIN
66 (1980); Royal Trust Company, 37 Federal Register 18,414, 18,415
(1972).
1. Banking data are as of December 31, 1986.
Legal Developments
troller of the Currency. Beneficial is engaged primarily
in the extension of credit by means of the issuance of
Visa and MasterCard credit cards. Beneficial also
accepts time deposit accounts in the form of certificates of deposit, but it does not accept demand deposits. Because of the limited scope of Beneficial's activities, the proposed transaction would have no
significant effect on the concentration of banking resources in Delaware.
Section 3(d) of the Act (12 U.S.C. § 1842(d)), the
Douglas Amendment, prohibits the Board from approving an application by a bank holding company to
acquire control of any bank located outside of the bank
holding company's home state unless the acquisition is
"specifically authorized by the statute laws of the
state in which such bank is located, by language to that
effect and not merely by implication." 2 As of May 18,
1987, the statute laws of Delaware authorize the
acquisition by an out-of-state bank holding company
of an existing bank that satisfies the requirements of
section 803, Title 5, of the Delaware Code. 3 The
Delaware Commissioner of Banks has notified the
Board that he has approved the acquisition.
Based on the foregoing, the Board has determined
that the proposed acquisition is specifically authorized
by the statute laws of Delaware and thus Board
approval is not prohibited by the Douglas Amendment.
Applicant operates subsidiaries that compete with
Beneficial in the provision of credit card services.
Applicant controls approximately 3.9 percent of the
market for bank revolving credit cards and Beneficial
controls approximately 1.2 percent of the market.4
The market for such services is nationwide, and there
are numerous existing and potential competitors in the
market. Accordingly, consummation of this proposal
would not result in a substantial lessening of competition in any relevant market.
The financial and managerial resources of Applicant
and Beneficial are consistent with approval of the
proposal. Considerations relating to the convenience
and needs of the communities to be served also are
consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that the application under section 3 of the Act should be and hereby is approved.
The acquisition of Beneficial shall not be consummat-
2. A bank holding company's home state is the state in which the
operations of the bank holding company's subsidiary banks were
principally conducted on July 1, 1966, or the date on which the
company became a bank holding company, whichever is later.
3. Del. Am. S.B. No. 109 § 160(3) (May 18, 1987); Del. Code Ann.
tit. 5 § 803 (1985).
4. Data are as of June 30, 1986, and are based on bank credit card
and check credit receivables.
601
ed before the thirtieth day following the effective date
of this Order, or later than 90 days after the effective
date of this Order, unless such period is extended for
good cause by the Board or by the Federal Reserve
Bank of Chicago, pursuant to delegated authority.
By order of the Board of Governors, effective
May 26, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
Norstar Bancorp, Inc.
Albany, New York
Order Approving Acquisition
of a Bank
Norstar Bancorp, Inc., Albany, New York, a bank
holding company within the meaning of the Bank
Holding Company Act (12 U.S.C. § 1841 et seq.) (the
"Act"), has applied for the Board's approval under
section 3(a)(3) of the Act (12 U.S.C. § 1842(a)(3)) to
acquire all of the voting shares of Syracuse Savings
Bank, Syracuse, New York, a stock savings bank
("Bank"). Bank presently operates as a mutual association and will convert to stock form in order to effect
the acquisition.
Notice of the application, affording an opportunity
for interested persons to submit comments, has been
published (52 Federal Register 8,967 (1987)). The time
for filing comments has expired, and the Board has
considered the application and all comments received
in light of the factors set forth in section 3(c) of the Act
(12 U.S.C. § 1842(c)).
The Board previously has determined that a state
savings bank is a "bank" under section 2(c) of the Act
if it accepts demand deposits, engages in the business
of making commercial loans, and is not covered by the
exemption created by the Garn-St Germain Depository Institutions Act of 1982 for thrift institutions
insured by the Federal Savings and Loan Insurance
Corporation ("FSLIC") or is not operating under a
charter by the Federal Home Loan Bank Board. 1 Bank
1. Excel
Bancorp,
Inc.,
72 FEDERAL RESERVE BULLETIN 731
( 1 9 8 6 ) ; First Fidelity
Bancorporation,
72 FEDERAL RESERVE BULLETIN 4 8 7 (1986); BankVermont
Corporation,
7 0 FEDERAL RESERVE
BULLETIN 8 2 9 ( 1 9 8 4 ) ; The Frankford
Corporation,
7 0 FEDERAL
RESERVE BULLETIN 6 5 4 ( 1 9 8 4 ) ; The One Bancorp,
7 0 FEDERAL
RESERVE BULLETIN 3 5 9 ( 1 9 8 4 ) ; First NH Banks,
Inc., 6 9 FEDERAL
RESERVE BULLETIN 874 (1983); Amoskeag
FEDERAL RESERVE BULLETIN 8 6 0 ( 1 9 8 3 ) .
Bank Shares, Inc., 69
602
Federal Reserve Bulletin • July 1987
will accept deposits and engage in the business of
making commercial loans, and its deposits will not be
insured by the FSLIC. Accordingly, Bank will be a
"bank" for purposes of the Act. The application
therefore has been considered in light of the requirements of section 3 of the Act pertaining to the acquisition of banks.
Applicant is the tenth largest commercial banking
organization in New York, with deposits of approximately $8.3 billion, controlling 3.3 percent of the total
deposits in commercial banking organizations in the
state. 2 Bank is the twenty-fourth largest commercial
banking organization in New York, with approximately $1.1 billion in deposits, controlling 0.4 percent of the
total deposits in commercial banking organizations in
New York. Upon consummation of this proposal,
Applicant would remain the tenth largest commercial
banking organization in New York. Consummation of
this proposal would not have a significant effect on the
concentration of banking resources in New York.
Both Applicant and Bank operate in the Syracuse
and Elmira-Corning banking markets. 3
Applicant is the sixth largest of 15 commercial
banking organizations in the Syracuse banking market,
with 3.4 percent of the total deposits in commercial
banking organizations in the market. Bank is the
largest commercial banking organization in the Syracuse banking market, with 30.2 percent of the total
deposits in commercial banking organizations in the
market. Upon consummation of the transaction, Applicant will become the largest commercial banking
organization in the market, with 33.6 percent of the
total deposits in commercial banking organizations in
the market. The market is highly concentrated, with a
Herfindahl-Hirschman Index ("HHI") of 1836, and
the proposed acquisition will increase the HHI by 202
points.
Although consummation of this proposal would
eliminate some existing competition between Applicant and Bank in the Syracuse banking market, certain
facts of record mitigate the adverse competitive effect
of the proposal in this market. Numerous other commercial banking organizations would continue to operate in the market after consummation of the proposal.
Moreover, the Board has considered as an extenuating
2. State deposit data are as of December 31, 1986. Market deposit
data are as of June 30, 1985.
3. The Syracuse banking market is approximated by all of Cayuga,
Onondaga, and Oswego Counties, and parts of Cortland and Madison
Counties. The Elmira-Corning banking market is approximated by all
of Chemung County and parts of Allegany, Schuyler, and Steuben
Counties.
factor in its evaluation of the competitive effects of this
proposal Bank's deteriorating financial condition and
that consummation of this proposal will provide it with
the financial and managerial resources to continue to
serve the convenience and needs of the community.
In addition, the Board has considered the presence
of thrift institutions in the Syracuse market. The Board
previously has indicated that thrift institutions have
become, or have the potential to become, major competitors of commercial banks. 4 Thrift institutions already exert a considerable competitive influence in the
market by providing a wide array of deposit and
lending services to consumer and commercial customers. In view of these facts, the Board has concluded
that thrift institutions exert a significant competitive
influence that mitigates the anticompetitive effects of
this proposal in the Syracuse market. In accordance
with the Board's practice, the Board has included in
the calculation of market concentration 50 percent of
the deposits controlled by thrift institutions.
Taking into account all of these factors, the Board
notes that if 50 percent of deposits held by thrift
institutions in the Syracuse market were included in
the calculation of market concentration, Applicant
would be the eighth largest of 28 depository institutions in the market with 2.5 percent of the total
deposits in depository institutions in the market. Bank
would be the largest depository institution in the
market with 22.7 percent of the total deposits in
depository institutions in the market. Upon consummation of the transaction, Applicant would become
the largest depository institution in the market with
25.2 percent of the total deposits in depository institutions in the market. The market would be moderately
concentrated, with an HHI of 1185, and the proposed
acquisition would increase the HHI by 114 points to
1299. This market share and concentration ratio are
consistent with prior decisions by the Board involving
acquisitions of direct competitors.
Applicant is the third largest of 14 commercial
banking organizations in the Elmira-Corning banking
market, with 13.2 percent of the total deposits in
commercial banking organizations in the market. Bank
is the sixth largest commercial banking organization in
the Elmira-Corning banking market, with 5.8 percent
4. National City Corporation, 70 FEDERAL RESERVE BULLETIN 743
(1984); The Chase Manhattan Corporation, 70 FEDERAL RESERVE
BULLETIN 5 2 9 ( 1 9 8 4 ) ; NCNB
Bancorporation,
7 0 FEDERAL RESERVE
BULLETIN 225 (1984); General Bancshares Corporation, 69 FEDERAL
RESERVE BULLETIN 802 (1983); First Tennessee Corporation, 69
FEDERAL RESERVE BULLETIN 2 9 8 ( 1 9 8 3 ) .
Legal Developments
of the total deposits in commercial banking organizations in the market. Upon consummation of the transaction, Applicant will become the second largest commercial banking organization in the market, with 19.1
percent of the total deposits in commercial banking
organizations in the market. The market is moderately
concentrated, with an HHI of*1297, and the proposed
acquisition will increase the HHI by 154 points. Accordingly, the Board concludes that the acquisition
would have no significant adverse effect on existing
competition in the Elmira-Corning banking market.5
In the past, Bank has engaged in certain real estate
investment activities authorized by state law. Bank
has advised Applicant that it currently is not engaged
in these activities, and Applicant has committed that,
upon consummation, Bank will not engage, directly or
indirectly, in any real estate investment activities.
Bank engages, through a separate department, in the
sale and issuance of Savings Bank Life Insurance
("SBLI"). As required by New York law, the assets,
reserves and earnings of Bank's SBLI department are
held solely for the benefit of policyholders. These
holdings are segregated from all other assets, liabilities, obligations, and expenses of Bank. 6 Bank also
engages in certain insurance activities through a subsidiary. The subsidiary acts as an agent in selling
various types of insurance such as life insurance.
In connection with Applicant's proposal, the Independent Insurance Agents of America, Inc., the National Association of Casualty and Surety Agents, the
National Association of Surety Bond Producers, the
National Association of Life Underwriters, and the
National Association of Professional Insurance Agents
submitted comments protesting this application on the
grounds that the insurance activities conducted by
Bank are prohibited under the amendments to section
5. If deposits held by thrift institutions in the Elmira-Corning
market were included in the calculation of market concentration,
Applicant would be the third largest of 20 depository institutions in the
market with 10.5 percent of the total deposits in depository institutions in the market. Bank would be the ninth largest depository
institution in the market with 4.6 percent of the total deposits in
depository institutions in the market. Upon consummation of the
transaction, Applicant would become the second largest depository
institution in the market with 15.1 percent of the total deposits in
depository institutions in the market. The market would be unconcentrated, with an HHI of 931, and the proposed acquisition would
increase the HHI by 97 points, to 1028, which is a moderately
concentrated market.
6. If the claims upon Bank's SBLI department exceed the department's reserves, those claims are paid by the New York State SBLI
Fund.
603
4 of the Act, contained in the Garn-St Germain
Depository Institutions Act of 1982.7
In response to the protests and in order to expedite
consideration of the application, Applicant has agreed
that, within two years of consummation of its acquisition of Bank, Bank will divest or terminate its SBLI
activities, unless during such period Applicant receives approval pursuant to an application under section 4(c)(8) of the Act to retain such activities, or the
Board otherwise determines that these activities are
permissible under the Act when conducted directly by
subsidiary banks of bank holding companies.
Accordingly, and without resolving whether section
4 of the Act governs the SBLI activities conducted
directly by savings banks owned by bank holding
companies, the Board has determined to accept Applicant's commitment to divest or terminate such activities within two years of consummation of the proposal
unless during that period Applicant obtains a Board
determination that Bank may continue to conduct its
SBLI activities under the Act. The Board wishes to
emphasize that its action in this case does not constitute a decision by the Board on the merits of the issues
raised by Protestants.
In this regard, the Board notes that, even if the
Board were to conclude, as the Protestants claim, that
the insurance prohibitions of the Act apply to the
direct activities of Bank, the Board would, under the
circumstances of this case, allow the Applicant two
years to conform to the nonbanking provisions of the
Act. 8 The Board believes the two-year period to be
particularly appropriate in this case in light of the facts
that this acquisition will result in the recapitalization of
7. The National Association of Life Underwriters and the National
Association of Professional Insurance Agents have also requested that
the Board order a factual hearing to determine whether the application
complies with section 4(c)(8) of the Act. Although section 3(b) of the
Act does not require a formal hearing in this instance, the Board may,
in any case, order an informal or formal hearing. In light of the
commitments made by Applicant and other facts of record, the Board
has determined that a hearing would serve no useful purpose. Accordingly, the request for a hearing is denied.
8. Section 4(a)(2) of the Act (12 U.S.C. § 1843(a)(2)) expressly
provides that a company has two years from the date it becomes a
bank holding company to terminate any impermissible activities.
Although Applicant is an established bank holding company, the
Board has also allowed, in certain circumstances, already established
bank holding companies a similar two-year period to divest impermissible nonbanking activities acquired in connection with the acquisition
of a permissible activity. See, e.g. Saban S.A., 73 FEDERAL RESERVE
BULLETIN 359 (1987); Maryland National Corporation, 73 FEDERAL
RESERVE BULLETIN 311 (1987); Security Pacific Corporation, 72
FEDERAL RESERVE BULLETIN 8 0 0 , 8 0 2 n . 1 2 ( 1 9 8 6 ) ;
Citicorp!Quotron,
72 FEDERAL RESERVE BULLETIN 497, 500 (1986); Chase Manhattan
Corporation, 71 FEDERAL RESERVE BULLETIN 960 (1985); Baltimore
Bancorp, 71 FEDERAL RESERVE BULLETIN 901 (1985); Citicorp/First
Federal Savings & Loan, 70 FEDERAL RESERVE BULLETIN 149, 155
(1984).
604
Federal Reserve Bulletin • July 1987
Bank and that Bank has conducted this activity safely
and soundly pursuant to explicit state authorization for
over 40 years. In addition, the Board notes that an
immediate requirement for cessation of Bank's SBLI
activity could cause adverse consequences for other
institutions offering SBLI as well as the state-SBLI
financial guaranty fund. On this basis, and in view of
the special and historical relationship between savings
banks and the SBLI program, the Board has determined to grant the two-year divestiture period proffered by Applicant.
With regard to the Bank's remaining insurance
activities, Applicant has agreed that, within two years
of consummation of the acquisition, Bank will divest
or terminate the insurance activities of its subsidiary,
unless during such period Applicant receives approval
pursuant to an application under section 4(c)(8) of the
Act to retain such activities. During this two-year
period or unless authorization is granted pursuant to
the Act for broader activities, Bank will limit the
insurance activities of its subsidiary to renewal of
existing policies. 9
In evaluating this application, the Board has considered the financial and managerial resources of Applicant and the effect on those resources of the proposed
acquisition. In this regard, the Board has previously
stated that it expects organizations experiencing substantial growth internally and by acquisition, such as
Applicant, to maintain a strong capital position substantially above the minimum levels specified in the
Capital Adequacy Guidelines, without significant reliance on intangibles, particularly goodwill. 10 Although
the proposed transaction will result in the creation of a
substantial amount of intangible assets, Applicant's
tangible primary capital ratio is and will remain well
above the minimum level specified in the Guidelines.
In this connection, the Board notes that Applicant is
raising common equity to fund the proposed acquisition. With respect to Bank's financial resources, Applicant will inject a significant amount of capital into
Bank and maintain Bank's tangible primary capital
ratio above the Board's minimum Guidelines. Accordingly, the Board concludes that the financial and
managerial resources and future prospects of Applicant are satisfactory and consistent with approval.
Considerations relating to the convenience and
needs of the communities to be served also are consis-
9. See Standard
Chartered
PLC, 73 FEDERAL RESERVE BULLETIN
167 (1987).
10. Citicorp,
72 FEDERAL RESERVE BULLETIN 7 2 4 ; C a p i t a l A d e -
quacy Guidelines, 50 Federal Register 16,057, 16,066-67 (April 24,
1985), 71 FEDERAL RESERVE BULLETIN 445 (1985); National City
Corporation,
70 FEDERAL RESERVE BULLETIN 7 4 3 , 7 4 6 ( 1 9 8 4 ) .
tent with approval, particularly in light of the fact that
the acquisition will result in the recapitalization of
Bank and enable it to continue to provide services to
the public.
Based on the foregoing and other facts of record,
including the commitments made by Applicant, the
Board has determined that the application under section 3 of the Act should be and hereby is approved.
The acquisition of Bank shall not be consummated
before the fifth calendar day following the effective
date of this Order, or later than 90 days after the
effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of New York, pursuant to
delegated authority.
By order of the Board of Governors, effective
May 6, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
[SEAL!
Associate
Secretary
of the Board
United Missouri Bancshares, Inc.
Kansas City, Missouri
Order Approving Acquisition
Company and Banks
of a Bank Holding
United Missouri Bancshares, Inc., Kansas City, Missouri, a bank holding company within the meaning of
the Bank Holding Company Act ("Act"), 12 U.S.C.
§ 1841 et seq., has applied for the Board's approval
pursuant to section 3(a)(3) of the Act, to acquire 100
percent of the voting shares of FCB Corp. ("FCB"),
Collinsville, Illinois, and thereby indirectly to acquire
The First National Bank of Collinsville, Collinsville,
Illinois; First County Bank of Maryville, Maryville,
Illinois; and First State Bank of Morrisonville, Morrisonville, Illinois.
Notice of the application, affording interested persons an opportunity to submit comments, has been
given in accordance with section 3(b) of the Act
(51 Federal Register 44,379 (1986)). The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 3(c) of the Act.
The Board is prohibited by the Douglas Amendment
to the Act from approving any application by a bank
holding company to acquire directly or indirectly a
bank located outside the bank holding company's
home state, unless the state where the bank to be
acquired is located has specifically authorized the
acquisition "by language to that effect and not merely
Legal Developments
605
by implication." 12 U.S.C. § 1842(d). Applicant's
home state is Missouri. FCB and its subsidiary banks
are located in Illinois. The Board reviewed the regional reciprocal interstate banking statutes of Illinois and
Missouri1 in Landmark Bancshares Corp., Clayton,
Missouri, to acquire Mid America Bancsystem, Inc.,
Fairview Heights, Illinois, and determined that the
laws of Illinois and Missouri met the requirements of
the Douglas Amendment and that the acquisition of an
Illinois bank holding company and banks by a Missouri bank holding company was, therefore, permissible
under the Act. 2 Accordingly, the Board concludes that
the Douglas Amendment does not prohibit Board
approval of Applicant's acquisition of FCB and its
subsidiary banks.
consummation of this proposal. 5 Based upon the number of commercial banking organizations that would
remain in the market after consummation and the
small increase in Applicant's market share, the Board
concludes that consummation of this proposal is not
likely to substantially lessen competition in the St.
Louis banking market.
FCB's subsidiary bank, First State Bank of Morrisonville, operates in the Christian County banking
market.6 FCB is the 9th largest of 11 commercial
banking organizations in the market, with total deposits of $8.6 million, representing 2.6 percent of total
deposits in commercial banks in the market. Applicant
is not currently represented in the Christian County
banking market.
Applicant, with deposits of $2.8 billion, 3 is the 5th
largest banking organization in Missouri, controlling
6.5 percent of the total deposits in commercial banking
organizations in Missouri. FCB, with deposits of
$146.7 million, is the 102nd largest banking organization in Illinois, controlling 0.1 percent of the total
deposits in commercial banking organizations in Illinois. Consummation of this proposal will not have a
significant adverse effect on existing levels of concentration of state-wide banking resources in either Missouri or Illinois.
This market is not located within a Metropolitan
Statistical Area, and FCB is among the smaller firms in
the market. In addition, there are a significant number
of banking organizations in Illinois and those states
with which it has established reciprocal interstate
banking, including Missouri, which qualify as probable
future entrants into the Christian County banking
market. Based upon these and other facts of record,
the Board concludes that consummation of this proposal would not have a significant adverse effect on
probable future competition in the Christian County
banking market. Accordingly, based on all the facts of
record, the Board concludes that consummation of the
proposal would not have a significant adverse effect on
existing or probable future competition or significantly
increase the concentration of banking resources in any
relevant banking market.
Applicant's subsidiary banks compete directly with
FCB's subsidiary banks in the St. Louis banking
market.4 Applicant is the 9th largest of 72 commercial
banking organizations in the market, with total market
deposits of $340.1 million, representing 1.8 percent of
total deposits in commercial banks in the market. FCB
is the 17th largest commercial banking organization in
the market, with total market deposits of $138.1 million, representing 0.7 percent of total deposits in
commercial banks in the market. Upon consummation
of this proposal, Applicant will become the 8th largest
commercial banking organization in the market, controlling deposits of $478.2 million, representing 2.5
percent of total deposits in commercial banks in the
market.
The St. Louis banking market is considered unconcentrated, with the four largest banks controlling 55.3
percent of deposits in commercial banks in the market.
The Herfindahl-Hirschman Index ("HHI") for the
market is 900, and would increase by 3 points upon
1. See, Mo. Rev. Stat. § 362.910, et seq. (1986); 111. Rev. Stat. Ch.
17 § 2501, et seq. (1986).
2. Landmark Bancshares Corp., Order approved November 24,
1986.
3. All banking data are as of December 31, 1986.
4. The St. Louis banking market is approximated by St. Louis,
Jefferson and St. Charles Counties, Missouri, and Lebanon and
Mascoutal Townships in St. Claire County, Illinois.
The financial and managerial resources of Applicant
and FCB are considered satisfactory and consistent
with approval.
In considering the convenience and needs of the
communities to be served, the Board has considered
the records of Applicant's bank subsidiaries under the
Community Reinvestment Act ("CRA"), as well as
the comments of the Committee Against Recurring
Economic Discrimination ("Protestant"). 7 Protestant
5. Under the revised Department of Justice Merger Guidelines
(49 Federal Register 26,823 (June 29, 1984)), any market in which the
post-merger HHI is below 1000 is considered unconcentrated, and the
Department will not challenge a merger with a post-merger HHI below
1000, except in extraordinary circumstances.
6. The Christian County banking market is approximated by
Christian County, Illinois, and the Townships of Cold Spring, Oconee,
Rural and Tower Hill in Shelby County, Illinois.
7. The CRA requires the Board to assess the record of banks in
meeting the credit needs of their entire communities, including low-tomoderate income neighborhoods, consistent with their safe and sound
operation, and to take those records into account in the Board's
evaluation of bank holding company applications. 12 U.S.C. § 2901
et seq.
606
Federal Reserve Bulletin • July 1987
alleges that Applicant's Kansas City Banks ("Banks")
have not adequately assessed or met the credit needs
of low-to-moderate income neighborhoods located
within the Banks' delineated service areas, in particular low-to-moderate income individuals residing in the
northeast section of Kansas City. In this regard,
pursuant to the Board's practice and procedures, the
Federal Reserve Bank of Kansas City arranged several
private meetings between the Applicant and Protestant
in January 1987 to clarify the issues under the CRA
and provide a forum for the resolution of differences. 8
The Board notes that Applicant's and FCB's subsidiary banks have achieved satisfactory overall CRA
ratings based upon the most recent compliance examinations. The Board also notes that, in 1985, approximately 18.6 percent of the Banks' total home purchase
loans were made in low-to-moderate income areas in
the Kansas City MSA.
The record also shows that since 1983, over 30
percent of the home improvement loans made by
Banks in the Kansas City MSA were made in low-tomoderate income areas. 9 This represents a higher level
of home improvement loans made in low-to-moderate
income census tracts in the Kansas City MSA than
was made by all other banks operating in the market.
In 1985, Banks also made 28.8 percent of their Small
Business Administration ("SBA") loans and 13.4 percent of their consumer installment loans in low-tomoderate income census tracts in the Kansas City
MSA.
Applicant has informed the Board that its internal
goals for 1987 contemplate a 20 percent increase in its
home mortgage lending activities throughout the Kansas City MSA, including a 20 percent increase in its
current home mortgage lending in low-to-moderate
income areas. Similarly, Applicant expects to increase
home improvement lending by approximately 10 percent in 1987.
In order to address concerns raised by Protestant, to
enhance its service to low-to-moderate income areas,
and to inform residents of low-to-moderate income
neighborhoods of services available through Applicant's subsidiaries, Applicant has committed to:
(1) Include statement stuffers with all checking and
savings account statements to improve customers'
understanding of the availability of home improvement, home purchase and SBA loans;
8. 12 C.F.R. § 262.25.
9. These ratios are 33.3 percent in 1983, 34.2 percent in 1984, and
32.6 percent in 1985.
(2) Place advertisements in an area newspaper,
suggested by Protestant as one having significant
interest and circulation in Protestant's census tracts,
describing the availability of home improvement,
home purchase and SBA loans;
(3) Designate a "Loan Officer" at United Missouri
City Bank's Independence Avenue office;
(4) Ensure that representatives of Applicant's mortgage banking subsidiary and loan officers of United
Missouri City Bank meet to review details of the
loan application process for home purchase loans
that qualify for Freddie Mac and Fannie Mae participation;
(5) Implement training sessions for loan officers and
personal banking representatives of Banks to increase familiarity with the CRA and the Board's
Regulation BB;
(6) Develop lobby posters and information leaflets
explaining the availability of loans and the application procedure;
(7) Ensure the availability of a representative of
United Missouri City Bank to become involved with
Old Northeast, Inc., an area neighborhood association, or some similar group; and
(8) Ensure that Banks' representatives will be available to make presentations to area groups concerning the services available at Banks.
The Board expects Applicant to provide the Reserve
Bank of Kansas City with quarterly written reports
detailing the progress of Applicant's Kansas City
Banks in implementing the proposed programs to
assess and serve the credit needs of their respective
communities and to fulfill the commitments made in
connection with this application.
Accordingly, based on all of the evidence, including
the commitments and measures Applicant has proposed in order to enhance its service of the convenience and needs of its communities, the Board concludes that convenience and needs considerations are
consistent with approval of this application. 10
10. The Board has also considered the Protestant's request for a
public meeting under section 262.25(d) of the Board's regulations and
a formal hearing under the Act. Protestant has been given the
opportunity to submit written facts and arguments to the Board
regarding this application. In addition, the Reserve Bank has arranged
several informal meetings between Protestant and Applicant in order
to permit clarification and discussion of the record of Applicant's
Banks in meeting the convenience and needs of the community. In
light of this and the representations and commitments made by
Applicant in response to Protestant's comments, the Board has
determined to deny Protestant's requests for a public meeting and a
formal hearing at this time.
Legal Developments
Based on the foregoing and other facts of record, the
Board has determined that the application should be,
and hereby is, approved. This transaction shall not be
consummated before the thirtieth calendar day following the effective date of this Order, or later than three
months after the effective date of this Order, unless
such period is extended for good cause by the Board or
by the Federal Reserve Bank of Kansas City, acting
pursuant to delegated authority.
By order of the Board of Governors, effective May
28, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Heller, and Kelley. Abstaining from this
action: Governor Angell.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
Orders Issued Under Section 4 of the Bank
Holding Company Act
The Chase Manhattan Corporation
New York, New York
Order Conditionally Approving Application to
Underwrite and Deal in Certain Securities to a
Limited Extent
The Chase Manhattan Corporation, New York, New
York, a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has
applied for the Board's approval under section 4(c)(8)
of the BHC Act and section 225.21(a) of the Board's
Regulation Y, 12 C.F.R. § 225.21(a), to engage
through a wholly owned subsidiary, Chase Manhattan
Securities, Inc. ("Company") 1 , in underwriting and
dealing in, on a limited basis, the following securities:
(1) municipal revenue bonds, including certain industrial development bonds;
(2) residential mortgage-related securities; and
(3) consumer-receivable-related securities ("CRRs").2
In addition, Applicant has applied for approval
under section 4(c)(8) of the BHC Act for Company to
1. Company is presently operating as Chase Manhattan Treasury
Corporation.
2. Applicant proposes to limit Company's underwriting and dealing
activity in these securities to 10 percent of the total business of the
underwriting subsidiary as measured by dollar volume and assets as
well as to 3 percent of the market.
607
underwrite and deal in U.S. government and agency
and state and municipal securities that state member
banks are authorized to underwrite and deal in under
section 16 of the Banking Act of 1933 (the "GlassSteagall Act") (12 U.S.C. § 24 Seventh) (hereinafter
"eligible securities"). Company would engage in the
proposed underwriting and dealing activities through
offices in New York, California, Illinois, Massachusetts, Pennsylvania, and Texas. 3
Applicant, with consolidated assets of $94.8 billion, 4
is the third largest banking organization in the nation.
It operates seven subsidiary banks in New York,
Maryland, Ohio, Delaware, Florida, and Arizona and
engages in a broad range of permissible nonbanking
activities in the United States and abroad.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (52 Federal Register 1,380
(1987)). The Board received two comments on the
proposal. The Securities Industry Association
("SIA"), a trade association of the investment banking industry, opposes the application for the reasons
stated in its earlier protests to similar applications by
Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust New York Corporation. The Dealer Bank
Association commented in favor of the application.
The Board has previously determined that underwriting and dealing in eligible securities is closely
related to banking under section 4(c)(8) of the BHC
Act. 12 C.F.R. § 225.25(b)(16). In addition, the Board
concludes that Company's performance of this activity
may reasonably be expected to result in public benefits
which would outweigh adverse affects under the proper incident to banking standard of section 4(c)(8) of the
BHC Act. Accordingly, Applicant may engage
through Company in underwriting and dealing in eligible securities to the extent that state member banks
are authorized by section 16 of the Glass-Steagall Act.
On April 30, the Board approved applications by
Citicorp, J.P. Morgan and Bankers Trust to underwrite and deal in, through their eligible securities
underwriting subsidiaries, 1-4 family mortgagebacked securities, municipal revenue bonds (and certain industrial development bonds) and (except for
Citicorp) commercial paper. 5 The Board concluded
that the underwriting subsidiaries would not be "en-
3. The Board has previously authorized Applicant to underwrite
and deal in third party commercial paper through a commercial
finance subsidiary, Chase Commercial Corporation, Englewood, New
Jersey, subject to 5 percent gross revenues and market limitations.
The Chase Manhattan Corporation, 73 FEDERAL RESERVE BULLETIN
3 6 7 (1987).
4. Banking data are as of December 31, 1986.
5. Citicorp!Morgan!Bankers Trust, supra.
608
Federal Reserve Bulletin • July 1987
gaged principally" in underwriting or dealing in securities within the meaning of section 20 of the GlassSteagall Act 6 provided they derived no more than 5
percent of their total gross revenues from underwriting
and dealing in the approved securities over any twoyear period and their underwriting and dealing activities did not exceed 5 percent of the market for each
particular type of security involved. The Board further
found that, subject to the prudential framework of
limitations established in those cases to address the
potential for conflicts of interest, unsound banking
practices or other adverse effects, the proposed underwriting and dealing activities were so closely related to
banking as to be a proper incident thereto within the
meaning of section 4(c)(8) of the BHC Act. In the case
of CRRs, the Board concluded that the record then
before it did not provide a sufficient evidentiary basis
for it to make the formal finding required by the BHC
Act, but stated that it would reconsider the matter
within 60 days of its Order on the basis of fuller
submissions.
For the reasons set forth in the Board's Citicorp/
Morgan/Bankers Trust Order, the Board concludes
that Applicant's proposal to engage through Company
in underwriting and dealing in municipal revenue
bonds 7 and 1-4 family mortgage-related securities
would not result in a violation of section 20 of the
Glass-Steagall Act and is closely related and a proper
incident to banking within the meaning of section
4(c)(8) of the BHC Act provided Applicant limits
Company's activities as provided in the Citicorp!
Morgan/Bankers Trust Order. The Board will reconsider the permissibility of Applicant's proposal with
respect to CRRs within 60 days. Accordingly, the
Board has determined to approve the underwriting
application subject to all of the terms and conditions
established in the Citicorp!Morgan!Bankers
Trust
Order. The Board hereby adopts and incorporates
herein by reference the reasoning and analysis contained in the Citicorp!Morgan!Bankers
Trust Order.
The Board's approval of this application extends
only to activities conducted within the limitations of
section 225.25(b)(16) of the Board's Regulation Y and
the Citicorp!Morgan!Bankers
Trust Order, including
the Board's reservation of authority to establish additional limitations to ensure that the subsidiary's activities are consistent with safety and soundness, conflict
of interest and other relevant considerations under the
BHC Act. Underwriting and dealing in the approved
securities in any manner other than as approved in that
Order8 is not within the scope of the Board's approval
and is not authorized for Company.
As the Board noted in the
Citicorp!Morgan!Bankers
Trust Order, Congress has under consideration legislation that would prohibit Board approval of an underwriting application, such as this, between March 6,
1987 and March 1,1988. While this moratorium legislation has not yet been enacted into law, the Board calls
to Applicant's attention that it may be required by
subsequent Congressional action to cease its underwriting and dealing activities approved in this Order.
The Board retains jurisdiction over the application to
act to carry out the requirements of any legislation
adopted by Congress that would affect Applicant's
conduct of underwriting and dealing activities under
this Order and the BHC Act.
The Board's determination is subject to all of the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
to the Board's authority to require modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with, and to prevent
evasion of, the provisions of the BHC Act and the
Board's regulations and orders issued thereunder.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
May 18, 1987.
Voting for this action: Governors Johnson, Seger, and
Heller. Voting against this action: Chairman Volcker and
Governor Angell.
JAMES M C A F E E
6. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits
the affiliation of a member bank with "any corporation . . . engaged
principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of
stocks, bonds, debentures, notes, or other securities . . . ."
7. The industrial development bonds approved in those applications and for Applicant in this case are only those tax exempt bonds in
which the governmental issuer, or the governmental unit on behalf of
which the bonds are issued, is the owner for federal income tax
purposes of the financed facility (such as airports, mass commuting
facilities, and water pollution control facilities). Without further
approval from the Board, Company may underwrite or deal in only
these types of industrial development bonds.
[SEAL]
Associate
Secretary
of the Board
8. Company may also provide services that are necessary incidents
to these approved activities. The incidental services should be taken
into account in computing the gross revenue and market share limits
on the underwriting subsidiaries' ineligible underwriting and dealing
activities, to the extent such limits apply to particular incidental
activities.
Legal Developments
Dissenting Statement
Governor Angell
of Chairman Volcker and
For the reasons set forth in our dissenting statement in
the Citicorp!Morgan!Bankers
Trust Order, we regret
we are unable to join the majority in approving this
application.
May 18, 1987
Chemical New York Corporation
New York, New York
Order Approving Expansion of Activities of Trust
Company to Include Deposit-Taking and Consumer
Lending
Chemical New York Corporation, New York, New
York, a bank holding company within the meaning of
the Bank Holding Company Act (12 U.S.C. § 1841
et seq.) (the "BHC Act" or "Act"), has applied for
the Board's approval under section 4(c)(8) of the Act
(12 U.S.C. § 1843(c)(8)) and section 225.23(a)(1) of the
Board's Regulation Y (12 C.F.R. § 225.23(a)(1)), to
expand the activities of its subsidiary, Chemical Trust
Company of Florida, N . A . , Palm Beach, Florida
("Company"), to include the acceptance of savings,
time, and demand deposits and the making of consumer loans. These activities have been previously determined by the Board to be closely related to banking.
12 C.F.R. § 225.25(b)(1); U.S. Trust Corporation, 70
FEDERAL RESERVE BULLETIN 371 (1984).
Notice of the application, affording opportunity for
interested persons to comment, has been published
(51 Federal Register 43,244 (1986)). The time for filing
comments and views has expired, and the Board has
considered the application and all comments received,
including those submitted by the Comptroller of the
State of Florida, the Florida Bankers Association, and
the Conference of State Bank Supervisors (collectively, the "Protestants") in opposition to the proposal, in
light of the factors set forth in section 4(c)(8) of the Act
(12 U.S.C § 1843(c)(8)).
Applicant, with total consolidated assets of $61.0
billion,1 is the fifth largest commercial banking organization in New York. Company is a national banking
association chartered by the Office of the Comptroller
of the Currency ("OCC") in 1982 as a limited purpose
1. Asset data are as of March 31, 1987, and do not reflect Applicant's acquisition of Texas Commerce Bancshares, Inc., Houston,
Texas.
609
trust company. It engages in activities normally performed by a trust company, such as the provision of
fiduciary, investment advisory, and custody and agency services. Its original charter did not authorize it to
engage in deposit-taking or lending activities.
Company now proposes to expand its trust company
activities to offer various forms of FDIC-insured savings, time, and demand deposits. Company also intends to offer loans to individuals for personal, family,
household, or charitable purposes, and other noncommercial purposes. Company has received the permission of the OCC to engage in the proposed expanded list of activities.
Applicant has stated that because Company will not
engage in the business of making commercial loans,
Company will not be a "bank" as defined in section 2
of the BHC Act, 2 and thus that Board approval of the
application is not barred by the interstate banking
limitations of the Douglas Amendment to the BHC
Act. 3
In approving an application by U.S. Trust Corporation to expand the powers of its Florida trust company
subsidiary to include certain deposit-taking and consumer lending activities, the Board concluded that a
bank holding company could acquire, on an interstate
basis, a nationally chartered nonbank bank that would
accept demand deposits but not make commercial
loans. 4 The Board's determination has been upheld in
a decision by the U.S. Court of Appeals for the
Eleventh Circuit.5
2. The BHC Act defines the term "bank" to include any institution
chartered under the laws of the United States or any state that accepts
deposits that the depositor has a legal right to withdraw on demand
and that engages in the business of making commercial loans.
12 U.S.C. § 1841(c). An institution that is chartered as a bank but that
does not perform one of the two essential functions required for
"bank" status under the BHC Act has been referred to as a "nonbank
bank".
3. 12 U.S.C. § 1842(d). The Douglas Amendment prohibits Board
approval of an application by a bank holding company to acquire a
bank outside the holding company's home state unless the state in
which the bank is located has by statute authorized the acquisition.
The Douglas Amendment applies only to the acquisition of banks as
defined in the Act and has no applicability in the case of nonbanking
companies. Lewis v. BTInvestment Managers, Inc., 447 U.S. 27, 47,
49 (1980).
4.
U.S.
Trust
Corporation,
7 0 FEDERAL RESERVE BULLETIN 371
(1984) {"U.S. Trust"). Applicant states that Company's excess funds
will be invested in investment securities permitted for national banks
under 12 U.S.C. section 24 (seventh). Applicant further has committed that Company will not channel funds into any commercial lending
affiliate of Company. Accordingly, it appears that Company will not
engage in the business of making commercial loans, either directly or
indirectly.
5. Florida Dept. of Banking & Finance v. Board of Governors, 760
F.2d 1135 (11th Cir. 1985), vacated and remanded for further consideration in light of Dimension
U.S
106 S. Ct. 875 (1986), on
remand, 800 F.2d 1534 (11th Cir. 1986), cert, denied, 55 U.S.L.W.
3706 (U.S. April 21, 1987) (No. 86-1024).
610
Federal Reserve Bulletin • July 1987
State Law
Considerations
Protestants contend that the proposed transaction is
prohibited under a 1984 Florida statute that prohibits
the acquisition of nonbank banks in Florida. 6 The
statute generally prevents a bank holding company,
whether headquartered in Florida or outside Florida,
from acquiring an institution located in Florida that
takes deposits insured by the FDIC unless the institution qualifies as a "bank" under the BHC Act. In
addition, the statute prohibits a nonbanking company
from acquiring a bank in Florida unless the company is
a bank holding company.
Applicant contends that the Florida statute discriminates against interstate commerce and is thus unconstitutional under the Commerce Clause of the United
States Constitution. Applicant, therefore, urges the
Board to approve the application notwithstanding the
Florida statute.
In Whitney National Bank in Jefferson Parish v.
Bank of New Orleans & Trust Company, 379 U.S. 411,
419 (1965) ("Whitney"), the Supreme Court stated
that, in acting on bank holding company proposals, the
Board must make a finding in the first instance regarding the applicability and validity of state laws that bear
on the particular transaction before the Board, and
that the Board may not approve a bank acquisition
under the Bank Holding Company Act that would be
prohibited by a valid state statute. 7 The United States
Court of Appeals for the District of Columbia confirmed that this requirement applies to constitutional
issues. 8
6. Fla. Stat. Ann. § 658.296 (West 1984 and Supp. 1987).
7. See also First State Bank of Clute v. Board of Governors, 553
F.2d 950 (5th Cir. 1977), and Gravois Bank v. Board of Governors, 478
F.2d 546 (8th Cir. 1973), which do not deal with constitutional issues
but required a decision by the Board as to the applicability of state
laws to bank holding company acquisitions.
In acting on nonbanking proposals under section 4 of the Act, the
Board has also considered whether consummation of the proposal
would violate or result in a violation of a state statute. E.g., Guaranty
Bancshares Corp., 69 FEDERAL RESERVE BULLETIN 39, 40 (1983);
Commerce Bancshares, 69 FEDERAL RESERVE BULLETIN 447 (1983);
Crocker National Corp., 66 FEDERAL RESERVE BULLETIN 66 (1980).
The U.S. Court of Appeals for the Fifth Circuit has held that the
Board cannot ignore the applicability and effect of state law in acting
on nonbanking proposals under section 4(c)(8) of the Act. Florida
Ass'n of Insurance Agents v. Board of Governors, 591 F.2d 334, 342
(5th Cir. 1979).
8. Iowa Independent Bankers Association v. Board of Governors
of the Federal Reserve System, 511 F.2d 1288, 1293 n.4 (1975). The
court stated that it felt constrained "to register . . . substantial doubt
that the Board can continue to presume conclusively the constitutional validity of state or federal law in light of the Supreme Court's
opinion in [Whitney]. . . ." The Board notes that Justice Douglas in
his dissent in Whitney noted that the specific issue with respect to the
Louisiana statute at issue in that case would require the Board to
decide a "bare, bald question of . . . constitutionality." 379 U.S. at
431.
In light of these decisions, the Board has taken the
position that, in acting on applications under the BHC
Act, it would review the applicability of the state
statutes that bear on the proposed transaction, including the constitutionality of such statutes, but that it
would not "hold the state statute to be unconstitutional without clear and unequivocal evidence of the
inconsistency of the state law with the federal Constitution." NCNB Corp., 68 FEDERAL RESERVE BULLETIN 54, 56 (1982). Bank of New England
Corporation,
7 0 FEDERAL RESERVE B U L L E T I N 3 7 4 , 3 7 6 ( 1 9 8 4 ) .
In this case, the state statute in question would
directly prohibit consummation of Applicant's proposal and thus directly bears on the Board's decision on
the application under the BHC Act. Moreover, resolution of the issues raised regarding the consistency of
the Florida statute with the Commerce Clause of the
U.S. Constitution are closely intertwined with the
consideration of the provisions of the BHC Act.
Indeed, the Florida statute was enacted to deal with a
particular issue that arises under the BHC Act and the
impact of the statute on affected banking organizations
may only be understood in the context of the interstate
banking prohibitions of the Douglas Amendment to the
Bank Holding Company Act.
The Board, therefore, believes that, as the agency
with primary federal responsibility for administration
of the BHC Act, it is particularly appropriate for the
Board to express its views in this case regarding the
constitutionality of the Florida nonbank bank statute.
The Board recognizes that this matter must in the final
analysis be resolved by the judiciary, but believes its
views would be of benefit to the court in reviewing the
matter, particularly in light of the critical importance
to the constitutional issue of the interplay between the
Florida statute and the BHC Act. See Whitney, 379
U.S. at 421 (The Board's "role in the development of
the national banking laws . . . makes its views of
particular benefit to the courts where ultimately the
validity of the arrangement will be tested."). 9
Accordingly, the Board has examined carefully the
arguments advanced by Applicant and Protestants as
well as additional information regarding the constitutionality of the Florida statute obtained at an informal
hearing on February 6, 1985. For the reasons set out in
detail in the attached Appendix, the Board concludes
that the Florida statute, as it applies to bank holding
9. See also Florida Ass'n of Insurance Agents, 591 F.2d at 342
("the 'applicability and effect' of state law on public benefits criteria
under the Act is 'the very type of question that Congress envisioned as
being resolved in the first instance by the Board.'" (citing Whitney,
379 U.S. at 425)).
Legal Developments
companies, is not consistent with the Commerce
Clause of the U.S. Constitution and is not authorized
under the Douglas Amendment to the BHC Act.
In sum, the Board believes that the Florida statute is
inconsistent with the Commerce Clause of the Constitution because the record clearly and unequivocally
shows that the statute in practice imposes a substantial
burden on bank holding companies located outside of
Florida and its southern interstate banking region that
is not imposed on Florida and southern region bank
holding companies; that the burden on out-of-state
bank holding companies resulting from the statute is
clearly excessive in relation to the local benefits
resulting from the statute; and that the state statute in
this case is not authorized by federal statute. 10 Accordingly, the Board concludes that the Florida statute
does not bar Board approval of this application under
the BHC Act.
The Board notes that the issue of the constitutionality of state statutes regulating the ownership or operation by holding companies of nonbank banks is raised
in a number of other proposals. While the Board has
expressed its views regarding this issue in the context
of this application, the Board believes that the ultimate
resolution of this issue is a proper function of the
courts, which have particular expertise in the analysis
and balancing of interests required to resolve constitutional questions.
Limitations
on Nonbank
Banks
Applicant intends to operate Company as a nonbank
bank in accordance with the Board's U.S. Trust decision. As in the U.S. Trust case, the Board believes it is
appropriate to take action to ensure that Company is
not used as a vehicle for evasion of the Act's bank
definition. In U.S. Trust, the Board determined to
condition its approval on the following limitations:
1. Applicant will not operate the demand-deposit
taking activities of the nonbank bank in tandem with
any other subsidiary or other financial institution;
2. Applicant will not link in any way the demand
deposit and commercial lending services that define
a bank under the Act; and
3. The nonbank bank will not engage in any transactions with affiliates, other than the payment of
dividends to Applicant or the infusion of capital by
Applicant into the nonbank bank, without the
Board's approval.
In the Board's view, these conditions preclude the
type of linked or integrated operations that could
otherwise render Company a bank for purposes of the
Act. On the basis of Applicant's proposed adherence
to these conditions and for the reasons set out more
fully in the Board's decision in U.S. Trust, the Board
concludes that Company will not be a bank as that
term is defined in the Act.
Applicant has requested Board approval pursuant to
the third U.S. Trust condition to engage in certain
transactions with affiliates. Applicant through its lead
bank, Chemical Bank, currently provides certain services to Company on an arms length basis, and has
requested that it be permitted to continue to provide
these services upon consummation of the proposal.
They involve: securities custodial arrangements; research and investment advisory services; as well as
data processing and similar internal support services.
These services are conducted in such a manner that
customers of Company would not have direct contact
with Applicant or any of its affiliates providing the
services.
For the following reasons, the Board has determined
that it is appropriate to permit Applicant to continue to
conduct these activities in this case. First, the securities custodial arrangements, as well as the research
and investment advisory services, are specifically permitted for bank holding companies and their subsidiaries under Regulation Y. 12 C.F.R. § 225.25(b)(3) and
(4). Bank holding companies are also specifically authorized under the BHC Act to provide internal support services to their bank and nonbank subsidiaries,
12 U.S.C. § 1843(c)(1)(C).
Second, the continued provision of these services
by Applicant or Chemical Bank to Company would not
link demand deposit taking with commercial lending,
result in any impermissible commingling of banking
and commerce, or implicate any of the fundamental
policy concerns underlying the Board's U.S. Trust
conditions.
The Board finds no evidence that consummation of
this proposal, subject to the limitations and conditions
described above, would result in any conflicts of
interest, unfair competition, unsound banking practices or other adverse effects. Due to the de novo
nature of this proposal, there will not be any decrease
in competition. Indeed, consummation of the proposal
may reasonably be expected to result in increased
competition.
Need for Congressional
10. The Board notes that the Florida statute as it applies to
nonbanking concerns would not be subject to these constitutional
concerns. See Sears, Roebuck & Co. v. Brown, 806 F.2d 399 (2d Cir.
1986).
611
Action
The Board has previously indicated its reluctance to
approve nonbank bank acquisitions in view of the
potential presented by such acquisitions to alter signif-
612
Federal Reserve Bulletin • July 1987
icantly the nation's banking structure without Congressional action on the underlying policy issues." For
the reasons stated in the Board's previous orders, the
Board continues to believe that Congressional action
to close the nonbank bank loophole is imperative. The
fact that the Board is required by the technical aspects
of the bank definition in the Act to approve this
application should not be construed as encouragement
to Applicant to consummate this proposal or to others
to pursue similar acquisitions.
In this regard, the Board notes that the United
States Senate has recently passed legislation that
would eliminate the nonbank bank loophole in the
BHC Act by redefining the term "bank" to include
FDIC-insured banks. 12 While this legislation has not
yet been enacted, the Board calls to Applicant's
attention that it may be required by subsequent Congressional action to limit the activities of Company.
The Board retains jurisdiction over the application to
act to carry out the requirements of any legislation
adopted by Congress that would affect Company's
activities.
Based upon the foregoing and other facts of record,
the Board has determined that the Florida statute, as it
applies to bank holding companies seeking to acquire
nonbank banks in Florida, is inconsistent with the
Commerce Clause and is not a bar to approval of this
application, and that the balance of public interest
factors the Board is required to consider under section
4(c)(8) is favorable. Accordingly, the application is
hereby approved. 13 Consummation of the proposal is
subject to the conditions set forth in this Order and the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b). In
addition, Company may not engage directly or indi-
11. See e.g., U. S. Trust, supra.
12. S.790 (The Competitive Equality Banking Act of 1987), 100th
Cong., 1st Sess. (1987).
13. The Protestants have requested that the Board convene a
formal hearing in order to develop a complete record regarding the
validity of the Florida statute. The courts have determined that the
Board is required to hold a formal hearing regarding an application
submitted under section 4(c)(8) of the Act only where ' 'there is dispute
as to facts material to the Board's ultimate decision." Connecticut
Bankers Ass'n v. Board of Governors, 627 F.2d 245, 250 (D.C. Cir.
1980). See also 12 C.F.R. § 225.23(g). In this case, Protestants have
been given the opportunity to submit facts and arguments to the
Board, and in fact have submitted material to the Board. Protestants
have not identified any material fact that is in dispute in this case, but
have disputed only the legality of the proposal under the Florida
statute—which is a question of law, and not of fact. Moreover, on
February 6, 1985, the Board held an informal hearing regarding the
constitutionality of the Florida statute at issue in this case as well as
other similar statutes.
In light of the extensive record compiled in this case and at the
earlier informal meeting, and the fact that Protestants have not
identified any material facts that remain in dispute, Protestants'
request for a formal hearing in this case is denied.
rectly in any activity other than those explicitly approved by the Board in this Order. 14
The Board's approval is also subject to the Board's
authority to require modification or termination of the
activities of the holding company or any of its subsidiaries as the Board finds necessary to assure compliance with the provisions and purposes of the Act and
the Board's regulations and orders issued thereunder,
or to prevent evasion thereof. In accordance with the
provisions of section 225.23(b)(iii) of Regulation Y, the
Board's approval would be required for additional
acquisitions by Applicant of nonbank banks or for the
establishment of offices of Company located in a state
other than Florida.
By order of the Board of Governors, effective
May 29, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, Heller, and Kelley.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
APPENDIX
Appendix to the Order Approving the Application of Chemical New York Corporation, New
York, New York, to Expand the Activities of its
Subsidiary, Chemical Trust Company of Florida,
NA., Palm Beach, Florida
In 1984, Florida enacted a statute that prohibits any
bank holding company, whether located in Florida or
outside Florida, from acquiring an institution located
in Florida that takes deposits insured by the FDIC
unless the institution qualifies as a "bank" under the
Bank Holding Company Act ("BHC Act"). 1 The BHC
Act defines a bank as any institution chartered as a
bank "which (1) accepts deposits that the depositor
14. In this regard, the Board notes that because Company is not
considered a bank under the BHC Act, the provisions of section
225.22(d)(1) of Regulation Y would not be applicable to exempt the
acquisitions or activities of Company from Board approval under
section 4 of the Act.
1. The Florida statute provides that "No bank holding company
shall control a bank [i.e., a company (with several exceptions not
relevent here) that accepts deposits in Florida that are insured under
the provisions of the Federal Deposit Insurance Act] unless the bank
is a bank as defined in section 2(c) of the federal Bank Holding
Company Act." Fla. Stat. Ann. 658.296(2) (West 1984 and Supp.
1987). The statute also provides that " N o company that is not a bank
holding company shall control a bank." Fla. Stat. Ann. 658.296(3).
Legal Developments
has a legal right to withdraw on demand, and (2)
engages in the business of making commercial loans."
12 U.S.C. § 1841(c).
Applicant asserts that this state statute is unconstitutional under the Commerce Clause of the United
States Constitution because the practical effect of the
Florida statute is to discriminate against bank holding
companies located outside of Florida and the southern
region. 2 Consequently, Applicant urges the Board to
declare the Florida statute void and approve the
application.
The Office of the Comptroller of Florida, the Florida
Bankers Association, and the Conference of State
Bank Supervisors ("Protestants") have protested
Board approval of this application. Protestants argue
that the Florida statute represents a legitimate exercise
of the State's authority to regulate the structure of
banking within Florida and to provide for the wellbeing of residents of Florida. Protestants also assert
that the Florida statute does not discriminate against
interstate commerce and visits its prohibition against
ownership of deposit-taking nonbank banks in Florida
evenhandedly on all companies, including Florida
bank holding companies. Protestants argue that any
practical advantage granted to Florida bank holding
companies is the result of the disparate treatment of
bank holding companies under the Douglas Amendment to the BHC Act, and not the result of the Florida
ban on ownership of nonbank banks, which applies
equally to in-state and out-of-state companies. As a
result, Protestants contend that the Florida statute is
consistent with the requirements of the Commerce
Clause of the U.S. Constitution and bars approval of
the proposal in this case.
The Commerce Clause of the U.S. Constitution
invests Congress with the power to regulate interstate
commerce. Art. I, § 8, cl. 3. The courts have long
interpreted the positive grant of authority to Congress
contained in the Commerce Clause as limiting the
power of states to erect barriers against interstate
trade. See, e.g., Philadelphia v. New Jersey, 437 U.S.
617, 623 (1978); Pike v. Bruce Church, Inc., 397 U.S.
137, 142 (1970); Cooley v. Board of Wardens, 12 How.
299 (1852).
The Supreme Court has interpreted the Commerce
Clause as prohibiting a state from discriminating
against interstate commerce and placing itself in a
2. Pursuant to the Douglas Amendment, Florida has authorized
bank holding companies located in certain states in the southern
region of the United States to acquire banks in Florida. Fla. Stat. Ann.
658.295 (West 1984 and Supp. 1987). Thus, for purposes of this
Appendix, these institutions will be treated as Florida bank holding
companies, and not as out-of-state bank holding companies. Bank
holding companies located outside of this region continue to be barred
by the Douglas Amendment from acquiring a bank in Florida.
613
position of economic isolation. See, e.g., Philadelphia
v. New Jersey, 437 U.S. at 626-27; Baldwin v. G.A.F.
Seelig, Inc., 294 U.S. 511 (1935). The states retain the
authority, particularly pursuant to their powers to
safeguard the health and safety of their residents, to
regulate matters of legitimate local concern even
though interstate commerce may be affected. 3 However,
the states may not regulate in a manner that imposes
more than an incidental burden on interstate commerce
or that discriminates against articles of commerce from
outside the state unless there is some reason apart from
their origin to treat them differently.4
In those instances where the states have acted to
effect purposes of simple economic protectionism or in
a manner that is patently discriminatory, the Supreme
Court has held such state statutes to be per se unconstitutional.5 In determining whether a state statute that
is neutral on its face discriminates against interstate
commerce, the Supreme Court has stated that "the
principal focus of inquiry must be the practical operation of the statute, since the validity of state laws must
be judged chiefly in terms of their probable effects." 6
In this case, the Florida restriction on ownership of
deposit-taking nonbank banks is neutral on its face and
prohibits all bank holding companies, wherever located, from owning deposit-taking nonbank banks located
in Florida. However, in practice, the Florida statute
operates to discriminate against out-of-state bank
holding companies, while imposing no burden on
Florida bank holding companies. The Florida statute
has no effect on in-state bank holding companies
because bank holding companies located in Florida
take deposits through full service commercial banks
and therefore have no reason or incentive to acquire a
nonbank bank in Florida. A nonbank bank offers no
advantage to a Florida bank holding company over a
full service commercial bank either in the services that
the nonbank bank may provide, or in the geographic
locations at which it may offer these services in
Florida. A Florida bank holding company may own a
full service commercial bank at every location in
Florida that a nonbank bank may operate. The absence of any effect from the Florida statute on in-state
3. Pike v. Bruce Church, Inc., 397 U.S. at 142.
4. Philadelphia v. New Jersey, 437 U.S. at 624.
5. Id. The Court has declared that "where simple economic protectionism is affected by state legislation, a virtually per se rule of
invalidity has been erected." 437 U.S. at 624.
6. Lewis v. BT Investment Managers, Inc., 447 U.S. 27, 37 (1980)
(emphasis supplied); see also Hunt v. Washington Apple Advertising
Commission, 432 U.S. 333 (1977) (facially neutral North Carolina
statute regulating transportation and display of apples in North
Carolina was found inconsistent with the Commerce Clause because it
had the effect of imposing a substantial burden on the shipment of
Washington apples into North Carolina).
614
Federal Reserve Bulletin • July 1987
bank holding companies is demonstrated by the fact
that no Florida bank holding company owns or has
applied to own a nonbank bank in Florida. In contrast,
out-of-state bank holding companies have applied for
48 nonbank bank charters in Florida.
On the other hand, the Florida restriction on ownership of deposit-taking nonbank banks imposes a direct
burden on out-of-state bank holding companies by
foreclosing to them the only method available under
the BHC Act to acquire a deposit-taking banking
institution in Florida. The Douglas Amendment to the
BHC Act prohibits bank holding companies located
outside of Florida from acquiring full service banks in
Florida. 7 Deposit-taking nonbank banks which are the
subject of the Florida statute are not "banks" for
purposes of the BHC Act, but are deemed to be
nonbanking companies subject to section 4 of the BHC
Act. 8 As a result, the courts have held that the
acquisition of nonbank banks by bank holding companies is not subject to the interstate banking limitations
contained in the Douglas Amendment. 9 Thus, the
Florida statute, by preventing the acquisition of nonbank banks in Florida, imposes a significant burden on
out-of-state bank holding companies effectively preventing them from competing with Florida bank holding companies by operating deposit-taking facilities in
Florida that are permissible for bank holding companies under the BHC Act.
Accordingly, because the operation and actual effect
of the Florida statute results in discrimination against
interstate commerce based solely on the geographic
location of the bank holding company involved, the
statute, insofar as it applies to bank holding companies, 10 violates the Commerce Clause of the United
States Constitution. As noted, the Florida statute has
7. 12 U.S.C. § 1842(d). Florida law permits bank holding companies
with 80 percent of their total deposits located in certain southern
states to acquire banks located in Florida. Fla. Stat. Ann. 658.295
(West 1984 and Supp. 1987).
8. See Board of Governors of the Federal Reserve System v.
Dimension Financial Corp., 106 S. Ct. 681 (1986); Florida Dept. of
Banking and Finance v. Board of Governors, 760 F.2d 1135 (11th Cir.
1985), vacated and remanded for further consideration in light of
Dimension,
U.S
106 S. Ct. 875 (1986), on remand, 800 F.2d
1534 (11th Cir. 1986), cert, denied, 55 U.S.L.W. 3706 (U.S. April 21,
1987) (No. 86-1024).
9. Id. See also Lewis, 447 U.S. at 47, 48, in which the Supreme
Court held that the Douglas Amendment does not apply to nonbanking
companies.
10. The Florida statute, both as the statute is written and as it
operates in practice, appears to treat nonbanking companies controlling nonbank banks equally, whether the companies are located inside
or outside Florida. Accordingly, the statute would appear to be
consitutional as it applies to ownership of nonbank banks by such
nonbanking companies. See Sears, Roebuck and Co. v. Brown, 806
F.2d 399 (2d Cir. 1986). This equal distribution of burden in one area
does not, however, save the statute from constitutional infirmity as it
applies to bank holding companies because the Commerce Clause
requires that like entities be treated in a like manner without regard to
geographic criteria. Id. at 408.
no effect on Florida bank holding companies and,
insofar as bank holding companies are concerned,
operates exclusively to deny to out-of-state bank holding companies the ability to conduct deposit-taking in
Florida through nonbank banks as permitted for bank
holding companies under the BHC Act. 11
It has been suggested that the burden experienced
by out-of-state bank holding companies is the result of
the Douglas Amendment, which prohibits out-of-state
bank holding companies from acquiring full service
banks in Florida, and not the result of the Florida
statute. The Douglas Amendment does not, however,
prohibit the acquisition of nonbank banks in Florida,
which as noted may be acquired by out-of-state bank
holding companies. It is the Florida statute that forecloses this opportunity for out-of-state bank holding
companies to compete in Florida, thereby burdening
interstate commerce. In effect, the Florida statute
attempts to extend the coverage of the Douglas
Amendment to institutions that Congress exempted
from the Douglas Amendment. See Dimension, 106 S.
Ct. at 687. As discussed below, the Douglas Amendment does not authorize the states to act beyond the
limits of the Commerce Clause in regulating the acquisition of nonbanking companies, including nonbank
banks. See Lewis, 447 U.S. at 47, 44, see also Northeast Bancorp v. Board of Governors, 472 U.S. 159, 174
(1985) (an individual state could not on its own authority comprehensively regulate the acquisition of local
banks by out-of-state bank holding companies).
Moreover, a state may not enact a facially neutral
statute that, in tandem with some other pre-existing
legal requirement, operates in practice to discriminate
against out-of-state business organizations seeking to
do business in the state. See Hunt v. Washington State
Apple Advertising Comm'n, 432 U.S. 334 (1977).
11. The legislative history of the Florida statute illustrates that the
Florida legislators intended the legislation to prohibit nonbank banks
in Florida as a means to prevent circumvention of Florida's interstate
banking statute by out-of-state bank holding companies through
acquisition of deposit-taking nonbank banks in Florida. At that time,
the Comptroller of Florida advised the Governor and members of the
Florida legislature of the need to bar nonbank banks in Florida, noting
that there were a number of pending applications before the Comptroller of the Currency and the Federal Reserve Board for nonbank banks
in Florida. See Letter dated November 13, 1984, from Gerald Lewis,
Florida Comptroller, to Honorable D. Robert Graham, Governor of
Florida. Similar letters dated November 14, 1984, to James Harold
Thompson, Speaker, Florida House of Representatives, and Harry A.
Johnston, II, President, Florida Senate.
The record shows that all of these applications involved acquisitions
by out-of-state bank holding companies. Thus, the Florida legislature
was aware that, insofar as bank holding companies were concerned,
the statute would affect only out-of-state bank holding companies that
were prohibited by the Douglas Amendment and Florida law from
acquiring full service banks in Florida. See also Staff Analysis of Bill
10A, Committee on Commerce, Florida House of Representatives,
p.4 (December 5, 1984).
Legal Developments
The burden imposed by the Florida statute on outof-state bank holding companies also is not outweighed by the putative local benefits of the statute.
See Pike v. Bruce Church, Inc., supra. The Protestants argue that the statute serves the purpose of
preventing the diversion of deposits outside of Florida
and of assuring the availability of commercial loans in
Florida.12
The Florida statute itself, however, regulates only
the ownership of nonbank banks and does not directly
address the possible diversion of funds out of Florida
or place any limits on the use of deposits by Florida
institutions seeking to support their out-of-state commercial lending operations. The statute does not, for
example, require that commercial loans made by nonbank banks be made in Florida. Moreover, there is
nothing in the statute that would prohibit Florida
banks owned by Florida bank holding companies or
southern region bank holding companies from using
Florida deposits exclusively to fund commercial loans
or other operations outside of Florida. Similarly, the
statute does not apply to banks or nonbank banks
unless they are owned by a company, or to deposittaking thrift institutions under any circumstances. In
addition, a company may satisfy the statute's requirements by making any amount of commercial loans, no
matter how small in volume.
As currently written, the Florida statute has the
practical effect of requiring out-of-state bank holding
companies to bear the burden for achieving these local
benefits. Both purposes of preventing diversion of
funds from Florida and of assuring the availability of
commercial loans in Florida would be better served by
legislation that also regulates the activities of full
service banks and thrift institutions in Florida, rather
than by simply regulating the ownership of nonbank
banks.
In sum, there appear to be several methods of
accomplishing the ostensible purposes of the Florida
statute that would be more effective and would not in
practice result in discrimination based upon geographic location as does the Florida ban on nonbank banks.
12. The record demonstrates that the concerns of the Protestants
about nonbank banks have focused, insofar as bank holding companies are concerned, on the fact that the nonbank bank loophole
undermines the right of the states under the Douglas Amendment to
authorize and limit interstate acquisition of "banks" within their
borders, rather than because there was evidence that nonbank banks
were used to divert funds from Florida or because of a belief that
regulating nonbank banks would assure the availability of commercial
loans in Florida. See U.S. Trust Corporation, 70 FEDERAL RESERVE
BULLETIN 371 (1984); Florida Dept. of Banking and Finance, supra.
As discussed below, in light of the Supreme Court's decisions in
Dimension and Lewis, however, it appears clear that the provisions of
the BHC Act and the Douglas Amendment do not authorize the states
to attempt to accomplish these purposes by restricting the acquisition
of local nonbank banks by out-of-state bank holding companies in a
manner that is not consistent with the Commerce Clause.
615
Thus, it does not appear that the state's local interests
have been significantly or evenhandedly advanced by
the Florida statute in a manner consistent with the
Commerce Clause. See Lewis 447 U.S. at 42-3; Hunt
432 U.S. at 353-54.
The Board's conclusion that the Florida statute in
this case falls outside the limits established by the
Commerce Clause is consistent with previous decisions of the U.S. Supreme Court. The discriminatory
effect resulting in practice from the Florida statute is
substantially similar to the effect of a North Carolina
law declared unconstitutional by the Supreme Court in
Hunt, supra. Both the state statute in Hunt and the
Florida statute at issue here impose requirements that
significantly burden the ability of certain out-of-state
companies to compete within the state while having
no, or virtually no, impact on the operations of similar
in-state companies. See Hunt 432 U.S. at 350. Moreover, neither the statute in Hunt, which was ostensibly
enacted to eliminate the problems of deception and
confusion in grading apples, nor the Florida statute
here adequately serve legitimate local purposes, and
appear in fact to have been enacted for the purpose of
protecting local companies from competition from outof-state companies. Id. at 353.
The Florida statute may also be distinguished from
the statutes upheld by the Court in Exxon Corp. v.
Governor of Maryland, 437 U.S. 117 (1978), and
Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456
(1981). In both Exxon and Minnesota v. Clover Leaf,
entities of the same type, whether located inside or
outside of the state, were in practice treated similarly
by the state statutes at issue. In Exxon, the statute
affected only out-of-state oil refiners because there
were in fact no Maryland oil refiners at that time.
Similarly, in Minnesota v. Clover Leaf, most plastic
container manufacturers affected by the state statute
were located outside of Minnesota. In both cases,
however, there was no bar to the establishment of a
Maryland oil refiner or to the establishment of a plastic
container manufacturer in Minnesota, and, in both
cases, any in-state companies that existed or were
subsequently established would in fact have been
subject to the same state statutory requirements and
practical effects of those statutory requirements as
similar institutions located out-of-state. 13
13. The Florida statute here may also be distinguished from the
Indiana statute reviewed by the Court in CTS Corp. v. Dynamics
Corp., 55 U.S.L.W. 4478 (U.S. April 21, 1987). In that case, while the
record suggested that, as a practical matter, most tender offers
affected by the Indiana statute are launched by offerors located
outside Indiana, the Indiana statute in practice imposed the same
burden on offerors, whether located inside or outside Indiana. Id. at
4483. As discussed above, the Florida statute at issue here, in
practice, imposes a greater burden on out-of-state bank holding
companies than on in-state bank holding companies.
616
Federal Reserve Bulletin • July 1987
Such is not the case here. As discussed above, the
Florida statute in actual effect imposes a significant
burden on out-of-state bank holding companies that is
not similarly borne by Florida bank holding companies. 14 In addition, unlike the statute in Exxon and
Minnesota v. Clover Leaf, the Florida statute directly
eliminates interstate commerce by foreclosing to out-ofstate bank holding companies the only vehicle available
to them to operate a deposit-taking banking institution in
Florida in competition with Florida bank holding companies, which as noted, are not affected in any manner by
the Florida statute in their ability to operate deposittaking institutions in Florida. In short, Florida has
enacted a statute that only bank holding companies
located in Florida or the Southern region may comply
with, and, thereby, has effectively prevented out-ofregion bank holding companies from operating deposittaking banking institutions in Florida.
In conclusion, in the Board's view, the Florida
statute is not consistent with the Commerce Clause
because it "discriminates among affected business
entities according to the extent of their contacts with
the local economy . . . [and] in actual effect . . .
displays a local favoritism or protectionism that significantly alters its Commerce Clause status." Lewis, 447
U.S. at 42.
A state statute that imposes a discriminatory burden
on interstate commerce may nonetheless withstand
constitutional challenge if the statute is authorized by
Congress. Northeast, All U.S. at 174 (the Douglas
Amendment authorizes states to discriminate against
out-of-state bank holding companies in the acquisition
of banks located within the state). Florida's ban on
nonbank banks is not authorized by federal statute,
however. As noted above, the Supreme Court has
determined that so-called deposit-taking nonbank
banks are not "banks" for purposes of the BHC Act.
Dimension, supra. As a result, the acquisition of a
deposit-taking nonbank bank is deemed to be the
acquisition of a nonbanking company subject to section 4 of the BHC Act, and not within the scope of the
Douglas Amendment, which is limited to the acquisition under section 3 of the BHC Act of banks as
defined by the Act. Florida Department of Banking
and Finance, supra. The Supreme Court determined
in Lewis, supra, that the Douglas Amendment to the
BHC Act does not grant the states authority to limit
the acquisition of a nonbanking company by out-ofstate bank holding companies, and that the authority
reserved to the states in section 7 of the BHC Act
14. In Lewis, 447 U.S. at 42, the Supreme Court stated that "the
absence of a similar discrimination between interstate and local
producer-refiners was a most critical factor in Exxon."
applies only to state legislation that operates within the
boundaries of the Commerce Clause. Lewis, 447 U.S.
at 47, 49. Thus, the provisions of the BHC Act do not
authorize the states to restrict the acquisition of local
nonbank banks in a manner that is not consistent with
the Commerce Clause.
Accordingly, the Board believes that the Florida
statute in this case does not meet the requirements for
valid state action under the Commerce Clause of the
U.S. Constitution and relevant Supreme Court decisions as the statute applies to prohibit the ownership of
nonbank banks in Florida by bank holding companies.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
Chemical New York Corporation
New York, New York
Order Conditionally Approving Applications to
Underwrite and Deal in Certain Securities to a
Limited Extent and to Place Commercial Paper
Chemical New York Corporation, New York, New
York, a bank holding company within the meaning of
the Bank Holding Company Act ("BHC Act"), has
applied for the Board's approval under section 4(c)(8)
of the BHC Act and section 225.21(a) of the Board's
Regulation Y, 12 C.F.R. § 225.21(a), to engage through
a wholly owned subsidiary, Chemical Securities, Inc.
("Company"), in underwriting and dealing in, on a
limited basis, the following securities:
(1) municipal revenue bonds, including certain industrial development bonds;
(2) residential mortgage-related securities;
(3) consumer-receivable-related securities ("CRRs");
and
(4) commercial paper.1
Applicant has also applied separately for Company
to act as agent for issuers of commercial paper and
other short-term promissory notes in connection with
the placement of such notes with institutional customers.
Applicant has previously received approval under
section 4(c)(8) of the BHC Act for Company to underwrite and deal in U.S. government and agency and
state and municipal securities that state member banks
1. Applicant proposes to limit Company's underwriting and dealing
activity in these securities in the same manner and to the same extent
as proposed by Bankers Trust in its application to underwrite and deal
in these securities. See Citicorp!]. P. Morgan & Co. Incorporated!
Bankers Trust New York Corporation, Order dated April 30, 1987, pp.
17-18 n . l l .
Legal Developments
are authorized to underwrite and deal in under section
16 of the Banking Act of 1933 (the "Glass-Steagall
Act") (12 U.S.C. § 24 Seventh) (hereinafter "eligible
securities"). 2 The proposed new underwriting and
dealing activities would be provided in addition to the
previously approved activities, with Company serving
customers through offices in New York.
Applicant, with total consolidated assets of $60.6
billion, is the seventh largest commercial banking
organization in the nation. 3 It operates 69 subsidiary
banks in New York, Delaware, Colorado, Florida, and
Texas and engages directly and through subsidiaries in
a broad range of permissible nonbanking activities.
Notice of the applications, affording interested persons an opportunity to submit comments on the proposals, has been published (51 Federal Register 42,003
and 42,300 (1986)). The Board received two comments
on each proposal. The Securities Industry Association
("SIA"), a trade association of the investment banking industry, opposes the applications for the reasons
stated in its earlier protests to similar applications by
Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust New York Corporation. The Dealer Bank
Association commented in favor of the applications.
On April 30, the Board approved applications by
Citicorp, J.P. Morgan and Bankers Trust to underwrite and deal in, through their eligible securities
underwriting subsidiaries, 1-4 family mortgagebacked securities, municipal revenue bonds (and certain industrial development bonds) and (except for
Citicorp) commercial paper. 4 The Board concluded
that the underwriting subsidiaries would not be "engaged principally" in underwriting or dealing in securities within the meaning of section 20 of the GlassSteagall Act 5 provided they derived no more than 5
percent of their total gross revenues from underwriting
and dealing in the approved securities over any two
year period and their underwriting and dealing activities did not exceed 5 percent of the market for each
particular type of security involved. The Board further
found that, subject to the prudential framework of
limitations established in those cases to address the
potential for conflicts of interest, unsound banking
practices or other adverse effects, the proposed underwriting and dealing activities were so closely related to
2. These activities are authorized for bank holding companies
under section 225.25(b)(16) of Regulation Y. 12 C.F.R.
§ 225.25(b)(16).
3. Banking data are as of December 31, 1986.
4. CiticorplMorganlBankers Trust, supra.
5. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits
the affiliation of a member bank with "any corporation . . . engaged
principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of
stocks, bonds, debentures, notes, or other securities . . . ."
617
banking as to be a proper incident thereto within the
meaning of section 4(c)(8) of the BHC Act. In the case
of CRRs, the Board concluded that the record then
before it did not provide a sufficient evidentiary basis
for it to make the formal finding required by the BHC
Act, but stated that it would reconsider the matter
within 60 days of its Order on the basis of fuller
submissions.
For the reasons set forth in the Board's Citicorp/
Morgan/Bankers Trust Order, the Board concludes
that Applicant's proposal for Company to underwrite
and deal in municipal revenue bonds, 6 commercial
paper and 1-4 family mortgage-related securities
would not result in a violation of section 20 of the
Glass-Steagall Act and is closely related and a proper
incident to banking within the meaning of section
4(c)(8) of the BHC Act, provided Applicant limits
Company's activities as provided in the Citicorp/
Morgan/Bankers Trust Order. The Board will reconsider the permissibility of Applicant's proposal with
respect to CRRs within 60 days. Accordingly, the
Board has determined to approve the underwriting
application subject to all of the terms and conditions
established in the CiticorplMorganlBankers
Trust Order. The Board hereby adopts and incorporates herein
by reference the reasoning and analysis contained in
the CiticorplMorganlBankers
Trust Order.
For the reasons set forth in the Board's Bankers
Trust commercial paper placement decision, 7 the
Board concludes that Applicant's proposal to place
commercial paper is also consistent with section 20 of
the Glass-Steagall Act and permissible for bank holding companies under section 4(c)(8) of the BHC Act,
subject to the prudential limitations of that Order and
the CiticorplMorganlBankers
Trust Order.
The Board's approval of these applications extends
only to activities conducted within the limitations of
the CiticorplMorganlBankers
Trust Order and the
Bankers Trust commercial paper placement Order,
including the Board's reservation of authority to estab-
6. The industrial development bonds approved in those applications and for Applicant in this case are only those tax exempt bonds in
which the governmental issuer, or the governmental unit on behalf of
which the bonds are issued, is the owner for federal income tax
purposes of the financed facility (such as airports, mass commuting
facilities, and water pollution control facilities). Without further
approval from the Board, Company may underwrite or deal in only
these types of industrial development bonds.
7. Bankers Trust New York Corporation, 73 FEDERAL RESERVE
BULLETIN 138 (1987). Company may underwrite, deal in and place
only commercial paper that is exempt from the registration and
prospectus requirements of the Securities Act of 1933 and that is short
term, of prime quality, and issued in denominations no smaller than
$100,000. Applicant has stated the paper will be issued or backed by
large companies and sold to financially sophisticated corporate and
other institutional investors.
618
Federal Reserve Bulletin • July 1987
lish additional limitations to ensure that the subsidiary's activities are consistent with safety and soundness, conflict of interest and other relevant
considerations under the BHC Act. Underwriting and
dealing in the approved securities, or acting as agent
for the placement of commercial paper, in any manner
other than as approved in those Orders8 is not within
the scope of the Board's approval and is not authorized for Company.
As the Board noted in the Citicorp!Morgan!Bankers
Trust Order, Congress has under consideration legislation that would prohibit Board approval of an underwriting application, such as this, between March 6,
1987 and March 1, 1988. While this moratorium legislation has not yet been enacted into law, the Board calls
to Applicant's attention that it may be required by
subsequent Congressional action to cease its underwriting and dealing activities approved in this Order.
The Board retains jurisdiction over the applications to
act to carry out the requirements of any legislation
adopted by Congress that would affect Applicant's
conduct of underwriting and dealing activities under
this Order and the BHC Act.
The Board's determination is subject to all of the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
to the Board's authority to require modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with, and to prevent
evasion of, the provisions of the BHC Act and the
Board's regulations and orders issued thereunder.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
May 18, 1987.
Voting for this action: Governors Johnson, Seger, and
Heller. Voting against this action: Chairman Volcker and
Governor Angell.
Dissenting Statement
Governor Angell
of Chairman Volcker and
For the reasons set forth in our dissenting statement in
the Citicorp!Morgan!Bankers
Trust Order, we regret
we are unable to join the majority in approving this
application.
May 18, 1987
Citicorp
New York, New York
Order Approving Application to Underwrite and
Deal in Commercial Paper to a Limited Extent
Citicorp, New York, New York, a bank holding company within the meaning of the Bank Holding Company Act, 12 U.S.C. § 1841 et seq. ("BHC Act"), has
applied pursuant to section 4(c)(8) of the BHC Act
(12 U.S.C. § 1843(c)(8)) and section 225.21(a) of the
Board's Regulation Y (12 C.F.R. § 225.21(a)) to
engage through Citicorp Securities, Inc. ("CSI"), a
wholly owned subsidiary, in underwriting and dealing
in commercial paper to a limited extent. 1
Applicant has previously received Board approval
for CSI to underwrite and deal in U.S. government and
agency and state and municipal securities that state
member banks are authorized to underwrite and deal
in under section 16 of the Banking Act of 1933 (the
"Glass-Steagall Act") (12 U.S.C. § 24 Seventh)
(hereinafter "eligible securities"). 2 On April 30, 1987,
the Board authorized Citicorp to engage through CSI
in underwriting and dealing in 1-4 family mortgagebacked securities and municipal revenue bonds. 3
Citicorp, with total consolidated assets of $196
billion, is the largest banking organization in the
nation. 4 It operates eight banking subsidiaries and
engages directly and through subsidiaries in a broad
range of permissible nonbanking activities.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (52 Federal Register 13,317
(1987)). The Securities Industry Association ("SIA"),
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
8. Company may also provide services that are necessary incidents
to these approved activities. The incidental services should be taken
into account in computing the gross revenue and market share limits
on the underwriting subsidiaries' ineligible underwriting and dealing
activities, to the extent such limits apply to particular incidental
activities.
1. Applicant proposes to limit CSI's underwriting and dealing
activity in commercial paper as described in its application to underwrite and deal in municipal revenue bonds, mortgage-backed securities and consumer-receivable-related securities. See Citicorp, J. P.
Morgan & Co. Incorporated and Bankers Trust New York Corporation ("Citicorp/Morgan/Bankers Trust"), Order dated April 30, 1987,
pp. 17-18 n . l l .
2. These activities are authorized for bank holding companies
under section 225.25(b)(16) of Regulation Y. 12 C.F.R.
§ 225.25(b)(16).
3. Citicorp/Morgan/Bankers Trust, supra.
4. All asset data are as of December 31, 1986.
Legal Developments
a trade association of the investment banking industry,
opposes the application for the reasons stated in its
earlier protests to similar applications by Citicorp, J.P.
Morgan and Bankers Trust.
In its Citicorp/Morgan/Bankers
Trust decision, the
Board concluded that CSI and the eligible securities
underwriting subsidiaries of J.P. Morgan and Bankers
Trust would not be "engaged principally" in underwriting or dealing in municipal revenue bonds, 1-4
family mortgage-backed securities and (except for
Citicorp) commercial paper within the meaning of
section 20 of the Glass-Steagall Act 5 provided they
derived no more than 5 percent of their total gross
revenues from underwriting and dealing in the approved securities over any two year period and their
underwriting and dealing activities did not exceed 5
percent of the market for each particular type of
security involved. The Board further found that, subject to the prudential framework of limitations established in those cases to address the potential for
conflicts of interest, unsound banking practices or
other adverse effects, the proposed underwriting and
dealing activities were so closely related to banking as
to be a proper incident thereto within the meaning of
section 4(c)(8) of the BHC Act.
For the reasons set forth in the Citicorp!Morgan!
Bankers Trust Order,6 the Board concludes that Applicant's proposal for CSI to underwrite and deal in
commercial paper would not result in a violation of
section 20 of the Glass-Steagall Act and is closely
related and a proper incident to banking within the
meaning of section 4(c)(8) of the BHC Act provided
Applicant limits CSI's activities as provided in the
CiticorplMorganlBankers
Trust Order. Accordingly,
the Board has determined to approve the application
subject to the terms and conditions established in the
CiticorplMorganlBankers
Trust Order. The Board
hereby adopts and incorporates herein by reference
the reasoning and analysis contained in the Citicorp/
Morgan/Bankers Trust and Chase Orders.
The Board's approval of this application extends
only to activities conducted within the limitations of
the CiticorplMorganlBankers
Trust Order, including
the Board's reservation of authority to establish addi-
5. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits
the affiliation of a member bank with "any corporation . . . engaged
principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of
stocks, bonds, debentures, notes, or other securities . . . ."
6. In The Chase Manhattan Corporation, 73 FEDERAL RESERVE
BULLETIN 367 (1987), the Board found that underwriting commercial
paper was closely related to banking under section 4(c)(8) of the BHC
Act. The CiticorplMorganlBankers Trust decision incorporated these
findings.
619
tional limitations to ensure that the subsidiary's activities are consistent with safety and soundness, conflict
of interest and other relevant considerations under the
BHC Act. Underwriting and dealing in commercial
paper in any manner other than as approved in that
Order7 is not within the scope of the Board's approval
and is not authorized for CSI.
As the Board noted in the
CiticorplMorganlBankers
Trust Order, Congress has under consideration legislation that would prohibit Board approval of an underwriting application, such as this, between March 6,
1987 and March 1, 1988. While this moratorium legislation has not yet been enacted into law, the Board calls
to Applicant's attention that it may be required by
subsequent Congressional action to cease its underwriting and dealing activities approved in this Order.
The Board retains jurisdiction over the application to
act to carry out the requirements of any legislation
adopted by Congress that would affect Applicant's
conduct of underwriting and dealing activities under
this Order and the BHC Act.
The Board's determination is subject to all of the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
to the Board's authority to require modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with, and to prevent
evasion of, the provisions of the BHC Act and the
Board's regulations and orders issued thereunder.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
May 18, 1987.
Voting for this action: Governors Johnson, Seger, and
Heller. Voting against this action: Chairman Volcker and
Governor Angell.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
7. CSI may also provide services that are necessary incidents to
these approved activities. The incidental services should be taken into
account in computing the gross revenue and market share limits on the
underwriting subsidiaries' ineligible underwriting and dealing activities, to the extent such limits apply to particular incidental activities.
620
Federal Reserve Bulletin • July 1987
Dissenting Statement
Governor Angell
of Chairman Volcker and
Applicant has also applied for Company to act as
agent for issuers of commercial paper in connection
with the placement of such notes with institutional
customers.
Applicant has previously received approval under
section 4(c)(8) of the BHC Act for Company to underwrite and deal in U.S. government and agency and
state and municipal securities that state member banks
are authorized to underwrite and deal in under section
16 of the Banking Act of 1933 (the "Glass-Steagall
Act") (12 U.S.C. § 24 Seventh) (hereinafter "eligible
securities"). 2 In addition, Company, pursuant to
Board authorization, engages in securities brokerage
services pursuant to section 225.25(b)(15) of Regulation Y, 12 C.F.R. § 225.25(b)(15). These brokerage
services are conducted separately from the eligible
securities underwriting and dealing activity. The proposed new underwriting and dealing activities would
be provided in addition to the previously approved
activities, with Company serving customers through
offices in New York.
Applicant, with total consolidated assets of $75.8
billion, is the fifth largest commercial banking organization in the nation. 3 It operates two subsidiary banks
in New York and Delaware and engages directly and
through subsidiaries in a broad range of permissible
nonbanking activities.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (52 Federal Register 6,218
(1987)). The Board received two comments on the
proposal. The Securities Industry Association
("SIA"), a trade association of the investment banking industry, opposes the application for the reasons
stated in its earlier protests to similar applications by
Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust New York Corporation. The Dealer Bank
Association commented in favor of the application.
On April 30, the Board approved applications by
Citicorp, J.P. Morgan and Bankers Trust to underwrite and deal in, through their eligible securities
underwriting subsidiaries, 1-4 family mortgagebacked securities, municipal revenue bonds (and certain industrial development bonds) and (except for
Citicorp) commercial paper. 4 The Board concluded
that the underwriting subsidiaries would not be "engaged principally" in underwriting or dealing in securities within the meaning of section 20 of the GlassSteagall Act 5 provided they derived no more than 5
percent of their total gross revenues from underwriting
and dealing in the approved securities over any two
year period and their underwriting and dealing activities did not exceed 5 percent of the market for each
particular type of security involved. The Board further
found that, subject to the prudential framework of
limitations established in those cases to address the
potential for conflicts of interest, unsound banking
practices or other adverse effects, the proposed under-
1. Applicant proposes to limit Company's underwriting and dealing
activity in these securities in the same manner and to the same extent
as proposed by Bankers Trust in its application to underwrite and deal
in these securities. See Citicorp, J.P. Morgan & Co. Incorporated and
Bankers Trust New York Corporation, Order dated April 30, 1987, pp.
17-18 n.l 1.
2. These activities are authorized for bank holding companies
under section 225.25(b)(16) of Regulation Y.
12 C.F.R.
§ 225.25(b)(16).
3. Asset data are as of March 31, 1987. Banking data are as of
December 31, 1986.
4. Citicorp/MorganlBankers Trust, supra.
5. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits
the affiliation of a member bank with "any corporation . . . engaged
principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of
stocks, bonds, debentures, notes, or other securities . . . ."
For the reasons set forth in our dissenting statement in
the Citicorp!Morgan!Bankers
Trust order, we regret
we are unable to join the majority in approving this
application.
May 18, 1987
Manufacturers Hanover Corporation
New York, New York
Order Conditionally Approving Application to
Underwrite and Deal in Certain Securities to a
Limited Extent and to Place Commercial Paper
Manufacturers Hanover Corporation, New York,
New York, a bank holding company within the meaning of the Bank Holding Company Act ("BHC Act"),
has applied for the Board's approval under section
4(c)(8) of the BHC Act and section 225.21(a) of the
Board's Regulation Y, 12 C.F.R. § 225.21(a), to
engage through a wholly owned subsidiary, Manufacturers Hanover Securities Corporation ("Company"),
in underwriting and dealing in, on a limited basis, the
following securities:
(1) municipal revenue bonds, including certain industrial development bonds;
(2) residential mortgage-related securities;
(3) consumer-receivable-related securities ("CRRs");
and
(4) commercial paper. 1
Legal Developments
writing and dealing activities were so closely related to
banking as to be a proper incident thereto within the
meaning of section 4(c)(8) of the BHC Act. In the case
of CRRs, the Board concluded that the record then
before it did not provide a sufficient evidentiary basis
for it to make the formal finding required by the BHC
Act, but stated that it would reconsider the matter
within 60 days of its Order on the basis of fuller
submissions.
For the reasons set forth in the Board's Citicorp!
Morgan!Bankers Trust Order, the Board concludes
that Applicant's proposal to engage through Company
in underwriting and dealing in municipal revenue
bonds, 6 commercial paper and 1-4 family mortgagerelated securities would not result in a violation of
section 20 of the Glass-Steagall Act and is closely
related and a proper incident to banking within the
meaning of section 4(c)(8) of the BHC Act provided
Applicant limits Company's activities as provided in
the CiticorplMorganlBankers
Trust Order. The Board
will reconsider the permissibility of Applicant's proposal with respect to CRRs within 60 days. Accordingly, the Board has determined to approve the underwriting application subject to all of the terms and
conditions established in the
CiticorplMorganlBankers
Trust Order. The Board hereby adopts and incorporates herein by reference the reasoning and analysis
contained in the CiticorplMorganlBankers
Trust Order.
For the reasons set forth in the Board's Order in
Bankers Trust approving commercial paper placement
activity, the Board concludes that Applicant's proposal to place commercial paper is also consistent with
section 20 of the Glass-Steagall Act and permissible
for bank holding companies under section 4(c)(8) of
the BHC Act, subject to the prudential limitations of
that Order and the CiticorplMorganlBankers
Trust
Order.7
The Board's approval of this application extends
only to activities conducted within the limitations of
the CiticorplMorganlBankers
Trust Order and the
Bankers Trust commercial paper placement Order,
6. The industrial development bonds approved in those applications and for Applicant in this case are only those tax exempt bonds in
which the governmental issuer, or the governmental unit on behalf of
which the bonds are issued, is the owner for federal income tax
purposes of the financed facility (such as airports, mass commuting
facilities, and water pollution control facilities). Without further
approval from the Board, Company may underwrite or deal in only
these types of industrial development bonds.
7. Bankers Trust New York Corporation, 73 FEDERAL RESERVE
BULLETIN 138 (1987). Company may underwrite, deal in and place
only commercial paper that is exempt from the registration and
prospectus requirements of the Securities Act of 1933 and that is short
term, of prime quality, and issued in denominations no smaller than
$100,000. Applicant has stated the paper will be issued or backed by
large companies and sold to financially sophisticated corporate and
other institutional investors.
621
including the Board's reservation of authority to establish additional limitations to ensure that the subsidiary's activities are consistent with safety and soundness, conflict of interest and other relevant
considerations under the BHC Act. Underwriting and
dealing in the approved securities in any manner other
than as approved in those Orders8 is not within the
scope of the Board's approval and is not authorized for
Company.
As the Board noted in the
CiticorplMorganlBankers
Trust Order, Congress has under consideration legislation that would prohibit Board approval of an underwriting application, such as this, between March 6,
1987 and March 1, 1988. While this moratorium legislation has not yet been enacted into law, the Board calls
to Applicant's attention that it may be required by
subsequent Congressional action to cease its underwriting and dealing activities approved in this Order.
The Board retains jurisdiction over the application to
act to carry out the requirements of any legislation
adopted by Congress that would affect Applicant's
conduct of underwriting and dealing activities under
this Order and the BHC Act.
The Board's determination is subject to all of the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
to the Board's authority to require modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with, and to prevent
evasion of, the provisions of the BHC Act and the
Board's regulations and orders issued thereunder.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of New
York, pursuant to delegated authority.
By order of the Board of Governors, effective
May 18, 1987.
Voting for this action: Governors Johnson, Seger, and
Heller. Voting against this action: Chairman Volcker and
Governor Angell.
JAMES M C A F E E
[SEAL]
Associate
Secretary
of the Board
8. Company may also provide services that are necessary incidents
to these approved activities. The incidental services should be taken
into account in computing the gross revenue and market share limits
on the underwriting subsidiaries' ineligible underwriting and dealing
activities, to the extent such limits apply to particular incidental
activities.
622
Federal Reserve Bulletin • July 1987
Dissenting Statement
Governor Angell
of Chairman Volcker and
For the reasons set forth in our dissenting statement in
the CiticorplMorgan/Bankers
Trust Order, we regret
we are unable to join the majority in approving this
application.
May 18, 1987
Security Pacific Corporation
Los Angeles, California
Order Conditionally Approving Application to
Underwrite and Deal in Certain Securities to a
Limited Extent
Security Pacific Corporation, Los Angeles, California,
a bank holding company within the meaning of the
Bank Holding Company Act ("BHC Act"), has applied for the Board's approval under section 4(c)(8) of
the BHC Act and section 225.21(a) of the Board's
Regulation Y, 12 C.F.R. § 225.21(a), to engage
through a wholly owned subsidiary, Security Pacific
Securities, Inc. ("Company"), in underwriting and
dealing in, on a limited basis, the following securities:
(1) municipal revenue bonds, including certain industrial development bonds;
(2) residential mortgage-related securities;
(3) consumer-receivable-related securities ("CRRs");
and
(4) commercial paper.1
Applicant has previously received approval under
section 4(c)(8) of the BHC Act for Company to underwrite and deal in U.S. government and agency and
state and municipal securities that state member banks
are authorized to underwrite and deal in under section
16 of the Banking Act of 1933 (the "Glass-Steagall
Act") (12 U.S.C. § 24 Seventh) (hereinafter "eligible
securities"). 2 The proposed new underwriting and
dealing activities would be provided in addition to the
previously approved eligible securities activities, with
Company serving customers through offices in Los
Angeles.
1. Applicant proposes to limit Company's underwriting and dealing
activity in these securities in the same manner and to the same extent
as proposed by Bankers Trust in its application to underwrite and deal
in these securities. See Citicorp, J.P. Morgan & Co. Incorporated and
Bankers Trust New York Corporation, Order dated April 30, 1987, pp.
17-18 n . l l .
2. These activities are authorized for bank holding companies
under section 225.25(b)(16) of Regulation Y.
12 C.F.R.
§ 225.25(b)(16).
Applicant, with total consolidated assets of $64.0
billion, is the sixth largest commercial banking organization in the nation. 3 It operates five subsidiary banks
in California, Arizona, Washington and Oregon and
engages directly and through subsidiaries in a broad
range of permissible nonbanking activities.
Notice of the application, affording interested persons an opportunity to submit comments on the proposal, has been published (52 Federal Register 8,365
(1987)). The Board received two comments on the
proposal. The Securities Industry Association
("SIA"), a trade association of the investment banking industry, opposes the application for the reasons
stated in its earlier protests to similar applications by
Citicorp, J.P. Morgan & Co. Incorporated and Bankers Trust N e w York Corporation. The Dealer Bank
Association commented in favor of the application.
On April 30, the Board approved applications by
Citicorp, J.P. Morgan and Bankers Trust to underwrite and deal in, through their eligible securities
underwriting subsidiaries, 1-4 family mortgagebacked securities, municipal revenue bonds (including
certain industrial development bonds) and (except for
Citicorp) commercial paper. 4 The Board concluded
that the underwriting subsidiaries would not be "engaged principally" in underwriting or dealing in securities within the meaning of section 20 of the GlassSteagall Act 5 provided they derived no more than 5
percent of their total gross revenues from underwriting
and dealing in the approved securities over any two
year period and their underwriting and dealing activities did not exceed 5 percent of the market for each
particular type of security involved. The Board further
found that, subject to the prudential framework of
limitations established in those cases to address the
potential for conflicts of interest, unsound banking
practices or other adverse effects, the proposed underwriting and dealing activities were so closely related to
banking as to be a proper incident thereto within the
meaning of section 4(c)(8) of the BHC Act. In the case
of CRRs, the Board concluded that the record then
before it did not provide a sufficient evidentiary basis
for it to make the formal findings required by the BHC
Act, but stated that it would reconsider the matter
within 60 days of its Order on the basis of fuller
submissions.
3. Asset data are as of March 31, 1987. Banking data are as of
December 31, 1986.
4. CiticorplMorgan/Bankers Trust, supra.
5. Section 20 of the Glass-Steagall Act (12 U.S.C. § 377) prohibits
the affiliation of a member bank with "any corporation . . . engaged
principally in the issue, flotation, underwriting, public sale, or distribution at wholesale or retail or through syndicate participation of
stocks, bonds, debentures, notes, or other securities . . . ."
Legal Developments
For the reasons set forth in the Board's Citicorp/
Morgan/Bankers Trust Order, the Board concludes
that Applicant's proposal to engage through Company
in underwriting and dealing in municipal revenue
bonds, 6 commercial paper and 1-4 family mortgagerelated securities would not result in a violation of
section 20 of the Glass-Steagall Act and is closely
related and a proper incident to banking within the
meaning of section 4(c)(8) of the BHC Act provided
Applicant limits Company's activities as provided in
the Citicorp/Morgan/Bankers
Trust Order. The Board
will reconsider the permissibility of Applicant's proposal with respect to CRRs within 60 days. Accordingly, the Board has determined to approve the underwriting application subject to all of the terms and
conditions established in the Citicorp!Morgan!Bankers
Trust Order. The Board hereby adopts and incorporates herein by reference the reasoning and analysis
contained in the Citicorp!Morgan/Bankers
Trust Order.
The Board's approval of this application extends
only to activities conducted within the limitations of
the Citicorp!Morgan!Bankers
Trust Order, including
the Board's reservation of authority to establish additional limitations to ensure that the subsidiary's activities are conducted consistent with safety and soundness, conflict of interest and other relevant
considerations under the BHC Act. Underwriting and
dealing in the approved securities in any manner other
than as approved in that Order7 is not within the scope
of the Board's approval and is not authorized for
Company.
As the Board noted in the Citicorp!Morgan!Bankers
Trust Order, Congress has under consideration legislation that would prohibit Board approval of an underwriting application, such as this, between March 6,
1987 and March 1, 1988. While this moratorium legisla-
6. The industrial development bonds approved in those applications and for Applicant in this case are only those tax exempt bonds in
which the governmental issuer, or the governmental unit on behalf of
which the bonds are issued, is the owner for federal income tax
purposes of the financed facility (such as airports, mass commuting
facilities, and water pollution control facilities). Without further
approval from the Board, Company may underwrite or deal in only
these types of industrial development bonds.
7. Company may also provide services that are necessary incidents
to these approved activities. The incidental services should be taken
into account in computing the gross revenue and market share limits
on the underwriting subsidiaries' ineligible underwriting and dealing
activities, to the extent such limits apply to particular incidental
activities.
Applicant has proposed to place third party commercial paper as
agent as an incident to its commercial paper underwriting and dealing
activity. In this case, the Board concludes that Company may, as an
incident to its commercial paper underwriting and dealing activities,
engage in commercial paper placement provided Company observes
the prudential limitations set forth by the Board in the Citicorp/
Morgan/Bankers Trust Order and Bankers Trust New York Corporation,
7 3 FEDERAL RESERVE BULLETIN 138 ( 1 9 8 7 ) .
623
tion has not yet been enacted into law, the Board calls
to Applicant's attention that it may be required by
subsequent Congressional action to cease its underwriting and dealing activities approved in this Order.
The Board retains jurisdiction over the application to
act to carry out the requirements of any legislation
adopted by Congress that would affect Applicant's
conduct of underwriting and dealing activities under
this Order and the BHC Act.
The Board's determination is subject to all of the
conditions set forth in the Board's Regulation Y,
including those in sections 225.4(d) and 225.23(b), and
to the Board's authority to require modification or
termination of the activities of a bank holding company or any of its subsidiaries as the Board finds
necessary to assure compliance with, and to prevent
evasion of, the provisions of the BHC Act and the
Board's regulations and orders issued thereunder.
This transaction shall not be consummated later
than three months after the effective date of this
Order, unless such period is extended for good cause
by the Board, or by the Federal Reserve Bank of San
Francisco, pursuant to delegated authority.
By order of the Board of Governors, effective
May 18, 1987.
Voting for this action: Governors Johnson, Seger, and
Heller. Voting against this action: Chairman Volcker and
Governor Angell.
JAMES M C A F E E
[SEAL]
Dissenting Statement
Governor Angell
Associate
Secretary
of the Board
of Chairman Volcker and
For the reasons set forth in our dissenting statement in
the Citicorp!Morgan!Bankers
Trust Order, we regret
we are unable to join the majority in approving this
application.
May 18, 1987
Orders Approved
Under the Bank Merger Act
Carney Bank
Boynton Beach, Florida
Carney Bank of Broward County
Sunrise, Florida
Order Approving Merger of Banks
Carney Bank, Boynton Beach, Florida, and Carney
Bank of Broward County, Sunrise, Florida ("Sunrise
624
Federal Reserve Bulletin • July 1987
Bank"), have applied for the Board's approval under
the Bank Merger Act (12 U.S.C. § 1828(c)) to merge
under the title and charter of Carney Bank.
Notice of the application, affording interested persons an opportunity to submit comments and views,
has been given in accordance with the Bank Merger
Act and the Board's Rules of Procedure (12 C.F.R.
§ 262.3(b)). As required by the Bank Merger Act,
reports on the competitive effects of the transaction
were requested from the United States Attorney General, the Comptroller of the Currency, and the Federal
Deposit Insurance Corporation. The time for filing
comments has expired, and the Board has considered
the application and all comments received in light of
the factors set forth in section 18(c) of the Bank
Merger Act.
Carney Bank, a Florida corporation with one
branch, is one of the smallest commercial banking
organization in Florida, 1 controlling total deposits of
$8.9 million, representing less than 1 percent of total
deposits in commercial banks in the state. Sunrise
Bank, which is also a Florida corporation with one
branch, is one of the smallest commercial banking
organizations in Florida, controlling total deposits of
$7.8 million, representing less than one percent of total
deposits in commercial banks in the state. The resultant bank would control total deposits of $16.7 million,
representing less than 1 percent of total deposits in
commercial banks in the state.
Carney Bank and Sunrise Bank do not operate in the
same banking market. In view of this fact and the fact
that this proposal represents a reorganization of existing ownership interests, consummation of the proposed transaction would not result in any significant
adverse effects on competition or increase the concentration of banking resources in any relevant area.
This proposed merger will result in a reduction in
operating expenses and will be accompanied by an
injection of additional capital. In view of these facts
and other facts of record, the financial and managerial
resources of Carney Bank and Sunrise Bank are
considered consistent with approval. Considerations
relating to the convenience and needs of the community to be served are also consistent with approval.
Based on the foregoing and other facts of record, the
Board has determined that consummation of the transaction would be in the public interest and that the
application is approved for the reasons summarized
above. The transaction shall not be consummated
before the thirtieth calendar day following the effective
date of this Order, or later than three months after the
effective date of this Order, unless such period is
extended for good cause by the Board or by the
Federal Reserve Bank of Atlanta, acting pursuant to
delegated authority.
By order of the Board of Governors, effective
May 7, 1987.
Voting for this action: Chairman Volcker and Governors
Johnson, Seger, Angell, and Heller.
JAMES M C A F E E
1. All banking data are as of October 31, 1986.
[SEAL]
Associate
Secretary
of the Board
Legal Developments
ORDERS APPROVED
By Federal Reserve
UNDER BANK HOLDING
COMPANY
625
ACT
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
Applicant
ALLIANCE FINANCIAL
CORPORATION,
Dearborn, Michigan
Belle Fourche Bancshares, Inc.,
Belle Fourche, South Dakota
Cherry Bancorporation, Inc.,
Cherry, Illinois
Chesapeake Bank Corporation,
Chesapeake, Virginia
Citizens First Bancorp, Inc.,
Union City, Tennessee
Citizens State Bank Employee
Stock Ownership Trust,
Trenton, Tennessee
City National Bancshares, Inc.,
Miami, Florida
CNB Financial Corporation,
Litchfield, Minnesota
Collegiate Peaks
Bancorporation, Inc.,
Buena Vista, Colorado
Connecticut Bancorp, Inc.,
Norwalk, Connecticut
Dime Financial Corp.,
West Chester, Pennsylvania
First Azle Bancshares, Inc.,
Azle, Texas
First Caprock Bancshares, Inc.
Claude, Texas
First Citizens Banc Corp.,
Sandusky, Ohio
First City Corporation
Employee Stock Ownership
Trust,
Fort Smith, Arkansas
First Community Corporation,
Woodstock, Georgia
Bank(s)
Reserve
Bank
Effective
date
Michigan Bank—Huron,
East Tawas, Michigan
Chicago
April 24, 1987
Pioneer Bank and Trust
Company,
Bell Fourche, South Dakota
State Bank of Cherry,
Cherry, Illinois
American Bank,
Newport News, Virginia
Bank of Obion County,
Union City, Tennessee
Citizens State Bank,
Trenton, Tennessee
Minneapolis
April 30, 1987
Chicago
April 22, 1987
Richmond
May 8, 1987
St. Louis
April 23, 1987
St. Louis
April 30, 1987
Atlanta
April 24, 1987
Minneapolis
May 4, 1987
Kansas City
May 4, 1987
N e w York
May 5, 1987
Philadelphia
April 14, 1987
Dallas
May 15, 1987
Dallas
May 8, 1987
Cleveland
May 8, 1987
St. Louis
May 6, 1987
Atlanta
May 14, 1987
City National Bank of Florida,
Hallandale, Florida
City National Bank Corporation,
Miami, Florida
First Bank Central (N.A.)Litchfield,
Litchfield, Minnesota
Collegiate Peaks Bank,
Buena Vista, Colorado
The Norwalk Bank,
Norwalk, Connecticut
The Dime Savings Bank of
Chester County,
West Chester, Pennsylvania
First National Bank of Azle,
Azle, Texas
The First National Bank of
Claude,
Claude, Texas
The Citizens Banking Company,
Sandusky, Ohio
First City Corporation,
Fort Smith, Arkansas
Community First Bank,
Woodstock, Georgia
626
Federal Reserve Bulletin • July 1987
Section 3—Continued
Applicant
First Gilmer Bankshares, Inc..
Gilmer, Texas
First Interstate Corporation of
Wisconsin,
Sheboygan, Wisconsin
First Jersey National
Corporation,
Jersey City, New Jersey
First Union Corporation,
Charlotte, North Carolina
First Virginia Banks, Inc.,
Falls Church, Virginia
First Wachovia Corporation,
Winston-Salem, North
Carolina
FMB Bankshares, Inc.,
Madison, South Dakota
F.N.B. Corporation,
Hermitage, Pennsylvania
Greenville Bancshares
Corporation,
Greenville, Texas
Gulf/Bay Financial Corporation,
Tampa, Florida
Gulf & Southern Financial
Corporation,
Fort Myers, Florida
Indiana United Bancorp,
Greensburg, Indiana
Lee Capital Corp.,
Fort Madison, Iowa
Liberty Bancshares, Inc.,
Ada, Ohio
Manteno Bancshares, Inc.,
Manteno, Illinois
Market Bancorporation, Inc.,
New Market, Minnesota
McLachlen Bancshares
Corporation,
Washington, D.C.
Mercantile Bancorporation Inc.,
St. Louis, Missouri
„ ., .
Bank(s)
Reserve
B&nk
Effective
^
The First National Bank of
Gilmer,
Gilmer, Texas
State Bank of Green Valley,
Green Valley, Wisconsin
Dallas
May 1, 1987
Chicago
May 15, 1987
Newmarket National Bank,
Fort Washington, Pennsylvania
New York
April 24, 1987
First Sarasota Bancorporation,
Tampa, Florida
First Virginia Bank—Clinch
Valley,
Richlands, Virginia
F.A. Bankshares, Inc.,
Monroe, Georgia
Richmond
April 22, 1987
Richmond
April 22, 1987
Richmond
April 23, 1987
First Madison Bank,
Madison, South Dakota
First County Bank,
Chardon, Ohio
American National Bank of
Greenville,
Greenville, Texas
Gulf/Bay Bank,
Tampa, Florida
Community National Bank of
Sarasota County,
Venice, Florida
The Peoples Bank,
Portland, Indiana
Lee County Bancorp, Inc.,
Fort Madison, Iowa
The Liberty National Bank of
Ada,
Ada, Ohio
First Midwest Bank/Bradley,
Bradley, Illinois
First State Bank of New Market,
New Market, Minnesota
McLachlen National Bank,
Washington, D.C.
Minneapolis
April 27, 1987
Cleveland
April 30, 1987
Dallas
April 22, 1987
Atlanta
April 23, 1987
Atlanta
April 24, 1987
Chicago
April 20, 1987
Chicago
April 23, 1987
Cleveland
May 8, 1987
Chicago
May 12, 1987
Minneapolis
May 5, 1987
Richmond
May 12, 1987
Mercantile Bank of Delaware,
New Castle, Delaware
St. Louis
May 8, 1987
Legal Developments
Section 3—Continued
* *>
Applicant
Mercantile Partners and F-K
Partnership,
Fort Worth, Texas
Landmark Financial Group of
Delaware,
Wilmington, Delaware
Landmark Service Corporation,
Fort Worth, Texas
Landmark Financial Group, Inc.,
Fort Worth, Texas
Merchants & Miners
Bancshares, Inc.,
Hibbing, Minnesota
Merchants National
Corporation,
Indianapolis, Indiana
Mountaineer Bankshares of
W. Va., Inc.,
Martinsburg, West Virginia
Mountaineer Bankshares of
W. Va., Inc.,
Martinsburg, West Virginia
NBD Bancorp, Inc.,
Detroit, Michigan
Northside Bancshares, Inc.,
Roswell, Georgia
NW Bancshares, Inc.,
Chippewa Falls, Wisconsin
Peoples Bancshares, Inc.,
Lewisville, Arkansas
Premier Bankshares
Corporation,
Tazewell, Virginia
Rainbow Investment Company,
Inc.,
Tuckerman, Arkansas
Randolph Bancshares, Inc.,
Oxford, Alabama
Republic Bancorp Inc.,
Flint, Michigan
Trustcorp, Inc.,
Toledo, Ohio
r> i / \
Bank(s)
Reserve
^
Effective
^
Landmark Bank-Mid Cities,
Euless, Texas
Security Bank of Arlington,
Arlington, Texas
Tarrant County Bancshares, Inc.,
Fort Worth, Texas
Dallas
April 24, 1987
Merchants & Miners State Bank
of Hibbing,
Hibbing, Minnesota
Indiana United Bancorp,
Greensburg, Indiana
Minneapolis
May 1, 1987
Chicago
April 20, 1987
Mercantile Bancorp, Inc.,
Moundsville, West Virginia
Richmond
May 5, 1987
Morgan Bancorp, Inc.,
Berkeley Springs, West
Virginia
N B D Battle Creek, National
Association,
Battle Creek, Michigan
The Northside Bank & Trust
Company,
Roswell, Georgia
The Northwestern Bank,
Chippewa Falls, Wisconsin
Peoples Bank and Loan
Company,
Lewisville, Arkansas
The Richlands National Bank,
Richlands, Virginia
Richmond
May 5, 1987
Chicago
May 5, 1987
Atlanta
May 6, 1987
Minneapolis
May 4, 1987
St. Louis
May 14, 1987
Richmond
April 22, 1987
Bank of Tuckerman,
Tuckerman, Arkansas
St. Louis
May 5, 1987
Alabanc, Inc.,
Wadley, Alabama
Republic Bank of Ann Arbor,
Ann Arbor, Michigan
Trustcorp Company, Dayton,
Dayton, Ohio
Atlanta
May 14, 1987
Chicago
April 24, 1987
Cleveland
May 6, 1987
627
628
Federal Reserve Bulletin • July 1987
Section 3—Continued
Applicant
U.S.B. Corporation,
Washington, Indiana
VALLEY BANC SERVICES
CORP.,
Antioch, Illinois
West Tennessee Bancorp, Inc.
Lexington, Tennessee
Worthington Bancshares, Inc.,
Worthington, Minnesota
Wyatt Bancshares, Inc.,
Calico Rock, Arkansas
Bank(s)
United Southwest Bank,
Washington, Indiana
State Bank of Osco,
Osco, Illinois
Henderson County Bank,
Lexington, Tennessee
First National Bank in
Worthington,
Worthington, Minnesota
The First National Bank of Izard
County,
Calico Rock, Arkansas
Reserve
Bank
Effective
date
St. Louis
April 24, 1987
Chicago
April 27, 1987
St. Louis
April 28, 1987
Minneapolis
May 11, 1987
St. Louis
May 8, 1987
Section 4
Applicant
Bank of New England
Corporation,
Boston, Massachusetts
Continental Illinois Corporation,
Chicago, Illinois
Delaware National Bankshares
Corp.,
Georgetown, Delaware
Nonbanking
Company/Activity
Reserve
Bank
Effective
date
Clayton, Polleys & Co., Inc.,
Boston, Massachusetts
Boston
May 13, 1987
Continental Capital Management
Corporation,
Chicago, Illinois
Kenneth White Insurance Agency
Inc.,
Lewes, Delaware
Chicago
May 6, 1987
Philadelphia
April 24, 1987
Section 3 and 4
Applicant
Draper Holding Company, Inc.
Draper, South Dakota
First of America
Bancorporation-Illinois, Inc.,
Libertyville, Illinois
Bank(s)/Nonbanking
Company
Draper State Bank,
Draper, South Dakota
First Insurance-Presho,
Presho, South Dakota
Hayes Insurance Agency,
Draper, South Dakota
Keystone Bancshares, Inc.,
Kankakee, Illinois
Keystone Bancshares Life
Insurance Co.,
Kankakee, Illinois
Keystone Data Corporation,
Kankakee, Illinois
Reserve
Bank
Effective
date
Minneapolis
April 28, 1987
Chicago
April 24, 1987
Legal Developments
Section 3 and 4—Continued
Bank(s)/Nonbanking
Company
Applicant
First of America Bank
Corporation,
Kalamazoo, Michigan
Lincoln Financial Corporation,
Fort Wayne, Indiana
Society for Savings Bancorp,
Inc.,
Hartford, Connecticut
ORDERS APPROVED
Keystone Bancshares, Inc.,
Kankakee, Illinois
Keystone Bancshares Life
Insurance Co.,
Kankakee, Illinois
Keystone Data Corporation,
Kankakee, Illinois
SSB Bancorp,
Shipshewana, Indiana
Shipshewana State Bank,
Shipshewana, Indiana
Shipshewana Insurance Agency,
Inc.,
LaGrange, Indiana
Society for Savings,
Hartford, Connecticut
Fidelity Acceptance Corporation,
Minneapolis, Minnesota
Society Mortgage Corporation,
Wethersfield, Connecticut
Financing for Science and
Industry, Inc.,
Hartford, Connecticut
UNDER THE BANK MERGER
By Federal Reserve
Effective
date
Chicago
April 24, 1987
Chicago
April 20, 1987
Boston
April 21, 1987
ACT
Banks
Applicant
Alpine Bank and Trust,
Glen wood Springs, Colorado
Bank of Lewanee,
Adrian, Michigan
First Virginia Bank—Clinch
Valley,
Richlands, Virginia
Newport News Interim Bank,
Newport News, Virginia
Security Bank Northeast,
Richmond, Michigan
Reserve
Bank
Bank(s)
Alpine Bank, Glen wood Springs
Mall,
Glenwood Springs, Colorado
Hudson State Savings Bank,
Hudson, Michigan
Clinch Valley Bank & Trust
Company,
Richlands, Virginia
American Bank,
Newport News, Virginia
Security Bank of Almont,
Almont, Michigan
Reserve
Bank
Effective
date
Kansas City
April 22, 1987
Chicago
May 15, 1987
Richmond
April 22, 1987
Richmond
May 8, 1987
Chicago
April 30, 1987
629
630
Federal Reserve Bulletin • July 1987
PENDING CASES INVOLVING
THE BOARD OF
GOVERNORS
This list of pending cases does not include suits against the Federal Reserve
Governors is not named a party.
Securities Industry Association
v. Board of Governors, et al., No. 87-1169 (D.C. Cir., filed April 17,
1987).
Jones v. Volcker, No. 87-0427 (D.D.C., filed Feb. 19,
1987).
Bankers Trust New York Corp. v. Board of Governors,
No. 87-1035 (D.C. Cir., filed Jan. 23, 1987).
Securities Industry Association v. Board of Governors, et al., No. 87-1030 (D.C. Cir., filed Jan. 20,
1987).
Grimm v. Board of Governors, No. 87-4006 (2nd Cir.,
filed Jan. 16, 1987).
Independent Insurance Agents of America, et al. v.
Board of Governors,
Nos. 86-1572, 1573, 1576
(D.C. Cir., filed Oct. 24, 1986).
Securities Industry Association v. Board of Governors, No. 86-2768 (D.D.C., filed Oct. 7, 1986).
Independent
Community
Bankers Association
of
South Dakota v. Board of Governors, No. 86-5373
(8th Cir., filed Oct. 3, 1986).
Jenkins v. Board of Governors, No. 86-1419 (D.C.
Cir., filed July 18, 1986).
Securities Industry Association v. Board of Governors, No. 86-1412 (D.C. Cir., filed July 14, 1986).
Adkins v. Board of Governors, No. 86-3853 (4th Cir.,
filed May 14, 1986).
Optical Coating Laboratory, Inc. v. United
States,
No. 288-86C (U.S. Claims Ct., filed May 6, 1986).
CBC, Inc. v. Board of Governors, No. 86-1001 (10th
Cir., filed Jan. 2, 1986).
Myers, et al. v. Federal Reserve Board, No. 85-1427
(D. Idaho, filed Nov. 18, 1985).
Souser, et al. v. Volcker, et al., No. 85-C-2370, et al.
(D. Colo., filed Nov. 1, 1985).
Banks in which the Board
of
Podolak v. Volcker, No. C85-0456, et al. (D. Wyo.,
filed Oct. 28, 1985).
Kolb v. Wilkinson, et al., No. C85-4184 (N.D. Iowa,
filed Oct. 22, 1985).
Farmer v. Wilkinson, et al., No. 4-85-CIVIL-1448 (D.
Minn., filed Oct. 21, 1985).
Kurkowski v. Wilkinson, et al., No. CV-85-0-916 (D.
Neb., filed Oct. 16, 1985).
Alfson v. Wilkinson, et al., No. A l - 8 5 - 2 6 7 (D. N . D . ,
filed Oct. 8, 1985).
Independent Community Bankers Associaton of South
Dakota v. Board of Governors, No. 84-1496 (D.C.
Cir., filed Aug. 7, 1985).
Urwyler, et al. v. Internal Revenue Service, et al., No.
85-2877 (9th Cir., filed July 18, 1985).
Wight, et al. v. Internal Revenue Service, et al., No.
85-2826 (9th Cir., filed July 12, 1985).
Florida Bankers Association v. Board of Governors,
No. 84-3883 and No. 84-3884 (11th Cir., filed Feb.
15, 1985).
Florida Department of Banking v. Board of Governors, No. 84-3831 (11th Cir., filed Feb. 15, 1985),
and No. 84-3832 (11th Cir., filed Feb. 15, 1985).
Lewis v. Volcker, et al., No. 86-3210 (6th Cir., filed
Jan. 14, 1985).
Brown v. United States Congress, et al., No. 84-28876(IG) (S.D. Cal., filed Dec. 7, 1984).
Melcher v. Federal Open Market Committee, No. 8 4 1335 (D.D.C., filed Apr. 30, 1984).
Florida Bankers Association, et al. v. Board of Governors, Nos. 84-3269, 84-3270 (11th Cir., filed April
20, 1984).
Securities Industry Association
v. Board of Governors, No. 86-5089, et al. (D.C. Cir., filed Oct. 24.,
1980)
631
Membership of the Board of Governors
of the Federal Reserve System, 1913-87
Federal Reserve
District
Name
APPOINTIVE
Date of initial
oath of office
Other dates and information relating
to membership 2
MEMBERS1
Charles S. Hamlin
Boston.
Paul M. Warburg
Frederic A. Delano
W.P.G. Harding
Adolph C. Miller
New York
Chicago
Atlanta
San Francisco
Albert Strauss
Henry A. Moehlenpah
Edmund Piatt
David C. Wills
John R. Mitchell
Milo D. Campbell
Daniel R. Crissinger
George R. James
New York
Chicago
New York
Cleveland
Minneapolis
Chicago
Cleveland
St. Louis
Oct. 26, 1918
Nov. 10, 1919
June 8, 1920
Sept. 29, 1920
May 12, 1921
Mar. 14, 1923
May 1, 1923
May 14, 1923
Edward H. Cunningham...Chicago
Roy A. Young
Minneapolis
Eugene Meyer
New York
Wayland W. Magee
Kansas City
Eugene R. Black
Atlanta
M.S. Szymczak
Chicago
do
Oct. 4, 1927
Sept. 16, 1930
May 18, 1931
May 19, 1933
June 14, 1933
J.J. Thomas
Marriner S. Eccles
do
Nov. 15, 1934
Kansas City
San Francisco
.Aug. 10, 1914
.do.
.do,
.do.
.do.
Joseph A. Broderick
New York
John K. McKee
Cleveland
Ronald Ransom
Atlanta
Ralph W. Morrison
Dallas
Chester C. Davis
Richmond
Ernest G. Draper
New York
Rudolph M. Evans
Richmond
James K. Vardaman, Jr. ..St. Louis
Lawrence Clayton
Boston
Thomas B. McCabe
Philadelphia
Edward L. Norton
Atlanta
Oliver S. Powell
Minneapolis
Wm. McC. Martin, Jr
New York
Feb. 3, 1936
do
do
Feb. 10, 1936
June 25, 1936
Mar. 30, 1938
Mar. 14, 1942
Apr. 4, 1946
Feb. 14, 1947
Apr. 15, 1948
Sept. 1, 1950
do
April 2, 1951
A.L. Mills, Jr
J.L. Robertson
C. Canby Balderston
Paul E. Miller
Chas. N. Shepardson
G.H. King, Jr
San Francisco
Kansas City
Philadelphia
Minneapolis
Dallas
Atlanta
Feb. 18,
do
Aug. 12,
Aug. 13,
Mar. 17,
Mar. 25,
George W. Mitchell
Chicago
Aug. 31, 1961
1952
1954
1954
1955
1959
Reappointed in 1916 and 1926. Served until
Feb. 3, 1936.3
Term expired Aug. 9, 1918.
Resigned July 21, 1918.
Term expired Aug. 9, 1922.
Reappointed in 1924. Reappointed in 1934
from the Richmond District. Served until
Feb. 3, 1936.3
Resigned Mar. 15, 1920.
Term expired Aug. 9, 1920.
Reappointed in 1928. Resigned Sept. 14, 1930.
Term expired Mar. 4, 1921.
Resigned May 12, 1923.
Died Mar. 22, 1923.
Resigned Sept. 15, 1927.
Reappointed in 1931. Served until Feb. 3,
1936.4
Died Nov. 28, 1930.
Resigned Aug. 31, 1930.
Resigned May 10, 1933.
Term expired Jan. 24, 1933.
Resigned Aug. 15, 1934.
Reappointed in 1936 and 1948. Resigned May
31, 1961.
Served until Feb. 10, 1936.3
Reappointed in 1936, 1940, and 1944.
Resigned July 14, 1951.
Resigned Sept. 30, 1937.
Served until Apr. 4, 1946.3
Reappointed in 1942. Died Dec. 2, 1947.
Resigned July 9, 1936.
Reappointed in 1940. Resigned Apr. 15, 1941.
Served until Sept. 1, 1950.3
Served until Aug. 13, 1954.3
Resigned Nov. 30, 1958.
Died Dec. 4, 1949.
Resigned Mar. 31, 1951.
Resigned Jan. 31, 1952.
Resigned June 30, 1952.
Reappointed in 1956. Term expired Jan. 31,
1970.
Reappointed in 1958. Resigned Feb. 28, 1965.
Reappointed in 1964. Resigned Apr. 30, 1973.
Served through Feb. 28, 1966.
Died Oct. 21, 1954.
Retired Apr. 30, 1967.
Reappointed in 1960. Resigned Sept. 18,
1963.
Reappointed in 1962. Served until Feb. 13,
1976.3
632
Federal Reserve Bulletin • July 1987
Federal Reserve
District
Name
Date of initial
oath of office
Other dates and information relating
to membership 2
Served until Mar. 8, 1974.3
Served through May 31, 1972.
Resigned Aug. 31, 1974.
Reappointed in 1968. Resigned Nov. 15, 1971.
Term began Feb. 1, 1970. Resigned Mar. 31,
1978.
Resigned June 1, 1975.
Resigned Jan. 2, 1976.
Resigned May 15, 1976.
Resigned Dec. 15, 1986
Served through Feb. 29, 1980.
Resigned Nov. 17, 1978.
Served until Feb. 7, 1986.3
Died Nov. 19, 1978.
Resigned Feb. 24, 1978.
Resigned Aug. 6, 1979.
Served through June 27, 1984.
Resigned Dec. 31, 1986.
Served through Feb. 11, 1982.
J. Dewey Daane
Sherman J. Maisel ...
Andrew F. Brimmer.
William W. Sherrill..
Arthur F. Burns
.Richmond
.San Francisco
.Philadelphia
.Dallas
.New York
Nov. 29, 1963
Apr. 30, 1965
Mar. 9, 1966
May 1, 1967
Jan. 31, 1970
John E. Sheehan
Jeffrey M. Bucher
Robert C. Holland
Henry C. Wallich
Philip E. Cold well
Philip C. Jackson, Jr. .
J. Charles Partee
Stephen S. Gardner....
David M. Lilly
G. William Miller
Nancy H. Teeters
Emmett J. Rice
Frederick H. Schultz..
Paul A. Volcker
Lyle E. Gramley
Preston Martin
Martha R. Seger
Wayne D. Angell
Manuel H. Johnson....
H. Robert Heller
Edward W. Kelley, Jr.
.St. Louis
.San Francisco
.Kansas City
.Boston
.Dallas
.Atlanta
.Richmond
.Philadelphia
.Minneapolis
.San Francisco
.Chicago
.New York
.Atlanta
.Philadelphia
.Kansas City
.San Francisco
.Chicago
.Kansas City
.Richmond
.San Francisco
.Dallas
Jan. 4, 1972
June 5, 1972
June 11, 1973
Mar. 8, 1974
Oct. 29, 1974
July 14, 1975
Jan. 5, 1976
Feb. 13, 1976
June 1, 1976
Mar. 8, 1978
Sept. 18, 1978
June 20, 1979
July 27, 1979
Aug. 6, 1979
May 28, 1980
Mar. 31, 1982
July 2, 1984
Feb. 7, 1986
Feb. 7, 1986
Aug. 19, 1986
May 26, 1987
Chairmen4
Charles S. Hamlin
W.P.G. Harding
Daniel R. Crissinger ..,
Roy A. Young
Eugene Meyer
Eugene R. Black
Marriner S. Eccles
Thomas B. McCabe ...
Wm. McC. Martin, Jr.
Arthur F. Burns
G. William Miller
Paul A. Volcker
EX-OFFICIO
.Aug. 10, 1914-Aug. 9, 1916
.Aug. 10, 1916-Aug. 9, 1922
.May 1, 1923-Sept. 15, 1927
.Oct. 4, 1927-Aug. 31, 1930
.Sept. 16, 1930-May 10, 1933
.May 19, 1933-Aug. 15, 1934
.Nov. 15, 1934-Jan. 31, 1948
.Apr. 15, 1948-Mar. 31, 1951
.Apr. 2, 1951-Jan. 31, 1970
.Feb. 1, 1970-Jan. 31, 1978
.Mar. 8, 1978-Aug. 6, 1979
.Aug. 6, 1979-
Resigned Sept. 1, 1985.
Resigned April 30, 1986.
Vice Chairmen4
Frederic A. Delano
Paul M. Warburg
Albert Strauss
Edmund Piatt
J.J. Thomas
Ronald Ransom
C. Canby Balderston
J.L. Robertson
George W. Mitchell
Stephen S. Gardner
Frederick H. Schultz
Preston Martin
Manuel H. Johnson
Aug. 10, 1914-Aug. 9, 1916
Aug. 10, 1916-Aug. 9, 1918
Oct. 26, 1918-Mar. 15, 1920
July 23, 1920-Sept. 14, 1930
Aug. 21, 1934-Feb. 10, 1936
Aug. 6, 1936-Dec. 2, 1947
Mar. 11, 1955-Feb. 28, 1966
Mar. 1, 1966-Apr. 30, 1973
May 1, 1973-Feb. 13, 1976
Feb. 13, 1976-Nov. 19, 1978
July 27, 1979-Feb. 11, 1982
Mar. 31, 1982-Mar. 31, 1986
Aug. 22, 1986-
MEMBERS'
Secretaries of the Treasury
W.G. McAdoo
Dec. 23, 1913-Dec. 15, 1918
Carter Glass
Dec. 16, 1918-Feb. 1, 1920
David F. Houston
Feb. 2, 1920-Mar. 3, 1921
Andrew W. Mellon
Mar. 4, 1921-Feb. 12, 1932
Ogden L. Mills
Feb. 12, 1932-Mar. 4, 1933
William H. Woodin
Mar. 4, 1933-Dec. 31, 1933
Henry Morgenthau, Jr. ..Jan. 1, 1934-Feb. I, 1936
Comptrollers of the Currency
John Skelton Williams ...Feb.
Daniel R. Crissinger
Mar.
Henry M. Dawes
May
Joseph W. Mcintosh
Dec.
J.W. Pole
Nov.
J.F.T. O'Connor
May
1. Under the provisions of the original Federal Reserve Act, the
Federal Reserve Board was composed of seven members, including
five appointive members, the Secretary of the Treasury, who was exofficio chairman of the Board, and the Comptroller of the Currency.
The original term of office was ten years, and the five original
appointive members had terms of two, four, six, eight, and ten years
respectively. In 1922 the number of appointive members was increased to six, and in 1933 the term of office was increased to twelve
years. The Banking Act of 1935, approved Aug. 23, 1935, changed the
name of the Federal Reserve Board to the Board of Governors of the
Federal Reserve System and provided that the Board should be
composed of seven appointive members; that the Secretary of the
Treasury and the Comptroller of the Currency should continue to
serve as members until Feb. 1, 1936, or until their successors were
appointed and had qualified; and that thereafter the terms of members
should be fourteen years and that the designation of Chairman and
Vice Chairman of the Board should be for a term of four years.
2. Date after words "Resigned" and "Retired" denotes final day of
service.
3. Successor took office on this date.
4. Chairman and Vice Chairman were designated Governor and
Vice Governor before Aug. 23, 1935.
2, 1914-Mar. 2, 1921
17, 1921-Apr. 30, 1923
1, 1923-Dec. 17, 1924
20, 1924-Nov. 20, 1928
21, 1928-Sept. 20, 1932
11, 1933-Feb. 1, 1936
1
Financial and Business Statistics
CONTENTS
Domestic
WEEKLY REPORTING
Financial
Statistics
MONEY STOCK AND BANK
A3
A4
A5
A6
Reserves, money stock, liquid assets, and debt
measures
Reserves of depository institutions, Reserve
Bank credit
Reserves and borrowings—Depository
institutions
Selected borrowings in immediately available
funds—Large member banks
POLICY
A7
A8
A9
CREDIT
INSTRUMENTS
Federal Reserve Bank interest rates
Reserve requirements of depository institutions
Federal Reserve open market transactions
FEDERAL RESERVE
BANKS
A10 Condition and Federal Reserve note statements
A l l Maturity distribution of loan and security
holdings
MONETAR Y AND CREDIT AGGREGA TES
A12 Aggregate reserves of depository institutions
and monetary base
A13 Money stock, liquid assets, and debt measures
A15 Bank debits and deposit turnover
A16 Loans and securities—All commercial banks
COMMERCIAL BANKING
INSTITUTIONS
All Major nondeposit funds
A18 Assets and liabilities, last-Wednesday-of-month
series
A19
A20
A21
A22
COMMERCIAL
BANKS
Assets and liabilities
All reporting banks
Banks in N e w York City
Branches and agencies of foreign banks
Gross demand deposits—individuals,
partnerships, and corporations
FINANCIAL
MARKETS
A23 Commercial paper and bankers dollar
acceptances outstanding
A23 Prime rate charged by banks on short-term
business loans
A24 Interest rates—money and capital markets
A25 Stock market—Selected statistics
A26 Selected financial institutions—Selected assets
and liabilities
FEDERAL
FINANCE
A28
A29
A30
A30
Federal fiscal and financing operations
U.S. budget receipts and outlays
Federal debt subject to statutory limitation
Gross public debt of U.S. Treasury—Types and
ownership
A31 U.S. government securities dealers—
Transactions
A32 U.S. government securities dealers—Positions
and financing
A33 Federal and federally sponsored credit
agencies—Debt outstanding
SECURITIES MARKETS AND
CORPORATE FINANCE
A34 N e w security issues—State and local
governments and corporations
A35 Open-end investment companies—Net sales and
asset position
A35 Corporate profits and their distribution
2
Federal Reserve Bulletin • July 1987
A36 Nonfinancial corporations—Assets and
liabilities
A36 Total nonfarm business expenditures on new
plant and equipment
A37 Domestic finance companies—Assets and
liabilities and business credit
A54 Foreign official assets held at Federal Reserve
Banks
A55 Foreign branches of U.S. banks—Balance sheet
data
A57 Selected U.S. liabilities to foreign official
institutions
REAL
REPORTED BY BANKS IN THE UNITED STATES
ESTATE
A38 Mortgage markets
A39 Mortgage debt outstanding
CONSUMER INSTALLMENT
CREDIT
A40 Total outstanding and net change
A41 Terms
A57
A58
A60
A61
Liabilities to and claims on foreigners
Liabilities to foreigners
Banks' own claims on foreigners
Banks' own and domestic customers' claims on
foreigners
A61 Banks' own claims on unaffiliated foreigners
A62 Claims on foreign countries—Combined
domestic offices and foreign branches
REPORTED BY NONBANKING
BUSINESS
ENTERPRISES IN THE UNITED STATES
FLOW OF FUNDS
A42 Funds raised in U.S. credit markets
A43 Direct and indirect sources of funds to credit
markets
A63 Liabilities to unaffiliated foreigners
A64 Claims on unaffiliated foreigners
Domestic
Nonfinancial
SECURITIES HOLDINGS AND
SELECTED
MEASURES
Statistics
A44 Nonfinancial business activity—Selected
measures
A45 Labor force, employment, and unemployment
A46 Output, capacity, and capacity utilization
A47 Industrial production—Indexes and gross value
A49 Housing and construction
A50 Consumer and producer prices
A51 Gross national product and income
A52 Personal income and saving
International
SUMMARY
Statistics
STATISTICS
A53 U.S. international transactions—Summary
A54 U.S. foreign trade
A54 U.S. reserve assets
TRANSACTIONS
A65 Foreign transactions in securities
A66 Marketable U.S. Treasury bonds and notes—
Foreign transactions
INTEREST AND EXCHANGE
RATES
A67 Discount rates of foreign central banks
A67 Foreign short-term interest rates
A68 Foreign exchange rates
A69 Guide to Tabular
Presentation,
Statistical Releases, and Special
Tables
SPECIAL
TABLES
A70 Assets and liabilities of commercial banks,
September 30, 1986
A76 Assets and liabilities of commercial banks,
December 31, 1986
Money Stock and Bank Credit
1.10
A3
RESERVES, MONEY STOCK, LIQUID ASSETS, A N D DEBT MEASURES
Monetary and credit aggregates
(annual rates of change, seasonally adjusted in percent) 1
Item
1986
1
2
3
4
Reserves of depository
Total
Required
Nonborrowed
Monetary base 3
5
6
7
8
9
Concepts
Ml
M2
M3
L
Debt
of money,
Nontransaction
10 M2 5
11 M3 only 6
institutions2
liquid assets,
and
Q4
Q3
Q2
1987
1986
Q1
Dec.
1987
Jan.'
Feb.'
Mar.'
Apr.
18.7 r
20.7 r
18.6'
9.1'
21.0'
21.9'
21.3'
9.7'
24.3'
22.8'
25.3'
11.0'
16.4'
16.5'
18.5'
11.3'
36.9'
28.8'
35.8'
13.4'
15.3
22.3
20.9
14.6
-.2
-3.3
.3
7.6
-.4
5.9
.2
2.9
23.2
25.5
13.5
9.9
15.5
9.4
8.7
7.1
10.2
16.5
10.6
9.6
8.0
12.3
17.0
9.2
8.0
8.2
12.1
13.0
6.4
6.5'
6.6
11.8'
30.5
10.5
10.2'
9.6'
15.4
11.7
9.5
9.0
9.7
12.8
-.7
-.1
1.3
2.7
8.0
3.3
1.7
1.7
-2.4
7.9
17.7
5.7
5.5
n.a.
n.a.
7.5
6.0
8.6
5.7
6.6
3.4
4.1
6.9'
3.7
8.9'
8.6
7.3
.1
6.9
1.2
1.9
1.4
4.8
13.4
-2.5
-3.5
25.0
-7.5
-1.5
36.9
-10.7
.4
37.0
-4.9
9.2'
34.4
-3.9
7.9'
41.2
.0
15.6
33.8
-7.2
.8
28.5
-8.3
11.8
27.8
-8.3
27.7
16.0
.3
11.2
21.0
-3.4
2.8
23.0
-6.4
-7.3
27.9
-4.8
-10.0
19.6
-6.8
-5.4
29.5
-5.2
-10.1
33.2
-3.0
-14.0
29.1
.2
-8.7
30.5
-1.7
-19.1
11.6
9.8
4.1
14.5
11.7
10.6
12.1
12.1
9.1
19.1
14.2
17.4
8.6
14.2
16.1
4.6
9.1
.9
3.9
9.1
3.8
n.a.
n.a.
11.9
debt4
components
Time and savings
deposits
Commercial banks
Savings 7
Small-denomination time 8
Large-denomination t i m e 9 1 0
Thrift institutions
15
Savings 7
16
Small-denomination time
17
Large-denomination time 9
12
13
14
Debt
components4
18 Federal
19 Nonfederal
20 Total loans and securities at commercial b a n k s "
1. Unless otherwise noted, rates of change are calculated from average
amounts outstanding in preceding month or quarter.
2. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. To adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
3. The monetary base not adjusted for discontinuities consists of total
reserves plus required clearing balances and adjustments to compensate for float
at Federal Reserve Banks plus the currency component of the money stock less
the amount of vault cash holdings of thrift institutions that is included in the
currency component of the money stock plus, for institutions not having required
reserve balances, the excess of current vault cash over the amount applied to
satisfy current reserve requirements. After the introduction of contemporaneous
reserve requirements (CRR), currency and vault cash figures are measured over
the weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After CRR, the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock plus the remaining items seasonally
adjusted as a whole.
4. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits
at all commercial banks other than those due to domestic banks, the U.S.
government, and foreign banks and official institutions less cash items in the
process of collection and Federal Reserve float; and (4) other checkable deposits
(OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer
service (ATS) accounts at depository institutions, credit union share draft
accounts, and demand deposits at thrift institutions. The currency and demand
deposit components exclude the estimated amount of vault cash and demand
deposits respectively held by thrift institutions to service their O C D liabilities.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, Money Market Deposit Accounts
(MMDAs), savings and small-denomination time deposits (time deposits—including retail RPs—in amounts of less than $100,000), and balances in both taxable and
tax-exempt general purpose and broker/dealer money market mutual funds.
Excludes individual retirement accounts (IRA) and Keogh balances at depository
institutions and money market f u n d s . Also excludes all balances held by U.S.
10.2
12.3'
10.1
commercial banks, money market funds (general purpose and broker/dealer),
foreign governments and commercial banks, and the U.S. government. Also
subtracted is a consolidation adjustment that represents the estimated amount of
demand deposits and vault cash held by thrift institutions to service their time and
savings deposits.
M3: M2 plus large-denomination time deposits and term R P liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U.S. banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted is
a consolidation adjustment that represents the estimated amount of overnight RPs
and Eurodollars held by institution-only money market mutual f u n d s .
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U.S. government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve Board's flow of f u n d s accounts. Debt
data are based on monthly averages. Growth rates for debt reflect adjustments for
discontinuities over time in the levels of debt presented in other tables.
5. Sum of overnight RPs and Eurodollars, money market fund balances
(general purpose and broker/dealer), M M D A s , and savings and small time
deposits less the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposit liabilities.
6. Sum of large time deposits, term RPs, and Eurodollars of U.S. residents,
money market fund balances (institution-only), less a consolidation adjustment
that represents the estimated amount of overnight RPs and Eurodollars held by
institution-only money market mutual f u n d s .
7. Excludes MMDAs.
8. Small-denomination time deposits—including retail RPs—are those issued
in amounts of less than $100,000. All IRA and Keogh accounts at commercial
banks and thrifts are subtracted from small time deposits.
9. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
10. Large-denomination time deposits at commercial banks less those held by
money market mutual f u n d s , depository institutions, and foreign banks and
official institutions.
11. Changes calculated from figures shown in table 1.23.
A4
Domestic Financial Statistics • July 1987
1.11
R E S E R V E S OF DEPOSITORY INSTITUTIONS A N D RESERVE B A N K CREDIT
Millions of dollars
Monthly averages of
daily figures
Weekly averages of daily figures for week ending
1987
1987
Factors
Feb.
Mar.
222,882
221,583
230,049
221,286
195,023
194,910
113
7,750
7,719
31
0
554
2,085
17,470
11,070
5,018
17,652
195,925
195,619
306
7,772
7,719
53
0
535
466
16,885
11,083
5,018
17,711
203,630
201,662
1,968
8,220
7,703
517
0
872
604
16,723
11,079
5,018
17,744
195,737
195,388
349
7,818
7,719
99
0
502
384
16,845
11,083
5,018
17,709
206,450
484
207,265
506
209,684
530
4,834
228
3,161
238
2,519
424
2,026
442
Apr.
Mar. 18
Apr. 1
Apr. 8
221,096
222,732
225,432
227,243
232,065
233,864
195,389
195,389
0
7,719
7,719
0
0
553
373
17,063
11,082
5,018
17,723
196,549
196,549
0
7,719
7,719
0
0
690
1,107
16,667
11,081
5,018
17,718
199,491
197,717
1,774
8,118
7,717
401
0
591
669
16,563
11,080
5,018
17,728
201,744
201,299
445
7,862
7,714
148
0
693
224
16,720
11,078
5,018
17,738
204,393
202,535
1,858
8,195
7,701
494
0
1,219
1,512
16,746
11,078
5,018
17,748
207,658
205,270
2,388
8,374
7,683
691
0
798
-48
17,082
11,076
5,018
17,758
207,704
500
207,318
507
207,376
516
208,876
525
210,111
531
210,281
534
209,620
531
7,163
279
3,255
208
2,865
254
3,025
259
3,923
264
3,815
202
4,758
270
13,312
354
2,211
424
2,145
468
1,975
423
2,036
459
2,048
431
2,318
399
2,041
451
1,993
390
Mar. 25
Apr. 15
Apr. 22
Apr. 29
SUPPLYING RESERVE F U N D S
1 Reserve Bank credit
2
U.S. government securities 1
3
Bought outright
4
Held under repurchase a g r e e m e n t s . . . .
5
Federal agency obligations
6
Bought outright
7
Held under repurchase a g r e e m e n t s . . . .
8
Acceptances
9
Loans
10
Float
11
Other Federal Reserve assets
12 Gold stock 2
13 Special drawing rights certificate a c c o u n t . . . .
14 Treasury currency outstanding
ABSORBING R E S E R V E F U N D S
15 Currency in circulation
16 Treasury cash holdings 2
Deposits, other than reserve balances, with
Federal Reserve Banks
17
Treasury
18
Foreign
19
Service-related balances and
adjustments
20
Other
21 Other Federal Reserve liabilities and
capital
22 Reserve balances with Federal
Reserve Banks 5
6,602
6,345
6,896
6,348
6,429
6,569
6,791
6,762
7,018
7,043
35,081
35,412
36,701
34,468
35,148
36,309
36,399
36,939
40,556
34,474
End-of-month figures
Wednesday
1987
figures
1987
Feb.
Mar.
Apr.
220,180
227,578
249,706
220,131
194,178
194,178
0
7,719
7,719
0
0
514
1,023
16,746
196,409
196,409
0
7,719
7,719
0
0
1,587
5,241
16,622
218,883
205,112
13,771
11,039
7,683
3,356
0
2,464
126
17,914
194,413
194,182
231
7,826
7,719
107
0
420
387
17,085
11,085
5,018
17,679
11,081
5,018
17,735
11,076
5,018
17,767
205,988
510
207,818
518
3,482
201
Mar. 18
Mar. 25
Apr. 1
Apr. 8
Apr. 15
220,344
222,860
232,873
229,625
242,619
243,550
194,544
194,544
0
7,719
7,719
0
0
573
249
17,259
197,013
197,013
0
7,719
7,719
0
0
596
577
16,955
204,720
196,920
7,800
9,236
7,714
1,522
0
1,592
380
16,945
203,917
202,818
1,099
8,198
7,714
484
0
464
294
16,752
209,978
202,034
7,944
10,028
7,683
2,345
0
5,627
-102
17,088
213,824
204,590
9,234
10,436
7,683
2,753
0
1,0%
691
17,503
11,082
5,018
17,721
11,082
5,018
17,735
11,081
5,018
17,727
11,079
5,018
17,737
11,078
5,018
17,747
11,077
5,018
17,757
11,076
5,018
17,767
210,265
531
207,692
505
207,331
515
208,035
519
209,649
532
210,460
534
210,179
531
209,899
529
3,576
268
29,688
343
2,437
190
2,953
226
4,563
399
3,531
176
4,056
285
9,431
225
25,802
504
1,799
539
1,817
577
1,812
533
1,807
498
1,807
610
1,817
485
1,818
360
1,806
557
1,810
522
1,811
527
6,110
6,682
7,057
6,140
6,267
6,541
6,727
6,677
7,037
7,165
35,334
40,156
33,337
34,684
34,470
34,326
43,914
39,092
46,736
31,172
Apr. 22
Apr. 29
SUPPLYING RESERVE F U N D S
23 Reserve Bank credit
24
25
26
27
28
29
30
31
32
33
U.S. government securities 1
Bought outright
Held under repurchase a g r e e m e n t s . . . .
Federal agency obligations
Bought outright
Held under repurchase a g r e e m e n t s . . . .
Acceptances
Loans
Float
Other Federal Reserve assets
34 Gold stock 2
35 Special drawing rights certificate account
36 Treasury currency outstanding
...
ABSORBING R E S E R V E F U N D S
37 Currency in circulation
38 Treasury cash holdings 2
Deposits, other than reserve balances with
Federal Reserve Banks
39
Treasury
40
Foreign
41
Service-related balances and
adjustments
42
Other
43 Other Federal Reserve liabilities and
capital
44 Reserve balances with Federal
Reserve Banks 3
1. Includes securities loaned—fully guaranteed by U . S government securities
pledged with Federal Reserve Banks—and excludes any securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Revised for periods between October 1986 and April 1987. At times during
this interval, outstanding gold certificates were inadvertently in excess of the gold
stock. Revised data not included in this table are available from the Division of
Research and Statistics, Banking Section.
3. Excludes required clearing balances and adjustments to compensate for
float.
NOTE. For amounts of currency and coin held as reserves, see table 1.12.
Money Stock and Bank Credit
1.12
R E S E R V E S A N D BORROWINGS
Millions of dollars
A5
Depository Institutions
Monthly averages 8
Reserve classification
1
2
3
4
5
6
7
8
9
10
Reserve balances with Reserve Banks 1
Total vault cash 2
Vault 3
Surplus 4
Total reserves 5
Required reserves
Excess reserve balances at Reserve Banks 6
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks 7
1984
1985
1986
1986
1987
Dec.
Dec.
Dec.
Sept.
Oct.
Nov.
Dec.
Jan.
21,738
22,313
18,958
3,355
40,696
39,843
853
3,186
113
2,604
27,620
22,953
20,522
2,431
48,142
47,085
1,058
1,318
56
499
37,360
24,071
22,199
1,872
59,560
58,191
1,369
827
38
303
31,922
23,384
21,267
2,117
53,189
52,463
726
1,008
137
570
32,947
23,753
21,676
2,078
56,623
53,877
746
841
99
497
34,803
23,543
21,595
1,947
56,399
55,421
978
752
70
418
37,360
24,071
22,199
1,872
59,560
58,191
1,369
827
38
303
36,584
25,049
23,084
1,965
59,668
58,600
1,068
580
34
225
Feb.
33,625
25,889 r
23,435
2,454
57,060
55,849
1,211
556
71
283
Mar.
35,318
23,759
21,743
2,016
57,061
56,146
916
527
91
264
Biweekly averages of daily figures for weeks ending
1987
11
12
13
14
15
16
17
18
19
20
Reserve balances with Reserve B a n k s '
Total vault cash 2
Vault 3
Surplus 4
Total reserves 5
Required reserves
Excess reserve balances at Reserve Banks 6
Total borrowings at Reserve Banks
Seasonal borrowings at Reserve Banks
Extended credit at Reserve Banks 7
Jan. 14
Jan. 28
Feb. 11
Feb. 25
Mar. 11
Mar. 25
Apr. 8
Apr. 22
38,710
24,583 r
22,815
1,768
61,525
60,680
845
505
28
215
35,228
25,028
23,012
2,017
58,239
57,033
1,206
689
36
227
32,991
27,327
24,677
2,650
57,667
56,208
1,459
425
56
265
33,742
25,237
22,857
2,380
56,599
55,530
1,070
680
81
299
35,400
23,662
21,582
2,080
56,982
56,021
961
466
83
275
34,809
24,077
22,038
2,039
56,847
55,866
981
528
96
263
36,358
23,198
21,350
1,848
57,708
57,029
679
641
98
248
38,746
23,479
21,761
1,719
60,506
59,703
804
956
110
267
1. Excludes required clearing balances and adjustments to compensate for
float.
2. Dates refer to the maintenance periods in which the vault cash can be used to
satisfy reserve requirements. U n d e r contemporaneous reserve requirements,
maintenance periods end 30 days after the lagged computation periods in which
the balances are held.
3. Equal to all vault cash held during the lagged computation period by
institutions having required reserve balances at Federal Reserve Banks plus the
amount of vault cash equal to required reserves during the maintenance period at
institutions having no required reserve balances.
4. Total vault cash at institutions having no required reserve balances less the
amount of vault cash equal to their required reserves during the maintenance
period.
5. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
adjustments to compensate for float, plus vault cash used to satisfy reserve
requirements. Such vault cash consists of all vault cash held during the lagged
May 6p
37,613
23,289
21,517
1,772
59,130
58,106
1,024
1,410
159
299
May 20 p f
36,343
23,552
21,786
1,766
58,129
57,041
1,088
830
190
276
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
6. Reserve balances with Federal Reserve Banks plus vault cash used to satisfy
reserve requirements less required reserves.
7. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
8. Before February 1984, data are prorated monthly averages of weekly
averages; beginning February 1984, data are prorated monthly averages of
biweekly averages.
NOTE. These data also appear in the B o a r d ' s H . 3 (502) release. F o r address, see
inside front cover.
A6
Domestic Financial Statistics • July 1987
1.13
S E L E C T E D BORROWINGS IN IMMEDIATELY A V A I L A B L E F U N D S
Averages of daily figures, in millions of dollars
Large Member Banks'
1987 week ending Monday
Maturity and source
Feb. 2
1
2
3
4
Federal funds purchased, repurchase agreements, and other
selected borrowing in immediately available funds
From commercial banks in the United States
For one day or under continuing contract
For all other maturities
From other depository institutions, foreign banks and
foreign official institutions, and United States
government agencies
For one day or under continuing contract
For all other maturities
Feb. 9
Feb. 16
Feb. 23
Mar. 2
Mar. 9
Mar. 16
Mar. 23
Mar. 30
78,255
8,052
80,428
8,229
76,927
8,764
77,242
8,315
75,122
9,130
80,561
8,677
78,545
8,385
76,584
8,387
74,628
8,312
38,995
6,175
39,005
5,920
39,000
6,603
39,390
6,021
40,802
6,631
43,033
6,504
42,504
7,083
39,322
6,917
39,651
7,412
Repurchase agreements on United States
government
and federal agency securities in immediately
available
funds
Brokers and nonbank dealers in securities
For one day or under continuing contract
For all other maturities
All other customers
For one day or under continuing contract
F o r all other maturities
13,194
9,066 r
12,909
9,802'
13,906
10,551'
14,289
9,258'
14,033
10,649'
12,682
9,714'
12,226
9,638
11,325
10,345
12,120
10,525
28,016
10,667'
27,793
10,363'
26,148
10,541'
27,380
9,880'
27,176
10,098'
27,408
9,578'
26,848
9,209
25,636
9,399
25,813
9,874
MEMO: Federal funds loans and resale agreements in
immediately available f u n d s in maturities of one day
or under continuing contract
9 T o commercial banks in the United States
10 To all other specified customers 2
34,026
12,671
31,180'
10,976'
28,120'
12,235
28,588'
11,852
27,305
11,786
27,952
10,762
26,831
11,508
25,694
11,935
23,909
10,288
5
6
7
8
1. Banks with assets of $1 billion or more as of Dec. 31, 1977.
2. Brokers and nonbank dealers in securities; other depository institutions;
foreign banks and official institutions; and U . S . government agencies.
Policy Instruments
1.14
A7
F E D E R A L R E S E R V E B A N K INTEREST RATES
Percent per annum
Current and previous levels
Extended credit 2
Short-term adjustment credit and
seasonal credit 1
First 60 days of
borrowing
Federal Reserve
Bank
Next 5K) days of
borrowing
After 150 days
Effective date for
current rates
Rate on
5/28/87
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco . . .
SVi
SVi
Effective
date
Previous
rate
Rate on
5/28/87
Previous
rate
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
6
5%
6
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
6
5
Vi
6
Rate on
5/28/87
6
Previous
rate
Rate on
5/28/87
7
m
Vi
6Vi
7
Previous
rate
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
8/22/86
8/21/86
8/21/86
8/21/86
8/21/86
m
Range of rates in recent years 3
Effective date
In effect Dec. 31, 1973
1974—Apr. 25
30
Dec. 9
16
1975—Jan.
6
10
24
Feb. 5
7
Mar. 10
14
May 16
23
1976—Jan.
19
23
Nov. 22
26
1977—Aug. 30
31
Sept. 2
Oct. 26
1978—Jan.
9
20
May 11
12
July
3
July 10
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
IVi
lVi-%
IVi
8
73/4-8
73/4
7V4-73/4
7V+-73/4
7V4
63/4-7V4
63/4
6V4-63/4
6V4
6-6V4
6
8
8
73/4
73/4
73/4
7V4
7V4
63/4
63/4
6V4
6V4
6
6
5Vi-6 5Vi
SVi
SVi
5V*-SVi 5V4
5Vi
SV4
5(4-53/4
SV4
5V4-53/4
53/4
6
6-6Vi
6Vt>
6Vi-7
7
1-1 Vi
IVi
53/4
53/4
6
Vi
1
7
1V4
IVi
6
6Vi
Effective date
1978-—Aug. 21
Sept. 22
Oct. 16
20
Nov. 1
1979-- J u l y 20
Aug. 17
20
Sept. 19
21
Oct. 8
10
F.R.
Bank
of
N.Y.
73/4
8
8-8W
73/4
8
8Vt>
SVi
SVi
SVi-9Vi 9Vi
9Vi
9V2
10
10
lOVi
lo-iovt!
10 Vi
low
10Vi-ll
11
11-12
12
11
11
12
12
1980-- F e b . 15
19
May 29
30
June 13
16
July 28
29
Sept. 26
Nov. 17
Dec. 5
8
12-13
13
12-13
12
11-12
11
10-11
10
11
12
12-13
13
13
13
13
12
11
11
10
10
11
12
13
13
5
8
2
6
4
13-14
14
13-14
13
12
14
14
13
13
12
1981--- M a y
Nov.
Dec.
1. After May 19, 1986, the highest rate within the structure of discount rates
may be charged on adjustment credit loans of unusual size that result from a major
operating problem at the borrower's facility.
A temporary simplified seasonal program was established on Mar. 8,1985, and
the interest rate was a fixed rate Vi percent above the rate on adjustment credit.
The program was re-established on Feb. 18, 1986 and again on Jan. 28, 1987; the
rate may be either the same as that for adjustment credit or a fixed rate Vi percent
higher.
2. Applicable to advances when exceptional circumstances or practices involve
only a particular depository institution and to advances when an institution is
under sustained liquidity pressures. As an alternative, for loans outstanding for
more than 150 days, a Federal Reserve Bank may charge a flexible rate that takes
into account rates on market sources of funds, but in no case will the rate charged
be less than the basic rate plus one percentage point. Where credit provided to a
particular depository institution is anticipated to be outstanding for an unusually
prolonged period and in relatively large amounts, the time period in which each
Range (or
level)—
All F.R.
Banks
Effective date
1982—July
20
23
2
3
16
27
30
Oct. 12
13
Nov. 22
26
Dec. 14
15
17
Aug.
1984—Apr.
9
13
Nov. 21
26
Dec. 24
1985—May 20
24
1986—Mar.
7
10
Apr. 21
23
July 11
Aug. 21
22
In effect May 28, 1987
Range (or
level)—
All F.R.
Banks
F.R.
Bank
of
N.Y.
1 IVi
11 Vi
nvi
11-11V2 11
11
11
10V2 lOVi
11VS-12
10-10%
10
9V2-10
9Yi
9-9V2
9
8 Vi-9
8 Vi-9
8%
8V2-9
9
8Vi-9
8V>
8
7Vi-8
7 Vi
1-lVi
7
6Vi-7
6
6
5Vi-6
5
Vi
Vi
SVi
10
10
9Vi
9
9
9
9
Vi
m
8 Vi
9
9
8Vi
m
8
IVi
7 Vi
7
7
6Vi
6V2
6
5 Vi
5Vl
SVi
rate under this structure is applied may be shortened. See section 201.3(b)(2) of
Regulation A.
3. Rates for short-term adjustment credit. For description and earlier data see
the following publications of the Board of Governors: Banking and Monetary
Statistics, 1914-1941, and 1941-1970; Annual Statistical Digest, 1970-1979, 1980,
1981, and 1982.
In 1980 and 1981, the Federal Reserve applied a surcharge to short-term
adjustment credit borrowings by institutions with deposits of $500 million or more
that had borrowed in successive weeks or in more than 4 weeks in a calendar
quarter. A 3 percent surcharge was in effect from Mar. 17, 1980, through May 7,
1980. There was no surcharge until Nov. 17,1980, when a 2 percent surcharge was
adopted; the surcharge was subsequently raised to 3 percent on Dec. 5,1980, and
to 4 percent on May 5, 1981. The surcharge was reduced to 3 percent effective
Sept. 22, 1981, and to 2 percent effective Oct. 12. As of Oct. 1, the formula for
applying the surcharge was changed from a calendar quarter to a moving 13-week
period. The surcharge was eliminated on Nov. 17, 1981.
A8
Domestic Financial Statistics • July 1987
1.15
R E S E R V E R E Q U I R E M E N T S OF DEPOSITORY INSTITUTIONS 1
Percent of deposits
Type of deposit, and
deposit interval 2
Depository institution requirements
after implementation of the
Monetary Control Act
Effective date
Net transaction
accounts*-*
$0 million-$36.7 million . . .
More than $36.7 million . . .
Nonpersonal time deposits
By original maturity
Less than 1 Vi years
1 Vi years or more
Eurocurrency
All types
12/30/86
12/30/86
5
10/6/83
10/6/83
liabilities
1. Reserve requirements in effect on Dec. 31, 1986. Required reserves must be
held in the form of deposits with Federal Reserve Banks or vault cash. Nonmembers may maintain reserve balances with a Federal Reserve Bank indirectly on a
pass-through basis with certain approved institutions. For previous reserve
requirements, see earlier editions of the Annual Report and of the FEDERAL
RESERVE BULLETIN. U n d e r provisions of the Monetary Control Act, depository
institutions include commercial banks, mutual savings banks, savings and loan
associations, credit unions, agencies and branches of foreign banks, and Edge
corporations.
2. The G a r n - S t . Germain Depository Institutions Act of 1982 (Public Law 97320) requires that $2 million of reservable liabilities (transaction accounts,
nonpersonal time deposits, and Eurocurrency liabilities) of each depository
institution be subject to a zero percent reserve requirement. The Board is to adjust
the amount of reservable liabiliiies subject to this zero percent reserve requirement each year for the succeeding calendar year by 80 percent of the percentage
increase in the total reservable liabilities of all depository institutions, measured
on an annual basis as of June 30. N o corresponding adjustment is to be made in the
event of a decrease. On Dec. 30, 1986, the exemption was raised from $2.6 million
to $2.9 million. In determining the reserve requirements of depository institutions,
the exemption shall apply in the following order: (I) net N O W accounts ( N O W
accounts less allowable deductions); (2) net other transaction accounts; and (3)
nonpersonal time deposits or Eurocurrency liabilities starting with those with the
11/13/80
highest reserve ratio. With respect to N O W accounts and other transaction
accounts, the exemption applies only to such accounts that would be subject to a 3
percent reserve requirement.
3. Transaction accounts include all deposits on which the account holder is
permitted to make withdrawals by negotiable or transferable instruments, payment orders of withdrawal, and telephone and preauthorized transfers in excess of
three per month for the purpose of making payments to third persons or others.
H o w e v e r , M M D A s and similar accounts subject to the rules that permit no more
than six preauthorized, automatic, or other transfers per month, of which no more
than three can be checks, are not transaction accounts (such accounts are savings
deposits subject to time deposit reserve requirements).
4. The Monetary Control Act of 1980 requires that the amount of transaction
accounts against which the 3 percent reserve requirement applies be modified
annually by 80 percent of the percentage increase in transaction accounts held by
all depository institutions, determined as of June 30 each year. Effective Dec. 30,
1986, the amount was increased from $31.7 million to $36.7 million.
5. In general, nonpersonal time deposits are time deposits, including savings
deposits, that are not transaction accounts and in which a beneficial interest is
held by a depositor that is not a natural person. Also included are certain
transferable time deposits held by natural persons and certain obligations issued
to depository institution offices located outside the United States. F o r details, see
section 204.2 of Regulation D.
Policy Instruments
1.17
A9
F E D E R A L R E S E R V E O P E N M A R K E T TRANSACTIONS 1
Millions of dollars
1987
1986
1984
Type of transaction
1986
1985
Oct.
Sept.
Nov.
Dec.
Jan.
Mar.
Feb.
U . S . TREASURY SECURITIES
Outright transactions (excluding
transactions)
1
2
3
4
Treasury bills
Gross purchases
Gross sales
Exchange
Redemptions
5
6
7
8
9
matched
20,036
8,557
0
7,700
22,214
4,118
0
3,500
22,602
2,502
0
1,000
861
0
0
0
928
0
0
0
3,318
0
0
0
5,422
0
0
0
997
583
0
0
191
3,581
0
800
1,062
0
0
0
Others within 1 year
Gross purchases
Gross sales
Maturity shift
Exchange
Redemptions
1,126
0
16,354
-20,840
0
1,349
0
19,763
-17,717
0
190
0
18,673
-20,179
0
0
0
1,053
-1,892
0
0
0
974
-529
0
190
0
2,974
-1,810
0
0
0
1,280
-1,502
0
0
0
611
0
0
0
0
1,855
-4,954
0
0
0
1,762
-1,799
0
10
11
12
13
1 to 5 years
Gross purchases
Gross sales
Maturity shift
Exchange
1,638
0
-13,709
16,039
2,185
0
-17,459
13,853
893
0
-17,058
16,984
0
0
-1,053
1,892
0
0
-969
529
893
0
-2,414
1,510
0
0
-1,280
1,502
0
0
-591
0
0
252
-1,650
4,354
0
0
-1,762
1,799
14
15
16
5 to 10 years
Gross purchases
Gross sales
Maturity shift
536
300
-2,371
2,750
458
100
-1,857
2,184
236
0
-1,620
2,050
0
0
0
0
0
0
-5
0
236
0
-560
200
0
0
0
0
0
0
-20
0
0
0
-204
400
0
0
0
0
18
19
20
21
Over 10 years
Gross purchases
Gross sales
Maturity shift
Exchange
441
0
-275
2,052
293
0
-447
1,679
158
0
0
1,150
0
0
0
0
0
0
0
0
158
0
0
100
0
0
0
0
0
0
0
0
0
0
0
200
0
0
0
0
22
23
24
All maturities
Gross purchases
Gross sales
Redemptions
23,776
8,857
7,700
26,499
4,218
3,500
24,078
2,502
1,000
861
0
0
928
0
0
4,795
0
0
5,422
0
0
997
583
0
191
3,833
800
1,062
0
0
Matched
transactions
25 Gross sales
26 Gross purchases
808,986
810,432
866,175
865,968
927,997
927,247
73,179
70,817
77,262
81,892
60,146
60.232
91,404
88,730
63,865
65,145
82,086
81,387
72,306
73,476
Repurchase
agreements2
27 Gross purchases
28 Gross sales
127,933
127,690
134,253
132,351
170,431
160,268
14,717
8,403
5,670
11,984
16,888
15,471
44,303
32,028
36,373
46,897
0
3,168
5,657
5,657
8,908
20,477
29,989
4,814
-756
6,298
15,023
-8,830
-8,307
2,231
0
0
256
0
0
162
0
0
398
0
0
0
0
0
93
0
0
125
0
0
0
0
0
110
0
0
0
0
0
0
11,509
11,328
22,183
20,877
31,142
30,522
2,678
869
952
2,761
1,622
1,274
5,488
3,522
4,714
6,171
0
857
897
897
-76
1,144
222
1.809
-1,902
223
1,965
-1,567
-857
0
36 Repurchase agreements, net
-418
0
0
0
0
0
0
0
0
0
37 Total net change in System Open Market
Account
8,414
21,621
30,211
6,623
-2,658
6,522
16,988
-10,397
-9,165
2,231
29 Net change in U.S. government securities
FEDERAL AGENCY OBLIGATIONS
Outright
transactions
30 Gross purchases
31 Gross sales
32 Redemptions
Repurchase
agreements2
33 Gross purchases
34 Gross sales
35 Net change in federal agency obligations
BANKERS ACCEPTANCES
1. Sales, redemptions, and negative figures reduce holdings of the System
Open Market Account; all other figures increase such holdings. Details may not
add to totals because of rounding.
2. In July 1984 the Open Market Trading Desk discontinued accepting bankers
acceptances in repurchase agreements,
A10
1.18
Domestic Financial Statistics • July 1987
FEDERAL RESERVE BANKS
Condition and Federal Reserve Note Statements
Millions of dollars
Account
Apr. 1
Wednesday
End of month
1987
1987
Apr. 15
Apr. 8
Apr. 22
Apr. 29
Feb.
Apr.
Mar.
Consolidated condition statement
ASSETS
11,081
5,018
563
11,080
5,018
556
11,078
5,018
549
11,078
5,018
537
11,077
5,018
523
11,059
5,018
578
11,081
5,018
569
11,076
5,018
517
596
0
1,592
0
464
0
5,627
0
1,096
0
514
0
1,587
0
2,464
0
0
0
0
0
0
0
0
0
7,719
0
7,719
0
7,683
3,356
104,536
73,378
26,676
204,590
9,234
213,824
100,581
67,673
25,924
194.178
0
194,178
102,812
67,673
25,924
196,409
0
196,409
105,058
73,378
26,676
205,112
13,771
218,883
225,633
225,356
202,411
205,715
232,386
6,808
675
7,039
675
6,338
669
13,284
671
6,203
675
8,879
7,198
8,809
7,604
8,642
8,186
9,960
6,117
9,467
6,484
8,283
8,236
255,591
253,608
266,162
266,516
242,150
252,289
272,394
191,391
193,001
193,797
193,491
193,187
189,370
191,170
193,547
36,143
4,563
399
485
45,732
3,531
176
360
40,898
4,056
285
557
48,546
9,431
225
522
32,983
25,802
504
527
37,133
3,482
201
539
41,973
3,576
268
577
35,149
29,688
343
533
41,590
49,799
45,796
58,724
59,816
41,355
46,394
65,713
6,667
2,333
6,064
2,595
7,338
2,538
6,910
2,889
6,348
3,024
5,315
2,189
8,043
2,219
6,077
2,696
241,981
251,459
249,469
262,014
262,375
238,229
247,826
268,033
1,917
1,874
417
1,918
1,873
341
1,917
1,873
349
1,920
1,873
355
1,921
1,873
347
1,910
1,860
151
1,916
1,874
673
1,921
1,873
567
33 Total liabilities and capital accounts
246,189
255,591
253,608
266,162
266,516
242,150
252,289
272,394
34 MEMO: Marketable U.S. government securities held in
custody for foreign and international account
176,098
178,243
178,466
175,355
176,544
166,449
175,569
174,715
1 Gold certificate account
2 Special drawing rights certificate account
3 Coin
Loans
4
To depository institutions
5
Other
Acceptances—Bought outright
6
Held under repurchase agreements
Federal agency obligations
7
Bought outright
8
Held under repurchase agreements
U.S. government securities
Bought outright
9
Bills
10
Notes
11
Bonds
12
Total bought outright 1
13
Held under repurchase agreements
14 Total U.S. government securities
7,719
0
7,714
1,522
7,714
484
7,683
2,345
7,683
2,753
101,221
69,637
26,155
197,013
0
197,013
101,128
69,637
26,155
196,920
7,800
204,720
104,949
71,420
26,449
202,818
1,099
203,917
104,165
71,420
26,449
202,034
7,944
209,978
15 Total loans and securities
205,328
215,548
212,579
7,244
671
6,444
670
7,632
675
9,251
7,033
8,964
7,311
246,189
16 Items in process of collection
17 Bank premises
Other assets
18
Denominated in foreign currencies 2
19
All other 3
20 Total assets
LIABILITIES
21 Federal Reserve notes
Deposits
22
To depository institutions
23
U.S. Treasury—General account
24
Foreign—Official accounts
25
Other
26 Total deposits
27 Deferred credit items
28 Other liabilities and accrued dividends 4
29 Total liabilities
CAPITAL ACCOUNTS
30 Capital paid in
31 Surplus
32 Other capital accounts
Federal Reserve note statement
3") Federal Reserve notes outstanding
36
LESS: Held by bank
37
Federal Reserve notes, net
Collateral held against notes net:
38
Gold certificate account
39
Special drawing rights certificate account
40
Other eligible assets
41
U.S. government and agency securities
237,082
45,691
191,391
238,048
45,047
193,001
238,783
44,986
193,797
239,561
46,070
193,491
240,024
46,837
193,187
234,114
44,744
189,370
236,868
45,698
191,170
240,164
46,617
193,547
11,081
5,018
0
175,292
11,080
5,018
0
176,903
11,078
5,018
0
177,701
11,078
5,018
0
177,395
11,077
5,018
0
177,092
11,059
5,018
0
173,293
11,081
5,018
0
175,071
11,076
5,018
0
177,453
42 Total collateral
191,391
193,001
193,797
193,491
193,187
189,370
191,170
193,547
1. Includes securities loaned—fully guaranteed by U.S. government securities
pledged with Federal Reserve Banks—and excludes (if any) securities sold and
scheduled to be bought back under matched sale-purchase transactions.
2. Assets shown in this line are revalued monthly at market exchange rates.
3. Includes special investment account at Chicago of Treasury bills maturing
within 90 days.
4. Includes exchange-translation account reflecting the monthly revaluation at
market exchange rates of foreign-exchange commitments.
NOTE: Some of these data also appear in the Board's H.4.1 (503) release. For
address, see inside front cover.
Federal Reserve Banks
1.19
FEDERAL RESERVE BANKS
Millions of dollars
Maturity Distribution of Loan and Security Holdings
E n d of m o n t h
Wednesday
T y p e and maturity groupings
A p r . 29
F e b . 27
1,096
1,082
14
514
502
12
1,587
1,573
14
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
203,917
13,192
51,305
58,892
40,587
16,232
23,709
209,978
15,179
52,594
61,677
40,587
16,232
23,709
213,824
19,553
50,056
61,890
41,851
16,538
23,936
194,178
4,662
52,118
59,463
39,042
15,627
23,266
196,409
4,688
53,011
61,450
38,367
15,627
23,266
8,198
516
732
1,485
3,848
1,337
280
10,028
2,475
10,436
2,884
669
1,547
3,750
1,306
280
7,719
301
640
1,307
3,819
1,372
280
7,719
295
532
1,352
3,918
1,342
280
A p r . 22
Apr. 1
Apr. 8
A p r . 15
596
567
29
1,592
1,558
34
464
449
15
5,627
5,619
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9 U.S. government securities—Total
10
Within 15 d a y s 1
11
16 d a y s t o 90 d a y s
12
91 d a y s to 1 y e a r
13
Over 1 year to 5 years
14
O v e r 5 y e a r s to 10 y e a r s
15
O v e r 10 y e a r s
197,013
9,639
47,756
60,628
39,611
15,917
23,462
204,720
17,113
48,029
60,588
39,611
15,917
23,462
16 F e d e r a l a g e n c y o b l i g a t i o n s — T o t a l .
17
Within 15 d a y s 1
18
16 d a y s to 90 d a y s
19
91 d a y s t o 1 y e a r
20
O v e r 1 y e a r to 5 y e a r s
21
O v e r 5 y e a r s t o 10 y e a r s
22
O v e r 10 y e a r s
7,719
40
532
1,607
3,918
1,342
280
9,236
1,589
710
1,417
3,898
1,342
280
1 Loans—Total
2
Within 15 d a y s
3
16 d a y s to 90 d a y s
91 d a y s t o 1 y e a r
4
5 Acceptances—Total
Within 15 d a y s
6
7
16 d a y s t o 90 d a y s
8
91 d a y s t o 1 y e a r
661
1,526
3,749
1,337
280
1. H o l d i n g s u n d e r r e p u r c h a s e a g r e e m e n t s a r e classified a s m a t u r i n g within 15 d a y s in a c c o r d a n c e with m a x i m u m m a t u r i t y of t h e a g r e e m e n t s .
All
A12
1.20
Domestic Financial Statistics • July 1987
A G G R E G A T E R E S E R V E S OF DEPOSITORY INSTITUTIONS A N D M O N E T A R Y B A S E
Billions of dollars, averages of daily figures
1983
Dec.
1984
Dec.
1985
Dec/
1986'
1987
1986
Dec/
Sept.
Oct.
Nov.
Dec.
Jan/
Feb/
Mar/
Apr.
Seasonally adjusted
A D J U S T E D FOR
1 Total reserves 2
2
3
4
5
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
36.16
39.51
46.06
56.17
52.30
53.23
54.49
56.17
56.88
56.87
56.85
57.95
35.38
35.38
35.59
185.38'
36.32
38.93
38.66
199.2 <y
44.74
45.24
45.00
217.32
55.34
55.64
54.80
239.51
51.29
51.86
51.58
232.28
52.38
52.88
52.48
234.43
53.74
54.16
53.51
236.88
55.34
55.64
54.80
239.51
56.30
56.53
55.82
242.43
56.32
56.60
55.66
243.97
56.33
56.59
55.94
244.56
56.%
57.23
57.12
246.57
Not seasonally adjusted
6 Total reserves 2
7
8
9
10
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
36.87
40.57
47.24
57.64
52.02
52.83
54.59
57.64
58.73
56.09
56.07
58.37
36.09
36.10
36.31
188.65
37.38
39.98
39.71
202.34
45.92
46.42
46.18
220.82
56.81
57.11
56.27
243.63
51.01
51.58
51.29
232.07
51.98
52.48
52.08
233.61
53.84
54.26
53.61
237.50
56.81
57.11
56.27
243.63
58.15
58.38
57.66
243.42
55.53
55.81
54.88
240.82
55.54
55.80
55.15
241.93
57.38
57.65
57.54
246.05
38.89
40.70
48.14
59.56
53.19
54.62
56.40
59.56
59.67
57.06
57.06
59.39
38.12
38.12
38.33
192.26
37.51
40.09
39.84
204.18
46.82
47.41
47.08
223.53
58.73
59.04
58.19
247.71
52.18
52.76
52.46
235.07
53.78
54.15
53.88
237.26
55.65
56.15
55.42
241.27
58.73
59.04
58.19
247.71
59.09
59.32
58.60
246.75
56.50
56.74
55.85
244.22
56.53
56.82
56.15
244.98
58.40
58.19
58.56
249.23
N O T A D J U S T E D FOR
C H A N G E S IN R E S E R V E R E Q U I R E M E N T S 5
11 Total reserves 2
12
13
14
15
Nonborrowed reserves
Nonborrowed reserves plus extended credit 3
Required reserves
Monetary base 4
1. Figures incorporate adjustments for discontinuities associated with the
implementation of the Monetary Control Act and other regulatory changes to
reserve requirements. T o adjust for discontinuities due to changes in reserve
requirements on reservable nondeposit liabilities, the sum of such required
reserves is subtracted from the actual series. Similarly, in adjusting for discontinuities in the monetary base, required clearing balances and adjustments to
compensate for float also are subtracted from the actual series.
2. Total reserves not adjusted for discontinuities consist of reserve balances
with Federal Reserve Banks, which exclude required clearing balances and
adjustments to compensate for float, plus vault cash used to satisfy reserve
requirements. Such vault cash consists of all vault cash held during the lagged
computation period by institutions having required reserve balances at Federal
Reserve Banks plus the amount of vault cash equal to required reserves during the
maintenance period at institutions having no required reserve balances.
3. Extended credit consists of borrowing at the discount window under the
terms and conditions established for the extended credit program to help
depository institutions deal with sustained liquidity pressures. Because there is
not the same need to repay such borrowing promptly as there is with traditional
short-term adjustment credit, the money market impact of extended credit is
similar to that of nonborrowed reserves.
4. The monetary base not adjusted for discontinuities consists of total reserves
plus required clearing balances and adjustments to compensate for float at Federal
Reserve Banks and the currency component of the money stock less the amount
of vault cash holdings of thrift institutions that is included in the currency
component of the money stock plus, for institutions not having required reserve
balances, the excess of current vault cash over the amount applied to satisfy
current reserve requirements. After the introduction of contemporaneous reserve
requirements (CRR), currency and vault cash figures are measured over the
weekly computation period ending Monday.
Before CRR, all components of the monetary base other than excess reserves
are seasonally adjusted as a whole, rather than by component, and excess
reserves are added on a not seasonally adjusted basis. After C R R , the seasonally
adjusted series consists of seasonally adjusted total reserves, which include
excess reserves on a not seasonally adjusted basis, plus the seasonally adjusted
currency component of the money stock and the remaining items seasonally
adjusted as a whole.
5. Reflects actual reserve requirements, including those on nondeposit liabilities, with no adjustments to eliminate the effects of discontinuities associated
with implementation of the Monetary Control Act or other regulatory changes t o
reserve requirements.
NOTE. Latest monthly and biweekly figures are available from the B o a r d ' s
H.3(502) statistical release. Historical data and estimates of the impact on
required reserves of changes in reserve requirements are available f r o m the
Banking Section, Division of Research and Statistics, Board of G o v e r n o r s of the
Federal Reserve System, Washington, D.C. 20551.
Monetary and Credit Aggregates
1.21
A13
M O N E Y STOCK, L I Q U I D A S S E T S , A N D D E B T M E A S U R E S
Billions of dollars, averages of daily figures
1987
Item 1
1983
Dec.
1984
Dec.
1985
Dec.
1986
Dec.
Jan.
Feb.'
Mar.
Apr.
Seasonally adjusted
1
? M2
M3
4
5
526.9
2,184.6
2,692.8
3,154.6
5,206.3
557.5
2,369.1
2,985.4 r
3,529.0 r
5,946.0
627.0
2,569.5
3,205.5
3,838.9
6,774.9
737.6
2,821.8'
3,515.(K
4,174.3'
7,707.2'
737.2
2,821.6
3,518.8
4,183.8
7,758.7
148.3
4.9
242.3
131.4
158.5
5.2
248.3
145.5
170.6
5.9
272.2
178.3
183.5
6.4
308.3
232.3
186.0
6.5
305.1
240^
187.2
6.7
300.7
242.7
1,657.7
508.2
1,811.5
616.3'
1,942.5
636.1'
2,069.3
689.0'
2,084.2'
693.2'
2,084.3
697.2
730.5
2,799.7 r
3,488.8 r
4,140.8'
7,625.6'
739.2
2,825.5'
3,523.8'
4,175.6
7,809.6
750.1
2,839.0
3,540.0
n.a.
n.a.
6
7
8
9
Ml components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
10
11
Nontransactions components
In M2 6
In M3 only 7
1?
13
Savings deposits 8
Commercial Banks
Thrift institutions
133.2
173.0
122.2
166.6
124.6
179.0
154.5
211.7
159.8
216.9
164.3
222.9
168.2
228.3
172.1
234.1
14
15
Small denomination time deposits 9
Commercial Banks
Thrift institutions
350.9
432.9
386.6
498.6
383.9
500.3
364.7
488.5
364.7
486.4'
362.5
485.2
360.0
485.3
357.5
484.6
16
17
Money market mutual funds
General purpose and broker/dealer
Institution-only
138.2
43.2
167.5
62.7
176.5
65.1
207.6
84.1
209.0
84.0
210.7
84.7
211.6
84.9
211.8
83.1
18
19
Large denomination time deposits 1 0
Commercial Banks 1 1
Thrift institutions
230.0
96.2
269.6
147.3
284.1
152.1
291.9'
155.1
295.7'
153.8
295.9
152.0
298.8'
150.9'
305.7
148.5
70
21
Debt components
Federal debt
Nonfederal debt
1,172.8
4,033.5
1,367.6
4,578.4
1,587.0
5,187.9
1,804.8
5,820.8'
1,817.8
5,889.5'
1,824.7
5,933.9
1,830.7
5,978.9
n.a.
n.a.
723.1
2,809.6
3,509.1
4,175.6
7,742.3
728.7
2,819.3'
3,520.9'
4,179.0
7,786.4
757.4
2,847.6
3,548.1
n.a.
n.a.
184.8
6.2
291.9
240.1
186.0
6.4
291.4
244.8'
188.0
6.5
305.7
257.2
2,086.5
699.5
2,090.6'
701.6'
2,090.3
700.5
187.8
6.8
299.1
245.5
2,086.3'
698.3'
188.9
6.8
303.9
250.5
2,088.8
701.1
Not seasonally adjusted
r>
Ml
73 M2
74 M3
L
26 Debt
570.3
2,378.3
2,997.2'
3,539.7'
5,940.2
641.0
2,580.5
3,218.8 r
3,850.7
6,768.3
150.6
4.6
251.0
132.2
160.8
4.9
257.2
147.4
173.1
5.5
282.0
180.4
1,653.3
510.8
1,808.0
618.9
538.3
2,191.6
2,702.4
3,163.1
5,200.7
746.5'
2,813.2'
3,504.C
4,154.2'
7,618.4'
744.3
2,832.0'
3,525.8'
4,185.7'
7,701.4'
77
28
79
30
Ml components
Currency 2
Travelers checks 3
Demand deposits 4
Other checkable deposits 5
31
32
Nontransactions components
M2 6
M3 only 7
33
34
Money market deposit accounts
Commercial banks
Thrift institutions
230.4
148.5
267.4
150.0
332.5
180.7
379.0
192.3
381.7
192.4
378.4
192.2
378.1
192.2
375.3
189.9
3S
36
Savings deposits 8
Commercial Banks
Thrift institutions
132.2
172.4
121.4
166.2
123.9
178.8
153.8
211.7
159.2
217.2
162.7
222.0
167.1
228.2
172.0
234.3
37
38
Small denomination time deposits 9
Commercial Banks
Thrift institutions
351.1
433.5
386.7
499.6
383.8
501.5
364.4
489.6
364.4
489.5'
362.1
487.6
359.6
485.5'
355.6
483.0
39
40
Money market mutual f u n d s
General purpose and broker/dealer
Institution-only
138.2
43.2
167.5
62.7
176.5
65.1
207.6
84.1
209.0
84.0
210.7
84.7
211.6
84.9
211.8
83.1
41
42
Large denomination time deposits 1 0
Commercial Banks 1 1
Thrift institutions
231.6
96.3
271.2
147.3
285.6
151.9
293.3'
154.7
296.9'
154.2
298.0
152.8
301.2'
150.9
303.1
147.8
43
44
Debt components
Federal debt
Nonfederal debt
1,170.2
4,030.5
1,364.7
4,575.5
1,583.7
5,184.6
1,803.3'
5,815.1'
1,816.9
5,884.5'
1,826.7
5,915.6
F o r notes see following page.
1,939.5
638.3'
186.2
6.0
319.4'
235.0
2,066.7
690.8
184.6
6.0
311.0
242.8
2,087.7'
693.7'
1,838.3
5,948.2
n.a.
n.a.
A14
DomesticNonfinancialStatistics • July 1987
N O T E S T O T A B L E 1.21
1. Composition of the money stock measures and debt is as follows:
M l : (1) currency outside the Treasury, Federal Reserve Banks, and the vaults
of commercial banks; (2) travelers checks of nonbank issuers; (3) demand deposits
at all commercial banks other than those due to domestic banks, the U.S.
government, and foreign banks and official institutions less cash items in the
process of collection and Federal Reserve float; and (4) other checkable deposits
(OCD) consisting of negotiable order of withdrawal (NOW) and automatic transfer
service (ATS) accounts at depository institutions, credit union share draft
accounts, and demand deposits at thrift institutions. The currency and demand
deposit components exclude the estimated amount of vault cash and demand
deposits respectively held by thrift institutions to service their O C D liabilities.
M2: Ml plus overnight (and continuing contract) repurchase agreements (RPs)
issued by all commercial banks and overnight Eurodollars issued to U.S. residents
by foreign branches of U.S. banks worldwide, M M D A s , savings and smalldenomination time deposits (time deposits—including retail RPs—in amounts of
less than $100,000), and balances in both taxable and tax-exempt general purpose
and broker-dealer money market mutual funds. Excludes individual retirement
accounts (IRA) and Keogh balances at depository institutions and money market
funds. Also excludes all balances held by U.S. commercial banks, money market
funds (general purpose and broker-dealer), foreign governments and commercial
banks, and the U.S. government. Also subtracted is a consolidation adjustment
that represents the estimated amount of demand deposits and vault cash held by
thrift institutions to service their time and savings deposits.
M3: M2 plus large-denomination time deposits and term RP liabilities (in
amounts of $100,000 or more) issued by commercial banks and thrift institutions,
term Eurodollars held by U.S. residents at foreign branches of U . S . banks
worldwide and at all banking offices in the United Kingdom and Canada, and
balances in both taxable and tax-exempt, institution-only money market mutual
funds. Excludes amounts held by depository institutions, the U.S. government,
money market funds, and foreign banks and official institutions. Also subtracted is
a consolidation adjustment that represents the estimated amount of overnight RPs
and Eurodollars held by institution-only money market mutual f u n d s .
L: M3 plus the nonbank public holdings of U.S. savings bonds, short-term
Treasury securities, commercial paper and bankers acceptances, net of money
market mutual fund holdings of these assets.
Debt: Debt of domestic nonfinancial sectors consists of outstanding credit
market debt of the U . S . government, state and local governments, and private
nonfinancial sectors. Private debt consists of corporate bonds, mortgages, consumer credit (including bank loans), other bank loans, commercial paper, bankers
acceptances, and other debt instruments. The source of data on domestic
nonfinancial debt is the Federal Reserve Board's flow of f u n d s accounts. Debt
data are based on monthly averages.
2. Currency outside the U . S . Treasury, Federal Reserve Banks, and vaults of
commercial banks. Excludes the estimated amount of vault cash held by thrift
institutions to service their O C D liabilities.
3. Outstanding amount of U.S. dollar-denominated travelers checks of nonbank issuers. Travelers checks issued by depository institutions are included in
demand deposits.
4. Demand deposits at commercial banks and foreign-related institutions other
than those due to domestic banks, the U . S . government, and foreign b a n k s and
official institutions less cash items in the process of collection and Federal
Reserve float. Excludes the estimated amount of demand deposits held at
commercial banks by thrift institutions to service their O C D liabilities.
5. Consists of N O W and A T S balances at all depository institutions, credit
union share draft balances, and demand deposits at thrift institutions. Other
checkable deposits seasonally adjusted equals the difference between the seasonally adjusted sum of demand deposits plus O C D and seasonally adjusted d e m a n d
deposits. Included are all ceiling free " S u p e r N O W s , " authorized by the
Depository Institutions Deregulation committee to be offered beginning Jan. 5,
1983.
6. Sum of overnight RPs and overnight Eurodollars, money market fund
balances (general purpose and broker-dealer), M M D A s , and savings and small
time deposits, less the consolidation adjustment that represents the estimated
amount of demand deposits and vault cash held by thrift institutions to service
their time and savings deposits liabilities.
7. Sum of large time deposits, term RPs and term Eurodollars of U.S.
residents, money market fund balances (institution-only), less a consolidation
adjustment that represents the estimated amount of overnight RPs and Eurodollars held by institution-only money market funds.
8. Savings deposits exclude M M D A s .
9. Small-denomination time deposits—including retail RPs— are those issued
in amounts of less than $100,000. All individual retirement accounts (IRA) and
Keogh accounts at commercial banks and thrifts are subtracted f r o m small time
deposits.
10. Large-denomination time deposits are those issued in amounts of $100,000
or more, excluding those booked at international banking facilities.
11. Large-denomination time deposits at commercial banks less those held by
money market mutual f u n d s , depository institutions, and foreign banks and
official institutions.
NOTE: Latest monthly and weekly figures are available f r o m the B o a r d ' s H.6
(508) release. Historical data are available from the Banking Section, Division of
Research and Statistics, Board of Governors of the Federal Reserve System,
Washington, D.C. 20551.
Monetary and Credit Aggregates
1.22
A15
B A N K DEBITS A N D DEPOSIT T U R N O V E R
Debits are shown in billions of dollars, turnover as ratio of debits to deposits. Monthly data are at annual rates.
1986
1987
Nov.
Oct.
Dec.
Jan.
Feb.
Mar.
Seasonally adjusted
D E B I T S TO
2
Demand deposits
1
All insured banks
2
Major N e w York City banks
3
Other banks
4 A T S - N O W accounts 3
5 Savings deposits 4
128,440.8
57,392.7
71,048.)
1,588.7
633.1
154,556.0
70,445.1
84,110.9
1,920.8
539.0
189,534.1
91,212.9
98,321.4
2,351.1
410.3
197,222.5
95,919.7
101,302.9
2,292.5
456.5
187,594.4
96,829.5
90,764.9
2,501.0
424.9
206,689.6
95,831.3
110,858.4
2,960.8
533.7
210,574.2
99,357.1
111,217.1
2,255.7
459.2
211,169.4
98,712.3
112,457.1
2,306.0
477.7
217,019.7
104,224.5
112,795.2
2,344.6
468.6
434.4
1,843.0
268.6
15.8
5.0
496.5
2,168.9
301.8
16.7
4.5
561.8
2,460.6
327.4
16.8
3.1
569.6
2,493.4
329.2
15.2
3.2
538.2
2,513.2
292.8
16.1
2.9
560.7
2,251.6
340.0
18.3
3.5
580.3
2,426.4
345.5
13.4
2.9
594.7
2,461.0
357.0
13.5
2.9
613.8
2,707.8
358.0
13.6
2.8
DEPOSIT TURNOVER
6
7
8
9
10
Demand deposits 2
All insured banks
Major N e w York City banks
Other banks
A T S - N O W accounts 3
Savings deposits 4
Not seasonally adjusted
D E B I T S TO
14
15
16
Demand deposits 2
All insured banks
Major N e w York City b a n k s
Other banks
A T S - N O W accounts 3
MMDA 5
Savings deposits 4
17
18
19
20
21
22
Demand deposits 2
All insured banks
Major N e w York City banks
Other banks
A T S - N O W accounts 3
MMDA 5
Savings deposits 4
11
12
N
128,059.1
57,282.4
70,776.9
1,579.5
848.8
632.9
154,108.4
70,400.9
83,707.8
1,903.4
1,179.0
538.7
189,443.3
91,294.4
98,149.0
2,338.4
1,599.3
404.3
204,618.4
98,837.9
105,780.4
2,231.9
1,607.4
449.2
167,465.5
85,849.7
81,615.8
2,255.1
1,434.0
382.7
226,263.1
106,935.2
119,327.9
2,841.5
2,058.2
503.6
216,638.7
102,274.2
114,364.5
2,679.2
1,913.3
499.0
191,572.9
89,866.7
101,706.2
2,173.2
1,600.7
434.6
222,532.0
106,161.2
116,370.8
2,422.7
1,754.4
476.2
433.5
1,838.6
267.9
15.7
3.5
5.0
497.4
2,191.1
301.6
16.6
3.8
4.5
564.0
2,494.3
327.9
16.8
4.5
3.1
593.5
2,656.9
343.9
14.9
4.3
3.2
476.4
2,225.4
260.8
14.6
3.8
2.6
572.0
2,235.2
357.4
17.4
5.4
3.3
554.8
2,130.5
346.6
15.7
5.0
3.1
550.0
2,273.3
329.4
12.9
4.2
2.7
641.0
2,742.6
377.3
14.1
4.7
2.9
DEPOSIT TURNOVER
1. Annual averages of monthly figures.
2. Represents accounts of individuals, partnerships, and corporations and of
states and political subdivisions.
3. Accounts authorized for negotiable orders of withdrawal (NOW) and accounts authorized for automatic transfer to demand deposits (ATS). A T S data are
available beginning December 1978.
4. Excludes A T S and N O W accounts, M M D A and special club accounts, such
as Christmas and vacation clubs.
5. Money market deposit accounts.
NOTE. Historical data for demand deposits are available back to 1970 estimated
in part from the debits series for 233 SMSAs that were available through June
1977. Historical data for A T S - N O W and savings deposits are available back to
July 1977. Back data are available on request f r o m the Banking Section, Division
of Research and Statistics, Board of Governors of the Federal Reserve S y s t e m ,
Washington, D.C. 20551.
These data also appear on the B o a r d ' s G.6 (406) release. F o r address, see inside
front cover.
A16
1.23
DomesticNonfinancialStatistics • July 1987
LOANS AND SECURITIES
All Commercial Banks 1
Billions of dollars; averages of Wednesday figures
1986
1987
ego y
May
July
June
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Seasonally adjusted
f Total loans and securities 2
2 U.S. government securities
3 Other securities
4 Total loans and leases 2
5
Commercial and industrial
6
Bankers acceptances h e l d 3 . .
Other commercial and
7
industrial
8
U . S . addressees 4
9
N o n - U . S . addressees 4
Real estate
10
11
Individual
Security
12
13
Nonbank financial
institutions
14
Agricultural
15
State and political
subdivisions
Foreign banks
16
17
Foreign official institutions . . .
Lease financing r e c e i v a b l e s . . .
18
19
All other loans
1,969.8
1,978.3
1,998.2
2,022.6
2,044.6
2,052.4
2,063.5
2,089.8
2,118.3
2,119.7
2,126.2'
2,147.3
275.7
185.6
1,508.5
509.9
6.1
275.7
187.0
1,515.6
513.0
6.3
284.7
189.7
1,523.7
512.6
6.1
291.5
196.0
1,535.1
515.2
6.5
294.9
204.2
1,545.4
517.3
6.6
299.6
199.8
1,553.0
520.0
6.7
304.1
197.9
1,561.5
525.7
6.4
309.9
196.9
1,583.0
541.4
6.4
316.3
190.2
1,611.8
554.1
6.7
315.2
193.8
1,610.7
553.8
6.8
314.3
195.5
1,616.4'
551.7
6.1
315.8
197.2
1,634.3
553.9
6.5
503.8
493.9
9.9
449.3
303.7
45.(K
506.6
497.3
9.4
453.6
305.1
41.3'
506.5
497.7
8.9
458.3
306.3
43.7'
508.7
499.8
8.9
464.8
308.1
43.1'
510.7
501.7
9.0
468.9
309.9
42.8'
513.3
504.6
8.8
474.2
311.2
39.1'
519.2
510.7
8.5
479.6
312.6
40.1'
535.1'
525.7
9.4
489.0
314.2
38.6'
547.3
537.8
9.5
499.2
314.9
37.7'
547.0
537.9
9.1
504.0
315.2
38.5'
545.5'
536.8'
8.7
511.0
315.7
38.3'
547.5
539.0
8.5
517.9
316.6
43.6
33. 7'
34.2
34.6'
33.7
34.5
33.3
34.5'
33.0
34.9'
32.7
35.5'
32.4
34.9'
32.1
35.2'
31.7
35.7
31.5
34.7'
31.6
35.(y
31.5'
35.4
31.1
60.3
10.0
6.1
20.2
36.2'
60.1
10.3
6.0
20.4
37.4'
59.9
10.3
6.1
20.5
38.2'
60.1
10.1
6.1
20.7
39.5'
60.0
10.1
6.0
21.1
41.7'
59.3
10.0
6.0
21.8
43.3
58.7
10.0
5.9
22.0
39^
57.9
10.4
5.8
22.2
36.6'
57.8
10.6
5.9
22.1
42.3'
57.2
10.3
6.1
22.2
37.2'
56.9
9.7
6.7
22.3
37.5'
55.9
9.9
6.7
22.6
40.7
Not seasonally adjusted
20 Total loans and securities 2
1,967.8
1,978.2
1,993.7
2,015.1
2,042.3
2,044.0
2,064.2
2,105.2
2,123.7
2,121.6
2,127.8'
2,148.4
21 U.S. government securities
22 Other securities
23 Total loans and leases 2
24
Commercial and i n d u s t r i a l . . . .
25
Bankers acceptances h e l d 3 . .
Other commercial and
26
industrial
27
U . S . addressees 4
28
N o n - U . S . addressees 4
29
Real estate
30
Individual
31
Security
32
Nonbank financial
institutions
33
Agricultural
34
State and political
subdivisions
35
Foreign banks
36
Foreign official institutions . . .
37
Lease financing r e c e i v a b l e s . . .
38
All other loans
275.5
185.1
1,507.2
511.8
6.0
276.2
185.7
1,516.3
514.2
6.4
285.6
187.5
1,520.6
512.1
6.2
290.5
196.2
1,528.4
512.8
6.3
293.8
205.0
1,543.5
516.1
6.7
296.1
200.1
1,547.8
517.8
6.6
303.2
198.3
1,562.6
525.2
6.6
308.3
198.1
1,598.7
544.3
6.7
314.6
193.7
1,615.4
552.4
6.6
318.9
194.1
1,608.6
551.7
6.6
317.2
194.4
1,616.2'
554.5
6.2
317.7
195.2
1,635.4
556.5
6.4
505.8
495.8
9.9
448.5
301.8
44.9'
507.8
498.4
9.4
453.3
303.8
41.9'
506.0
496.8
9.2
458.4
305.2
42.7'
506.5
497.3
9.1
464.9
307.9
40.7'
509.4
500.2
9.2
469.9
310.8
41.3'
511.2
502.1
9.1
475.1
312.3
37.8'
518.5
509.5
9.1
480.7
313.7
40.4'
537.6
528.8
8.8
489.9
317.8
40.9'
545.9
537.1
8.8
499.3
317.9
39.4'
545.1
536.3
8.8
503.1
314.7
37.5'
548.3'
539.9
8.4
509.8
313.3
38.6'
550.1
541.6
8.4
516.7
314.4
45.1
33.2
34.0
34.7
34.1
34.5
34.0
34.8
33.9
35.6
33.7
35.6
33.2
35.4
32.2
36.4
31.4
35.7
30.8
33.8
30.6
33.8
30.5'
34.8
30.3
60.3
9.7
6.1
20.3
36.7'
60.1
10.1
6.0
20.5
37.7'
59.9
10.3
6.1
20.5
36.8'
60.1
9.9
6.1
20.6
36.7'
60.0
10.3
6.0
21.0
39.0'
59.3
10.0
6.0
21.5
39.1'
58.7
10.1
5.9
21.8
38.6'
57.9
10.9
5.8
22.2
41.3'
57.8
10.7'
5.9
22.4
43.(K
57.2
10.5
6.1
22.4
40.8'
56.9
9.7
6.7
22.5
39.8'
55.9
9.5
6.7
22.7
42.7
1. These data also appear in the B o a r d ' s G.7 (407) release.
2. Excludes loans to commercial banks in the United States.
3. Includes nonfinancial commercial paper held.
4. United States includes the 50 states and the District of Columbia.
Commercial Banking Institutions
1.24
A17
MAJOR NONDEPOSIT F U N D S OF COMMERCIAL BANKS1
Monthly averages, billions of dollars
1987
1986
Source
May
Total nondeposit funds
Seasonally adjusted 2
Not seasonally adjusted
Federal funds, RPs, and other
borrowings from nonbanks 3
3
Seasonally adjusted
4
Not seasonally adjusted
5 Net balances due to foreign-related
institutions, not seasonally
adjusted
1
2
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.'
Mar.'
Apr.
137.4
138.5
134.3
132.0'
136.1
132.9
137.9
137.8
142.6
141.9
140.5
139.5
144.2
145.7
144.9
145.0
154.1'
153.6'
158.1
160.7
163.1
165.4
159.7
159.8
158.8
159.8 r
158.0
155.7
165.5
162.4
167.4
167.3
166.9
166.2
167.8
166.9
166.0
167.5
164.0
164.1
169.2
168.7
170.1
172.8
169.1
171.4
169.4
169.5
-21.3
-23.7
-29.5
-29.5
-24.3
-27.3
-21.8
-19.1
-15.1'
-12.1
-6.0
-9.7
-29.3
72.9
43.6
-30.5
72.2
41.7
-33.8
73.9
40.1
-31.2
75.2
44.0
-29.2
74.0
44.8
-31.9
73.5
41.6
-28.7
70.8
42.1
-30.7
73.4
42.7
-25.7'
70.8'
45.2
-24.0
68.6
44.6
-20.8
65.7
44.8
-22.4
70.0
47.6
8.0
60.0
67.9
6.8
62.8
69.6
4.3
64.2
68.6
1.7
66.3
67.9
4.9
67.9
72.7
4.6
68.3
72.9
6.9
68.7
75.6
11.6
70.8
82.5
10.6'
74.6
85.1
11.9
72.8
84.8
14.9
71.1
86.0
12.7
72.6
85.3
89.9
91.0
90. K
87.9
95.2
92.0
95.9
95.8
95.9
95.2
97.0
96.1
96.9
98.5
97.CK
97.1
99.4
98.9
96.3
99.0
93.9
96.2
97.1
97.2
19.1
21.8
17.7
16.1
15.4
16.8
14.5
11.1
16.5
18.2
17.1
15.3
23.2
15.3
21.2
19.2
21.3
27.5
23.2
28.6
17.7
17.1
20.7
21.6
341.9
340.5
341.8
339.2
341.1
338.3
344.3
344.0
344.2
345.5
342.7
343.8
343.3
344.1
345.6'
347.1
350.1'
351.3'
351.1
353.2
354.1
356.4
359.8
357.1
MEMO
6 Domestically chartered banks' net
positions with own foreign
branches, not seasonally
adjusted 4
7
Gross due f r o m balances
8
Gross due to balances
9 Foreign-related institutions' net
positions with directly related
institutions, not seasonally
adjusted 5
10
Gross due from balances
11
Gross due to balances
Security RP borrowings
12
Seasonally adjusted"
Not seasonally adjusted
13
U.S. Treasury demand balances 7
14
Seasonally adjusted
15
Not seasonally adjusted
Time deposits, $100,000 or more 8
16
Seasonally adjusted
17
Not seasonally adjusted
1. Commercial banks are those in the 50 states and the District of Columbia
with national or state charters plus agencies and branches of foreign banks. New
York investment companies majority owned by foreign banks, and Edge Act
corporations owned by domestically chartered and foreign banks.
2. Includes seasonally adjusted federal funds, RPs, and other borrowings from
nonbanks and not seasonally adjusted net Eurodollars. Includes averages of
Wednesday data for domestically chartered banks and averages of current and
previous month-end data for foreign-related institutions.
3. Other borrowings are borrowings on any instrument, such as a promissory
note or due bill, given for the purpose of borrowing money for the banking
business. This includes borrowings f r o m Federal Reserve Banks and from foreign
banks, term federal funds, overdrawn due f r o m bank balances, loan RPs, and
participations in pooled loans.
4. Averages of daily figures for m e m b e r and n o n m e m b e r banks.
5. Averages of daily data.
6. Based on daily average data reported by 122 large banks.
7. Includes U.S. Treasury demand deposits and Treasury tax-and-loan notes at
commercial banks. Averages of daily data.
8. Averages of Wednesday figures.
A18
1.25
DomesticNonfinancialStatistics • July 1987
ASSETS A N D LIABILITIES OF COMMERCIAL BANKING INSTITUTIONS
Last-Wednesday-of-Month Series'
Billions of dollars
1986
1987
Account
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
2,117.8
435.9
259.5
176.4
27.3
1,654.7
138.9
1,515.8
516.2
454.3
304.6
240.8
2,144.5
449.0
269.1
179.9
28.6
1,666.9
148.7
1,518.2
510.6
459.8
305.8
242.1
2,164.8
460.0
272.9
187.1
29.3
1,675.6
145.5
1,530.1
513.8
466.5
308.8
241.0
2,179.7
469.4
276.6
192.8
27.9
1,682.4
139.8
1,542.5
515.9
470.5
311.2
244.9
2,183.2
471.9
282.8
189.1
26.0
1,685.3
141.2
1,544.1
517.2
476.2
312.8
237.8
2,227.3
475.4
287.3
188.0
28.1
1,723.8
154.7
1,569.1
524.9
481.8
314.1
248.2
2,314.3
479.6
292.6
187.0
27.8
1,807.0
168.9
1,638.1
568.2
497.5
320.4
252.0
2,284.8
482.2
296.1
186.1
26.4
1,776.3
160.1
1,616.2
551.1
499.9
317.0
248.3
2,279.4
484.7
298.8
185.9
29.0
1,765.6
156.7
1,608.9
551.5
503.5
314.7
239.2
2,279.2
486.2
299.5
186.7
25.2
1,767.8
154.3
1,613.5
555.3
510.7
313.1
234.4
2,306.1
492.5
305.0
187.4
23.3
1,790.3
151.8
1,638.5
555.5
518.9
315.2
248.9
198.7
28.3
23.0
67.3
209.0
28.6
23.3
72.2
208.3
28.3
23.7
73.5
199.3
28.2
22.9
66.2
203.5
31.6
23.5
66.2
227.0
32.2
22.2
86.5
273.7
41.2
25.7
111.3
214.4
33.4
23.7
74.5
206.3
28.4
23.5
71.4
203.8
31.1
22.9
68.1
209.7
29.8
24.0
74.5
32.5
47.5
34.3
50.7
34.0
48.7
32.8
49.2
33.1
49.0
38.3
47.9
43.3
52.3
34.0
48.8
33.0
50.1
32.7
49.0
33.9
47.5
ALL COMMERCIAL BANKING
INSTITUTIONS2
1 Loans and securities
2
Investment securities
3
U.S. government securities
4
Other
5
Trading account assets
6
Total loans
7
Interbank loans
8
Loans excluding interbank
9
Commercial and industrial
10
Real estate
Individual
11
12
All other
13 Total cash assets
14
Reserves with Federal Reserve Banks
15
Cash in vault
16
Cash items in process of collection . . .
17
Demand balances at U.S. depository
institutions
18
Other cash assets
195.2
195.3
194.8
201.4
198.6
202.2
224.8
201.3
201.1
202.1
204.1
20 Total assets/total liabilities and capital . . .
2,511.7
2,548.9
2,567.8
2,580.4
2,585.3
2,656.5
2,812.8
2,700.5
2,686.8
2,685.2
2,719.8
21
22
23
24
25
26
27
1,796.1
524.8
484.0
787.3
370.0
168.8
176.7
1,822.4
541.6
492.5
788.3
381.7
168.7
176.0
1,837.6
545.7
499.2
792.6
379.8
173.8
176.7
1,834.5
538.9
505.5
790.1
391.6
176.3
178.1
1,847.1
548.8
516.0
782.2
383.3
175.7
179.2
1,900.2
596.3
522.9
781.1
397.4
180.0
178.9
2,018.0
691.1
535.0
791.9
414.5
199.6
180.6
1,898.3
577.8
532.3
788.2
432.7
188.0
181.5
1,895.5
569.2
535.9
790.3
425.6
184.6
181.2
1,899.6
568.8
539.7
791.2
414.9
188.7
181.9
1,919.4
590.7
535.1
793.6
422.6
194.9
182.9
276.4
288.4
290.6
293.2
299.5
304.8
308.4
314.5
320.1
316.7
318.9
186.8
189.2
198.7
204.1
198.4
198.8
198.9
194.1
193.7
194.7
196.9
1,996.7
420.9
252.7
168.2
27.3
1,548.5
116.6
1,431.9
453.8
448.4
304.3
225.4
2,020.1
433.8
262.5
171.3
28.6
1,557.7
124.0
1,433.7
448.9
453.8
305.4
225.6
2,034.6
443.0
265.0
178.0
29.3
1,562.3
119.7
1,442.7
449.4
460.4
308.5
224.4
2,044.8
450.5
267.9
182.5
27.9
1,566.4
115.6
1,450.8
448.1
464.3
310.9
227.5
2,052.1
452.9
273.6
179.3
26.0
1,573.2
1)8.8
1,454.3
449.0
470.0
312.5
222.7
2,094.7
457.1
279.0
178.2
28.1
1,609.5
133.0
1,476.4
455.7
475.1
313.8
231.8
2,154.4
459.3
283.0
176.3
27.8
1,667.3
137.9
1,529.5
488.2
490.3
320.1
230.9
2,136.7
461.5
286.8
174.8
26.4
1,648.8
134.3
1,514.5
475.5
493.2
316.7
229.2
2,130.3
463.3
289.2
174.1
29.0
1,638.0
130.5
1,507.5
474.1
497.0
314.4
221.9
2,121.7
463.6
289.4
174.2
25.2
1,632.9
124.1
1,508.8
474.6
504.1
312.7
217.4
2,146.8
469.9
295.2
174.7
23.3
1,653.5
124.2
1,529.3
473.5
511.9
314.9
229.0
182.3
26.4
23.0
66.7
190.1
27.2
23.3
71.7
191.2
26.6
23.7
73.1
182.5
26.9
22.9
65.8
185.6
29.7
23.5
65.6
210.0
29.8
22.2
86.1
253.5
39.7
25.7
110.9
196.6
31.2
23.6
74.0
188.9
27.1
23.5
71.0
186.5
29.7
22.8
67.7
192.5
27.2
24.0
74.0
30.7
35.6
32.5
35.4
32.3
35.5
30.9
36.0
31.3
35.5
36.3
35.6
40.8
36.4
32.2
35.6
31.1
36.4
31.1
35.2
31.9
35.4
19 Other assets
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)
MEMO
28 U.S. government securities (including
trading account)
29 Other securities (including trading
account)
DOMESTICALLY CHARTERED
COMMERCIAL BANKS3
30 Loans and securities
Investment securities
31
U.S. government securities
32
33
Other
34
Trading account assets
35
Total loans
36
Interbank loans
37
Loans excluding interbank
38
Commercial and industrial
39
Real estate
Individual
40
41
All other
42 Total cash assets
43
Reserves with Federal Reserve Banks
44
Cash in vault
45
Cash items in process of collection . . .
Demand balances at U.S. depository
46
institutions
47
Other cash assets
48 Other assets
49 Total assets/total liabilities and capital . . .
50
51
52
53
54
55
56
Deposits
Transaction deposits
Savings deposits
Time deposits
Borrowings
Other liabilities
Residual (assets less liabilities)
142.6
140.4
139.3
143.5
141.0
141.6
165.0
141.5
144.0
143.4
144.4
2,321.5
2,350.6
2,365.0
2,370.8
2,378.7
2,446.3
2,572.8
2,474.8
2,463.2
2,451.5
2,483.7
1,746.3
516.9
482.3
747.1
296.2
105.5
173.6
1,771.6
533.5
490.8
747.3
302.2
103.9
172.9
1,784.2
537.6
497.4
749.3
296.8
110.5
173.5
1,779.3
530.6
503.7
745.0
306.9
109.6
174.9
1,792.8
540.9
514.1
737.7
301.3
108.6
176.0
1,844.8
588.2
520.8
735.8
314.1
111.7
175.8
1,957.0
682.2
533.0
741.8
322.9
115.5
177.5
1,840.8
569.4
530.3
741.1
341.7
114.0
178.3
1,838.2
561.3
533.9
743.0
336.1
110.8
178.1
1,840.7
560.5
537.7
742.5
319.1
113.0
178.8
1,857.1
582.2
533.0
741.9
328.1
118.8
179.7
1. Data have been revised because of benchmarking to new Call Reports and
new seasonal factors beginning July 1985. Back data are available from the
Banking Section, Board of Governors of the Federal Reserve System, Washington, D.C., 20551.
Figures are partly estimated. They include all bank-premises subsidiaries and
other significant majority-owned domestic subsidiaries. L o a n and securities data
for domestically chartered commercial b a n k s are estimates for the last Wednesday of the month based on a sample of weekly reporting banks and quarter-end
condition report data. Data for other banking institutions are estimates made for
the last Wednesday of the month based on a weekly reporting sample of foreignrelated institutions and quarter-end condition reports.
2. Commercial banking institutions include insured domestically chartered
commercial banks, branches and agencies of foreign banks, Edge Act and
Agreement corporations, and N e w York State foreign investment corporations.
3. Insured domestically chartered commercial banks include all m e m b e r banks
and insured nonmember banks.
Weekly Reporting
1.26
Commercial
Banks
A19
A L L L A R G E W E E K L Y REPORTING COMMERCIAL B A N K S with Domestic Assets of $1.4 Billion or More on
December 31, 1982, Assets and Liabilities
Millions of dollars, Wednesday figures
1 Cash and balances due f r o m depository institutions . . . .
Mar. 4
Mar. 11
Mar. 18
103,334
105,003
102,523'
1,008,989' 1,004,946' 1,001,501'
2 Total loans, leases and securities, net
Mar. 25
95,872
Apr. 1
Apr. 8
114,633
103,130
996,414' 1,011,601 1,006,690
Apr. 15
Apr. 22
119,102
Apr. 29
109,998
99,258
1,020,503 1,021,813
1,016,620
3 U.S. Treasury and government agency
4
Trading account
5
Investment account, by maturity
6
One year or less
7
Over one through five years
8
Over five years
9 Other securities
10
Trading account
11
Investment account
12
States and political subdivisions, by maturity
13
One year or less
14
Over one year
15
Other bonds, corporate stocks, and securities
16 Other trading account assets
117,832
21,586
96,245
17,302'
41,494
37,449'
67,371
3,523
63,848
52,343
6,870
45,473
11,505
4,394
115,499
19,414
96,086
17,418
40,998
37,670
67,497
3,405
64,092
52,150
6,766
45,384
11,942
4,562
113,048
18,314
94,734
16,629'
40,614
37,491'
67,290
3,335
63,955
51,829
6,702
45,127
12,126
5,046
112,921
17,256
95,664
16,304'
40,456'
38,904'
67,324
3,515
63,810
51,626
6,590
45,036
12,184
4,440
112,345
16,596
95,749
15,997
40,612
39,139
67,487
3,773
63,714
51,368
6,528
44,840
12,346
4,244
112,098
16,377
95,721
16,014
40,048
39,659
67,247
3,511
63,736
51,310
6,575
44,735
12,426
4,879
111,902
16,578
95,324
16,017
40,630
38,677
68,076
4,182
63,894
51,380
6,544
44,835
12,514
4,757
110,467
14,346
96,121
15,426
41,501
39,193
68,551
4,576
63,975
51,421
6,580
44,841
12,554
4,482
110,606
13,847
96,759
15,321
42,028
39,410
69,450
4,946
64,504
51,528
6,629
44,899
12,976
4,500
17 Federal funds sold 1
18
To commercial banks
19
To nonbank brokers and dealers in securities
20
To others
21 Other loans and leases, gross 2
22
Other loans, gross 2
23
Commercial and industrial 2
24
Bankers acceptances and commercial paper
25
All other
26
U.S. addressees
27
N o n - U . S . addressees
57,163'
34,70C
14,932
7,532
785,076 r
766,856'
281,226'
2,484
278,742'
275,065'
3,677'
59,758'
35,868'
16,565
7,326
780,507'
762,241'
280,274'
2,652
277,622'
274,032'
3,590'
54,452'
30,904'
15,880
7,668
784,553'
766,270'
281,002'
2,428
278,574'
275,180'
3,394'
53,877'
31,546'
15,205
7,126
780,473'
762,143'
280,097'
2,280
277,817'
274,405'
3,412'
62,950
38,441
18,402
6,107
786,903
768,557
279,601
2,298
277,304
273,991
3,313
58,332
35,870
15,202
7,261
786,531
768,122
278,648
2,317
276,331
273,012
3,319
63,856
41,298
16,118
6,439
794,330
775,892
280,336
2,178
278,157
274,717
3,440
65,983
39,636
18,885
7,462
794,636
776,205
279,934
2,429
277,505
274,147
3,358
60,379
35,833
16,539
8,007
793,834
775,230
277,688
2,177
275,511
272,195
3,315
216,439
141,388'
51,373'
20,625'
5,566'
25,181
15,213
5,326
34,563'
3,271'
18,058'
18,22c
4,833
18,014
762,228'
130,599
217,513
140,982'
50,533'
20,193'
4,970'
25,370'
12,915
5,339
34,280'
3,231
17,175'
18,266'
4,829
18,050
757,628'
126,381
218,752
140,731'
51,373'
20,833'
5,058'
25,482
13,606
5,368
34,268'
3,262'
17,907'
18,283'
4,830
18,058
761,664'
126,967
218,440'
140,530'
49,332'
20,326'
4,934'
24,072'
13,904
5,344
34,299'
3,189
17,009'
18,33(K
4,614
18,008
757,851'
125,294'
219,457
140,563
51,988
21,171
5,200
25,616
14,900
5,322
34,052
3,166
19,506
18,346
4,568
17,760
764,574
131,191
219,748
140,320
53,587
22,599
4,998
25,990
15,763
5,325
33,772
3,027
17,930
18,410
4,591
17,807
764,134
129,817
220,633
141,040
53,060
21,782
4,632
26,645
18,463
5,323
33,716
3,068
20,253
18,437
4,596
17,822
771,912
128,413
220,520
141,481
52,560
22,504
4,896
25,160
20,353
5,326
33,653
3,000
19,378
18,430
4,590
17,716
772,329
126,696
221,069
141,923
53,480
23,376
4,561
25,543
20,435
5,318
33,508
3,045
18,764
18,604
4,483
17,667
771,684
126,320
1,268,019 1,258,508
1,242,198
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Real estate loans 2
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
F o r purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions . . . .
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve 2
Other loans and leases, net 2
All other assets
1,242,922' 1,236,330' 1,230,991' 1,217,579' 1,257,426 1,239,638
44 Total assets
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U.S. government
Depository institutions in United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
Nontransaction balances
Individuals, partnerships and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Foreign governments, official institutions and banks . .
Liabilities for borrowed money
Borrowings f r o m Federal Reserve Banks
Treasury tax-and-loan notes
All other liabilities for borrowed money 3
Other liabilities and subordinated note and debentures.
230,727'
176,401'
5,259
4,894
25,982
6,365
700
11,125
60,710'
519,119
480,591'
26,587'
733
10,196
1,011
259,176
100
10,506
248,570
86,011'
223,641'
173,282'
4,610
2,751'
23,328
6,217
849
12,605
59,653'
518,950
480,392'
26,712'
746
10,092
1,007
258,049'
0
6,111
251,938'
88,725'
225,538'
172,555'
5,191
4,160
24,521
6,663
590
11,858
59,44(K
519,643
480,973'
26,810'
731
10,098
1,031
251,450
0
14,004
237,446
87,769'
215,343'
167,748'
5,066
2,013
23,949
5,919
758
9,890'
59,135
518,495
479,952'
26,899'
709
9,984
952
248,716
70
9,923
238,722
87,895'
250,126
194,415
5,776
1,516
30,131
6,643
1,030
10,615
61,602
521,088
482,867
26,488
753
10,029
951
251,484
0
4,977
246,508
84,422
224,041
174,330
4,594
2,877
23,630
6,640
928
11,042
63,224
520,839
483,016
26,352
738
9,801
932
261,362
1,180
8,904
251,278
81,405
1,155,743' 1,149,018' 1,143,840' 1,129,583' 1,168,723 1,150,871
65 Total liabilities
66 Residual (total assets minus total liabilities) 4
233,431
179,974
5,755
3,963
25,181
6,421
829
11,309
64,623
516,313
478,418
26,439
833
9,705
918
266,995
4,838
18,929
243,228
88,667
228,895
176,883
5,585
4,378
23,857
6,338
1,076
10,777
60,280
516,208
478,130
26,698
791
9,698
890
253,902
156
20,764
232,982
94,420
1,179,528 1,170,029
1,153,706
262,570
195,740
6,138
11,521
28,222
6,546
855
13,549
66,729
518,641
481,172
26,170
699
9,672
928
251,653
0
7,906
243,747
79,934
87,179
87,312
87,151
87,996
88,703
88,767
88,491
88,478
88,492
976,512'
786,914'
158,352'
2,037
1,551
485
232,676
971,763'
784,204'
158,215'
1,942
1,470
472
232,966
972,652'
787,268'
158,470
1,954
1,482
472
233,555
967,164'
782,478'
158,230
1,967
1,486
481
232,792
974,318
790,241
157,667
1,940
1,460
480
236,368
970,619
786,395
158,661
1,903
1,457
446
235,664
979,840
795,105
157,278
1,862
1,402
460
234,545
981,980
798,479
158,003
1,754
1,283
470
231,712
979,561
795,005
159,588
1,685
1,215
470
230,211
MEMO
67
68
69
70
71
72
73
5
Total loans and leases (gross) and investments a d j u s t e d .
Total loans and leases (gross) adjusted 2 - 5
Time deposits in amounts of $100,000 or more
Loans sold outright to affiliates—total 6
Commercial and industrial
Other
Nontransaction savings deposits (including MMDAs)
1. Includes securities purchased under agreements to resell.
2. Levels of major loan items were affected by the Sept. 26, 1984, transaction
between Continental Illinois National Bank and the Federal Deposit Insurance
Corporation. For details see the H.4.2 statistical release dated Oct. 5, 1984.
3. Includes federal funds purchased and securities sold under agreements to
repurchase; for information on these liabilities at banks with assets of $1 billion or
more on Dec. 31, 1977, see table 1.13.
4. This is not a measure of equity capital for use in capital adequacy analysis or
for other analytic uses.
5. Exclusive of loans and federal funds transactions with domestic commercial
banks.
6. Loans sold are those sold outright to a b a n k ' s own foreign branches,
nonconsolidated nonbank affiliates of the bank, the bank's holding company (if
not a bank), and nonconsolidated nonbank subsidiaries of the holding company.
A20
1.28
DomesticNonfinancialStatistics • July 1987
L A R G E W E E K L Y REPORTING COMMERCIAL B A N K S IN N E W YORK CITY Assets and Liabilities
Millions of dollars, Wednesday figures except as noted
1987
Account
Mar. 4
1 Cash and balances due from depository institutions
2 Total loans, leases and securities, net 1
Securities
3 U.S. Treasury and government agency 2
4
Trading account 2
5
Investment account, by maturity
6
One year or less
7
Over one through five years
8
Over five years
9 Other securities 2
10
Trading account 2
11
Investment account
12
States and political subdivisions, by maturity
13
One year or less
14
Over one year
15
Other bonds, corporate stocks and securities
16 Other trading account assets 2
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
Loans and leases
Federal funds sold 3
To commercial banks
To nonbank brokers and dealers in securities
To others
Other loans and leases, gross
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial paper
All other
U.S. addressees
N o n - U . S . addressees
Real estate loans
To individuals for personal expenditures
To depository and financial institutions
Commercial banks in the United States
Banks in foreign countries
Nonbank depository and other financial institutions
F o r purchasing and carrying securities
To finance agricultural production
To states and political subdivisions
To foreign governments and official institutions
All other
Lease financing receivables
LESS: Unearned income
Loan and lease reserve
Other loans and leases, net
All other assets 4
44 Total assets
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
Deposits
Demand deposits
Individuals, partnerships, and corporations
States and political subdivisions
U . S . government
Depository institutions in the United States
Banks in foreign countries
Foreign governments and official institutions
Certified and officers' checks
Transaction balances other than demand deposits
ATS, N O W , Super N O W , telephone transfers)
Nontransaction balances
Individuals, partnerships and corporations
States and political subdivisions
U.S. government
Depository institutions in the United States
Foreign governments, official institutions and banks
Liabilities for borrowed money
Borrowings from Federal Reserve Banks
Treasury tax-and-loan notes
All other liabilities for borrowed money 5
Other liabilities and subordinated note and debentures
65 Total liabilities
66 Residual (total assets minus total liabilities) 6
Mar. 11
Mar. 18
Mar. 25
Apr. 1
Apr. 8
Apr. 15
Apr. 22
Apr. 29
24,497
30,317
26,221
25,419
34,104
28,339
32,137
27,134
24,078
218,318
219,405
217,071
216,671
220,495
220,858
223,880
229,297
226,815
0
0
14,214
1,670'
4,623
7,921'
0
0
16,418
13,996
1,436
12,560
2,423
0
0
0
13,844
1,732
4,116
7,995
0
0
16,440
13,923
1,393
12,530
2,517
0
0
0
13,663
1,608'
4,124
7,931'
0
0
16,513
13,981
1,407
12,573
2,532
0
0
0
13,604
1,474'
4,136
7,994'
0
0
16,549
13,974
1,392
12,582
2,575
0
0
0
13,793
1,594
4,173
8,025
0
0
16,472
13,868
1,350
12,517
2,605
0
0
0
14,002
1,613
4,221
8,168
0
0
16,498
13,869
1,386
12,483
2,629
0
0
0
13,929
1,650
4,407
7,872
0
0
16,555
13,933
1,368
12,564
2,622
0
0
0
14,041
1,536
4,981
7,524
0
0
16,482
13,915
1,380
12,536
2,567
0
0
0
14,218
1,535
5,135
7,547
0
0
16,527
13,955
1,395
12,560
2,572
0
20,539
8,617
5,803
6,119
173,987
169,610
65,631
762
64,869
64,300
569
39,568
20,576
20,844
11,550
2,993
6,301
7,396
244
8,537
1,036
5,776
4,377
1,591
5,250
167,146
66,908
25,273
11,732
7,832
5,709
170,769
166,366
65,127
859
64,268
63,772
4%
39,868
20,385
20,052
11,223
2,445
6,384
5,799
249
8,331
993
5,560
4,403
1,594
5,326
163,849
61,421
21,124
8,247
7,377
5,500
172,667
168,254
64,737
691
64,046
63,671
375
40,407
20,402
21,012
11,532
2,625
6,855
6,631
261
8,304
1,038
5,461
4,413
1,5%
5,300
165,771
62,150
21,742
10,123
6,662
4,956
171,639
167,199
64,615
610
64,005
63,593
412
40,463
20,411
20,095
11,109
2,652
6,334
6,781
252
8,348
977
5,258
4,440
1,598
5,264
164,776
59,148
22,934
9,572
9,451
3,911
174,035
169,559
62,882
578
62,304
61,880
423
40,831
20,508
21,679
11,865
2,786
7,028
7,390
252
8,237
974
6,807
4,476
1,579
5,160
167,295
65,752
23,054
10,488
7,408
5,158
174,057
169,560
62,575
601
61,974
61,568
406
40,813
20,500
22,583
12,815
2,642
7,126
7,868
258
8,172
833
5,957
4,497
1,588
5,165
167,304
62,611
23,906
11,366
8,311
4,228
176,262
171,748
62,558
562
61,996
61,539
457
40,591
20,641
21,444
11,751
2,319
7,374
9,936
252
8,223
887
7,215
4,514
1,589
5,183
169,489
62,520
28,502
13,432
9,749
5,322
176,943
172,422
62,283
743
61,540
61,086
453
40,817
20,788
21,521
12,026
2,563
6,932
11,006
253
8,207
845
6,701
4,521
1,585
5,086
170,271
62,166
26,681
11,837
8,456
6,388
175,959
171,302
61,118
590
60,527
60,096
431
40,895
20,908
21,792
12,311
2,365
7,117
11,265
248
8,088
882
6,108
4,657
1,485
5,085
169,389
62,900
309,723
311,143
305,442
301,238
320,351
311,808
318,536
318,5%
313,793
59,784
40,732
547
992
6,502
5,199
556
5,254
59,288
39,546
574
518
5,477
5,080
679
7,413
61,214
41,292
636
782
6,058
5,452
438
6,557
57,256
39,860
729
355
5,952
4,822
605
4,932
71,589
50,265
709
149
9,944
5,409
882
4,231
57,581
39,243
571
504
5,441
5,383
770
5,670
72,378
48,460
757
2,660
7,306
5,329
709
7,157
61,261
42,007
528
707
7,047
5,073
688
5,210
59,405
41,385
556
713
5,771
5,176
917
4,886
7,753
99,740
90,650
6,259
35
2,189
608
80,216
0
2,362
77,855
33,888
7,675
99,024
90,035
6,262
37
2,085
605
79,832
0
1,403
78,429
36,904
7,764
99,657
90,800
6,203
36
2,004
613
71,597
0
3,690
67,907
36,765
7,774
98,670
90,045
6,168
26
1,897
534
72,171
0
2,536
69,636
36,044
8,115
100,184
91,620
6,152
32
1,848
532
76,943
0
1,367
75,576
33,841
8,456
99,553
91,041
6,149
33
1,820
510
83,640
1,180
2,111
80,348
32,899
9,190
98,996
90,694
6,111
31
1,647
513
76,413
0
1,932
74,481
32,053
8,769
98,544
90,205
6,105
31
1,694
508
79,879
3,250
5,236
71,393
40,697
8,135
98,093
89,705
6,123
31
1,752
482
73,209
0
5,244
67,%5
45,586
281,382
282,724
276,997
271,916
290,671
282,130
289,030
289,151
284,429
28,341
28,419
28,445
29,322
29,680
29,678
29,506
29,446
29,365
204,992
174,359
36,428
203,370
173,086
36,263
204,188
174,012
36,172
202,302
172,149
35,633
205,799
175,533
35,881
204,307
173,808
36,174
207,534
177,050
35,816
210,511
179,988
35,733
209,237
178,492
35,955
MEMO
67 Total loans and leases (gross) and investments adjusted 1 - 7
68 Total loans and leases (gross) adjusted 7
69 Time deposits in amounts of $100,000 or more
1. Excludes trading account securities.
2. Not available due to confidentiality.
3. Includes securities purchased under agreements to resell.
4. Includes trading account securities.
5. Includes federal f u n d s purchased and securities sold under agreements to
repurchase.
6. Not a measure of equity capital for use in capital adequacy analysis or for
other analytic uses.
7. Exclusive of loans and federal f u n d s transactions with domestic commercial
banks.
NOTE. These data also appear in the B o a r d ' s H.4.2 (504) release. F o r address,
see inside front cover.
Weekly Reporting
1.30
Commercial Banks
LARGE WEEKLY REPORTING U.S. BRANCHES A N D AGENCIES OF FOREIGN BANKS'
Liabilities
A21
Assets and
Millions of dollars, Wednesday figures
1987
Account
Mar. 4
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
Cash and due f r o m depository institutions.
Total loans and securities
U.S. Treasury and govt, agency securities
Other securities
Federal funds sold 2
To commercial banks in the United States
To others
Other loans, gross
Commercial and industrial
Bankers acceptances and commercial
paper
All other
U . S . addressees
N o n - U . S . addressees
To financial institutions
Commercial banks in the United States .
Banks in foreign countries
N o n b a n k financial institutions
To foreign govts, and official institutions . .
For purchasing and carrying securities . .
All other
Other assets (claims on nonrelated p a r t i e s ) . .
Net due f r o m related institutions
Total assets
Deposits or credit balances due to other
than directly related i n s t i t u t i o n s . . . .
Transaction accounts and credit balances 3
Individuals, partnerships, and
corporations
Other
Nontransaction accounts 4
Individuals, partnerships, and
corporations
Other
Borrowings f r o m other than directly
related institutions
Federal funds purchased 5
F r o m commercial banks in the
United States
F r o m others
Other liabilities for borrowed m o n e y . . . .
To commercial banks in the
United States
To others
Other liabilities to nonrelated parties
Net due to related institutions
Total liabilities
Mar. 11
Mar. 18
Mar. 25
Apr. 15
Apr. 22
Apr. 29
9,343
85,732
6,964
7,183
5,102
4,189
913
66,483
41,921
9,423
87,041
6,986
7,103
4,920
3,667
1,253
68,033
42,748
9,834
90,502
6,856
7,189
6,499
5,755
744
69,957
43,484
10,354
90,250
6,966
7,087
5,862
4,523
1,339
70,335
44,481
10,092
87,814
6,748
7,225
4,173
2,837
1,336
69,668
43,446
9,722
89,778
6,551
7,264
5,098
3,456
1,643
70,864
43,957
10,152
94,608
6,370
7,278
9,212
7,235
1,976
71,748
44,615
10,179
92,308
6,728
7,493
7,223
5,759
1,464
70,864
44,208
2,798
39,269
36,960
2,310
15,935
12,318
1,134
2,483
844
2,799
5,438
22,433
15,527
131,776
2,808
39,113
36,887
2,226
15,970
12,445
942
2,582
895
2,402
5,294
22,978
14,794
132,848
2,707
40,041
37,776
2,265
16,226
12,777
884
2,565
978
2,654
5,427
23,390
15,696
135,550
2,616
40,868
38,621
2,246
17,089
13,592
884
2,613
1,035
2,899
5,450
23,308
14,387
138,030
2,660
41,821
39,542
2,278
16,433
12,840
912
2,680
1,028
2,906
5,488
22,701
15,447
138,752
2,838
40,608
38,312
2,2%
16,396
12,750
900
2,747
1,153
3,264
5,409
23,186
15,467
136,559
2,971
40,986
38,699
2,287
16,403
12,475
1,085
2,843
1,152
3,930
5,422
22,749
15,984
138,233
3,126
41,489
39,092
2,397
16,278
12,568
1,018
2,693
908
4,524
5,421
23,026
15,086
142,872
3,112
41,096
38,835
2,261
15,922
12,173
953
2,795
839
4,402
5,493
23,690
13,753
139,930
39,778
3,133
40,129
3,181
40,407
3,243
40,667
3,136
40,678
3,417
40,160
2,982
40,955
3,232
41,955
3,392
43,556
3,786
1,979
1,154
36,645
1,852
1,328
36,948
1,767
1,476
37,164
1,706
1,430
37,531
1,804
1,613
37,261
1,782
1,201
37,177
1,907
1,325
37,723
2,042
1,350
38,563
2,036
1,750
39,771
29,281
7,364
29,467
7,480
29,627
7,538
30,408
7,124
30,116
7,145
30,058
7,120
30,502
7,221
31,374
7,189
32,299
7,471
53,698
25,808
52,504
23,789
55,278
25,212
54,013
22,928
58,111
27,813
56,626
25,702
57,442
25,848
58,451
26,489
54,096
23,451
15,352
10,457
27,890
13,525
10,264
28,715
15,014
10,197
30,066
13,419
9,510
31,084
16,972
10,841
30,297
15,455
10,248
30,923
15,480
10,368
31,594
15,178
11,312
31,961
12,771
10,680
30,645
24,316
3,574
24,576
13,724
131,776
24,986
3,729
24,767
15,447
132,848
26,265
3,801
25,272
14,593
135,550
26,606
4,478
25,538
17,813
138,030
26,051
4,246
24,484
15,480
138,752
26,800
4,123
25,599
14,174
136,559
27,577
4,017
25,902
13,934
138,233
27,791
4,170
26,276
16,190
142,872
26,439
4,206
27,024
15,254
139,930
69,384
55,810
69,098
54,950
70,597
56,509
71,155
57,109
72,887
58,835
72,227
58,254
73,848
60,032
74,805
61,157
74,376
60,155
1. Effective Jan. 1, 1986, the reporting panel includes 65 U.S. branches and
agencies of foreign banks that include those branches and agencies with assets of
$750 million or more on June 30, 1980, plus those branches and agencies that had
reached the $750 million asset level on Dec. 31, 1984.
2. Includes securities purchased under agreements to resell.
3. Includes credit balances, demand deposits, and other checkable deposits.
Apr. 8
8,886
84,929
6,414
7,161
4,270
3,227
1,044
67,084
42,067
MEMO
41 Total loans (gross) and securities a d j u s t e d 6
42 Total loans (gross) adjusted 6
Apr. 1
4. Includes savings deposits, money market deposit accounts, and time
deposits.
5. Includes securities sold under agreements to repurchase.
6. Exclusive of loans to and federal funds sold to commercial banks in the
United States.
A22
1.31
DomesticNonfinancialStatistics • July 1987
GROSS D E M A N D DEPOSITS Individuals, Partnerships, and Corporations 1
Billions of dollars, estimated daily-average balances, not seasonally adjusted
Commercial banks
Type of holder
1981
Dec.
1982
Dec.
1985
1984
Dec.
1983
Dec.
Dec. 3 - 4
1986
Mar.
June
1987
Sept.
Dec.
Mar.
1 All holders—Individuals, partnerships, and
corporations
288.9
291.8
293.5
302.7
321.0
307.4
322.4
333.6
363.6
n.a.
2
3
4
5
6
28.0
154.8
86.6
2.9
16.7
35.4
150.5
85.9
3.0
17.0
32.8
161.1
78.5
3.3
17.8
31.7
166.3
81.5
3.6
19.7
32.3
178.5
85.5
3.5
21.2
31.8
166.6
84.0
3.4
21.6
32.3
180.0
86.4
3.0
20.7
35.9
185.9
86.3
3.3
22.2
41.4
202.0
91.1
3.3
25.8
n.a.
n.a.
n.a.
n.a.
n.a.
Financial business
Nonfinancial business
Consumer
Foreign
Other
Weekly reporting banks
1981
Dec.
1982
Dec.
1983
Dec.
1984
Dec. 2
1985
Dec. 3 - 4
7 All holders—Individuals, partnerships, and
corporations
8
9
10
11
12
Financial business
Nonfinancial business
Consumer
Foreign
Other
Mar.
June
1987
Sept.
Dec.
Mar.P
137.5
144.2
146.2
157.1
168.6
159.7
168.5
174.7
195.1
178.2
21.0
75.2
30.4
2.8
8.0
26.7
74.3
31.9
2.9
8.4
24.2
79.8
29.7
3.1
9.3
25.3
87.1
30.5
3.4
10.9
25.9
94.5
33.2
3.1
12.0
25.5
86.8
32.6
3.3
11.5
25.7
93.1
34.9
2.9
11.9
28.9
94.8
35.0
3.2
12.8
32.5
106.4
37.5
3.3
15.4
28.7
94.4
36.8
2.8
15.5
1. Figures include cash items in process of collection. Estimates of gross
deposits are based on reports supplied by a sample of commercial banks. Types of
depositors in each category are described in the June 1971 BULLETIN, p. 466.
Figures may not add to totals because of rounding.
2. Beginning in March 1984, these data reflect a change in the panel of weekly
reporting banks, and are not comparable to earlier data. Estimates in billions of
dollars for December 1983 based on the new weekly reporting panel are: financial
business, 24.4; nonfinancial business, 80.9; consumer, 30.1; foreign, 3.1; other,
9.5.
3. Beginning March 1985, financial business deposits and, by implication, total
gross demand deposits have been redefined to exclude demand deposits due to
1986
thrift institutions. Historical data have not been revised. The estimated volume of
such deposits for December 1984 is $5.0 billion at all insured commercial b a n k s
and $3.0 billion at weekly reporting banks.
4. Historical data back to March 1985 have been revised to account for
corrections of bank reporting errors. Historical data before March 1985 have not
been revised, and may contain reporting errors. Data for all commercial banks for
March 1985 were revised as follows (in billions of dollars): all holders, - . 3 ;
financial business, - . 8 ; nonfinancial business, - . 4 ; consumer, .9; foreign, .1;
other, - . 1 . Data for weekly reporting banks for March 1985 were revised as
follows (in billions of dollars): all holders, - . 1 ; financial business, - . 7 ; nonfinancial business. - . 5 ; consumer, 1.1; foreign, .1; other, - . 2 .
Financial Markets
1.32
A23
COMMERCIAL PAPER A N D B A N K E R S DOLLAR A C C E P T A N C E S O U T S T A N D I N G
Millions of dollars, end of period
1987
1986
Instrument
Dec.
Dec.
Dec.
Dec.
Dec.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Commercial paper (seasonally adjusted unless noted otherwise)
1 All issuers
2
3
4
5
6
Financial companies 1
Dealer-placed
paper*
Total
Bank-related (not seasonally
adjusted)
Directly placed
paper5
Total
Bank-related (not seasonally
adjusted)
Nonfinancial companies 6
166,436
187,658
237,586
300,899
330,828
328,275
322,292
330,828
336,996
336,550
338,797
34,605
44,455
56,485
78,443
99,980
99,186
95.015
99,980
101,731
102,784
102,889
2,516
2,441
2,035
1,602
2,265
2,172
2,031
2,265
2,284
2,174
2,116
84,393
97,042
110,543
135,504
152,385
147,056
146,856
152,385
157,252
158,954
159,333
32,034
47,437
35,566
46,161
42,105
70,558
44,778
86,952
40,860
78,463
38,957
82,033
39.205
80,421
40,860
78,463
45,085
78,013
45,722
74,812
46,634
76,575
Bankers dollar acceptances (not seasonally adjusted) 7
7 Total
Holder
Accepting banks
Own bills
Bills bought
Federal Reserve Banks
Own account
Foreign correspondents
Others
Basis
14 Imports into United States
15 Exports f r o m United States
16 All other
8
9
10
11
12
13
79,543
78,309
78,364
68,413
64,974
65,920
64,952
64,974
65,049
65,144
66,125
10,910
9,471
1,439
9,355
8,125
1,230
9,811
8,621
1,191
11,197
9,471
1,726
13,423
11,707
1,716
12,569
10,178
2,391
12,787
10,951
1,835
13,423
11,707
1,716
13,224
10,662
2,561
11,828
10,006
1,821
12,294
10,516
1,778
1,480
949
66,204
418
729
67,807
0
671
67,881
0
937
56,279
0
1,317
50,234
0
1,131
52,220
0
1,052
51,113
0
1,317
50,234
0
983
50,843
0
1,230
52,087
0
1,453
52,377
17,683
16,328
45,531
15,649
16,880
45,781
17,845
16,305
44,214
15,147
13,204
40,062
14,670
12,960'
26,344''
15,980
12,612
37,327
15,354
12,699
36,899
14,670
12,960
26,344 r
14,459
12,783
37,808'-
14,615
12,897
37,632
14,688
13,193
38,244
1. Effective Dec. 1, 1982, there was a break in the commercial paper series. The
key changes in the content of the data involved additions to the reporting panel,
the exclusion of broker or dealer placed borrowings under any master note
agreements from the reported data, and the reclassification of a large portion of
bank-related paper f r o m dealer-placed to directly placed.
2. Correction of a previous misclassification of paper by a reporter has created
a break in the series beginning December 1983. The correction adds some paper to
nonfinancial and to dealer-placed financial paper.
3. Institutions engaged primarily in activities such as, but not limited to,
commercial, savings, and mortgage banking; sales, personal, and mortgage
financing; factoring, finance leasing, and other business lending; insurance
underwriting; and other investment activities.
1.33
4. Includes all financial company paper sold by dealers in the open market.
5. As reported by financial companies that place their paper directly with
investors.
6. Includes public utilities and firms engaged primarily in such activities as
communications, construction, manufacturing, mining, wholesale and retail trade,
transportation, and services.
7. Beginning October 1984, the number of respondents in the bankers acceptance survey were reduced from 340 to 160 institutions—those with $50 million or
more in total acceptances. The new reporting group accounts for over 95 percent
of total acceptances activity.
PRIME R A T E C H A R G E D BY B A N K S on Short-Term Business Loans
Percent per annum
Average
rate
Effective Date
10.50
10.00
9.50
9.00
8.50
1986—July 11
Aug. 26
8.00
7.50
1987—Apr. 1
May 1
15
7.75
8.00
8.25
NOTE. These data also appear in the B o a r d ' s H.15 (519) release. For address,
see inside front cover.
1985—Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
10.61
10.50
10.50
10.50
10.31
9.78
9.50
9.50
9.50
9.50
9.50
9.50
1986—Jan.
Feb.
Mar.
9.50
9.50
9.10
1986—Apr
May
June
July
Aug
Sept
Oct
Dec
1987—Jan
Feb
Mar
May
A24
1.35
DomesticNonfinancialStatistics • July 1987
INTEREST R A T E S Money and Capital Markets
Averages, percent per annum; weekly and monthly figures are averages of business day data unless otherwise noted.
1987
Instrument
1984
1985
1987, week ending
1986
Jan.
Feb.
Mar.
Apr.
Mar. 27
Apr. 3
Apr. 10
Apr. 17
Apr. 24
MONEY MARKET RATES
1 Federal funds 1 - 2
2 Discount window b o r r o w i n g 1 2 , 3
Commercial paper 4 - 5
3
1-month
4
3-month
5
6-month
Finance paper, directly placed 4 - 5
6
1-month
7
3-month
8
6-month
Bankers acceptances 5 - 6
9
3-month
10
6-month
Certificates of deposit, secondary market 7
11
1-month
12
3-month
13
6-month
14 Eurodollar deposits, 3-month 8
U.S. Treasury bills'
Secondary market 9
15
3-month
16
6-month
17
1-year
Auction average 1 0
18
3-month
19
6-month
20
1-year
10.22
8.80
8.10
7.69
6.80
6.33
6.43
5.50
6.10
5.50
6.13
5.50
6.37
5.50
6.14
5.50
6.21
5.50
6.13
5.50
6.41
5.50
6.26
5.50
10.05
10.10
10.16
7.94
7.95
8.01
6.62
6.49
6.39
5.95
5.84
5.76
6.12
6.05
5.99
6.22
6.16
6.10
6.39
6.45
6.50
6.29
6.22
6.15
6.30
6.27
6.22
6.23
6.24
6.23
6.50
6.56
6.60
6.39
6.49
6.60
9.97
9.73
9.65
7.91
7.77
7.75
6.58
6.38
6.31
5.86
5.59
5.60
6.02
5.88
5.79
6.11
5.95
5.88
6.28
6.22
6.14
6.17
5.99
5.93
6.21
6.09
6.02
6.14
6.10
6.04
6.36
6.20
6.15
6.31
6.29
6.19
10.14
10.19
7.92
7.96
6.39
6.29
5.74
5.65
5.99
5.93
6.09
6.02
6.41
6.44
6.17
6.09
6.19
6.14
6.21
6.18
6.50
6.52
6.47
6.58
10.17
10.37
10.68
10.73
7.97
8.05
8.25
8.28
6.61
6.52
6.51
6.71
5.94
5.87
5.85
6.10
6.10
6.10
6.10
6.32
6.18
6.17
6.18
6.37
6.42
6.52
6.65
6.73
6.24
6.22
6.22
6.36
6.29
6.30
6.33
6.46
6.27
6.30
6.35
6.48
6.55
6.65
6.76
6.73
6.45
6.58
6.76
6.79
9.52
9.76
9.92
7.48
7.65
7.81
5.98
6.03
6.08
5.43
5.44
5.46
5.59
5.59
5.63
5.59
5.60
5.68
5.64
5.90
6.09
5.60
5.61
5.71
5.56
5.75
5.81
5.62
5.76
5.87
5.79
6.01
6.19
5.54
5.93
6.24
9.57
9.80
9.91
7.49
7.66
7.76
5.97
6.02
6.07
5.45
5.47
5.44
5.59
5.60
5.74
5.56
5.56
5.68
5.76
5.93
5.92
5.55
5.55
n.a.
5.72
5.80
n.a.
5.53
5.63
n.a.
5.98
6.08
5.92
5.77
6.00
n.a.
10.89
11.65
11.89
12.24
12.40
12.44
12.48
12.39
8.43
9.27
9.64
10.13
10.51
10.62
10.97
10.79
6.46
6.87
7.06
7.31
7.55
7.68
7.85
7.80
5.78
6.23
6.41
6.64
6.92
7.08
n.a.
7.39
5.96
6.40
6.56
6.79
7.06
7.25
n.a.
7.54
6.03
6.42
6.58
6.79
7.06
7.25
n.a.
7.55
6.50
7.02
7.32
7.57
7.83
8.02
n.a.
8.25
6.07
6.45
6.63
6.83
7.08
7.27
n.a.
7.59
6.18
6.61
6.86
7.09
7.36
7.56
n.a.
7.87
6.26
6.69
6.98
7.24
7.51
7.71
n.a.
7.98
6.60
7.05
7.39
7.68
7.91
8.12
n.a.
8.30
6.67
7.24
7.57
7.83
8.10
8.30
n.a.
8.48
11.99
10.75
8.14
7.60
7.69
7.62
8.31
7.65
7.91
8.02
8.38
8.56
9.61
10.38
10.10
8.60
9.58
9.11
6.95
7.76
7.32
6.12
6.93
6.61
6.05
6.98
6.61
6.25
7.25
6.66
7.20
8.29
7.55
6.45
7.45
6.79
6.65
7.60
6.93
6.95
8.10
7.27
7.55
8.65
7.90
7.45
8.55
7.82
13.49
12.71
13.31
13.74
14.19
12.05
11.37
11.82
12.28
12.72
9.71
9.02
9.47
9.95
10.39
9.04
8.36
8.86
9.23
9.72
9.03
8.38
8.88
9.20
9.65
8.99
8.36
8.84
9.13
9.61
9.35
8.85
9.15
9.36
10.04
8.98
8.36
8.83
9.11
9.62
9.09
8.50
8.94
9.16
9.72
9.11
8.56
8.93
9.18
9.77
9.35
8.82
9.18
9.35
10.05
9.51
9.07
9.26
9.49
10.23
13.81
12.06
9.61
8.92
8.82
8.84
9.51
8.91
9.07
9.33
9.52
9.96
11.59
4.64
10.49
4.25
8.76
3.48
7.91
3.17
7.93
3.02
7.52
2.90
7.94
2.99
7.51
2.97
7.68
2.92
7.63
2.93
8.06
3.03
8.09
3.01
CAPITAL MARKET RATES
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
U.S. Treasury notes and bonds 1 1
Constant maturities 1 2
1-year
2-year
3-year
5-year
7-year
10-year
20-year
30-year
Composite 1 3
Over 10 years (long-term)
State and local notes and bonds
Moody's series 1 4
Aaa
Baa
Bond Buyer series 1 5
Corporate bonds
Seasoned issues 1 6
All industries
Aaa
Aa
A
Baa
A-rated, recently-offered utility
bonds 1 7
MEMO: Dividend/price ratio 1 8
39
Preferred stocks
Common stocks
40
1. Weekly and monthly figures are averages of all calendar days, where the
rate for a weekend or holiday is taken to be the rate prevailing on the preceding
business day. T h e daily rate is the average of the rates on a given day weighted by
the volume of transactions at these rates.
2. Weekly figures are averages for statement week ending Wednesday.
3. Rate for the Federal Reserve Bank of N e w York.
4. Unweighted average of offering rates quoted by at least five dealers (in the
case of commercial paper), or finance companies (in the case of finance paper).
Before N o v e m b e r 1979, maturities for data shown are 30-59 days, 90-119 days,
and 120-179 days for commercial paper; and 30-59 days, 90-119 days, and 150179 days for finance paper.
5. Yields are quoted on a bank-discount basis, rather than an investment yield
basis (which would give a higher figure).
6. Dealer closing offered rates for top-rated banks. Most representative rate
(which may be, but need not be, the average of the rates quoted by the dealers).
7. Unweighted average of offered rates quoted by at least five dealers early in
the day.
8. Calendar week average. F o r indication purposes only.
9. Unweighted average of closing bid rates quoted by at least five dealers.
10. Rates are recorded in the week in which bills are issued. Beginning with the
Treasury bill auction held on Apr. 18, 1983, bidders were required to state the
percentage yield (on a bank discount basis) that they would accept to two decimal
places. Thus, average issuing rates in bill auctions will be reported using two
rather than three decimal places.
11. Yields are based on closing bid prices quoted by at least five dealers.
12. Yields adjusted to constant maturities by the U.S. Treasury. That is, yields
are read from a yield curve at fixed maturities. Based on only recently issued,
actively traded securities.
13. Averages (to maturity or call) for all outstanding b o n d s neither due nor
callable in less than 10 years, including one very low yielding " f l o w e r " bond.
14. General obligations based on Thursday figures; M o o d y ' s Investors Service.
15. General obligations only, with 20 years to maturity, issued by 20 state and
local governmental units of mixed quality. Based on figures for T h u r s d a y .
16. Daily figures from M o o d y ' s Investors Service. Based on yields to maturity
on selected long-term bonds.
17. Compilation of the Federal Reserve. This series is an estimate of the yield
on recently-offered, A-rated utility bonds with a 30-year maturity and 5 years of
call protection. Weekly data are based on Friday quotations.
18. Standard and P o o r ' s corporate series. Preferred stock ratio based on a
sample of ten issues: four public utilities, four industrials, one financial, and one
transportation. Common stock ratios on the 500 stocks in the price index.
NOTE. These data also appear in the B o a r d ' s H.15 (519) and G.13 (415) releases.
For address, see inside front cover.
Financial Markets
1.36
STOCK MARKET
A25
Selected Statistics
1986
Indicator
1984
1985
1987
1986
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Prices and trading (averages of daily figures)
Common stock prices
1 N e w York Stock Exchange
(Dec. 31, 1965 = 50)
2
Industrial
3
Transportation
4
Utility
5
Finance
6 Standard & P o o r ' s Corporation (1941-43 = 10)' . . .
7 American Stock Exchange 2
(Aug. 31, 1973 = 50)
92.46
108.01
85.63
46.44
89.28
160.50
108.09
123.79
104.11
56.75
114.21
186.84
136.00
155.85
119.85
71.35
147.18
236.34
140.91
160.10
111.24
77.84
152.90
245.00
137.06
156.52
114.06
74.56
145.56
238.27
136.74
156.56
120.04
73.38
143.89
237.36
140.84
162.10
122.27
75.77
142.97
245.09
142.12
163.85
121.26
76.07
144.29
248.61
151.17
175.60
126.61
78.54
153.32
264.51
160.23
189.17
135.49
78.19
158.41
280.93
166.43
198.95
138.55
77.15
162.41
292.47
163.88
199.03
137,91
72.74
150.52
289.32
207.96
229.10
264.38
268.55
264.30
257.82
265.14
264.65
289.02
315.60
332.55
330.65
Volume of trading (thousands
8 N e w York Stock Exchange
9 American Stock Exchange
91,084 109,191 141,306
6,107
8,355 11,846
154,770 148,228
10,513 12,272
192,419
14,755
183,478
14,962
180,251
15,678
187,135
14,420
of
shares)
128,661 150,831 131,155
9,885 10,853
8,930
Customer financing (end-of-period balances, in millions of dollars)
10 Margin credit at broker-dealers
Free credit balances
11 Margin-account 5
12 Cash-account
at
3
22,470
28,390
36,840
34,550
34,580
36,310
37,090
36,840
34,960
35,740
38,080
39,820
1,755
10,215
2,715
12,840
4,880
19,000
3,035
14,210
3,395
14,060
3,805
14,445
3,765
15,045
4,880
19,000
5,060
17,395
4,470
17,325
4,730
17,370
4,660
17,285
brokers4
Margin requirements (percent of market value and effective date) 6
Mar. 11, 1968
13 Margin stocks
14 Convertible bonds
15 Short sales
June 8, 1968
70
50
70
1. Effective July 1976, includes a new financial group, banks and insurance
companies. With this change the index includes 400 industrial stocks (formerly
425), 20 transportation (formerly 15 rail), 40 public utility (formerly 60), and 40
financial.
2. Beginning July 5, 1983, the American Stock Exchange rebased its index
effectively cutting previous readings in half.
3. Beginning July 1983, under the revised Regulation T , margin credit at
broker-dealers includes credit extended against stocks, convertible bonds, stocks
acquired through exercise of subscription rights, corporate bonds, and government securities. Separate reporting of data for margin stocks, convertible bonds,
and subscription issues was discontinued in April 1984.
80
60
80
May 6, 1970
65
50
65
Dec. 6, 1971
55
50
55
Nov. 24, 1972
65
50
65
Jan. 3, 1974
50
50
50
4. Free credit balances are in accounts with no unfulfilled commitments to the
brokers and are subject to withdrawal by customers on d e m a n d .
5. N e w series beginning June 1984.
6. Regulations G, T, and U of the Federal Reserve Board of G o v e r n o r s ,
prescribed in accordance with the Securities Exchange Act of 1934, limit the
amount of credit to purchase and carry margin stocks that may be extended on
securities as collateral by prescribing a maximum loan value, which is a specified
percentage of the market value of the collateral at the time the credit is extended.
Margin requirements are the difference between the market value (100 percent)
and the maximum loan value. T h e term "margin s t o c k s " is defined in the
corresponding regulation.
A26
1.37
DomesticNonfinancialStatistics • July 1987
S E L E C T E D F I N A N C I A L INSTITUTIONS
Millions of dollars, end of period
Selected Assets and Liabilities
1986
Account
1984
1987
1985
Apr.
May
Aug.
July
June
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Savings and loan associations
1 Assets
903,488
948,781
954,869
963,274
954,226
957,945
965,032'
957,229'
961,894' 964,096'
2 Mortgages
555,291'
4 Cash and investment securities' .
5 Other
124,801
223,396
583,235'
97,303
126,712
238,833
575,177
103,415
132,351
247,339
574,992
108,324
134,881
253,400
565,037
113,158
130,877
258,310
565,353
113,100
132,787
259,798
566,438
113,621
138,863'
259,726'
557,137
117,617'
138,619'
261,415'
557,303
121,606'
138,231'
250,735'
6 Liabilities and net worth
903,488
948,781
954,869
963,274
954,226
957,945
965,032'
957,229'
725,045
125,666
64,207
61,459
17,944
750,071
138,798
73,888
64,910
19,045
750,299
140,427
73,815
66,612
21,978
751,138
145,032
73,520
71,512
24,722
744,026
148,054
73,553
74,501
20,792
747,020
146,578
75,058
71,520
22,785
749,020
148,541'
75,594
72,947'
24,706
743,518
155,748
80,364
75,384
15,461
34,833
41,064
42,163
42,382
41,353
41,560
42,764'
61,305
54,475'
55,818'
57,997'
57,20c
55,687'
53,180'
7 Savings capital
8 Borrowed money
9
FHLBB
10
Other
11 O t h e r
12 N e t worth 2
963,291' 935,424
936,903
553,552
123,257'
142,680'
251,763'
n.a.
128,695
133,237
260,892
n.a.
128,097
136,226
262,921
961,894' 964,096'
963,291' 935,424
936,903
742,747
152,567
75,295
77,272
23,255'
740,066
156,920
75,626
81,294
24,078'
740,974'
159,705'
80,194
79,511'
20,144'
721,574
152,981
75,552
77,429
19,969
722,082
151,786
75,673
76,113
22,015
42,503'
43,326
43,034'
42,468'
40,901
41,019
51,163'
49,887'
48,222'
41,650'
n.a.
n.a.
556,780
122,682'
141,527'
250,248'
MEMO
13 Mortgage loan c o m m i t m e n t s
outstanding3
F S L l C - i n s u r e d federal savings b a n k s
14 Assets
98,559
131,868
155,686
164,129
180,124
183,317
186,810
196,225'
202,106
204,918
210,562' 235,351
235,661
15 Mortgages
16 Mortgage-backed s e c u r i t i e s . . . .
17 O t h e r
57,429
9,949
10,971
72,355
15,676
11,723
86,598
18,661
14,590
89,108
19,829
15,083
99,758
21,598
16,774
101,755'
23,247
17,027
103,019
24,097
17,056
108,627'
26,431'
18,509'
110,826
27,516
18,697
112,117
28,324
19,266
113,638
29,766
19,034'
136,707
33,393
15,948
136,428
34,457
16,209
18 Liabilities and net worth
98,559
131,868
155,686
164,129
180,124
183,317
186,810
196,225'
202,106
204,918
210,562'
235,351
235,661
19
20
21
22
23
24
79,572
12,798
7,515
5,283
1,903
4,286
103,462
19,323
10,510
8,813
2,732
6,351
121,133
23,196
12,476
10,720
3,758
7,599
126,123
25,686
12,830
12,856
4,338
7,982
138,168
28,502
15,301
13,201
4,279
9,175
140,610
28,722
15,866
12,856
4,564
9,422
142,858
29,390
16,123
13,267
4,914
9,647
149,074
32,319
16,853
15,466
4,666
10,165'
152,834
33,430
17,382
16,048
5,330
10,511
154,447
33,937
17,863
16,074
5,652
10,883
157,872'
37,329
19,897
17,432
4,263'
11,098'
176,722
40,502
20,730
19,772
5,321
12,811
177,335
39,623
20,226
19,397
5,540
13,165
3,234
5,355
8,287
8,762
9,410
10,139
9,770
10,221
9,356
9,952
8,686
n.a.
n.a.
Savings capital
Borrowed money
FHLBB
Other
Other
N e t worth
MEMO
25 Mortgage loan c o m m i t m e n t s
outstanding3
Savings b a n k s
203,898
216,776
222,542
226,495
223,367
224,569
227,011
228,854
230,919
232,577
236,866
235,603
238,074
102,895
24,954
110,448
30,876
111,813
34,591
112,417
35,500
110,958
36,692
111,971
36,421
113,265
37,350
114,188
37,298
116,648
36,130
117,612
36,149
118,323
35,167
119,199
36,122
119,737
37,207
14,643
19,215
2,077
23,747
4,954
11,413
13,111
19,481
2,323
21,199
6,225
13,113
12,013
21,885
2,372
20,439
5,570
13,859
13,210
22,546
2,343
20,260
6,225
13,994
12,115
22,413
2,281
2,036
5,301
13,244
12,297
22,954
2,309
20,862
4,651
13,104
12,043
21,161
2,400
20,602
5,018
13,172
12,357
23,216
2,407
20,902
4,811
13,675
12,585
23,437
2,347
21,156
5,195
13,421
13,037
24,051
2,290
20,749
5,052
13,637
14,209
25,836
2,185
20,459
6,894
13,793
13,332
26,220
2,180
19,795
5,239
13,516
13,525
26,893
2,168
19,770
5,143
13,631
35 Liabilities
203,898
216,776
222,542
226,495
223,367
224,569
227,011
228,854
230,919
232,577
236,866
235,603
238,074
36 D e p o s i t s
37
Regular 4
38
Ordinary savings
39
Time
40
Other
41 O t h e r liabilities
42 General r e s e r v e a c c o u n t s
180,616
177,418
33,739
104,732
3,198
12,504
10,510
185,972
181,921
33,018
103,311
4,051
17,414
12,823
189,025
184,580
33.057
105,550
4,445
19,074
14,114
190,310
185,716
33,577
105,146
4,594
21,384
14,519
189,109
183,970
34,008
103,083
5,139
19,226
14,731
188,615
183,433
34,166
102,374
5,182
20,641
15,084
189,937
184,764
34,530
102,668
5,173
21,360
15,427
190,210
185,002
35,227
102,191
5,208
21,947
16,319
190,334
185,254
36,165
101,125
5,080
23,319
16,896
190,858
185,958
36,739
101,240
4,900
24,254
17,146
192,194
186,345
37,717
100,809
5,849
25,274
18,105
191,441
186,385
38,467
100,604
5,056
24,710
18,236
192,559
187,597
39,370
100,922
4,962
25,663
18,486
26 Assets
27
28
29
30
31
32
33
34
Loans
Mortgage
Other
Securities
U.S. government
Mortgage-backed securities . . .
State and local g o v e r n m e n t . . .
C o r p o r a t e and o t h e r
Cash
O t h e r assets
Financial Markets
All
1.37—Continued
1987
1986
Account
1984
1985
Apr.
May
June
July
Aug.
Credit u n i o n s
43 Total assets/liabilities and capital .
44
45
Federal
State
46 L o a n s o u t s t a n d i n g
47
Federal
48
State
49 S a v i n g s
F
ederal
50
51
State
Sept.
Oct.
Nov.
Dec.
Jan.
i
i
n a.
n a.
Feb.
5
93,036
118,010
128,229
132,415
134,703
137,901
139,233
140,496
143,662
145,653
147,726
63,205
29,831
77,861
40,149
83,543
44,686
86,289
46,126
87,579
47,124
89,539
48,362
90,367
48,866
91,981
48,515
93,257
50,405
94,638
51,015
95,483
52,243
62,561
42,337
20,224
84,348
57,539
26,809
73,513
47,933
25,580
105,963
70,926
35,037
76,385
49,756
26,629
116,703
77,112
39,591
76,774
49,950
26,824
120,331
79,479
40,852
77,847
50,613
27,234
122,952
80,975
41,977
79,647
51,331
28,316
125,331
82,596
42,735
80,656
52,007
28,649
126,268
83,132
43,136
81,820
53,042
28,778
128,125
84,607
43,518
83,388
53,434
29,954
130,483
86,158
44,325
84,635
53,877
30,758
131,778
87,009
44,769
86,137
55,304
30,833
134,327
87,954
46,373
Life i n s u r a n c e c o m p a n i e s
52 Assets
53
54
55
.56
57
58
59
60
61
62
63
Securities
Government
United S t a t e s 6
S t a t e a n d local
Foreign7
Business
Bonds
Stocks
Mortgages
Real e s t a t e
Policy l o a n s
Other assets
722,979
825,901
855,605
863,610
872,359
877,919
887,255
892,304
860,682
910,691
920,771
931,962
63,899
42,204
8,713
12,982
359,333
295,998
63,335
156,699
25,767
54,505
63,776
75,230
51,700
9,708
13,822
423,712
346,216
77,496
171,797
28,822
54,369
71,971
78,494
54,705
9,869
13,920
445,573
361,306
84,267
175,951
30,059
54,272
71,256
79,051
55,120
9,930
14,001
450,279
364,122
86,157
177,554
30,025
54,351
72,352
78,284
54,197
10,114
13,973
455,119
367,966
87,153
180,041
30,350
57,342
74,223
78,722
54,321
10,350
14,051
455,013
369,704
85,309
182,542
31,151
54,249
76,214
79,188
54,487
10,472
14,229
463,135
374,670
88,465
183,943
31,844
54,247
74,898
81,636
56,698
10,606
14,332
462,540
378,267
84,273
185,268
31,725
54,273
76,862
82,047
57,511
10,212
14,324
467,433
381,381
86,052
186,976
31,918
54,199
77,798
84,858
59,802
10,712
14,344
473,860
386,293
87,567
189,460
32,184
54,152
76,177
85,849
61,494
10,267
14,088
474,485
386,994
87,491
192,975
32,079
54,016
81,367
85,000
61,014
10,048
13,938
487,837
395,994
91,843
193,395
32,229
53,692
79,809
1. H o l d i n g s of s t o c k of t h e F e d e r a l H o m e L o a n B a n k s a r e in " o t h e r a s s e t s . "
2. I n c l u d e s net u n d i s t r i b u t e d i n c o m e a c c r u e d by m o s t a s s o c i a t i o n s .
3. A s of July 1985, d a t a i n c l u d e l o a n s in p r o c e s s .
4. E x c l u d e s c h e c k i n g , c l u b , a n d s c h o o l a c c o u n t s .
5. D a t a include all f e d e r a l l y i n s u r e d credit u n i o n s , b o t h f e d e r a l a n d state
c h a r t e r e d , serving natural p e r s o n s .
6. Direct a n d g u a r a n t e e d obligations. E x c l u d e s f e d e r a l a g e n c y i s s u e s not
g u a r a n t e e d , w h i c h a r e s h o w n in the table u n d e r " B u s i n e s s " securities.
7. I s s u e s of f o r e i g n g o v e r n m e n t s and their subdivisions and b o n d s of the
International Bank for Reconstruction and Development.
NOTE. Savings
and loan associations:
E s t i m a t e s b y t h e F H L B B f o r all
a s s o c i a t i o n s in t h e U n i t e d S t a t e s b a s e d o n annual b e n c h m a r k s f o r n o n - F S L I C insured a s s o c i a t i o n s a n d t h e e x p e r i e n c e of F S L I C - i n s u r e d a s s o c i a t i o n s .
n a.
FSLIC-insured
federal savings banks: E s t i m a t e s by t h e F H L B B f o r f e d e r a l
savings b a n k s insured by t h e F S L I C a n d b a s e d o n m o n t h l y r e p o r t s of f e d e r a l l y
insured institutions.
Savings banks: E s t i m a t e s by the N a t i o n a l C o u n c i l of S a v i n g s I n s t i t u t i o n s f o r all
savings b a n k s in the United S t a t e s a n d f o r F D I C - i n s u r e d savings b a n k s t h a t h a v e
c o n v e r t e d t o federal savings b a n k s .
Credit unions: E s t i m a t e s by the N a t i o n a l C r e d i t U n i o n A d m i n i s t r a t i o n f o r
federally c h a r t e r e d and f e d e r a l l y insured s t a t e - c h a r t e r e d credit u n i o n s s e r v i n g
natural p e r s o n s .
Life insurance companies:
E s t i m a t e s of the A m e r i c a n C o u n c i l of L i f e I n s u r a n c e
f o r all life i n s u r a n c e c o m p a n i e s in the U n i t e d S t a t e s . A n n u a l figures a r e a n n u a l s t a t e m e n t a s s e t values, with b o n d s c a r r i e d on a n a m o r t i z e d basis a n d s t o c k s at
y e a r - e n d m a r k e t value. A d j u s t m e n t s f o r i n t e r e s t d u e a n d a c c r u e d a n d f o r
d i f f e r e n c e s b e t w e e n m a r k e t a n d b o o k v a l u e s a r e n o t m a d e o n e a c h item s e p a r a t e l y
but a r e i n c l u d e d , in total, in " o t h e r a s s e t s . "
A28
1.38
DomesticNonfinancialStatistics • July 1987
F E D E R A L FISCAL A N D F I N A N C I N G OPERATIONS
Millions of dollars
Calendar year
Type of account or operation
U.S.
budget
1 Receipts, total
2
On-budget
3
Off-budget
4 Outlays, total
5
On-budget
6
Off-budget
7 Surplus, or deficit ( - ) , total
8
On-budget
9
Off-budget
Source of financing (total)
Borrowing from the public
Cash and monetary assets (decrease, or
increase ( - ) ) 2
12
Other 3
10
U
Fiscal
year
1984
Fiscal
year
1985
Fiscal
year
1986
1986
1987
Nov.
Dec.
52,967
38,158
14,809
79,973
63,639
16,334
-27,006
-25,481
-1,524
78,035
60,694
17,341
89,158
74,669
14,489
-11,123
-13,976
2,853
Jan.
Feb.
Mar.
Apr.
81,771
62,981
18,790
83,942
68,176
15,766
-2,170
-5,195
3,024
55,463
37,919
17,544
83,828
67,138
16,690
-28,366
-29,219
854
56,515
38,469
18,046
84,527
67,872
16,655
-28,012
-29,403
1,391
122,897
99,083
23,814
84,240
69,215
15,025
38,657
29,867
8,790
666,457
500,382
166,075
851,781
685,968
165,813
-185,324
-185,586
262
734,057
547,886
186,171
946,316
769,509
176,807
-212,260
-221,623
9,363
170,817
197,269
236,284
40,352
22,824
4,353
15,248
7,884
9,075
6,631
7,875
13,367
1,630
-14,324
-1,235
-2,721
-10,625
-14,751
4,004
-9,564
7,381
16,574
-3,456
15,621
4,506
-47,189
-543
30,426
8,514
21,913
17.060
4,174
12,886
31,384
7,514
23,870
17,007
2,529
14,478
30,946
7,588
23,357
41,307
15,746
25,561
24,816
3,482
21,334
8,969
3,576
5,394
55,744
29,688
26,056
769,091
568,862
200,228
989,815
806,318
183,498
-220,725
-237,455
16,371
MEMO
13 Treasury operating balance (level, end of
period)
14
Federal Reserve Banks
15
Tax and loan accounts
1. In accordance with the Balanced Budget and Emergency Deficit Control Act
of 1985, all former off-budget entries are now presented on-budget. The Federal
Financing Bank ( F F B ) activities are now shown as separate accounts under the
agencies that use the F F B to finance their programs. The act has also moved two
social security trust funds (Federal old-age survivors insurance and Federal
disability insurance trust funds) off-budget.
2. Includes U . S . Treasury operating cash accounts; SDRs; reserve position on
the U.S. quota in the I M F ; loans to International Monetary F u n d ; and other cash
and monetary assets.
3. Includes accrued interest payable to the public; allocations of special
drawing rights; deposit funds; miscellaneous liability (including checks outstanding) and asset accounts; seigniorage; increment on gold; net gain/loss for U . S .
currency valuation adjustment; net gain/loss for I M F valuation adjustment; and
profit on the sale of gold.
SOURCES. "Monthly Treasury Statement of Receipts and Outlays of the U . S .
G o v e r n m e n t " and the Budget of the U.S.
Government.
Federal Finance
1.39
A29
U.S. BUDGET RECEIPTS A N D OUTLAYS
Millions of dollars
Calendar year
S o u r c e or t y p e
Fiscal
year
1985
Fiscal
year
1986
1987
1985
HI
HI
H2
Apr.
Feb.
RECEIPTS
1 All sources
2 Individual i n c o m e t a x e s , net
3
Withheld
Presidential E l e c t i o n C a m p a i g n F u n d .
4
5
Nonwithheld
Refunds
6
Corporation income taxes
7
Gross receipts
8
Refunds
9 Social i n s u r a n c e t a x e s a n d c o n t r i b u t i o n s
net
10
Employment taxes and
contributions1
11
Self-employment taxes and
contributions2
12
Unemployment insurance
13
O t h e r net r e c e i p t s 3
734,057
769,091
380,618
364,790
394,345
387,524
55,463
56,515
122,897
334,531
298,941
35
101,328
65,743
348,959
314,838
36
105,994
71,873
166,783
149,288
29
76,155
58,684
169,987
155,725
6
22,295
8,038
169,444
153,919
31
78,981
63,488
183,156
164,071
4
27,733
8,652
22,805
25,486
2
1,320
4,003
14,240
27,608
10
4,106
17,482
71,850
26,943
7
62,939
18,039
77,413
16,082
80,442
17,298
42,193
8,370
36,528
7,751
41,946
9,557
42,108
8,230
2,369
1,433
15,948
2,834
13,290
2,101
265,163
283,901
144,598
128,017
156,714
134,006
25,590
23,689
33,646
234,646
255,062
126,038
116,276
139,706
122,246
22,594
23,128
30,457
10,468
25,758
4,759
11,840
24,098
4,742
9,482
16,213
2,350
985
9,281
2,458
10,581
14,674
2,333
1,338
9,328
2,429
809
2,633
364
669
186
375
7,403
2,827
361
35,992
12,079
6,422
18,539
32,919
13,323
6,958
19,887
17,259
5,807
3,204
9,144
18,470
6,354
3,323
9,861
15,944
6,369
3,487
10,002
15,947
7,282
3,649
9,605
2,291
1,052
553
2,235
2,511
1,220
570
1,171
2,471
1,165
810
1,767
18 All types
946,223
989,789
463,842
487,188
486,037
504,785
83,828
84,527
84,240
19
20
21
22
23
24
National defense
I n t e r n a t i o n a l affairs
General science, space, and technology .
Energy
Natural resources and environment
Agriculture
252,748
16,176
8,627
5,685
13,357
25,565
273,369
14,471
9,017
4,792
13,508
31,169
124,186
6,675
4,230
680
5,892
11,705
134,675
8,367
4,727
3,305
7,553
15,412
135,367
5,384
12,519
2,484
6,245
14,482
138,544
8,876
4,594
2,735
7,141
16,160
23,475
1,319
791
189
871
2,293
24,742
681
703
441
1,092
2,453
24,407
163
653
361
1,052
2,641
25
26
27
28
C o m m e r c e a n d h o u s i n g credit
Transportation
C o m m u n i t y a n d regional d e v e l o p m e n t . .
E d u c a t i o n , training, e m p l o y m e n t , social
services
4,229
25,838
7,680
4,258
28,058
7,510
-260
11,440
3,408
644
15,360
3,901
860
12,658
3,169
3,647
14,745
3,494
-334
1,697
380
1,677
1,982
490
1,129
1,936
592
29,342
29,662
14,149
14,481
14,712
15,268
2,669
2,440
2,317
33,542
254,446
128,200
35,936
190,850
120,686
16,945
128,351
65,246
17,237
129,037
59,457
17,872
135,214
60,786
19,814
138,296
59,628
3,166
23,081
10,551
3,263
23,407
10,910
3,672
23,615
26,352
6,277
5,228
6,353
129,436
-32,759
26,614
6,555
6,796
6,430
135,284
-33,244
11,956
3,016
2,857
2,659
65,143
-14,436
14,527
3,212
3,634
3,391
67,448
-17,953
12,193
3,352
3,566
2,179
68,054
-17,193
14,497
3,360
2,786
2,767
65,816
-17,426
2,053
619
631
120
12,967
-2,708
1,137
570
439
61
10,971
-2,932
2,360
619
196
179
11,295
-4,230
14
15
16
17
Excise taxes
Customs deposits
E s t a t e a n d gift t a x e s
Miscellaneous receipts4
OUTLAYS
29 H e a l t h
30 Social security a n d m e d i c a r e
31 I n c o m e security
32
33
34
35
36
37
Veterans benefits and services
A d m i n i s t r a t i o n of j u s t i c e
General government
G e n e r a l - p u r p o s e fiscal a s s i s t a n c e
N e t interest 5
U n d i s t r i b u t e d offsetting r e c e i p t s 6
1. Old-age, disability, a n d h o s p i t a l i n s u r a n c e , and railroad r e t i r e m e n t a c c o u n t s .
2. Old-age, disability, a n d hospital i n s u r a n c e .
3. F e d e r a l e m p l o y e e r e t i r e m e n t c o n t r i b u t i o n s and civil s e r v i c e r e t i r e m e n t a n d
disability f u n d .
4. D e p o s i t s of e a r n i n g s b y F e d e r a l R e s e r v e B a n k s a n d o t h e r m i s c e l l a n e o u s
receipts.
11,282
5. N e t interest f u n c t i o n i n c l u d e s i n t e r e s t r e c e i v e d b y t r u s t f u n d s .
6. C o n s i s t s of r e n t s a n d r o y a l t i e s o n t h e o u t e r c o n t i n e n t a l shelf a n d U . S .
government contributions for employee retirement.
SOURCE. " M o n t h l y T r e a s u r y S t a t e m e n t of R e c e i p t s a n d O u t l a y s of t h e U . S .
G o v e r n m e n t , " and the Budget of the U.S. Government,
Fiscal Year 1988.
A30
1.40
DomesticNonfinancialStatistics • July 1987
F E D E R A L D E B T SUBJECT TO STATUTORY LIMITATION
Billions of dollars
1984
1986
1985
Item
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
Mar. 31
June 30
Sept. 30
Dec. 31
1 Federal debt outstanding
1,667.4
1,715.1
1,779.0
1,827.5
1,950.3
1,991.1
2,063.6
2,129.5
2,218.9
2 Public debt securities
3
Held by public
4
Held by agencies
1,663.0
1,373.4
289.6
1,710.7
1,415.2
295.5
1,774.6
1,460.5
314.2
1,823.1
1,506.6
316.5
1,945.9
1,597.1
348.9
1,986.8
1,634.3
352.6
2,059.3
1,684.9
374.4
2,125.3
1,742.4
382.9
2,214.8
1,811.7
403.1
4.5
3.4
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.4
3.3
1.1
4.3
3.2
1.1
4.3
3.2
1.1
4.2
3.2
1.1
4.0
3.0
1.1
5 Agency securities
6
Held by public
7
Held by agencies
1,663.7
1,711.4
1,775.3
1,823.8
1,932.4
1,973.3
2,060.0
2,111.0
2,200.5
9 Public debt securities
10 Other debt 1
1,662.4
1.3
1,710.1
1.3
1,774.0
1.3
1,822.5
1.3
1,931.1
1.3
1,972.0
1.3
2,058.7
1.3
2,109.7
1.3
2,199.3
1.3
11 MEMO: Statutory debt limit
1,823.8
1,823.8
1,823.8
1,823.8
2,078.7
2,078.7
2,078.7
2,111.0
2,300.0
8 Debt subject to statutory limit
1. Includes guaranteed debt of government agencies, specified participation
certificates, notes to international lending organizations, and District of Columbia
stadium bonds.
1.41
GROSS PUBLIC D E B T OF U.S. T R E A S U R Y
SOURCES. Treasury Bulletin and Monthly Statement
United States.
of the Public Debt of the
Types and Ownership
Billions of dollars, end of period
1986
Type and holder
1 Total gross public debt
2
3
4
5
6
7
8
9
10
11
12
13
By type
Interest-bearing debt
Marketable
Bills
Notes
Bonds
Nonmarketable 1
State and local government series
Foreign issues 2
Government
Public
Savings bonds and notes
Government account series 3
14 Non-interest-bearing debt
15
16
17
18
19
20
21
22
23
?4
25
26
By holder4
U.S. government agencies and trust funds
Federal Reserve Banks
Private investors
Commercial banks
Money market funds
Insurance companies
Other companies
State and local governments
Individuals
Savings bonds
Other securities
Foreign and international 5
Other miscellaneous investors 6
1983
1986
Q1
Q2
Q3
Q4
1,410.7
1,663.0
1,945.9
2,214.8
1,986.8
2,059.3
2,125.3
2,214.8
1,400.9
1,050.9
343.8
573.4
133.7
350.0
36.7
10.4
10.4
.0
70.7
231.9
1,660.6
1,247.4
374.4
705.1
167.9
413.2
44.4
9.1
9.1
.0
73.1
286.2
1,943.4
1,437.7
399.9
812.5
211.1
505.7
87.5
7.5
7.5
.0
78.1
332.2
2,212.0
1,619.0
426.7
927.5
249.8
593.1
110.5
4.7
4.7
.0
90.6
386.9
1,984.2
1,472.8
393.2
842.5
223.0
511.4
88.5
6.7
6.7
.0
79.8
336.0
2,056.7
1,498.2
396.9
869.3
232.3
558.5
98.2
5.3
5.3
.0
82.3
372.3
2,122.7
1,564.3
410.7
896.9
241.7
558.4
102.4
4.1
4.1
.0
85.6
365.9
2,212.0
1,619.0
426.7
927.5
249.8
593.1
110.5
4.7
4.7
.0
90.6
386.9
9.8
2.3
2.5
2.8
2.6
2.6
2.6
2.8
236.3
151.9
1,022.6
188.8
22.8
56.7
39.7
155.1
289.6
160.9
1,212.5
183.4
25.9
76.4
50.1
179.4
348.9
181.3
1,417.2
192.2
25.1
93.2
59.0
n.a.
403.1
211.3
1,602.0
225.0
28.6
n.a.
68.8
n.a.
352.6
184.8
1,473.1
195.1
29.9
95.8
59.6
n.a.
374.4
183.8
1,502.7
197.2
22.8
n.a.
59.8
n.a.
382.9
190.8
1,553.3
212.5
24.9
n.a.
67.0
n.a.
403.1
211.3
1,602.0
225.0
28.6
n.a.
68.8
n.a.
71.5
61.9
166.3
259.8
74.5
69.3
192.9
360.6
79.8
75.0
214.6
n.a.
92.3
68.0
257.0
n.a.
81.4
76.2
225.4
n.a.
83.8
73.9
239.8
n.a.
87.1
69.0
256.3
n.a.
92.3
68.0
257.0
n.a.
1. Includes (not shown separately): Securities issued to the Rural Electrification Administration; depository bonds, retirement plan bonds, and individual
retirement bonds.
2. Nonmarketable dollar-denominated and foreign currency-denominated series held by foreigners.
3. Held almost entirely by U.S. government agencies and trust funds.
4. Data for Federal Reserve Banks and U.S. government agencies and trust
funds are actual holdings; data for other groups are Treasury estimates.
1985
1984
5. Consists of investments offoreign and international accounts. Excludes noninterest-bearing notes issued to the International Monetary Fund.
6. Includes savings and loan associations, nonprofit institutions, credit unions,
mutual savings banks, corporate pension trust funds, dealers and brokers, certain
U.S. government deposit accounts, and U.S. government-sponsored agencies.
SOURCES. Data by type of security, U.S. Treasury Department, Monthly
Statement of the Public Debt of the United States; data by holder, Treasury
Bulletin.
Federal Finance
1.42
U.S. G O V E R N M E N T SECURITIES D E A L E R S
Par value; averages of daily figures, in millions of dollars
Transactions'
1987
1987
Item
1
7
3
4
5
6
7
8
9
10
11
1?
13
14
15
16
17
18
Immediate delivery 2
U . S . government securities
By maturity
Bills
Other within 1 year
1-5 years
5 - 1 0 years
Over 10 years
By type of customer
U . S . government securities
dealers
U . S . government securities
brokers
All others 3
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures transactions 4
Treasury bills
Treasury coupons
Federal agency securities
Forward transactions 5
U.S. government securities
Federal agency securities
1984
1985
1986'
Feb.
Mar.
Apr.
Mar. 25
Apr. 1
Apr. 8
Apr. 15
Apr. 22
Apr. 29
52,778
75,331
95,447
124,519
102,209
138,007
101,618
132,106
116,699
157,559
142,263
135,360
26,035
1,305
11,733
7,606
6,099
32,900
1,811
18,361
12,703
9,556
34,249
2,115
24,667
20,455
13,961
48,972
2,815
30,231
24,326
18,174
37,027
2,647
24,322
22,444
15,769
50,528
3,190
29,094
31,476
23,718
34,142
2,218
30,147
20,567
14,544
44,699
3,041
30,686
31,355
22,325
45,924
2,917
23,918
24,540
19,400
58,413
2,947
31,964
38,160
26,075
52,915
3,262
30,550
30,883
24,652
45,951
3,485
29,460
32,297
24,167
2,919
3,336
3,646
4,082
3,506
3,113
3,337
5,119
3,081
3,141
2,678
3,134
25,580
24,278
7,846
4,947
3,243
10,018
36,222
35,773
11,640
4,016
3,242
12,717
49,368
42,218
16,746
4,355
3,272
16,660
67,913
51,853
22,764
4,750
3,272
16,513
52,671
45,446
20,984
3,570
2,917
15,489
78,533
55,648
22,184
4,964
3,453
17,914
51,619
46,661
23,023
3,227
2,509
15,058
72,477
54,510
18,111
3,574
3,066
13,924
63,802
49,815
17,866
4,557
3,356
16,976
93,307
61,111
26,711
5,495
3,861
15,438
80,973
58,611
28,811
5,344
3,605
21,206
79,222
53,004
17,516
4,553
3,166
18,625
6,947
4,533'
264'
5,561
6,085'
252'
3,311
7,175
16
4,898
8,092
0
3,577
6,891
9
3,575
12,018
1
3,231
4,853
0
2,836
10,152
0
2,509
10,173
0
4,350
12,984
3
4,240
11,497
0
3,092
13,109
0
1,364
2,843
1,283
3,857
1,876
7,830
4,074
11,440
1,952
10,656
2,760
15,961
3,059
11,268
2,235
8,638
2,055
12,463
1,995
21,790
4,591
20,145
2,476
11,921
1. Transactions are market purchases and sales of securities as reported to the
Federal Reserve Bank of N e w York by the U . S . government securities dealers on
its published list of primary dealers.
Averages for transactions are based on the number of trading days in the period.
The figures exclude allotments of, and exchanges for, new U.S. government
securities, redemptions of called or matured securities, purchases or sales of
securities under repurchase agreement, reverse repurchase (resale), or similar
contracts.
2. Data for immediate transactions do not include forward transactions.
3. Includes, among others, all other dealers and brokers in commodities and
A31
securities, nondealer departments of commercial banks, foreign banking agencies,
and the Federal Reserve System.
4. Futures contracts are standardized agreements arranged on an organized
exchange in which parties commit to purchase or sell securities for delivery at a
future date.
5. Forward transactions are agreements arranged in the over-the-counter
market in which securities are purchased (sold) for delivery a f t e r 5 business days
from the date of the transaction for government securities (Treasury bills, notes,
and bonds) or after 30 days for mortgage-backed agency issues.
NOTE. Data for the period May 1 to Sept. 30, 1986, are partially estimated.
A32
1.43
DomesticNonfinancialStatistics • July 1987
U.S. G O V E R N M E N T SECURITIES D E A L E R S
Positions and Financing 1
Averages of daily figures, in millions of dollars
1987
Mar.'
Feb.
1987
Apr.
Apr. 1
Apr. 8
Apr. 15
Apr. 22
Apr. 29
Positions
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Net immediate 2
U.S. government securities
Bills
Other within 1 year
1-5 years
5 - 1 0 years
Over 10 years
Federal agency securities
Certificates of deposit
Bankers acceptances
Commercial paper
Futures positions
Treasury bills
Treasury coupons
Federal agency securities
Forward positions
U.S. government securities
Federal agency securities
5,429
5,500
63
2,159
-1,119
-1,174
15,294
7,369
3,874
3,788
7,391
10,075
1,050
5,154
-6,202
-2,686
22,860
9,192
4,586
5,570
13,047 r
12,724'
3,698
9,297
-9,503'
-3,169
33,075
10,533
5,533
8,087
6,057
7,365
3,709
7,399
-5,890
-6,526
32,048
9,671
4,934
9,215
7,840
7,070
3,513
7,451
-5,208
-4,986
33,296
8,615
5,015
8,954
-6,975
-778
3,046
2,537
-5,942
-5,838
32,916
8,502
3,694
6,261
2,814
499
2,712
7,968
-3,682
-4,682
32,234
8,059
4,003
7,159
1,956
4,168
3,348
3,120
-3,657
-5,023
31,463
8,287
4,502
5,492
-3,512
2,487
3,081
2,182
-5,139
-6,122
35,650
8,550
3,786
6,674
-9,274
-2,392
3,236
2,599
-6,608
-6,109
34,194
8,295
3,469
6,356
-16,927
-6,448
2,694
2,224
-8,802
-6,595
31,514
8,818
3,154
6,454
-4,525
1,794
233
-7,322
4,465
-722
-18,062'
3,492'
-153
-13,476
6,669
-94
-10,805
4,313
-98
-5,000
3,949
-95
-8,708
4,413
-98
-5,971
4,740
-98
-6,336
3,834
-90
-4,179
3,830
-98
-3,467
3,586
-96
-1,643
-9,205
-911
-9,420
-2,304'
-11,91 lr
357
-16,383
-2,151
-16,703
-2,388
-15,760
-1,766
-15,639
-1,008
-14,151
-1,920
-16,441
-3,791
-17,166
-2,996
-15,351
Financing 3
Reverse repurchase agreements 4
Overnight and continuing
Term agreements
Repurchase agreements 5
18
Overnight and continuing
Term agreements
19
16
17
44,078
68,357
68,035
80,509
98,954
108,693
128,668
132,531
127,183
130,489
n.a.
n.a.
135,111
127,349
128,410
124,115
129,370
121,485
134,383
138,459
125,916
149,607
75,717
57,047
101,410
70,076
141,735
102,640
174,370
115,522
177,021
112,078
n.a.
n.a.
180,009
105,626
174,398
104,632
175,298
100,894
186,887
105,821
170,842
122,608
1. Data for dealer positions and sources of financing are obtained f r o m reports
submitted to the Federal Reserve Bank of N e w York by the U.S. government
securities dealers on its published list of primary dealers.
Data for positions are averages of daily figures, in terms of par value, based on
the number of trading days in the period. Positions are net amounts and are shown
on a commitment basis. Data for financing are in terms of actual amounts
borrowed or lent and are based on Wednesday figures.
2. Immediate positions are net amounts (in terms of par values) of securities
owned by nonbank dealer firms and dealer departments of commercial banks on a
commitment, that is, trade-date basis, including any such securities that have
been sold under agreements to repurchase (RPs). The maturities of some
repurchase agreements are sufficiently long, however, to suggest that the securities involved are not available for trading purposes. Immediate positions include
reverses to maturity, which are securities that were sold after having been
obtained under reverse repurchase agreements that mature on the same day as the
securities. Data for immediate positions d o not include forward positions.
3. Figures cover financing involving U.S. government and federal agency
securities, negotiable CDs, bankers acceptances, and commercial paper.
4. Includes all reverse repurchase agreements, including those that have been
arranged to make delivery on short sales and those for which the securities
obtained have been used as collateral on borrowings, that is, matched agreements.
5. Includes both repurchase agreements undertaken to finance positions and
" m a t c h e d b o o k " repurchase agreements.
NOTE. Data on positions for the period May 1 to Sept. 30, 1986, are partially
estimated.
Federal Finance
1.44
F E D E R A L A N D F E D E R A L L Y S P O N S O R E D CREDIT A G E N C I E S
A33
Debt Outstanding
Millions of dollars, end of period
1987
1986
1983
Agency
1984
1985
Oct.
1 Federal and federally sponsored agencies
2 Federal agencies
3
Defense Department 1
4
Export-Import Bank 2 3
5
Federal Housing Administration 4
6
Government National Mortgage Association
participation certificates 5
7
Postal Service 6
8
Tennessee Valley Authority
9
United States Railway Association 6
10 Federally sponsored agencies 7
11
Federal H o m e L o a n Banks
12
Federal H o m e L o a n Mortgage Corporation
13
Federal National Mortgage Association
14
Farm Credit Banks
15
Student L o a n Marketing Association 8
Nov.
Dec.
Jan.
240,068
271,220
293,905
305,199
305,097
307,361
n.a.
n.a.
33,940
243
14,853
194
35,145
142
15,882
133
36,390
71
15,678
115
36,716
36
14,274
123
36,952
35
14,274
124
36,958
33
14,211
138
37,041
32
14,211
136
37,083
27
14,211
147
2,165
1,404
14,970
111
2,165
1,337
15,435
51
2,165
1,940
16,347
74
2,165
3,104
16,940
74
2,165
3,104
17,176
74
2,165
3,104
17,222
85
2,165
3,104
17,308
85
2,165
3,104
17,344
85
206,128
48,930
6,793
74,594
72,816
3,402
236,075
65,085
10,270
83,720
71,193
5,745
257,515
74,447
11,926
93,896
68,851
8,395
268,483
87,146
14,007
93,272
63,079
10,979
268,145
86,891
13,606
93,477
62,693
11,478
270,403
88,752
13,589
93,563
62,328
12,171
n.a.
90,225
n.a.
92,588
59,984
11,784
n.a.
91,313
n.a.
91,522
59,367
12,481
135,791
145,217
153,373
157,371
157,452
157,510
157,650
157,724
14,789
1,154
5,000
13,245
111
15,852
1,087
5,000
13,710
51
15,670
1,690
5,000
14,622
74
14,268
2,854
4,970
15,515
74
14,268
2,854
4,970
15,751
74
14,205
2,854
4,970
15,797
85
14,205'
2,854
4,970
15,928
85
14,205
2,854
4,970
15,954
85
55,266
19,766
26,460
58,971
20,693
29,853
64,234
20,654
31,429
65,374
21,506
32,810
65,374
21,531
32,630
65,374
21,680
32,545
65,374
21,719
32,515
65,374
21,749
32,533
MEMO
16 Federal Financing Bank debt
Lending
17
18
19
20
21
to federal
and federally
Mar.
n.a.
n a.
92,087
n.a.
91,618
58,364
13,230
sponsored
Export-Import Bank 3
Postal Service 6
Student L o a n Marketing Association
Tennessee Valley Authority
United States Railway Association 6
Other
Lending10
22 Farmers H o m e Administration
23 Rural Electrification Administration
24 Other
1. Consists of mortgages assumed by the Defense Department between 1957
and 1963 under family housing and h o m e o w n e r s assistance programs.
2. Includes participation certificates reclassified as debt beginning Oct. 1, 1976.
3. Off-budget Aug. 17, 1974, through Sept. 30, 1976; on-budget thereafter.
4. Consists of debentures issued in payment of Federal Housing Administration
insurance claims. O n c e issued, these securities may be sold privately on the
securities market.
5. Certificates of participation issued before fiscal 1969 by the Government
National Mortgage Association acting as trustee for the F a r m e r s H o m e Administration; Department of Health, Education, and Welfare; Department of Housing
and Urban Development; Small Business Administration; and the Veterans
Administration.
6. Off-budget.
Feb.
n a.
7. Includes outstanding noncontingent liabilities: N o t e s , b o n d s , and debentures. Some data are estimated.
8. Before late 1981, the Association obtained financing through the Federal
Financing Bank.
9. T h e F F B , which began operations in 1974, is authorized to purchase or sell
obligations issued, sold, or guaranteed by other federal agencies. Since F F B
incurs debt solely for the purpose of lending to other agencies, its debt is not
included in the main portion of the table in order to avoid double counting.
10. Includes F F B purchases of agency assets and guaranteed loans; the latter
contain loans guaranteed by numerous agencies with the guarantees of any
particular agency generally being small. The F a r m e r s H o m e Administration item
consists exclusively of agency assets, while the Rural Electrification Administration entry contains both agency assets and guaranteed loans.
A34
1.45
DomesticNonfinancialStatistics • July 1987
N E W SECURITY I S S U E S Tax-Exempt State and Local Governments
Millions of dollars
1986
Type of issue or issuer,
or use
1984
1985
Sept.
1 All issues, new and refunding
1
1987
1986
Oct.
Nov.
Dec.
Jan.
Feb.
Mar/
Apr.
106,641
214,189
134,606
4,532
8,825
10,085
14,082
6,829
8,738
14,350
6,530
Type of issue
2 General obligation
3 Revenue
26,485
80,156
52,622
161,567
44,801
89,806
1,267
3,265
2,104
6,721
1,427
8,658
4,254
9,828
960
5,869
3,543
5,195
3,796
10,554
3,369
3,161
Type of issuer
4 State
5 Special district and statutory authority 2
6 Municipalities, counties, townships
9,129
63,550
33,962
13,004
134,363
66,822
14,935
79,291
40,374
9
3,275
1,248
697
5,757
2,371
111
7,761
2,213
961
9,414
3,707
153
5,044
1,632
1,441
5,634
1,663
1,217
9,856
3,277
419
4,562
1,549
7 Issues for new capital, total
94,050
156,050
79,195
2,558
3,789
4,085
8,831
2,556
2,699
4,701
3,298
Use of proceeds
Education
Transportation
Utilities and conservation
Social welfare
Industrial aid
Other purposes
7,553
7,552
17,844
29,928
15,415
15,758
16,658
12,070
26,852
63,181
12,892
24,398
16,948
11,666
35,383
17,332
5,594
47,433
558
827
1,365
812
138
832
928
1,195
2,396
2,098
499
1,708
1,486
976
3,239
2,635
331
1,418
1,588
588
2,330
3,944
2,159
3,473
823
146
2,574
1,670
101
1,515
1,291
604
2,861
1,080
165
2,738
1,723
280
4,619
2,472
667
4,590
973
642
567
1,041
42
3,265
8
9
10
11
12
13
1. Par amounts of long-term issues based on date of sale.
2. Includes school districts beginning April 1986.
SOURCES. Securities Data Company beginning April 1986. Public Securities
Association for earlier data. This new data source began with the N o v e m b e r
BULLETIN.
1.46
N E W SECURITY I S S U E S Corporations
Millions of dollars
Type of issue or issuer,
or use
1986
1984
1985
Aug.
1 All issues
1
1987
1986
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.'
Mar.
132,531
155,074
294,326
24,245
16,093
28,582
28,835
25,181
23,133'
23,986
32,799
109,903
155,074
294,326
18,481
12,830
23,476
22,236
18,933
20,218'
20,219
22,983
73,579
36,324
119,559
46,195
232,496
n.a.
18,481
n.a.
12,829'
n.a.
23,476
n.a.
22,236
n.a.
18,933
n.a.
20,218'
n.a.
20,219
n.a.
22,983
n.a.
24,607
13,726
4,694
10,679
2,997
53,199
52,128
15,140
5,743
12,957
10,456
69,332
53,358
19,188
4,262
25,585
13,430
116,675
4,536
1,030
550
2,098
1,615
8,652
2,345
1,387
375
1,915
417
6,390
2,055
1,067
170
2,537
1,255
16,392
3,378
1,213
0
2,587
1,158
13,901
3,276
2,067
70
2,498
776
9,736
4,165
1,074
0
1,491
65
13,423'
3,679
1.714
100
2.715
250
11,762
6,349
3,723
521
694
300
11,397
11 Stocks 3
22,628
35,515
61,830
5,764
3,263
5,106
6,599
6,248
2,915
3,767
9,816
Type
12 Preferred
13 Common
4,118
18,510
6,505
29,010
11,514
50,316
1,290
4,474
402
2,861
817
4,289
1,390
5,209
1,293
4,955
429
2,486
905
2,862
2,321
7,495
4,054
6,277
589
1,624
419
9,665
5,700
9,149
1,544
1,966
978
16,178
14,234
9,252
2,392
3,791
1,504
30,657
982
803
57
208
379
3,335
250
1,009
28
174
0
1,802
570
1,271
511
410
59
2,285
2,565
535
15
218
104
3,162
1,781
709
183
873
101
2,601
365
148
0
237
16
2,149
814
437
191
509
9
1,807
2,134
2,264
299
893
57
4,169
2 Bonds 2
Type of offering
3 Public
4 Private placement
5
6
7
8
9
10
14
15
16
17
18
19
Industry
group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
Industry
group
Manufacturing
Commercial and miscellaneous
Transportation
Public utility
Communication
Real estate and financial
1. Figures, which represent gross proceeds of issues maturing in more than one
year, sold for cash in the United States, are principal amount or number of units
multiplied by offering price. Excludes offerings of less than $100,000, secondary
offerings, undefined or exempted issues as defined in the Securities Act of 1933,
employee stock plans, investment companies other than closed-end, intracorporate transactions, and sales to foreigners.
2. Monthly data include only public offerings.
3. Beginning in August 1981, gross stock offerings include new equity volume
from swaps of debt for equity.
SOURCES. IDD Information Services, Inc., Securities and Exchange Commission and the Board of Governors of the Federal Reserve System.
Securities Market and Corporate Finance
1.47
O P E N - E N D I N V E S T M E N T COMPANIES
Millions of dollars
Net Sales and Asset Position
1986
Item
1985
A35
1987
1986
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb/
Mar.
INVESTMENT COMPANIES1
1
2
3
Sales of o w n shares 2
Redemptions of own shares 3
Net sales
222,670
132,440
90,230
411,739
239,396
172,343
32,636
20,102
12,534
34,690
21,338
13,352
37,150
20,782
16,368
33,672
20,724
12,948
44,796
34,835
9,961
50,116
26,565
23,551
36,307
21,576
14,731
39,217
24,103
15,114
4
5
6
Assets 4
Cash position 5
Other
251,695
20,607
231,088
424,156
30,716
393,440
387,547
28,682
358,865
381,872
29,540
352,332
402,644
30,826
371,818
416,939
29,579
387,360
424,156
30,716
393,440
464,415
34,098
430,317
490,643
35,279
455,364
505,864
36,010
469,854
5. Also includes all U . S . government securities and other s h o r t - t e r m debt
securities.
1. Excluding money market f u n d s .
2. Includes reinvestment of investment income dividends. Excludes reinvestment of capital gains distributions and share issue of conversions from one fund to
another in the same group.
3. Excludes share redemption resulting from conversions from one fund to
another in the same group.
4. Market value at end of period, less current liabilities.
1.48
NOTE. Investment Company Institute data based on reports of m e m b e r s , which
comprise substantially all o p e n - e n d investment companies registered with the
Securities and Exchange Commission. Data reflect newly formed companies after
their initial offering of securities.
CORPORATE PROFITS A N D THEIR DISTRIBUTION
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1985
1984
Account
1
1985
1986
1987
1986
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
2
3
4
5
6
Corporate profits with inventory valuation and
capital consumption adjustment
Profits before tax
Profits tax liability
Profits a f t e r tax
Dividends
Undistributed profits
264.7
235.7
95.4
140.3
78.3
62.0
280.6
223.1
91.8
131.4
81.6
49.8
300.7
237.5
103.5
134.0
87.8
46.2
274.3
213.8
87.1
126.7
81.4
45.3
296.3
229.2
95.8
133.4
81.6
51.8
285.6
235.8
96.4
139.4
82.5
57.0
296.4
222.5
95.7
126.9
85.2
41.7
293.1
227.7
99.0
128.8
87.5
41.2
302.0
240.4
104.4
135.9
88.8
47.2
311.2
259.6
115.1
144.5
89.7
54.8
333.5
266.5
129.9
136.6
91.4
45.2
7
8
Inventory valuation
Capital consumption adjustment
-5.5
34.5
-.6
58.1
6.5
56.6
1.6
58.9
6.1
-9.4
59.2
16.5
57.3
10.6
54.8
6.1
61.0
55.5
-7.2
58.8
-7.4
74.4
SOURCE. Survey
of Current Business
(Department of Commerce).
A36
t.49
DomesticNonfinancialStatistics • July 1987
NONFINANCIAL CORPORATIONS
Assets and Liabilities
Billions of dollars, except for ratio
1986
1985
1980
Account
1981
1982
1983
1984
Q1
Q2
Q3
Q4
Q1
1,328.3
1,419.6
1,437.1
1,575.9
1,703.0
1,722.7
1,734.6
1,763.0
1,784.6
1,795.7
127.0
18.7
507.5
543.0
132.1
135.6
17.7
532.5
584.0
149.7
147.8
23.0
517.4
579.0
169.8
171.8
31.0
583.0
603.4
186.7
173.6
36.2
633.1
656.9
203.2
167.5
35.7
650.3
665.7
203.5
167.1
35.4
654.1
666.7
211.2
176.3
32.6
675.0
218.0
189.2
33.0
671.5
666.0
224.9
195.3
31.0
663.4
679.6
226.3
7 Current liabilities
890.6
971.3
986.0
1,059.6
1,163.6
1,174.1
1,182.9
1,211.9
1,233.6
1,222.3
8 N o t e s and accounts payable
9 Other
514.4
376.2
547.1
424.1
550.7
435.3
595.7
463.9
647.8
515.8
636.9
537.1
651.7
531.2
670.4
541.5
682.7
550.9
668.4
553.9
10 Net working capital
437.8
448.3
451.1
516.3
539.5
548.6
551.7
551.1
551.0
573.4
11 MEMO: Current ratio'
1.492
1.462
1.458
1.487
1.464
1.467
1.466
1.455
1.447
1.469
1 Current assets
2
3
4
5
6
Cash
U . S . government securities
N o t e s and accounts receivable
Inventories
Other
Statistics, Board of Governors of the Federal Reserve System, Washington, D . C .
1. Ratio of total current assets to total current liabilities.
NOTE. F o r a description of this series, see "Working Capital of Nonfinancial
C o r p o r a t i o n s " in the July 1978 BULLETIN, pp. 533-37.
All data in this table reflect the most current benchmarks. Complete data are
available upon request from the Flow of Funds Section, Division of Research and
1.50
661.0
20551.
SOURCE. Federal Trade Commission and Bureau of the Census.
TOTAL NONFARM BUSINESS EXPENDITURES on New Plant and Equipment •
Billions of dollars; quarterly data are at seasonally adjusted annual rates.
1985
Industry
1 Total nonfarm business
Manufacturing
2 Durable goods industries
3 Nondurable goods industries
Nonmanufacturing
4 Mining
Transportation
5
Railroad
6
Air
7
Other
Public utilities
8
Electric
9
Gas and other
10 Commercial and other 2
1985
1986
Q3
Q4
Q1
Q2
Q3
Q4
Ql'
Q2 1
387.13
397.27
390.80
389.23
397.88
377.94
375.92
374.55
388.69
384.02
396.22
73.27
80.21
69.08
73.65
70.60
74.27
72.99
81.48
75.47
82.79
68.01
76.02
68.33
73.35
69.31
69.89
70.68
75.33
69.06
73.89
73.02
74.37
15.88
11.25
10.10
15.89
15.25
12.99
11.22
10.15
10.63
10.22
10.54
7.08
4.79
6.15
6.63
6.26
5.86
6.15
6.48
6.44
7.79
5.17
5.85
6.74
6.07
6.34
6.22
6.58
5.42
6.77
5.77
5.74
7.31
5.69
6.03
6.25
6.99
6.24
5.92
6.93
6.18
6.46
6.05
6.59
36.11
12.71
150.93
33.93
12.51
160.10
32.58
13.62
170.55
35.58
12.86
151.62
36.38
13.41
155.42
34.21
12.82
155.67
33.81
12.74
158.18
33.91
11.99
160.25
33.78
12.49
166.31
32.33
13.13
166.36
32.82
13.55
172.80
• T r a d e and services are no longer being reported separately. They are included
in Commercial and other, line 10.
1. Anticipated by business.
1987
1986
1987'
2. " O t h e r " consists of construction; wholesale and retail trade; finance and
insurance; personal and business services; and communication.
SOURCE. Survey of Current Business (Department of Commerce).
Securities Markets and Corporate Finance
1.51
DOMESTIC F I N A N C E COMPANIES
Billions of dollars, end of period
Assets and Liabilities
1985
Account
A37
1982
1983
1986
1987
1984
Q3
Q4
Q2
Q1
Q4'
Q3
Q1
ASSETS
1
2
3
4
Accounts receivable, gross
Consumer
Business
Real estate
Total
5
6
Less:
Reserves for unearned income
Reserves for losses
7
8
9
75.3
100.4
18.7
194.3
83.3
113.4
20.5
217.3
89.9
137.8
23.8
251.5
108.6
143.7
26.3
278.6
113.4
158.3
28.9
300.6
117.2
165.9
29.9
312.9
125.1
167.7
30.8
323.6
137.1
161.0
32.1
330.2
136.5
174.8
33.7
345.0
133.9
182.8
35.1
351.8
29.9
3.3
30.3
3.7
33.8
4.2
38.0
4.6
39.2
4.9
40.0
5.0
40.7
5.1
42.4
5.4
41.4
5.8
40.4
5.9
Accounts receivable, net
All other
161.1
30.4
183.2
34.4
213.5
35.7
236.0
46.3
256.5
45.3
268.0
48.8
277.8
48.8'
282.4'
59.9'
297.8
57.9
305.5
59.0
Total assets
191.5
217.6
249.2
282.3
301.9
316.8
326.6'
342.3'
355.6
364.5
16.5
51.4
18.3
60.5
20.0
73.1
18.9
93.2
20.6'
99.2
19.0'
104.3
19.2'
108.4
20.2'
112.8
22.2
117.8
17.3
119.1
11.9
63.7
21.6
26.4
11.1
67.7
31.2
28.9
12.9
77.2
34.5
31.5
12.4
85.5
38.2
34.1
12.5
40.9'
35.7
13.4
101.0'
42.3'
36.7
15.4'
105.2'
40.1'
38.4'
16.0
109.8'
44.1'
39.4
17.2
115.6
43.4
39.4
21.6
118.4
46.3
41.8
191.5
217.6
249.2
282.3
301.9
316.8
326.6'
342.3'
355.6
364.5
LIABILITIES
12
13
14
15
Bank loans
Commercial paper
Debt
Other short-term
Long-term
All other liabilities
Capital, surplus, and undivided profits
16
Total liabilities and capital
10
11
93.1'
NOTE. Components may not add to totals because of rounding.
1.52
DOMESTIC F I N A N C E COMPANIES
Business Credit
Millions of dollars, seasonally adjusted except as noted
Type
Changes in accounts
receivable
Extensions
Repayments
1987
1987
1987
Accounts
receivable
outstanding
Mar. 3 1 ,
1987'
Feb.
Jan.
1
2
3
4
5
6
7
8
9
10
Total
Retail financing of installment sales
Automotive (commercial vehicles)
Business, industrial, and farm equipment
Wholesale financing
Automotive
Equipment
All other
Leasing
Automotive
Equipment
Loans on commercial accounts receivable and factored commercial accounts receivable
All other business credit
Jan.
Feb.
Mar.
29,836
Jan.
Feb.
Mar.
26,160'
26,342'
28,257
616
1,529
434
1,496
9,056'
643
2,301
10,492'
626
2,960
182,848
2,577'
1,850'
1,579
28,737'
28,193'
27,099
22,330
185
-417
602
-429
570
-40
801
1,112
1,036
1,067
29,735
5,314
8,812
2,119'
-46
918
11,175'
597
3,219
11,573'
658
2,919
20,013
39,361
-373
827
161
121
77
440
1,263
1,009
1,259
885
1,148
995
1,636
182
1,099
764
1,071
555
16,255
13,929
-22
-615
238
86
-652
155
7,841
1,719
7,619
1,177
7,664
1,224
7,862
2,334
7,381
1,092
8,316
1,069
These data also appear in the Board's G.20 (422) release. F o r address, see
inside front cover.
Mar.
-1,081'
31
-41
995
-235
269
1. Not seasonally adjusted,
1,138
1,255
12,676
672
3,064
568
1,295
11,681
907
2,795
A38
1.53
DomesticNonfinancialStatistics • July 1987
MORTGAGE M A R K E T S
Millions of dollars; exceptions noted.
1986
Oct.
Nov.
1987
Dec.
Jan.
Feb.
Mar.
Apr.
Terms and yields in primary and secondary markets
PRIMARY MARKETS
1
2
3
4
5
6
Conventional mortgages on new homes
Terms'
Purchase price (thousands of dollars)
Amount of loan (thousands of dollars)
Loan/price ratio (percent)
Maturity (years)
Fees and charges (percent of loan amount) 2
Contract rate (percent per annum)
Yield (percent per
7 F H L B B series 5
8 H U D series"
96.8
73.7
78.7
27.8
2.64
11.87
104.1
77.4
77.1
26.9
2.53
11.12
118.1
86.2
75.2
26.6
2.48
9.82
127.5
93.9
75.6
27.9
2.66
9.57
124.2
92.5
76.2
27.3
2.64
9.45
124.8
93.2
76.4
27.4
2.46
9.28
132.6
97.3
75.5
27.7
2.23
9.14
135.6
99.1
75.3
27.6
2.21
8.87
130.2'
95 . C
74.3'
27.1
2.2(Y
8 .77
134.2
98.8
75.0
26.9
2.25
8.86
12.37
13.80
11.58
12.28
10.25
10.07
10.02
9.89
9.91
9.47
9.69
9.33
9.51
9.09
9.23
9.04
9.14'
9.19
9.23
n.a.
13.81
13.13
12.24
11.61
9.91
9.30
9.80
9.06
9.26
8.83
9.21
8.62
8.79
8.46
8.81
8.28
8 .94
8 .18
n.a.
8.85
annum)
SECONDARY MARKETS
Yield (percent per annum)
9 F H A mortgages ( H U D series) 5
10 G N M A securities 6
Activity in secondary markets
F E D E R A L N A T I O N A L MORTGAGE ASSOCIATION
Mortgage holdings (end of
11 Total
12
FHA/VA-insured
13
Conventional
Mortgage transactions
14 Purchases
period)
(during
83,339
35,148
48,191
94,574
34,244
60,331
98,048
29,683
68,365
98,402
25,435
72,967
98,210
24,300
73,910
97,895
23,121
74,774
96,382
22,178'
74,204'
95,514
22,063 r
73,451'
16,721
21,510
30,826
3,784
2,549
2,336
1,346
979
21,007
6,384
20,155
3,402
32,987
3,386
2,375
5,740
1,811
4,625
1,272
3,386
948
2,258
912
2,175
9,283
910
8,373
12,399
841
11,558
13,517
746
12,837
12,905
722
12,183
12,315
707
11,607
11,564
694
10,870
10,964
686
10,279
A
21,886
18,506
44,012
38,905
103,474
100,236
11,566
11,417
9,862
10,510
11,305
11,169
7,950
8,269
n.a.
32,603
48,989
110,855
9,356
11,233
8,742
7,685
T
95,140
21,843'
73,297'
94,404
21,765
72,639
period)
Mortgage
commitments1
15 Contracted (during period)
16 Outstanding (end of period)
1,435
2,118
2,805'
3,539'
3,208
4,421
FEDERAL H O M E L O A N MORTGAGE CORPORATION
Mortgage holdings
17 Total
18
FHA/VA
19
Conventional
(end of
Mortgage transactions
20 Purchases
21 Sales
period)8
(during
Mortgage
commitments9
22 Contracted (during period)
|
1
period)
1. Weighted averages based on sample surveys of mortgages originated by
major institutional lender groups; compiled by the Federal H o m e Loan Bank
Board in cooperation with the Federal Deposit Insurance Corporation.
2. Includes all fees, commissions, discounts, and " p o i n t s " paid (by the
borrower or the seller) to obtain a loan.
3. Average effective interest rates on loans closed, assuming prepayment at the
end of 10 years.
4. Average contract rates on new commitments for conventional first mortgages; from Department of Housing and Urban Development.
5. Average gross yields on 30-year, minimum-downpayment, Federal Housing
Administration-insured first mortgages for immediate delivery in the private
secondary market. Based on transactions on first day of subsequent month. Large
monthly movements in average yields may reflect market adjustments to changes
in maximum permissable contract rates.
1
T
1
1
1
n.a.
n.a.
1
T
6. Average net yields to investors on Government National Mortgage Association guaranteed, mortgage-backed, fully modified pass-through securities, assuming prepayment in 12 years on pools of 30-year F H A / V A mortgages carrying the
prevailing ceiling rate. Monthly figures are averages of Friday figures f r o m the
Wall Street
Journal.
7. Includes some multifamily and nonprofit hospital loan commitments in
addition to 1- to 4-family loan commitments accepted in F N M A ' s free market
auction system, and through the F N M A - G N M A tandem plans.
8. Includes participation as well as whole loans.
9. Includes conventional and government-underwritten loans. F H L M C ' s mortgage commitments and mortgage transactions include activity under mortgage/
securities swap programs, while the corresponding data for F N M A exclude swap
activity.
Real Estate
1.54
A39
MORTGAGE D E B T O U T S T A N D I N G '
Millions of dollars, end of period
1987
1986
Type of holder, and type of property
1984
1985
1986
Ql
Q2
Q3
Q4
Ql
1 All holders
2,033,654
2,266,923
2,563,833 r
2,315,962
2,383,989'
2,469,954'
2,563,833'
2,622,446
2
3
4
5
1,317,940
185,414
418,300
112,000
1,466,773
213,816
480,719
105,615
1,665,510'
246,576'
554,087'
97,660'
1,494,603
221,587
495,879
103,893
1,543,681'
229,145'
509,574'
101,589'
1,607,238'
237,423'
525,112'
100,181'
1,665,510'
246,576'
554,087'
97,660'
1,709,954
250,601
566,045
95,846
1,269,702
379,498
196,163
20,264
152,894
10,177
154,441
107,302
19,817
27,291
31
1,390,394
429,196
213,434
23,373
181,032
11,357
177,263
121,879
23,329
31,973
82
1,506,046'
502,158'
235,704'
31,139'
222,579'
12,736'
224,232
154,801
30,161
39,166
104
1,408,665
441,096
216,290
25,389
187,620
11,797
188,154
131,381
23,980
32,707
86
1,435,437'
456,163'
221,640'
26,799'
195,484'
12,240'
203,398
142,174
26,543
34,577
104
1,464,371'
474,816'
228,718'
28,636'
204,986'
12,476'
215,036
149,786
28,400
36,762
88
1,506,046'
502,158'
235,704'
31,139'
222,579'
12,736'
224,232
154,801
30,161
39,166
104
1,519,771
515,953
239,918
32,660
230,373
13,002
226,409
156,236
30,476
39,592
105
555,277
421,489
55,750
77,605
433
156,699
14,120
18,938
111,175
12,466
23,787
583,236
432,422
66,410
83,798
606
171,797
12,381
19,894
127,670
11,852
28,902
553,080
403,611
66,898
82,070
501
192,975
12,763
20,847
148,367
10,998
33,601
574,732
420,073
67,140
86,860
659
174,823
12,605
20,009
130,569
11,640
29,860
565,037
413,865
66,020
84,618
534
180,041
12,608
20,181
135,924
11,328
30,798
557,139
408,152
65,827
82,644
516
185,269
12,927
20,709
140,213
11,420
32,111
553,080
403,611
66,898
82,070
501
192,975
12,763
20,847
148,367
10,998
33,601
545,976
398,017
66,609
80,914
436
196,575
12,763
20,997
151,867
10,948
34,858
158,993
2,301
585
1,716
1,276
213
119
497
447
166,928
1,473
539
934
733
183
113
159
278
203,800
889
47
842
48,421
21,625
7,608
8,446
10,742
165,041
1,533
527
1,006
704
217
33
217
237
161,398
876
49
827
570
146
66
111
247
159,505
887
48
839
457
132
57
115
153
203,800
889
47
842
48,421
21,625
7,608
8,446
10,742
198,996
846
46
800
48,471
21,525
7,708
8,496
10,742
Federal Housing and Veterans
Administration
1- to 4-family
Multifamily
Federal National Mortgage Association . . . .
1- to 4-family
Multifamily
Federal Land Banks
1- to 4-family
Farm
Federal H o m e L o a n Mortgage Corporation.
1- to 4-family
Multifamily
4,816
2,048
2,768
87,940
82,175
5,765
52,261
3,074
49,187
10,399
9,654
745
4,920
2,254
2,666
98,282
91,966
6,316
47,498
2,798
44,700
14,022
11,881
2,141
5,047
2,386
2,661
97,895
90,718
7,177
39,984
2,353
37,631
11,564
10,010
1,554
4,964
2,309
2,655
98,795
92,315
6,480
45,422
2,673
42,749
13,623
12,231
1,392
5,094
2,449
2,645
97,295
90,460
6,835
43,369
2,552
40,817
14,194
11,890
2,304
4,966
2,331
2,635
97,717
90,508
7,209
42,119
2,478
39,641
13,359
11,127
2,232
5,047
2,386
2,661
97,895
90,718
7,177
39,984
2,353
37,631
11,564
10,010
1,554
5,091
2,440
2,651
95,140
88,126
7,014
38,684
2,276
36,408
10,764
9,610
1,154
49 Mortgage pools or trusts 5
....
50
Government National Mortgage Association
51
1 - t o 4-family
52
Multifamily
53
Federal H o m e L o a n Mortgage Corporation.
54
1- to 4-family
55
Multifamily
56
Federal National Mortgage Association . . . .
57
1- to 4-family
58
Multifamily
59
Farmers Home Administration 4
60
1- to 4-family
61
Multifamily
62
Commercial
63
Farm
332,057
179,981
175,589
4,392
70,822
70,253
569
36,215
35,965
250
45,039
21,813
5,841
7,559
9,826
415,042
212,145
207,198
4,947
100,387
99,515
872
54,987
54,036
951
47,523
22,186
6,675
8,190
10,472
529,763
260,869
255,132
5,737
171,372
166,667
4,705
97,174
95,791
1,383
348
142
n.a.
132
74
440,701
220,348
215,148
5,200
110,337
108,020
2,317
62,310
61,117
1,193
47,706
22,082
6,943
8,150
10,531
475,615
229,204
223,838
5,366
125,903
123,676
2,227
72,377
71,153
1,224
48,131
21,987
7,170
8,347
10,627
522,721
241,230
235,664
5,566
146,871
143,734
3,137
86,359
85,171
1,188
48,261
21,782
7,353
8,409
10,717
529,763
260,869
255,132
5,737
171,372
166,667
4,705
97,174
95,791
1,383
348
142
0
132
74
575,567
279,598
273,449
6,149
187,962
182,857
5,105
107,673
106,068
1,605
334
137
0
127
70
64 Individuals and others 6
65
1- to 4-family
66
Multifamily
67
Commercial
68
Farm
272,902
153,710
48,480
41,279
29,433
294,559
165,199
55,195
47,897
26,268
324,224
180,159
65,864
53,327
24,874
301,555
167,755
57,850
49,756
26,194
311,539
174,396
60,938
50,513
25,692
323,357
182,569
63,635
51,983
25,170
324,224
180,159
65,864
53,327
24,874
328,112
181,628
67,673
54,676
24,135
1- to 4-family
Multifamily
Commercial
Farm
6 Selected financial institutions
7
Commercial banks 2
8
1- to 4-family
9
Multifamily
10
Commercial
11
Farm
12
Savings banks
13
1- to 4-family
14
Multifamily
15
Commercial
16
Farm
17
18
19
20
21
22
23
24
25
26
27
Savings and loan associations
1- to 4-family
Multifamily
Commercial
Farm
Life insurance companies
I- to 4-family
Multifamily
Commercial
Farm
Finance companies 3
28 Federal and related agencies
29
Government National Mortgage Association
30
1- to 4-family
31
Multifamily
32
Farmers H o m e Administration 4
33
1- to 4-family
34
Multifamily
35
Commercial
36
Farm
37
38
39
40
41
42
43
44
45
46
47
48
1. Based on data f r o m various institutional and governmental sources, with
some quarters estimated in part by the Federal Reserve. Multifamily debt refers to
loans on structures of five or more units.
2. Includes loans held by nondeposit trust companies but not bank trust
departments.
3. Assumed to be entirely 1- to 4-family loans.
4. FmHA-guaranteed securities sold to the Federal Financing Bank were
reallocated from F m H A mortgage pools to F m H A mortgage holdings in 1986: 4,
because of accounting changes by the F a r m e r s H o m e Administration.
5. Outstanding principal balances of mortgage pools backing securities insured
or guaranteed by the agency indicated.
6. Other holders include mortgage companies, real estate investment trusts,
state and local credit agencies, state and local retirement f u n d s , noninsured
pension funds, credit unions, and other U.S. agencies.
A40
1.55
DomesticNonfinancialStatistics • July 1987
C O N S U M E R I N S T A L L M E N T CREDIT 1 - 4 Total Outstanding, and Net Change, seasonally adjusted
Millions of dollars
1986
n o i u e r , anu lype oi c reu n
1985
1987
1986
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb/
Mar.
Amounts outstanding (end of period)
1 Total
522,805
577,784
558,059
563,660
571,280
576,874
577,656
577,784
578,578
579,591
579,528
By major holder
Commercial banks
Finance companies 2
Credit unions
Retailers 3
Savings institutions
Gasoline companies
242,084
113,070
72,119
38,864
52,433
4,235
261,604
136,494
77,857
40,586
58,037
3,205
255.744
127,380
74,865
40,158
56,500
3,411
257,482
129,265
75,637
40,379
57,524
3,372
258,990
135,516
76,299
40,455
56,687
3,333
260,940
138,038
76,995
40,565
57,046
3,289
262,949
136,314
77,508
40,496
57,168
3,221
261,604
136,494
77,857
40,586
58,037
3,205
261,694
135,802
78,284
40,617
58,906
3,276
262,105
136,009
78,492
40,644
59,031
3,311
262,344
136,050
78,325
40,469
58,936
3,405
By major type of credit
8 Automobile
9
Commercial banks
10
Credit unions
11
Finance companies
12
Savings institutions
208,057
93,003
35,635
70,091
9,328
245,055
100,709
39,029
93,274
12,043
227,822
95,972
37,529
83,066
11,255
231,200
96,871
37,916
84,868
11,545
239,014
98,057
38,248
91,241
11,468
243,400
99,385
38,597
93,786
11,632
243,005
100,221
38,854
92,188
11,742
245,055
100,709
39,029
93,274
12,043
245,472
101,389
39,243
92,617
12,223
246,064
101,688
39,347
92,780
12,249
246,114
101,589
39,264
93,032
12,229
13 Revolving
14
Commercial banks
15
Retailers
16
Gasoline companies
17
Savings institutions
18
Credit unions
122,021
75,866
34,695
4,235
5,705
1,520
134,938
85,652
36,240
3,205
7,713
2,128
132,181
83,987
35,827
3,411
7,105
1,851
133,180
84,545
36,028
3,372
7,325
1,910
133,123
84,430
36,086
3,333
7,308
1,966
133,816
84,868
36,190
3,289
7,445
2,024
134,391
85,426
36,137
3,221
7,529
2,078
134,938
85,652
36,240
3,205
7,713
2,128
134,916
85,395
36,277
3,276
7,829
2,139
135,663
86,053
36,308
3,311
7,845
2,145
135,150
85,631
36,141
3,405
7,833
2,141
19 Mobile home
20
Commercial banks
21
Finance companies
22
Savings institutions
25,488
9,538
9,391
6,559
25,710
8,812
9,028
7,870
25,891
9,126
9,414
7,351
25,939
9,055
9,337
7,547
25,732
9,016
9,216
7,500
25,784
9,025
9,149
7,610
25,731
8,951
9,091
7,689
25,710
8,812
9,028
7,870
25,852
8,787
9,077
7,988
25,789
8,739
9,045
8,005
25,563
8,749
8,823
7,992
23 Other
24
Commercial banks
25
Finance companies
26
Credit unions
27
Retailers
28
Savings institutions
167,239
63,677
33,588
34,964
4,169
30,841
172,081
66,431
34,192
36,700
4,346
30,412
172,165
66,659
34,900
35,485
4,331
30,790
173,341
67,011
35,061
35,811
4,351
31,107
173,411
67,487
35,059
36,085
4,369
30,411
173,874
67,662
35,104
36,374
4,375
30,359
174,529
68,351
35,035
36,576
4,359
30,208
172,081
66,431
34,192
36,700
4,346
30,412
172,338
66,122
34,108
36,901
4,340
30,867
172,076
65,625
34,183
36,999
4,336
30,932
172,701
66,375
34,196
36,921
4,327
30,882
2
3
4
5
6
7
Net change (during period)
29 Total
76,622
54,979
6,289
5,601
7,620
5,594
782
128
794
1,013
-63
By major holder
Commercial banks
Finance companies 2
Credit unions
Retailers 3
Savings institutions
Gasoline companies
32,926
23,566
6,493
1,660
12,103
-126
19,520
23,424
5,738
1,722
5,604
-1,030
2,366
2,234
622
175
931
-41
1,738
1,885
772
221
1,024
-39
1,508
6,251
662
76
-837
-39
1,950
2,522
696
110
359
-44
2,009
-1,724
513
-69
122
-68
-1,345
180
349
90
869
-16
90
-692
427
31
869
71
411
207
208
27
125
35
239
41
-167
-175
-95
94
By major type of credit
36 Automobile
37
Commercial banks
38
Credit unions
39
Finance companies
40
Savings institutions
35,705
9,103
5,330
17,840
3,432
36,998
7,706
3,394
23,183
2,715
3,415
707
312
2,121
275
3,378
899
387
1,802
290
7,814
1,186
332
6,373
-77
4,386
1,328
349
2,545
164
-395
836
257
-1,598
110
2,050
488
175
1,086
301
417
680
214
-657
180
592
299
104
163
26
50
-99
-83
252
-20
41 Revolving
Commercial banks
42
43
Retailers
44
Gasoline companies
45
Savings institutions
46
Credit unions
22,401
17,721
1,488
-126
2,771
547
12,917
9,786
1,545
-1,030
2,008
608
1,444
1,076
149
-41
206
54
999
558
201
-39
220
59
-57
-115
58
-39
-17
56
693
438
104
-44
137
58
575
558
-53
-68
84
54
547
226
103
-16
184
50
-22
-257
37
71
116
11
747
658
31
35
16
6
-513
-422
-167
94
-12
-4
47 Mobile home
48
Commercial banks
49
Finance companies
50
Savings institutions
778
-85
-405
1,268
222
-726
-363
1,311
85
-62
-36
183
48
-71
-77
196
-207
-39
-121
-47
52
9
-67
110
-53
-74
-58
79
-21
-139
-63
181
142
-25
49
118
-63
-48
-32
17
-226
10
-222
-13
51 Other
52
Commercial banks
53
Finance companies
54
Credit unions
55
Retailers
56
Savings institutions
17,738
6,187
6,131
616
172
4,632
4,842
2,754
604
1,736
177
-429
1,345
645
149
256
26
269
1,176
352
161
326
20
317
70
476
-2
274
18
-696
463
175
45
289
6
-52
655
689
-69
202
-16
-151
-2,448
-1,920
-843
124
-13
204
257
-309
-84
201
-6
455
-262
-497
75
98
-4
65
625
750
13
-78
-9
-50
30
31
32
a
34
35
1. The Board's series cover most short- and intermediate-term credit extended
to individuals that is scheduled to be repaid (or has the option of repayment) in
two o r more installments.
2. More detail for finance companies is available in the G.20 statistical release,
3. Excludes 30-day charge credit held by travel and entertainment companies,
4. All data have been revised.
Consumer Installment
1.56
Credit
A41
TERMS OF C O N S U M E R I N S T A L L M E N T CREDIT
Percent unless noted otherwise
1986
Item
1984
1985
1987
1986
Sept.
Nov.
Oct.
Dec.
Jan.
Mar.
Feb.
INTEREST RATES
1
2
3
4
i
6
Commercial banks 1
48-month new car 2
24-month personal
120-month mobile h o m e 2
Credit card
Auto finance companies
N e w car
Used car
13.71
16.47
15.58
18.77
12.91
15.94
14.%
18.69
11.33
14.82
13.99
18.26
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10.58
14.19
13.49
18.09
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
10.35
14.10
13.42
18.10
n.a.
n.a.
n.a.
n.a.
14.62
17.85
11.98
17.59
9.44
15.95
5.40
15.23
6.12
15.17
11.83
15.20
11.71
15.12
11.65
14.62
10.78
14.56
10.59
14.40
48.3
39.7
51.5
41.4
50.0
42.6
44.5
42.5
45.3
42.2
53.4
42.6
53.3
42.7
53.8
44.8
53.6
44.7
53.7
44.9
88
92
91
94
91
97
92
98
92
97
93
97
93
98
94
98
94
99
94
99
9,333
5,691
9,915
6,089
10,665
6,555
11,162
6,763
11,340
6,746
11,160
6,946
10,835
7,168
10,902
7,067
10,602
7,075
10,641
7,145
OTHER TERMS3
7
8
9
10
11
12
Maturity (months)
N e w car
Used car
Loan-to-value ratio
N e w car
Used car
Amount financed (dollars)
N e w car
Used car
1. Data for midmonth of quarter only.
2. Before 1983 the maturity for new car loans was 36 months, and for mobile
home loans was 84 months.
3. At auto finance companies.
NOTE. These data also appear in the Board's G.19 (421) release. F o r address,
see inside front cover.
A42
1.57
DomesticNonfinancialStatistics • July 1987
F U N D S R A I S E D IN U . S . CREDIT M A R K E T S
Billions of dollars; half-yearly data are at seasonally adjusted annual rates.
1984
HI
1985
H2
HI
1986
H2
HI
H2
Nonfinancial sectors
1 Total net borrowing by domestic nonfinancial sectors . . . .
375.8
387.4
548.8
756.3
869.3
827.7
727.8
784.8
732.6
1,006.1
705.2
950.7
87.4
87.8
-.5
161.3
162.1
-.9
186.6
186.7
-.1
198.8
199.0
-.2
223.6
223.7
-.1
214.3
214.7
-.3
181.3
181.5
-.2
216.3
216.4
-.1
201.8
201.9
-.1
245.5
245.5
-.1
211.3
211.4
-.1
217.5
218.0
-.5
5 Private domestic nonfinancial sectors
6
Debt capital instruments
7
Tax-exempt obligations
8
Corporate bonds
9
Mortgages
10
H o m e mortgages
11
Multifamily residential
12
Commercial
Farm
13
288.5
155.5
23.4
22.8
109.3
72.2
4.8
22.2
10.0
226.2
148.3
44.2
18.7
85.4
50.5
5.4
25.2
4.2
362.2
252.8
53.7
16.0
183.0
117.1
14.1
49.0
2.8
557.5
314.0
50.4
46.1
217.5
129.9
25.1
63.3
-.8
645.7
461.7
152.4
73.9
235.4
150.3
29.2
62.4
-6.4
613.3
447.0
48.5
109.2
289.4
200.6
30.4
64.4
-6.0
546.5
298.4
42.8
31.2
224.5
135.2
27.5
62.9
-1.1
568.5
329.6
58.0
61.1
210.5
124.7
22.7
63.7
-.5
530.8
355.4
67.5
72.7
215.2
133.1
24.6
60.3
-2.8
760.6
568.0
237.3
75.1
255.7
167.5
33.7
64.4
-10.0
494.0
384.3
15.9
129.2
239.2
156.4
30.9
59.3
-7.4
733.2
509.7
81.1
89.1
339.5
244.7
29.9
69.5
-4.6
14
13
16
17
18
Other debt instruments
Consumer credit
Bank loans n.e.c
Open market paper
Other
133.0
22.6
57.0
14.7
38.7
77.9
17.7
52.9
-6.1
13.4
109.5
56.8
25.8
-.8
27.7
243.5
95.0
80.1
21.7
46.6
184.0
96.6
41.3
14.6
31.4
166.3
67.9
80.2
-9.3
27.4
248.1
98.7
91.9
24.8
32.7
238.9
91.3
68.4
18.7
60.5
175.4
97.3
24.9
12.3
40.9
192.6
95.9
57.7
16.9
22.0
109.6
75.3
22.0
-15.7
28.1
223.5
61.2
138.4
-2.9
26.8
19
20
21
22
23
24
By borrowing sector
State and local governments
Households
Farm
Nonfarm noncorporate
Corporate
288.5
6.8
121.4
16.6
38.5
105.2
226.2
21.5
88.4
6.8
40.2
69.2
362.2
34.0
188.0
4.3
76.6
59.3
557.5
27.4
239.5
.1
97.1
193.4
645.7
107.8
295.0
-13.6
92.8
163.7
613.3
60.0
291.2
-11.7
100.7
173.2
546.5
25.2
232.8
-.4
101.4
187.4
568.5
29.6
246.2
.5
92.7
199.5
530.8
56.8
253.6
-5.9
85.6
140.7
760.6
158.7
336.4
-21.3
99.9
186.8
494.0
35.7
231.8
-15.2
95.7
145.9
733.2
84.2
351.1
-8.3
105.7
200.5
25 Foreign net borrowing in United States
26
Bonds
27
Bank loans n.e.c
28
Open market paper
29
U.S. government loans
23.5
5.4
3.0
3.9
11.1
16.0
6.7
-5.5
1.9
13.0
17.4
3.1
3.6
6.5
4.1
6.1
1.3
-6.6
6.2
5.3
1.7
4.0
-2.8
6.2
-5.7
14.4
5.2
-2.1
11.5
-.2
35.5
1.1
-2.2
18.0
18.7
-23.3
1.5
-11.1
-5.6
-8.1
-4.1
5.5
-6.1
4.2
-7.8
7.5
2.6
.4
8.2
-3.6
24.3
7.1
1.4
20.6
-4.8
4.4
3.3
-5.6
2.4
4.4
399.3
403.4
566.2
762.4
871.0
842.0
763.3
761.5
728.4
1,013.5
729.5
955.1
By sector and
instrument
2 U.S. government
3
Treasury securities
4
Agency issues and mortgages
30 Total domestic plus foreign
Financial sectors
31 Total net borrowing by financial sectors
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
By instrument
U.S. government related
Sponsored credit agency securities
Mortgage pool securities
Loans from U . S . government
Private financial sectors
Corporate bonds
Mortgages
Bank loans n.e.c
Open market paper
Loans from Federal H o m e L o a n Banks
By sector
Sponsored credit agencies
Mortgage pools
Private financial sectors
Commercial banks
Bank affiliates
Savings and loan associations
Finance companies
REITs
101.9
90.1
94.0
139.0
186.9
242.0
134.2
143.8
154.8
218.9
189.0
295.0
47.4
30.5
15.0
1.9
54.5
4.4
64.9
14.9
49.5
.4
25.2
12.5
.1
1.9
9.9
.8
67.8
1.4
66.4
74.9
30.4
44.4
80.0
31.8
48.2
92.9
25.3
67.6
64.4
17.3
.4
-.1
31.1
15.7
63.8
29.3
.4
1.4
17.0
15.7
61.9
35.3
-.1
21.3
-7.0
64.1
23.3
.4
.7
24.1
15.7
171.1
12.4
159.0
-.4
71.0
22.3
.1
3.6
25.2
19.8
69.8
29.1
40.7
26.2
12.1
101.5
20.6
79.9
1.1
85.3
36.5
.1
2.6
32.0
14.2
.9
13.9
11.7
110.2
15.9
92.1
2.2
108.8
37.7
.1
4.2
50.1
16.7
129.5
4.4
124.3
.8
59.6
28.7
.6
2.4
14.4
13.5
212.7
20.5
193.7
-1.5
82.4
15.9
-.5
4.7
36.1
26.2
1.4
66.4
26.2
5.0
12.1
-2.1
11.4
-.2
30.4
44.4
64.1
7.3
15.6
22.7
17.8
.8
21.7
79.9
85.3
-4.9
14.5
22.3
52.8
.5
12.1
159.0
71.0
-2.2
4.5
31.3
36.9
.5
29.1
40.7
64.4
15.4
23.7
20.2
4.3
.8
31.8
48.2
63.8
-.9
7.5
25.1
31.3
.8
25.3
67.6
61.9
-9.2
13.7
12.1
44.8
.5
18.1
92.1
108.8
-.6
15.3
32.6
60.9
.5
5.2
124.3
59.6
-6.7
1.7
23.1
40.6
.9
18.9
193.7
82.4
2.3
7.2
39.5
33.2
.1
*
1.2
32.7
16.2
32.4
15.0
54.5
11.6
9.2
15.5
18.5
-.2
15.3
49.5
25.2
11.7
6.8
2.5
4.3
*
*
*
All sectors
50 Total net borrowing
501.3
493.5
660.2
901.4
1057.8
1084.1
897.5
905.3
833.3
1,232.4
918.6
1250.1
51
52
53
54
55
56
57
58
133.0
23.4
32.6
109.2
22.6
61.2
51.3
68.0
225.9
44.2
37.8
85.4
17.7
49.3
5.7
27.6
254.4
53.7
31.2
183.0
56.8
29.3
26.9
24.8
273.8
50.4
70.7
217.8
95.0
74.2
52.0
67.6
324.2
152.4
114.4
235.4
96.6
41.0
52.8
41.0
385.8
48.5
136.6
289.4
67.9
81.7
27.4
46.7
251.2
42.8
49.6
224.8
98.7
89.6
73.8
67.1
296.4
58.0
91.9
210.8
91.3
58.8
30.1
68.1
294.8
67.5
113.5
215.2
97.3
19.8
30.4
44.8
353.5
237.3
115.3
255.7
95.9
62.3
75.2
37.3
340.0
15.9
165.0
239.7
75.3
25.9
19.3
37.5
431.7
81.1
108.3
339.0
61.2
137.5
35.5
55.8
U.S. government securities
State and local obligations
Corporate and foreign bonds
Mortgages
Consumer credit
Bank loans n.e.c
Open market paper
Other loans
External corporate equity funds raised in United States
59 Total new share issues
60
61
62
63
64
Mutual funds
All other
Nonfinancial corporations
Financial corporations
Foreign shares purchased in United States
-3.3
33.6
67.0
-31.1
37.5
115.3
-40.1
-22.2
33.3
41.6
149.6
81.1
6.0
-9.3
-11.5
1.9
.3
16.8
16.8
11.4
4.0
1.5
32.1
34.9
28.3
2.7
3.9
38.0
-69.1
-77.0
6.7
1.2
103.4
-65.9
-81.6
11.7
4.0
187.6
-72.3
-80.8
6.7
1.8
39.3
-79.4
-84.5
5.9
-.7
36.6
-58.8
-69.4
7.6
3.0
93.6
-60.4
-75.7
11.0
4.3
113.1
-71.5
-87.5
12.4
3.6
201.5
-52.0
-68.7
8.3
8.5
173.6
-92.6
-92.7
5.1
-4.9
Flow of Funds
1.58
A43
DIRECT A N D I N D I R E C T S O U R C E S O F F U N D S TO CREDIT M A R K E T S
Billions of dollars, except as noted; half-yearly data are at seasonally adjusted annual rates.
1982
Transaction category, or sector
1983
1984
HI
1 Total funds advanced in credit markets to domestic
nonfinancial sectors
375.8
387.4
548.8
756.3
869.3
By public agencies and foreign
2 Total net advances
3
U . S . government securities
4
Residential mortgages
5
F H L B advances to savings and loans
6
Other loans and securities
104.4
17.1
23.5
16.2
47.7
115.4
22.7
61.0
.8
30.8
115.3
27.6
76.1
-7.0
18.6
154.6
36.0
56.5
15.7
46.5
203.3
47.2
94.6
14.2
47.3
24.0
48.2
9.2
23.0
15.9
65.5
9.8
24.1
9.7
69.8
10.9
24.9
17.4
73.3
8.4
55.5
47.4
23.5
64.9
16.0
67.8
17.4
Private domestic funds
advanced
13 Total net advances
14
U . S . government securities
15
State and local obligations
16
Corporate and foreign bonds
17
Residential mortgages
18
Other mortgages and loans
19
LESS: Federal H o m e L o a n Bank advances
342.3
115.9
23.4
19.8
53.5
145.9
16.2
352.9
203.1
44.2
14.8
-5.3
96.9
Private
financial
intermediation
20 Credit market f u n d s advanced by private
institutions
21
Commercial banking
22
Savings institutions
23
Insurance and pension f u n d s
24
Other finance
320.2
106.5
26.2
93.5
94.0
261.9
110.2
25 Sources of funds
26
Private domestic deposits and RPs
27
Credit market borrowing
28
29
30
31
32
H2
HI
727.8
784.8
732.6
1,006.1
705.2
950 .7
313.0
85.5
156.5
19.8
51.2
132.5
26.8
52.7
15.7
37.5
176.6
45.2
60.2
15.7
55.5
201.8
53.1
85.6
11.7
51.4
204.9
41.3
103.7
16.7
43.2
261.3
77.4
121.0
13.5
49.4
364 .6
93 .5
191 .9
26 .2
53 .0
17.8
101.5
21.6
62.4
14.2
170.6
30.2
98.0
9.0
74.0
40.7
25.7
72.5
8.0
70.4
28.8
98.2
23.7
51.0
6.7
104.9
19.5
73.8
14.6
127.3
9.8
109.7
13 .8
214 .0
50 .6
86'.2
74.9
6.1
101.5
1.7
171.1
14.4
69.8
35.5
80.0
-23.3
92.9
-4.1
110.2
7.5
129.5
24.3
212 .7
4 .4
518.7
226.9
53.7
14.6
55.0
161.5
-7.0
682.7
237.8
50.4
32.6
98.5
279.1
15.7
769.2
277.0
152.4
41.2
84.8
228.1
14.2
700.1
300.3
48.5
75.3
74.5
221.3
19.8
700.5
224.4
42.8
25.6
109.9
313.6
15.7
664.9
251.2
58.0
39.6
87.0
244.7
15.7
619.6
241.7
67.5
49.7
72.0
200.4
11.7
918.8
312.2
237.3
32.7
97.5
255.9
16.7
597.7
262.5
15.9
96.4
66.2
170.1
13.5
803 .2
338 .2
81 .1
54 .3
82 .7
273 .0
26 .2
86.2
43.7
391.9
144.3
135.6
97.8
14.1
550.5
168.9
149.2
124.0
108.3
554.4
186.3
83.4
141.0
143.6
659.2
203.2
109.6
137.3
209.1
581.8
184.2
173.5
144.5
79.5
519.1
153.5
124.9
103.5
137.2
471.3
133.8
63.0
121.8
152.7
637.4
238.8
103.9
160.1
134.5
572.5
106.9
101.4
124.6
239.6
746 .6
299 .8
117 .8
150 .1
178 .8
320.2
214.5
54.5
261.9
195.2
25.2
391.9
212.2
26.2
550.5
317.6
64.1
554.4
204.8
85.3
659.2
253.3
71.0
581.8
300.2
64.4
519.1
334.9
63.8
471.3
203.0
61.9
637.4
206.6
108.8
572.5
224.5
59.6
746 .6
282 .3
82 .4
51.2
-23.7
-1.1
89.6
-13.6
41.5
-31.4
6.1
92.5
-25.7
153.4
16.3
-5.3
110.6
31.8
168.8
5.4
4.0
112.5
46.8
264.2
17.7
10.3
107.0
129.2
334.9
14.7
1.9
120.2
198.1
217.2
3.0
-.1
146.5
67.8
120.4
7.8
8.2
78.5
25.9
206.5
11.2
14.4
97.4
83.5
322.0
24.3
6.1
116.6
175.0
288.4
.9
-5.5
104.5
188.5
381 .9
28 .6
9 .4
135 .9
208 .1
Private domestic nonfinancial
investors
33 Direct lending in credit markets
34
U . S . government securities
35
State and local obligations
36
Corporate and foreign bonds
37
Open market paper
38
Other
76.6
37.1
11.1
-4.0
1.4
31.0
116.3
69.9
25.0
2.0
-1.3
20.6
153.0
95.5
39.0
-12.7
15.1
16.2
196.4
132.9
29.6
-3.4
8.9
28.3
300.2
150.9
59.2
13.2
51.8
25.1
111.9
65.7
6.4
11.5
7.0
21.3
183.1
142.2
25.0
-26.8
15.7
26.9
209.6
123.6
34.3
19.9
2.2
29.7
210.2
130.8
20.5
25.4
7.3
26.3
390.2
171.0
98.0
1.0
96.3
24.0
84.8
53.4
-24.5
44.6
-13.0
24.3
139 .0
78 .2
37 .3
- 2 1 .6
27 .1
18 .0
39 Deposits and currency
40
Currency
41
Checkable deposits
42
Small time and savings accounts
43
Money market fund shares
44
Large time deposits
45
Security RPs
46
Deposits in foreign countries
222.4
9.5
18.5
47.3
107.5
36.0
5.2
-1.7
204.5
9.7
18.6
135.7
24.7
5.2
11.1
-.4
229.7
14.3
28.8
215.3
-44.1
-6.3
18.5
3.1
321.1
8.6
27.8
150.7
47.2
84.9
7.0
-5.1
215.1
12.4
42.0
137.5
-2.2
14.0
13.4
-2.1
274.9
14.4
99.2
117.9
20.8
1.6
13.7
7.1
311.3
13.1
29.4
136.4
30.2
93.4
10.8
-2.0
330.9
4.1
26.3
164.9
64.2
76.5
3.1
-8.2
215.9
15.8
18.2
167.1
4.2
-.8
14.3
-2.9
214.3
9.0
65.8
108.0
-8.6
28.9
12.5
-1.3
241.6
308 .3
18 .0
114 .6
118 .3
12 .7
.3
.3
.1
Total advanced, by sector
U.S. government
Sponsored credit agencies
Monetary authorities
Foreign
7
8
9
10
Agency and foreign borrowing not in line 1
11
Sponsored credit agencies and mortgage pools .
12
Foreign
financial
Other sources
Foreign f u n d s
Treasury balances
Insurance and pension reserves
Other, net
47 Total of credit market instruments, deposits and
currency
48
49
50
Public holdings as percent of total
Private financial intermediation (in percent)
Total foreign funds
MEMO: Corporate equities not included above
51 Total net issues
52
Mutual fund shares
53
Other equities
54 Acquisitions by financial institutions
55 Other net purchases
21.8
320.7
382.7
517.4
494.4
540.5
426.0
604.5
326.4
.3
26.2
93.6
-.7
28.6
74.2
-7.3
20.4
75.5
41.3
20.3
80.6
60.9
23.3
72.1
80.1
37.2
94.2
112.7
17.4
83.1
43.7
23.2
78.1
78.2
27.7
76.1
62.2
20.2
69.4
98.1
35.8
95.8
110.5
38 .2
93 .0
114 .8
-3.3
33.6
-40.1
41.6
149.6
187.6
-72.3
27.8
87.5
39.3
-79.4
-4.1
-36.0
-22.2
36.6
-58.8
20.6
-42.7
33.3
38.0
-69.1
8.2
-39.4
37.5
103.4
-65.9
33.3
4.1
115.3
16.8
16.8
27.6
6.0
67.0
32.1
34.9
46.8
20.2
-31.1
6.0
-9.3
19.9
-23.2
93.6
-60.4
54.0
-20.7
113.1
-71.5
12.6
29.0
201.5
-52.0
35.4
114.2
81 .1
173 .6
- 9 2 .6
20 .3
60 .7
N O T E S BY L I N E N U M B E R .
1.
2.
6.
11.
13.
18.
26.
27.
29.
30.
Line 1 of table 1.57.
Sum of lines 3 - 6 or 7-10.
Includes farm and commercial mortgages.
Credit market funds raised by federally sponsored credit agencies, and net
issues of federally related mortgage pool securities.
Line 1 less line 2 plus line 11 and 12. Also line 20 less line 27 plus line 33. Also
sum of lines 28 and 47 less lines 40 and 46.
Includes farm and commercial mortgages.
Line 39 less lines 40 and 46.
Excludes equity issues and investment company shares. Includes line 19.
Foreign deposits at commercial banks, bank borrowings from foreign
branches, and liabilities of foreign banking agencies to foreign affiliates, less
claims on foreign affiliates and deposits by banking in foreign banks.
Demand deposits and note balances at commercial banks.
10.9
83.9
117.5
29.0
2.0
-7.9
6.2
31. Excludes net investment of these reserves in corporate equities.
32. Mainly retained earnings and net miscellaneous liabilities.
33. Line 13 less line 20 plus line 27.
34-38. Lines 14-18 less amounts acquired by private finance plus amounts
borrowed by private finance. Line 38 includes mortgages.
40. Mainly an offset to line 9.
47. Lines 33 plus 39, or line 13 less line 28 plus 40 and 46.
48. Line 2/line 1.
49. Line 20/line 13.
50. Sum of lines 10 and 29.
51. 53. Includes issues by financial institutions.
NOTE. Full statements for sectors and transaction types in flows and in amounts
outstanding may be obtained f r o m Flow of Funds Section, Division of Research
and Statistics, Board of Governors of the Federal Reserve System, Washington,
D.C. 20551.
A44
2.10
Domestic Nonfinancial Statistics • July 1987
NONFINANCIAL BUSINESS ACTIVITY
Selected Measures 1
1977 = 100; monthly and quarterly data are seasonally adjusted. Exceptions noted.
1986
Measure
1984
1985
1987
1986
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.'
Mar.'
Apr.
1 Industrial production
121.4
123.8
125.0
125.1
124.9
125.3
126.0
126.7
126.5
127.1
126.8
126.3
Market
groupings
Products, total
Final, total
Consumer goods
Equipment
Intermediate
Materials
126.7
127.3
118.0
139.6
124.7
114.2
130.8
131.1
120.2
145.4
130.0
114.2
133.2
132.3
124.4
142.7
136.4
113.9
133.8
132.6
125.1
142.5
137.8
113.2
133.3
132.2
124.2
142.8
137.0
113.5
134.0
132.7
124.7
143.3
138.7
113.3
134.5
133.1
125.6
143.1
139.2
114.3
135.0
133.7
127.2
142.2
139.7
115.2
134.9'
133.6'
126.8'
142.8'
139.1'
115.2'
136.0
135.0
127.5
144.9
139.3
115.0
135.6
134.4
127.0
144.2
139.7
114.8
134.9
133.5
125.9
143.6
139.5
114.7
123.4
126.4
129.1
129.5
129.5
129.9
130.3
131.1
131.1'
132.0
131.7
131.1
80.5
82.0
80.1
80.2
79.8
78.5
79.7
77.9
79.6
78.1
79.6
77.8
79.8
78.4
80.0
78.9
80.(K
78.8'
80.3
78.6
80.0
78.4
79.5
78.2
2
3
4
5
6
7
Industry
groupings
8 Manufacturing
Capacity utilization (percent) 2
9
Manufacturing
10
Industrial materials industries
11 Construction contracts (1982 = 100)
3
12
13
14
15
16
W
18
19
20
21
Nonagricultural employment, total 4
Goods-producing, total
Manufacturing, total
Manufacturing, production-worker
Service-producing
Personal income, total
Wages and salary disbursements
Manufacturing
Disposable personal income 5
Retail sales 6
22
23
Prices 7
Consumer (1967=100)
Producer finished goods (1967= 100) . . . .
...
135.0
148.0
155.0
155.0
155.0
151.0
156.0
155.0
150.0
145.0
160.0
158.0
114.6
101.6
98.4
94.1
120.0
193.5
184.8
164.6
193.6
179.0
118.4
102.4
98.1
92.9
125.0
206.2
197.8
172.5
205.0
190.6
121.5
102.4
97.5
92.1
129.4
216.8
208.6
176.7
215.5
199.9
121.6
102.2
97.1
91.7
129.7
217.6
209.6
176.6
215.9
201.7
121.9
102.1
97.0
91.7
130.2
218.2
210.1
176.5
216.4
213.0
122.3
102.1
97.1
91.8
130.7
218.8
211.5
179.0
216.7
201.9
122.6
102.3
97.3
92.1
131.1
219.2
212.5
177.8
216.8
200.9
122.9
102.4
97.5
92.3
131.4
220.4
212.8
178.1
217.5
211.8
123.2
102.7
97.4
92.2
131.8
221.1
214.2
178.7
218.7'
196.8
123.5
102.9
97.6
92.4
132.2
223.9
215.9
179.6
222.6
206.3
123.7
102.7
97.6
92.5
132.5
224.3
216.7
179.3
222.7
207.9
124.1
102.9
97.6
92.6
133.0
225.0
217.4
179.0
217.3
208.1
311.1
291.1
322.2
293.7
328.4
289.6
328.6
288.1
330.2
287.3
330.5
290.7'
330.8
290.7
331.1
290.4'
333.1
291.7
334.4
292.3
335.9
292.3
337.7
295.0
1. A major revision of the industrial production index and the capacity
utilization rates was released in July 1985. See " A Revision of the Index of
Industrial P r o d u c t i o n " and accompanying tables that contain revised indexes
( 1 9 7 7 = 1 0 0 ) t h r o u g h D e c e m b e r 1984 in t h e FEDERAL RESERVE B U L L E T I N , v o l . 71
(July 1985), pp. 487-501. The revised indexes for January through June 1985 were
shown in the September BULLETIN.
2. Ratios of indexes of production to indexes of capacity. Based on data from
Federal Reserve, McGraw-Hill Economics Department, Department of Commerce, and other sources.
3. Index of dollar value of total construction contracts, including residential,
nonresidential and heavy engineering, from McGraw-Hill Information Systems
Company, F. W. Dodge Division.
4. Based on data in Employment
and Earnings (U.S. Department of Labor).
Series covers employees only, excluding personnel in the Armed Forces.
5. Based on data in Survey of Current Business (U.S. Department of Commerce).
6. Based on Bureau of Census data published in Survey of Current
Business.
7. Data without seasonal adjustment, as published in Monthly Labor
Review.
Seasonally adjusted data for changes in the price indexes may be obtained f r o m
the Bureau of Labor Statistics, U.S. Department of Labor.
NOTE. Basic data (not index numbers) for series mentioned in notes 4, 5, and 6,
and indexes for series mentioned in notes 3 and 7 may also be found in the Survey
of Current
Business.
Figures for industrial production for the last two months are preliminary and
estimated, respectively.
Selected Measures
2.11
LABOR FORCE, EMPLOYMENT, A N D
A45
UNEMPLOYMENT
T h o u s a n d s o f p e r s o n s ; m o n t h l y data are s e a s o n a l l y adjusted. E x c e p t i o n s n o t e d .
1987
1986
Category
1984
1985
1986
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
HOUSEHOLD SURVEY DATA
1 Noninstitutional population1
178,602
180,440
182,822
183,261
183,450
183,628
183,815
184,092
184,259
184,436
184,597
2 Labor force (including Armed Forces) 1
Civilian labor force
3
115,763
113,544
117,695
115,461
120,078
117,834
120,536
118,272
120,678
118,414
120,940
118,675
120,854
118,586
121,299
119,034
121,610
119,349
121,479
119,222
121,588
119,335
Nonagricultural industries 2
Agriculture
Unemployment
6
Number
7
Rate (percent of civilian labor force) . . .
8 Not in labor force
101,685
3,321
103,971
3,179
106,434
3,163
106,845
3,142
107,030
3,162
107,217
3,215
107,476
3,161
107,866
3,145
108,146
3,236
108,084
3,284
108,545
3,290
8,539
7.5
62,839
8,312
7.2
62,745
8,237
7.0
62,744
8,285
7.0
62,725
8,222
6.9
62,772
8,243
6.9
62,688
7,949
6.7
62,961
8,023
6.7
62,793
7,967
6.7
62,649
7,854
6.6
62,957
7,500
6.3
63,009
9 Nonagricultural payroll employment 3
94,496
97,614
100,167
100,560
100,826
101,068
101,322
101,626
101,854'
102,009'
102,325
Manufacturing
Mining
Contract construction
Transportation and public utilities
Trade
Finance
Service
Government
19,378
966
4,383
5,159
22,100
5,689
20,797
16,023
19,314
930
4,687
5,242
23,100
5,953
21,974
16,415
19,186
792
4,960
5,286
23,831
6,305
23,072
16,735
19,105
743
5,010
5,316
23,924
6,388
23,300
16,774
19,118
746
5,001
5,316
24,007
6,409
23,359
16,870
19,156
742
4,993
5,351
24,056
6,429
23,451
16,890
19,186
738
4,996
5,359
24,065
6,472
23,578
16,928
19,168
731
5,109
5,382
24,153
6,495
23,670
16,918
19,211'
733'
5,094
5,394'
24,245'
6,519'
23,752'
16,906'
19,210'
735
5,059'
5,412'
24,279'
6,544'
23,815'
16,955'
19,224
740
5,082
5,415
24,351
6,581
23,918
17,014
4
ESTABLISHMENT SURVEY DATA
10
11
12
13
14
15
16
17
1. Persons 16 years of age and over. Monthly figures, which are based on
sample data, relate to the calendar week that contains the 12th day; annual data
are averages of monthly figures. By definition, seasonality does not exist in
population figures. Based on data from Employment and Earnings (U.S. Department of Labor).
2. Includes self-employed, unpaid family, and domestic service workers.
3. Data include all full- and part-time employees who worked during, or
received pay for, the pay period that includes the 12th day of the month, and
exclude proprietors, self-employed persons, domestic servants, unpaid family
workers, and members of the Armed Forces. Data are adjusted to the March 1984
benchmark and only seasonally adjusted data are available at this time. Based on
data from Employment and Earnings (U.S. Department of Labor).
A46
2.12
Domestic Nonfinancial Statistics • July 1987
OUTPUT, CAPACITY, A N D CAPACITY
UTILIZATION
Seasonally adjusted
1987
1986
1986
1987
1987
1986
aeries
Q2
Q3
Q4'
Ql'
Q2
Q3
Q4
Ql
Q2
Capacity (percent of 1977 output)
Output (1977 = 100)
Q4
Q3
QK
Utilization rate (percent)
1 Total industry
124.4
125.0
126.0
126.8
157.1
157.9
158.7
159.6
79.2
79.1
79.3
79.5
2 Mining
3 Utilities
99.9
108.9
96.6
108.8
96.6
110.4
95.9
109.8
132.1
136.9
131.9
137.5
131.7
138.1
131.3
138.7
75.6
79.5
73.2
79.1
73.4
79.8
73.1
79.2
4 Manufacturing
128.4
129.4
130.4
131.6
161.4
162.4
163.4
164.4
79.5
79.7
79.8
80.1
5 Primary processing . . .
6 Advanced processing ,
111.1
138.9
112.1
139.7
114.0
140.4
114.9
141.6
134.0
177.9
134.6
179.1
135.1
180.4
135.6
181.7
82.9
78.0
83.3
78.0
84.4
77.8
84.7
78.0
7 Materials
113.3
113.4
114.3
115.0
144.7
145.3
145.8
146.3
78.3
78.1
78.4
78.6
8 Durable goods
9
Metal materials . . . .
10 Nondurable g o o d s . . . .
11
Textile, paper, and chemical..
12
Paper
13
Chemical
118.8
75.1
116.9
117.0
130.1
115.4
118.8
73.1
119.7
120.4
135.1
117.7
120.1
75.7
121.2
122.4
136.0
120.1
120.9
75.5
123.0
124.6
136.6
122.9
160.7
114.5
139.5
138.8
138.1
144.3
161.5
114.0
139.9
139.2
138.9
144.7
162.2
113.4
140.4
139.6
139.7
145.0
163.0
112.7
141.0
140.4
140.8r
145.6'
73.9
65.6
83.8
84.3
94.2
80.0
73.6
64.2
85.6
86.5
97.3
81.4
74.0
66.7
86.4
87.6
97.3'
82.8
74.2
67.0
87.2
88.8
97.0
84.5
14 Energy materials
100.6
98.6
98.2
97.7
121.3
121.4
121.6
121.6
82.9
81.2
80.7
80.4
Previous cycle 1
High
Low
Latest cycle 2
High
Low
1986
Apr.
1986
Aug.
Sept.
Oct.
1987
Nov.
Dec.
Jan/
Feb/
Mar.'
Apr.
Capacity utilization rate (percent)
15 Total industry
88.6
72.1
86.9
69.5
79.5
79.2
79.0
79.0
79.4
79.6
79.4
79.6
79.3
78.9
16 Mining
17 Utilities
92.8
95.6
87.8
82.9
95.2
88.5
76.9
78.0
76.4
80.0
73.1
78.8
72.9
78.7
72.5
79.3
73.9
80.5
73.8
79.5
73.9
79.1
72.8
79.2
72.5
79.3
72.8
79.5
18 Manufacturing
87.7
69.9
86.5
68.0
79.9
79.7
79.6
79.6
79.8
80.0
80.0
80.3
80.0
79.5
19 Primary processing . . .
20 Advanced processing .
91.9
86.0
68.3
71.1
89.1
85.1
65.1
69.5
83.2
78.5
83.2
78.0
83.7
77.6
83.8
77.8
84.4
77.7
85.0
77.9
84.9
77.8
84.7
78.3
84.6
77.8
84.2
77.3
21 Materials
92.0
70.5
89.1
68.4
78.7
77.9
78.1
77.8
78.4
78.9
78.8
78.6
78.4
78.2
22 Durable goods
23
Metal materials
91.8
99.2
64.4
67.1
89.8
93.6
60.9
45.7
74.9
68.3
73.5
63.8
73.5
64.8
73.6
65.2
74.2
68.4
74.3
66.5
74.0
65.9
74.4
67.2
74.1
68.0
73.9
68.8
24 Nondurable goods . . . .
25
Textile, paper, and
chemical
26
Paper
27
Chemical
91.1
66.7
88.1
70.6
83.6
85.5
86.1
85.8
85.7
87.7
87.5
87.0
87.1
86.7
92.8
98.4
92.5
64.8
70.6
64.4
89.4
97.3
87.9
68.6
79.9
63.3
83.6
93.6
79.4
86.5
97.9
81.2
87.4
96.1
82.6
87.0
95.7
82.5
86.7
96.0
81.7
89.2
100.2
84.3
89.3
98.3
84.9
88.5
97.1
84.2
88.5
95.7
84.2
88.1
28 Energy materials
94.6
86.9
94.0
82.2
82.8
80.6
80.7
79.7
81.2
81.2
81.3
80.0
79.8
79.9
1. Monthly high 1973; monthly low 1975.
2. Monthly highs 1978 through 1980; monthly lows 1982.
NOTE. These data also appear in the Board's G.3 (402) release. For address, see
inside front cover.
2.13
INDUSTRIAL PRODUCTION
Selected Measures
A47
Dec.
Jan.r
Feb.
Mar.P
Apr.f
Indexes and Gross Value A
Monthly data are seasonally adjusted
Grouping
portion
avg.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Index (1977 = 100)
MAJOR MARKET
100.00
125.0
124.7
124.2
124.2
124.9
125.1
124.9
125.3
126.0
126.7
126.5
127.1
126.8
126.3
2 Products
3
Final products
4
C o n s u m e r goods
5
Equipment
57.72
44.77
25.52
19.25
133.2
132.3
124.4
142.7
132.7
132.1
124.5
142.3
132.4
131.6
124.3
141.2
132.4
131.1
124.4
140.0
133.2
132.0
125.2
141.0
133.8
132.6
125.1
142.5
133.3
132.2
124.2
142.8
134.0
132.7
124.7
143.3
134.5
133.1
125.6
143.1
135.0
133.7
127.2
142.2
134.9
133.6
126.8
142.8
136.0
135.0
127.5
144.9
135.6
134.4
127.0
144.2
134.9
133.5
125.9
143.6
6
Intermediate products
7 Materials
12.94
42.28
136.4
113.9
134.5
113.8
135.1
113.0
137.0
113.1
137.3
113.6
137.8
113.2
137.0
113.5
138.7
113.3
139.2
114.3
139.7
115.2
139.1
115.2
139.3
115.0
139.7
114.8
139.5
114.7
6.89
2.98
1.79
1.16
.63
1.19
3.91
1.24
1.19
.96
1.71
116.2
115.1
112.9
97.3
141.8
118.4
117.1
139.5
141.6
125.8
96.0
115.9
116.4
115.1
100.8
141.5
118.4
115.5
138.8
140.6
121.8
95.0
113.8
113.2
110.3
94.8
139.1
117.4
114.3
133.9
135.8
123.3
95.0
114.3
113.7
112.2
99.3
136.1
116.1
114.8
137.5
139.1
122.5
94.1
116.3
116.4
114.5
95.3
150.3
119.1
116.3
138.9
141.6
126.6
94.1
115.7
114.5
110.4
87.8
152.4
120.7
116.7
139.4
142.5
125.8
95.1
117.4
117.0
116.8
96.2
155.1
117.3
117.7
141.2
143.5
126.2
96.0
116.3
112.7
107.7
91.9
137.1
120.1
119.0
142.6
144.3
128.8
96.5
118.4
114.6
107.6
92.3
136.0
125.2
121.2
148.1
150.0
131.1
96.3
121.5
117.7
115.6
99.5
145.6
120.8
124.4
153.2
155.1
132.0
99.4
120.0
117.6
117.9
94.3
161.9
117.1
121.9
146.9
148.9
129.1
99.8
122.3
123.3
125.2
105.3
162.1
120.6
121.6
145.2
146.7
129.4
100.2
121.3
121.3
121.6
100.9
118.3
115.0
111.5
91.8
120.7
121.3
144.1
145.0
130.4
99.7
120.3
120.7
143.9
19 Nondurable c o n s u m e r goods
20
Consumer staples
21
Consumer foods and tobacco
22
Nonfood staples
23
Consumer chemical products .
24
Consumer paper products
25
C o n s u m e r energy
26
C o n s u m e r fuel
27
Residential utilities
18.63
15.29
7.80
7.49
2.75
1.88
2.86
1.44
1.42
127.5
97.0
134.1
131.9
136.5
161.2
147.4
105.7
92.8
127.7
134.3
131.9
136.7
163.1
145.1
106.0
93.7
118.4
128.1
135.0
132.4
137.7
162.4
148.6
106.8
96.4
117.5
128.1
135.1
133.3
137.0
163.6
147.1
104.8
91.8
118.1
128.4
135.3
132.2
138.5
166.4
146.4
106.6
91.2
122.3
128.6
135.5
133.2
137.9
163.4
147.7
107.1
94.9
119.6
126.7
133.6
131.0
136.3
161.1
145.7
106.3
92.0
120.9
127.8
134.4
131.6
137.2
161.7
150.3
105.2
90.8
119.8
128.3
135.0
132.6
137.4
161.0
151.5
105.5
91.7
119.6
129.4
136.0
133.9
138.2
163.1
150.1
106.4
92.2
120.8
129.2
135.9
132.9
139.0
165.9
149.4
106.3
95.0
117.8
129.4
136.0
133.7
138.4
165.4
148.6
105.7
92.5
119.2
129.1
135.8
133.6
138.1
165.1
148.2
105.6
92.0
128.7
135.5
Equipment
28 Business and defense equipment
29
Business equipment
30
Construction, mining, and f a r m .
31
Manufacturing
32
Power
33
Commercial
34
Transit
35
Defense and space equipment
18.01
14.34
2.08
3.27
1.27
5.22
2.49
3.67
147.1
138.6
59.8
112.0
81.6
214.6
109.2
180.3
146.6
138.6
58.6
111.9
83.0
213.4
112.1
178.0
146.0
137.9
60.9
111.9
82.9
212.9
107.3
178.0
145.1
136.6
61.9
111.7
83.5
208.2
108.8
178.4
146.4
137.9
60.6
112.6
81.7
214.5
103.9
179.5
147.8
139.3
58.3
113.3
81.7
217.5
106.9
181.0
148.0
139.3
58.1
113.0
80.3
215.1
113.3
182.0
148.4
139.1
58.0
112.7
80.5
215.4
111.8
184.6
148.1
138.6
56.6
109.6
79.5
217.3
110.7
184.9
147.0
137.1
58.2
108.8
80.2
213.7
108.9
185.8
147.7
138.1
57.2
110.1
79.6
215.9
109.5
185.2
150.0
140.7
56.8
111.1
80.1
218.6
117.4
186.5
149.2
139.6
57.0
110.0
79.1
218.0
114.0
186.7
5.95
6.99
5.67
1.31
124.7
146.4
150.6
128.3
123.6
143.8
148.0
125.8
123.5
145.0
148.3
130.7
124.1
147.9
151.6
131.9
124.0
148.6
153.3
128.3
125.4
148.4
152.5
130.6
125.9
146.4
151.2
125.8
126.3
149.3
154.1
128.8
126.8
149.7
153.7
132.4
127.9
149.8
154.3
130.3
128.3
148.3
153.3
126.8
127.9
149.1
153.8
128.8
128.1
149.6
154.4
128.9
127.9
20.50
4.92
5.94
9.64
4.64
119.7
98.5
153.9
109.4
80.0
120.2
99.3
154.8
109.4
82.9
118.4
96.4
152.3
108.8
78.9
117.8
96.3
151.8
107.9
76.7
118.8
96.7
154.3
108.2
77.4
118.8
95.2
155.6
108.1
76.9
118.9
95.3
154.8
108.8
78.4
119.2
97.0
153.5
109.4
78.8
120.4
98.0
154.5
110.7
82.1
120.7
98.8
154.2
111.2
80.3
120.5
99.0
154.0
110.8
79.2
121.3
99.9
155.5
111.2
80.3
121.0
98.5
155.2
111.4
80.9
120.7
97.2
155.0
111.5
1 Total index
Consumer
goods
8 Durable consumer goods
9
Automotive products
10
Autos and trucks
11
Autos, consumer
12
Trucks, c o n s u m e r
13
Auto parts and allied goods
14
Home goods
15
Appliances, A/C and TV
16
Appliances and TV
17
Carpeting and furniture
18
Miscellaneous home goods
Intermediate
products
36 Construction supplies
37 Business supplies
38
General business supplies
39
Commercial energy products
Materials
40 Durable goods materials
41
Durable c o n s u m e r parts
42
Equipment parts
43
Durable materials n.e.c
44
Basic metal materials
138.2
148.7
139.0
109.9
78.8
218.8
109.3
186.6
45 Nondurable goods materials
46
Textile, paper, and chemical
materials
47
Textile materials
48
Pulp and paper materials
49
Chemical materials
50
Miscellaneous nondurable materials
10.09
118.3
116.5
116.5
117.7
118.9
119.7
120.6
120.3
120.2
123.2
123.2
122.8
123.1
122.8
7.53
1.52
1.55
4.46
2.57
118.9
110.6
132.1
117.1
116.5
115.9
106.7
129.0
114.5
118.2
116.9
108.4
128.6
115.7
115.3
118.2
109.5
132.7
116.1
116.4
119.0
111.2
135.6
115.9
118.3
120.5
113.4
136.0
117.5
117.2
121.8
116.0
133.7
119.7
117.1
121.3
114.3
133.5
119.5
117.5
121.0
115.6
134.2
118.5
117.6
124.7
116.1
140.2
122.3
118.5
125.0
116.5
137.9
123.4
118.0
124.3
116.6
136.7
122.6
118.3
124.5
118.5
135.1
122.8
124.3
51 Energy materials
52
Primary energy
53
Converted fuel materials
11.69
7.57
4.12
99.9
105.5
89.6
100.4
106.2
89.7
100.5
106.7
89.2
100.8
106.5
90.4
99.9
104.8
90.9
97.9
103.7
87.3
98.0
103.8
87.4
96.9
102.7
86.2
98.7
104.8
87.6
98.8
105.1
87.3
98.9
104.1
89.4
97.2
101.8
88.9
96.9
101.1
89.3
97.1
A48
2.13
Domestic Nonfinancial Statistics • July 1987
INDUSTRIAL PRODUCTION Indexes and Gross Value—Continued
SIC
code
Grouping
1977
proportion
1987
1986
1986
avg.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec
Feb.
Mar.P
Apr.'
Index (1977 = 100)
MAJOR INDUSTRY
15.79
9.83
5.96
84.21
35.11
49.10
103.4
99.6
109.6
129.1
130.9
127.9
104.2
101.0
109.4
128.7
129.6
128.1
103.1
99.8
108.5
128.2
129.9
127.0
102.6
98.9
108.6
128.3
131.2
126.2
101.8
97.1
109.7
129.2
131.7
127.4
100.9
96.4
108.3
129.5
132.2
127.5
100.8
96.2
108.3
129.5
131.4
128.1
100.7
95.6
109.3
129.9
132.3
128.1
102.6
97.4
111.2
130.3
132.7
128.6
101.9
96.7
110.6
131.1
133.7
129.2
101.9
97.2
109.5
131.1
134.1
129.0
100.9
95.6
109.8
132.0
134.3
130.3
100.7
95.0
110.2
131.7
134.3
129.9
101.0
95.2
110.5
131.1
134.3
128.9
10
11.12
13
14
.50
1.60
7.07
.66
124.2
94.7
113.9
76.0
124.4
96.2
115.0
72.0
124.0
95.1
112.4
65.9
127.3
93.3
114.5
69.2
120.2
92.4
111.8
70.9
122.2
90.7
114.8
70.7
120.8
91.0
111.7
68.5
117.6
90.5
116.4
68.3
130.1
90.4
115.2
73.5
124.3
90.9
109.6
72.1
133.5
89.9
107.1
71.9
127.7
88.6
109.9
121.8
89.0
111.6
121.1
89.5
135.3
92.9
118.4
135.4
98.7
118.7
108.2
140.5
139.4
1 Mining and utilities
2
Mining
3
Utilities
4 Manufacturing
5
Nondurable
6
Durable
7
8
9
10
Mining
Metal
Coal
Oil and gas extraction
Stone and earth minerals
11
12
13
14
15
Nondurable
manufactures
Foods
Tobacco products
Textile mill products
Apparel products
Paper and products
20
21
22
23
26
7.96
.62
2.29
2.79
3.15
133.6
96.6
113.2
103.6
136.4
133.1
100.3
111.4
103.1
134.1
133.7
101.6
111.3
102.6
133.2
134.6
97.6
112.6
101.7
137.2
134.3
97.9
113.4
102.5
138.1
135.1
97.1
114.7
102.5
138.6
134.3
89.8
116.0
102.7
136.9
133.7
100.1
116.1
104.2
137.8
134.4
96.8
117.8
105.1
139.5
141.6
135.3
89.1
118.0
107.2
139.8
16
17
18
19
20
Printing and publishing
Chemicals and products
Petroleum products
Rubber and plastic p r o d u c t s . . .
Leather and products
27
28
29
30
31
4.54
8.05
2.40
2.80
.53
163.4
133.0
92.1
153.3
61.3
161.6
132.8
91.3
146.8
61.5
161.9
131.5
95.7
150.1
59.5
164.0
134.2
91.8
152.2
57.9
165.4
134.1
90.6
155.5
61.9
164.6
134.4
94.0
155.5
62.0
163.0
133.9
93.3
154.9
59.4
167.8
133.9
91.1
157.6
60.2
168.5
132.3
92.0
159.0
61.3
167.7
134.6
92.5
160.7
59.4
168.1
137.4
94.7
158.1
58.3
166.6
138.0
91.9
158.4
59.7
168.1
138.5
90.5
159.1
59.1
Durable
manufactures
21 Lumber and products
22 Furniture and fixtures
23 Clay, glass, stone p r o d u c t s . . . .
24
25
32
2.30
1.27
2.72
123.4
146.7
120.2
121.3
145.9
121.6
121.6
146.2
120.2
120.9
147.1
120.8
120.8
149.5
119.6
122.5
148.3
119.7
125.0
147.7
121.6
125.9
149.2
118.1
129.5
148.6
120.6
133.1
150.5
121.7
130.2
148.7
122.8
129.9
151.2
121.0
130.2
152.8
120.9
33
331.2
34
35
36
5.33
3.49
6.46
9.54
7.15
75.8
63.4
107.4
141.9
166.5
78.1
65.6
108.2
140.8
166.8
74.8
60.2
106.5
141.3
166.0
71.4
58.3
106.6
140.4
163.2
73.6
61.7
105.7
142.6
166.8
73.4
60.8
105.9
142.6
167.2
74.1
61.1
107.3
140.9
166.9
74.2
62.2
108.3
142.2
167.7
76.8
64.8
107.1
141.2
168.3
73.5
60.5
108.3
139.9
170.2
73.6
60.2
108.0
140.3
169.2
76.3
63.1
107.5
142.7
168.6
77.0
64.7
108.0
142.3
166.7
107.0
142.7
166.2
37
371
9.13
5.25
125.8
110.9
126.2
112.6
124.1
108.7
125.1
110.6
125.6
111.2
125.1
108.2
127.7
112.2
125.2
107.1
125.6
107.9
127.0
111.2
128.1
112.2
131.7
117.8
130.6
115.5
126.4
108.9
372-6.9
38
39
3.87
2.66
1.46
146.1
141.3
99.3
144.8
142.4
99.2
145.0
140.3
101.0
144.7
139.9
98.3
145.2
141.7
97.5
148.0
142.0
98.3
148.7
141.7
97.7
149.7
140.3
99.0
149.6
141.1
98.9
148.4
142.4
103.1
149.6
142.5
101.8
150.6
143.0
101.6
151.0
142.0
102.0
150.1
141.5
4.17
122.2
121.6
121.7
123.1
125.4
122.4
122.8
123.8
125.1
123.5
121.7
122.3
122.7
24
25
26
27
28
Primary metals
Iron and steel
Fabricated metal products
Nonelectrical machinery
Electrical machinery
....
29 Transportation equipment
30
Motor vehicles and p a r t s . . . .
31
Aerospace and miscellaneous
transportation equipment
32 Instruments
33 Miscellaneous m a n u f a c t u r e s . . .
Utilities
34 Electric
135.6
118.5
169.0
92.0
77.8
Gross value (billions of 1982 dollars, annual rates)
MAJOR MARKET
35 Products, total
517.S 1,702.2 1,686.3 1,687.6 1,676.7 1,669.9 1,681.3 1,677.8 1,683.9 1,690.8 1,701.9 1,707.1 1,719.6 1,714.7 1,700.8
36 Final
37
Consumer goods .
38
Equipment
39 Intermediate
405.7 1,314.5 1,307.0 1,301.1 1,289.5 1,282.7 1,292.6 1,292.3 1,292.5 1,297.6 1,306.7 1,315.1 1,330.9 1,321.8 1,306.7
272.7 853.8 852.3 852.4 843.8 842.4 846.9 839.8 839.3 847.2 860.5 865.5 869.4 864.4 854.4
133.0 458.2 454.7 448.7 445.7 440.4 445.7 452.5 453.2 450.4 446.2 449.6 461.4 457.5 452.2
111.9 387.6 379.3 386.4 387.2 387.1 388.7 385.5 391.4 393.2 395.3 391.9 388.7 392.9 394.2
• A major revision of the industrial production index and the capacity
utilization rates was released in July 1985. See " A Revision of the Index of
Industrial P r o d u c t i o n " and accompanying tables that contain revised indexes
( 1 9 7 7 = 1 0 0 ) t h r o u g h D e c e m b e r 1 9 8 4 in t h e F E D E R A L R E S E R V E B U L L E T I N , v o l . 71
(July 1985), pp. 487-501. The revised indexes for January through June 1985 were
shown in the September BULLETIN.
NOTE. These data also appear in the B o a r d ' s G.12.3 (414) release. F o r address,
see inside front cover.
Selected Measures
2.14
A49
HOUSING A N D CONSTRUCTION
Monthly figures are at seasonally adjusted annual rates except as noted.
1987
1986
1984
Item
1985
1986
July
June
Aug.
Sept.
Oct.
Nov.
Dec.
Jan/
Feb/
Mar.
Private residential real estate activity (thousands of units)
NEW
UNITS
1 Permits authorized
2
1-family
3
2-or-more-family
1,682
922
759
1,733
957
777
1,750
1,071
679
1,793'
1,110'
683'
1,778'
1,098'
68C
1,728'
1,059'
669'
1,687'
1,071'
616'
1,664'
1,036'
628'
1,667'
1,028'
639'
1,862'
1,184'
678'
1,652
1,085
567
1,676
1,204
472
1,719
1,150
569
4 Started
5
1-family
6
2-or-more-family
1,749
1,084
665
1,742
1,072
669
1,805
1,179
626
1,842
1,212
630
1,786
1,147
639
1,800
1,180
620
1,689
1,123
566
1,657
1,114
543
1,637
1,129
508
1,813
1,233
580
1,816
1,253
563
1,838
1,303
535
1,749
1,226
523
7 Under construction, end of period 1
8
1-family
9
2-or-more-family
1,051
556
494
1,063
539
524
1,074
583
490
1,147
609
537
1,154
620
534
1,163
628
534
1,154
627
527
1,142
625
518
1,125
619
506
1,104
610
494
1,089
609
480
1,097
622
476
1,090
620
470
1,652
1,025
627
1,703
1,072
631
1,756
1,120
637
1,644
1,068
576
1,750
1,074
676
1,757
1,124
633
1,740
1,113
627
1,745
1,165
580
1,774
1,158
616
1,894
1,184
710
1,956
1,217
739
1,725
1,106
619
1,668
1,126
542
296
284
244
232
238
231
243
241
237
251
242
231
228
639
358
688
350
748
361'
723
340
691
350
623
352
744
355
675
357
691
353
768'
357'
701
357
725
358
699
360
10 Completed
11
1-family
12
2-or-more-family
13 Mobile homes shipped
Merchant builder activity in 1-family
14 N u m b e r sold
15 N u m b e r for sale, end of period 1
Price (thousands
Median
Units sold
Average
17
Units sold
of
units
dollars)1
16
80.0
84.3
92.2
91.2
94.1
91.5
95.0
96.4
94.0
95.C
99.0
94.8
101.5
97.5
101.0
112.2'
110.9
116.8
113.2
114.0
114.9
113.6
118.9'
123.1
120.5
122.4
2,868
3,217
3,566
3,43(K
3,460'
3,590'
3,710'
3,760'
3,850'
4,060'
3,470
3,690
3,680
72.3
85.9
75.4
90.6
82.6
102.1
79.9
99.2
82.0
100.3
80.3'
98.2'
79.4
97.3
80.4
99.1
80.8
100.6
82.4
100.3
85.0
104.3
85.6
104.7
EXISTING UNITS ( 1 - f a m i l y )
18 N u m b e r sold
Price of units sold (thousands
19 Median
20 Average
of
2
dollars)
80. y
98. y
Value of new construction 3 (millions of dollars)
CONSTRUCTION
21
Total put in place
?? Private
Residential
24
Nonresidential, total
Buildings
?5
Industrial
26
Commercial
27
Other
Public utilities and other
28
n
Public
Military
Highway
32
Conservation and development
33
Other
79
30
31
382,603
382,581
388,471
383,142
378,527
381,084 383,934
378,987
271,973
155,148
116,825
292,792
158,818
133,974
306,697
175,597
131,100
304,567
174,478
130,089
309,003
178,821
130,182
310,155
178,761
131,394
308,617
178,480
130,137
315,267
186,962
128.305
311,668
185,716
125,952
305,489
181,514
123,975
307,199
185,373
121,826
309,109
183,031
126,078
305,109
183,786
121,323
13,746
48,100
12,547
42,432
15,769
59,626
12,619
45,960
13,653
52,084
13,433
51,930
13,027
57,443
13,263
46,356
12,866
58,132
13,277
45,907
12,543
60,054
13,315
45,482
13,180
58,001
14,001
44,955
12,948
56,220
14,324
44,813
13,532
54,884
13,937
43,599
12,582
54,419
13,880
43,094
12,155
51,908
14,100
43,663
12,640
55,167
14,617
43,654
11,730
52,557
14,512
42,524
55,232
2,839
16,343
4,654
31,396
62,777
3,283
19,998
4,952
34,544
71,204
3,893
21,260
4,728
41,323
70,830
3,761
22,001
4,657
40,411
71,719
3,553
21,603
4,415
42,148
72,448
4,132
21,607
4,294
42,415
73,964
5,050
20,552
4,841
43,521
73,204
3,540
20,480
4,754
44,430
71,474
3,980
18,425
4,516
44,553
73,039
4,295
18,989
5,038
44,717
73,885
4,025
22,895
5,100
41,865
74,826
3,616
21,898
4,751
44,561
73,878
4,156
21,558
4,907
43,257
327,209 355,570 377,903 375,397 380,722
1. Not at annual rates.
2. Not seasonally adjusted.
3. Value of new construction data in recent periods may not be strictly
comparable with data in prior periods because of changes by the Bureau of the
Census in its estimating techniques. For a description of these changes see
Construction Reports (C-30—76-5), issued by the Bureau in July 1976.
NOTE. Census Bureau estimates for all series except (a) mobile homes, which
are private, domestic shipments as reported by the Manufactured Housing
Institute and seasonally adjusted by the Census Bureau, and (b) sales and prices of
existing units, which are published by the National Association of Realtors. All
back and current figures are available from originating agency. Permit authorizations are those reported to the Census Bureau from 16,000 jurisdictions beginning
with 1978.
A50
2.15
Domestic Nonfinancial Statistics • July 1987
CONSUMER A N D PRODUCER PRICES
P e r c e n t a g e c h a n g e s b a s e d o n s e a s o n a l l y a d j u s t e d data, e x c e p t as n o t e d
Change from 12
months earlier
Change from 3 months earlier
(at annual rate)
Change from 1 month earlier
Index
level
Apr.
Item
1986
1986
1987
Apr.
Apr.
1987
1987
1986
=
June
Sept.
Dec/
Mar/
Dec.
Jan.
Feb.
Mar.
1987
(1967
100)1
Apr.
CONSUMER PRICES2
1
All items
2
3
4
5
6
Food
Energy items
All items less food and energy
Commodities
Services
1.6
3.8
1.6
2.0
2.5
6.2
.2
.7
.4
.4
.4
337.7
2.1
-14.8
4.2
.8
6.2
4.7
.2
4.2
3.1
4.7
3.9
-12.6
3.3
.3
4.9
8.4
-21.0
3.7
2.6
4.3
4.1
-9.9
3.7
1.4
5.1
2.5
26.1
5.2
5.1
5.3
.2
-.2
.2
.1
.3
.4
3.0
.5
.6
.5
.3
1.9
.3
.0
.4
-.1
1.0
.5
.7
.4
.3
.3
.5
.6
.4
331.0
362.4
338.3
270.3
412.3
-2.0
-.1
-27.7
2.5
1.9
2.7
4.2
-1.1
2.6
2.0
.7
8.2
-20.7
.9
2.4
-.4
11.2
-42.7
2.3
2.0
1.8
1.0
-12.5
4.4
3.4
3.9
-6.7
57.6
3.4
.1
.1'
-,5R
.7'
.2'
.1
.4'
-1.8
7.9'
.4'
.2
.1
-.5
4.0
-.3
-.3
.4
.5
-.2
.8
.1
.7
1.5
2.1
.2
.3
295.0
283.3
511.5
264.1
311.7
-3.8
-.4
1.2
1.6
-5.1
-1.2
-1.5
1.5
-1.2
1.2
8.0
3.3
.5
.2
.4
.3
.3
.2
316.8
309.3
-8.2
-23.0
-3.2
8.7
2.4
3.4
5.9
-29.1
6.6
18.1
-19.6
-24.1
-2.7
-.5
8.5
-11.3
41.2
16.3
.0
2.6
.0
.4
-.9
-.9
4.3
1.7
.7
239.4
590.9
257.6
PRODUCER PRICES
7
8
9
10
11
Finished goods
Consumer foods
Consumer energy
Other consumer goods
Capital equipment
12
13
Intermediate materials 3
Excluding energy
14
15
16
Crude materials
Foods
Energy
Other
1. Not seasonally adjusted.
2. Figures for consumer prices are those for all urban consumers and reflect a
rental equivalence measure of homeownership after 1982.
.0
.0
-1.3'
-.7'
.3'
1.0
.4
-3.3'
7.2'
4.8'
3. Excludes intermediate materials for food manufacturing and manufactured
animal feeds.
SOURCE. Bureau of Labor Statistics.
Selected Measures
2.16
A51
GROSS NATIONAL PRODUCT A N D INCOME
B i l l i o n s o f current d o l l a r s e x c e p t a s n o t e d ; quarterly data are at s e a s o n a l l y adjusted annual rates.
1987
1986
Account
1984
1985
1986
QL
Q2
Q3
Ql'
Q4
GROSS N A T I O N A L P R O D U C T
1
Total
3,765.0
3,998.1
4,206.1
4,149.2
4,175.6
4,240.7
4,258.7
4,348.4
2
3
4
5
By source
Personal consumption expenditures
Durable goods
Nondurable goods
Services
2,428.2
331.2
870.1
1,227.0
2,600.5
359.3
905.1
1,336.1
2,762.5
388.1
932.7
1,441.7
2,697.9
360.8
929.7
1,407.4
2,732.0
373.9
928.4
1,429.8
2,799.8
414.5
932.8
1,452.4
2,820.4
403.1
940.1
1,477.2
2,850.7
384.6
961.7
1,504.5
662.1
598.0
416.5
139.3
277.3
181.4
661.1
650.0
458.2
154.8
303.4
191.8
683.6
677.0
460.0
143.3
316.7
217.0
708.3
664.4
459.2
154.6
304.6
205.3
687.3
672.8
457.5
141.5
316.0
215.3
675.8
680.3
459.0
139.5
319.5
221.3
663.2
690.3
464.3
137.5
326.8
226.0
718.1
678.1
451.4
133.9
317.6
226.7
64.1
56.6
11.1
12.2
6.7
7.7
43.8
41.2
14.5
10.5
-4.5
-10.3
-27.1
-10.8
40.0
37.1
6
7
8
9
10
11
Gross private domestic investment
Fixed investment
Nonresidential
Structures
Producers' durable equipment
Residential structures
12
13
Change in business inventories
Nonfarm
14
15
16
Net exports of goods and services
Exports
Imports
-58.7
382.7
441.4
-78.9
369.8
448.6
-104.3
373.0
477.3
-93.7
374.8
468.5
-104.5
363.0
467.5
-108.9
370.8
479.7
-110.2
383.5
493.7
-111.9
391.6
503.4
17
18
19
Government purchases of goods and services
Federal
State and local
733.4
311.3
422.2
815.4
354.1
461.3
864.2
366.2
498.0
836.7
355.7
480.9
860.8
367.6
493.3
874.0
369.3
504.7
885.3
372.1
513.2
891.4
369.2
522.2
20
21
22
73
24
25
By major type of
Final sales, total
Goods
Durable
Nondurable
Services
Structures
3,700.9
1,576.7
675.0
901.7
1,813.1
375.1
3,987.0
1,630.2
700.2
930.0
1,959.8
408.1
4,199.4
1,670.5
716.8
953.7
2,105.6
430.0
4,105.4
1,669.0
710.6
958.4
2,057.7
422.6
4,161.2
1,661.6
703.1
958.5
2,087.4
426.7
4,245.2
1,680.2
730.1
950.1
2,125.2
435.3
4,285.8
1,671.3
723.5
947.8
2,152.1
435.3
4,308.4
1,723.5
746.0
977.5
2,190.7
434.2
26
27
28
Change in business inventories
Durable goods
Nondurable goods
64.1
39.2
24.9
11.1
6.6
4.5
6.7
-1.0
7.7
43.8
28.6
15.3
14.5
-.1
14.6
-4.5
-15.6
11.1
-27.1
-16.9
-10.2
40.0
29.8
10.2
3,489.9
3,585.2
3,674.9
3,655.9
3,661.4
3,686.4
3,696.1
3,735.9
product
2 9 MEMO: Total G N P in 1982 dollars
NATIONAL INCOME
30
Total
3,032.0
3,222.3
3,386.4
3,340.7
3,376.4
3,396.1
3,432.3
3,507.4
31
32
33
34
35
36
37
Compensation of employees
Wages and salaries
Government and government enterprises
Other
Supplement to wages and salaries
Employer contributions for social insurance
Other labor income
2,214.7
1,837.0
346.2
1,490.6
377.7
193.1
184.5
2,368.2
1,965.8
372.2
1,593.9
402.4
205.5
196.9
2,498.0
2,073.5
395.7
1,677.8
424.5
215.7
208.8
2,461.5
2,044.1
387.2
1,656.8
417.4
212.9
204.5
2,480.2
2,058.8
392.5
1,666.3
421.3
214.1
207.3
2,507.4
2,081.1
398.4
1,682.7
426.3
215.9
210.4
2,542.8
2,109.8
404.4
1,705.4
433.0
220.1
213.0
2,578.1
2,142.7
413.0
1,729.7
435.4
220.0
215.4
38
39
40
Proprietors' income 1
Business and professional 1
Farm 1
236.9
205.3
31.5
254.4
225.2
29.2
278.8
252.7
265.3
240.9
24.4
289.1
249.6
39.5
277.5
258.0
19.6
283.2
262.2
21.0
298.2
269.7
28.5
41
Rental income of persons 2
8.3
7.6
15.0
12.8
16.3
16.2
14.8
15.3
42
43
44
45
Corporate profits 1
Profits before tax 3
Inventory valuation adjustment
Capital consumption adjustment
264.7
235.7
-5.5
34.5
280.7
223.2
-.6
58.1
299.7
237.5
6.5
56.6
296.4
222.5
16.5
57.3
293.1
227.7
10.6
54.8
302.0
240.4
55.5
311.2
259.6
-7.2
58.8
333.5
266.5
-7.4
74.4
46
Net interest
307.4
311.4
294.0
304.9
297.7
292.9
280.4
282.2
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
26.1
6.1
3. For a f t e r - t a x profits, dividends, and the like, see table 1.48.
SOURCE. Survey of Current Business (Department of Commerce).
A52
2.17
Domestic Nonfinancial Statistics • July 1987
PERSONAL INCOME A N D SAVING
B i l l i o n s of current dollars; quarterly data are at s e a s o n a l l y adjusted annual rates. E x c e p t i o n s n o t e d .
1987
1986
Account
1984
1985
1986
Q1
Q2
Q4
Q3
Ql'
PERSONAL INCOME AND SAVING
1 Total personal income
2 Wage and salary disbursements
3
Commodity-producing industries
4
Manufacturing
5
Distributive industries
6
Service industries
7
Government and government enterprises
8
9
10
11
12
13
Other labor income
Proprietors' income 1
Business and professional 1
Farm 1
Rental income of persons 2
Dividends
15 Transfer payments
16
O l d - a g e survivors, disability, and health insurance b e n e f i t s . . .
17
LESS: Personal contributions for social insurance
18 EQUALS: Personal income
3,110.2
3,314.5
3,485.7
3,432.6
3,483.3
3,498.8
3,527.9
3,586.2
1,836.8
577.8
439.1
442.2
470.6
346.2
1,966.1
607.7
460.1
469.8
516.4
372.2
2,073.5
623.2
471.2
487.9
566.7
395.7
2,044.1
622.0
470.5
485.2
549.6
387.2
2,058.8
620.8
468.8
484.3
561.3
392.5
2,081.1
621.8
470.0
488.3
572.6
398.4
2,109.8
628.3
475.4
493.9
583.2
404.4
2,142.7
633.0
478.0
500.9
595.9
413.0
184.5
236.9
205.3
31.5
8.3
74.7
446.9
455.6
235.7
196.9
254.4
225.2
29.2
7.6
76.4
476.2
487.1
253.4
208.8
278.8
252.7
26.1
15.0
81.2
475.0
513.8
266.8
204.5
265.3
240.9
24.4
12.8
79.1
480.8
504.7
263.2
207.3
289.1
249.6
39.5
16.3
81.1
480.1
510.1
264.1
210.4
277.5
258.0
19.6
16.2
82.0
473.8
518.5
269.6
213.0
283.2
262.2
21.0
14.8
82.7
465.2
521.8
270.2
215.4
298.2
269.7
28.5
15.3
84.1
468.0
530.2
273.7
133.5
150.2
160.3
158.6
159.5
160.8
162.4
167.7
3,110.2
3,314.5
3,485.7
3,432.6
3,483.3
3,498.8
3,527.9
3,586.2
439.6
486.5
514.1
497.5
504.8
519.0
534.9
533.1
20 EQUALS: Disposable personal income
2,670.6
2,828.0
2,971.6
2,935.1
2,978.5
2,979.9
2,993.0
3,053.1
21
LESS: Personal outlays
2,501.9
2,684.7
2,857.4
2,789.4
2,825.5
2,895.8
2,918.8
2,949.1
22 EQUALS: Personal saving
168.7
143.3
114.2'
145.6
153.1
84.1
74.2
104.0
14,721.1
9,475.4
10,421.0
6.3
14,982.0
9,713.7
10,563.0
5.1
15,216.9
10,015.3
10,773.0
3.8
15,188.0
9,857.1
10,723.0
5.0
15,178.9
9,984.4
10,886.0
5.1
15,246.3
10,124.0
10,776.0
2.8
15,249.1
10,089.9
10,708.0
2.5
15,380.4
10,040.7
10,755.0
3.4
19
LESS: Personal tax and nontax payments
MEMO
Per capita (1982 dollars)
23
Gross national product
24
Personal consumption expenditures
25
Disposable personal income
26 Saving rate (percent)
GROSS SAVING
27 Gross saving
573.3
551.5
538.7
583.2
539.7
517.2
514.9
561.6
28
29
30
31
674.8
168.7
91.0
-5.5
687.8
143.3
107.3
679.0
114.2'
109.4
6.5
708.3
145.6
115.5
16.5
713.0
153.1
106.6
10.6
650.5
84.1
108.8
6.1
644.3
74.2
106.4
-7.2
684.5
104.0
112.2
-7.4
253.9
161.2
268.2
169.0
280.3
175.1
275.3
171.8
278.9
174.4
281.6
176.0
285.5
178.2
287.5
180.7
Gross private saving
Personal saving
Undistributed corporate profits 1
Corporate inventory valuation adjustment
Capital consumption
32 Corporate
33 Noncorporate
allowances
-.6
34
Government surplus, or deficit (-), national income and
35
36
Federal
State and local
-101.5
-170.0
68.5
-136.3
-198.0
61.7
-140.3
-203.3
63.1
-125.1
-195.0
69.9
-173.3
-232.2
58.9
-133.3
-197.4
64.0
-129.4
-188.8
59.4
-122.9
-174.4
51.5
571.4
545.9
541.7
579.6
544.3
527.5
515.5
572.4
38 Gross private domestic
39 Net foreign
662.1
-90.7
661.1
-115.2
683.6
-141.9
708.3
-128.6
687.3
-143.0
675.8
-148.3
663.2
-147.7
718.1
-145.7
-1.9
-5.5
3.0
-3.6
4.6
10.3
.6
10.8
40 Statistical discrepancy
1. With inventory valuation and capital consumption adjustments.
2. With capital consumption adjustment.
SOURCE. Survey of Current Business
(Department of Commerce).
3.10
U.S. INTERNATIONAL TRANSACTIONS
Summary Statistics
A53
Q1
Q2
Q3
Q4 p
Summary
M i l l i o n s of dollars; quarterly data are s e a s o n a l l y adjusted e x c e p t a s n o t e d . 1
1985
Item credits or debits
Q4
1 Balance on current account
2
Not seasonally adjusted
3
4
5
6
7
8
9
10
Merchandise trade balance 2
Merchandise exports
Merchandise imports
Military transactions, net
Investment income, net 3
Other service transactions, net
Remittances, pensions, and other transfers
U.S. government grants (excluding military)
11 Change in U.S. government assets, other than official
reserve assets, net (increase, —)
-106,466
117,677
-140,569
-33,695
-31,510
-34,040
-31,020
-34,397
-35,458
-35,299
-39,245
-36,837
-34,847
-112,522
219,900
-332,422
-1,827
18,751
-124,439
214,424
-338,863
-2,917
25,188
-525
-147,708
221,753
-369,461
-2,402
22,865
1,821
-37,352
52,727
-90,079
-1,322
9,255
-32
-36,489
53,588
-90,077
-1,066
6,500
6
-35,700
55,075
-90,775
-695
5,328
717
-37,149
55,764
-92,913
-570
6,146
437
-38,370
57,326
-95,696
-71
4,890
659
-3,621
-8,536
-3,787
-11,196
-3,320
-11,825
-937
-3,307
-922
-2,069
-802
-3,245
-744
-3,419
-853
-3,092
-5,523
-2,824
-1,978
-540
-250
-209
-1,429
12 Change in U.S. official reserve assets (increase, - )
13
Gold
14
Special drawing rights (SDRs)
15
Reserve position in International Monetary Fund
16
Foreign currencies
-3,130
-3,858
312
-3,148
-115
16
280
132
-979
-995
-1,156
-897
908
-3,869
-246
1,501
-942
-189
168
-3,126
-274
344
-185
-104
366
-246
163
508
-391
-31
283
-120
17 Change in U.S. private assets abroad (increase, - ) 3
18
Bank-reported claims
19
Nonbank-reported claims
20
U.S. purchase of foreign securities, net
21
U.S. direct investments abroad, net 3
-14,987
-11,127
5,081
-5,082
-3,859
-25,754
-691
1,665
-7,977
-18,752
-98,149
-57,312
-4,150
-4,765
-31,922
-19,579
-8,485
418
-1,411
-10,101
-12,644
6,333
-2,842
-6,133
-27,052
-19,326
-32,985
-29,932
-10,002
-25,468
-14,387
-1,220
-1,664
-8,197
349
-7,987
2,683
-5,736
22 Change in foreign official assets in the United States
(increase, +)
23
U.S. Treasury securities
24
Other U.S. government obligations
25
Other U.S. government liabilities 4
26
Other U.S. liabilities reported by U.S. banks
27
Other foreign official assets 5
3,037
4,690
13
436
555
-2,657
-1,324
-546
-295
483
522
-1,488
33,394
34,495
-1,214
1,067
-126
-828
-1,322
-1,976
-171
263
722
-160
2,469
3,256
-177
288
-1,261
363
14,704
14,538
-644
679
662
-531
15,448
12,193
-276
900
2,933
-302
774
4,508
-117
-799
-2,460
-358
28 Change in foreign private assets in the United States
(increase, +) 3
29
U.S. bank-reported liabilities
30
U.S. nonbank-reported liabilities
31
Foreign private purchases of U.S. Treasury securities, net
32
Foreign purchases of other U.S. securities, net
33
Foreign direct investments in the United States, net 3
99,730
33,849
4,704
23,059
12,759
25,359
128,430
40,387
-1,172
20,500
50,859
17,856
179,900
77,435
-3,112
9,334
70,658
25,585
53,158
20,427
2,232
5,676
22,441
2,382
34,151
8,434
-2,057
7,666
18,686
1,422
32,822
3,553
-1,644
3,807
23,018
4,088
54,075
30,128
589
541
17,185
5,632
58,851
35,320
34 Allocation of SDRs
35 Discrepancy
36
Owing to seasonal adjustments
37
Statistical discrepancy in recorded data before seasonal
adjustment
0
0
0
0
0
0
0
0
-88
' -2,680
11,769
14,442
0
0
0
0
0
0
0
0
27,338
23,006
27,091
5,125
3,771
10,429
1,329
12,532
-1,410
-6,023
-3,956
10,156
4,040
27,338
23,006
27,091
9,100
13,942
-2,068
6,116
-3,130
-3,858
312
-3,148
-115
16
280
132
2,601
-1,807
32,327
-1,585
2,181
14,025
14,548
1,573
-4,304
-6,599
-8,649
-1,002
1,421
-1,938
-2,847
-5,285
190
64
73
28
22
12
19
19
MEMO
Changes in official assets
U.S. official reserve assets (increase, - )
Foreign official assets in the United States
(increase, +)
40 Change in Organization of Petroleum Exporting Countries
official assets in the United States (part of line 22
above)
41 Transfers under military grant programs (excluded from
lines 4, 6, and 10 above)
38
39
1. Seasonal factors are not calculated for lines
38-41.
2. Data are on an international accounts (IA)
basis data, shown in table 3.11, for reasons of
exports are excluded from merchandise data and
3. Includes reinvested earnings.
6, 10, 12-16, 18-20, 22-34, and
basis. Differs from the Census
coverage and timing; military
are included in line 6.
4. Primarily associated with military sales contracts and other transactions
arranged with or through foreign official agencies.
5. Consists of investments in U.S. corporate stocks and in debt securities of
private corporations and state and local governments.
NOTE. Data are from Bureau of Economic Analysis, Survey of Current Business
(Department of Commerce).
A54
3.11
International Statistics • July 1987
U . S . FOREIGN T R A D E
Millions of dollars; monthly data are not seasonally adjusted.
1986
Item
1983
1984
1987
1985
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
17,518
19,330
18,595
18,431
16,421
18,660
21,064
1
E X P O R T S of d o m e s t i c a n d f o r e i g n
m e r c h a n d i s e e x c l u d i n g grant-aid
shipments
200,486
217,865
2
G E N E R A L I M P O R T S including
merchandise for immediate
c o n s u m p t i o n p l u s e n t r i e s into
bonded warehouses
258,048
325,726
345,276
28,695
30,018
36,187
27,795
27,466
32,307
33,198
3
Trade balance
-57,562
107,861
-132,129
-11,177
-10,688
-17,592
-9,364
-11,045
-13,647
-12,134
213,146
NOTE. T h e d a t a t h r o u g h 1981 in this t a b l e a r e r e p o r t e d b y t h e B u r e a u of C e n s u s
d a t a of a f r e e - a l o n g s i d e - s h i p (f.a.s.) v a l u e basis—that is, value at t h e port of
e x p o r t . Beginning in 1981, f o r e i g n t r a d e of t h e U . S . Virgin I s l a n d s is included in
t h e C e n s u s basis t r a d e d a t a ; this a d j u s t m e n t h a s been m a d e f o r all d a t a s h o w n in
t h e t a b l e . Beginning w i t h 1982 d a t a , the v a l u e of i m p o r t s are o n a c u s t o m s
valuation basis.
T h e C e n s u s b a s i s d a t a d i f f e r f r o m m e r c h a n d i s e t r a d e d a t a s h o w n in table 3.10,
U . S . I n t e r n a t i o n a l T r a n s a c t i o n s S u m m a r y , f o r r e a s o n s of c o v e r a g e a n d timing. O n
t h e export side, t h e largest a d j u s t m e n t s are; (1) the a d d i t i o n of e x p o r t s t o C a n a d a
3.12
not c o v e r e d in C e n s u s statistics, a n d (2) t h e e x c l u s i o n of military sales ( w h i c h a r e
c o m b i n e d w i t h o t h e r military t r a n s a c t i o n s a n d r e p o r t e d s e p a r a t e l y in t h e " s e r v i c e
a c c o u n t " in t a b l e 3.10, line 6). O n t h e import side, a d d i t i o n s a r e m a d e f o r g o l d ,
ship p u r c h a s e s , i m p o r t s of electricity f r o m C a n a d a , a n d o t h e r t r a n s a c t i o n s ;
military p a y m e n t s a r e e x c l u d e d a n d s h o w n s e p a r a t e l y a s i n d i c a t e d a b o v e . A s of
J a n . 1, 1987 c e n s u s d a t a are r e l e a s e d 45 d a y s a f t e r t h e e n d of t h e m o n t h .
SOURCE. F T 9 0 0 " S u m m a r y of U . S . E x p o r t a n d I m p o r t M e r c h a n d i s e T r a d e "
( D e p a r t m e n t of C o m m e r c e , B u r e a u of t h e C e n s u s ) .
U.S. RESERVE ASSETS
Millions of dollars, end of period
1986
Type
1983
1987
1985
Oct.
Nov.
Dec.
Feb.
Mar.
Apr."
1
Total
33,747
34,934
43,186'
47,089
47,824
48,517'
49,386'
49,358
48,824
46,591
2
G o l d s t o c k , including E x c h a n g e
Stabilization F u n d 1
11,121
11,096
11,090
11,066
11,070
11,064
11,062
11,085
11,081
11,076
3
Special drawing rights2,3
5,025
5,641
7,293
8,090
8,310
8,395
8,470
8,615
8,740
8,879
4
R e s e r v e p o s i t i o n in I n t e r n a t i o n a l
Monetary Fund
11,312
11,541
11,947'
11,575
11,659
11,730
11,872
11,699
11,711
11,745
5
Foreign currencies4
6,289
6,656
12,856
16,358
16,785
17,328
17,982
17,959
17,292
14,891
1. G o l d held u n d e r e a r m a r k at F e d e r a l R e s e r v e B a n k s f o r f o r e i g n and international a c c o u n t s is n o t i n c l u d e d in t h e gold s t o c k of t h e U n i t e d S t a t e s ; see table
3.13. G o l d s t o c k is v a l u e d at $42.22 p e r fine troy o u n c e .
2. B e g i n n i n g J u l y 1974, t h e I M F a d o p t e d a t e c h n i q u e f o r valuing t h e S D R b a s e d
o n a w e i g h t e d a v e r a g e of e x c h a n g e r a t e s f o r t h e c u r r e n c i e s of m e m b e r c o u n t r i e s .
F r o m July 1974 t h r o u g h D e c e m b e r 1980, 16 c u r r e n c i e s w e r e u s e d ; f r o m J a n u a r y
1981, 5 c u r r e n c i e s h a v e b e e n u s e d . T h e U . S . S D R holdings a n d r e s e r v e position
in t h e I M F also a r e v a l u e d o n this basis beginning July 1974.
3.13
3. I n c l u d e s allocations by the I n t e r n a t i o n a l M o n e t a r y F u n d of S D R s a s f o l l o w s ;
$867 million o n J a n . 1, 1970; $717 million o n J a n . 1, 1971; $710 million o n J a n . 1,
1972; $1,139 million o n J a n . 1, 1979; $1,152 million o n J a n . 1, 1980; a n d $1,093
million o n J a n . 1, 1981; plus t r a n s a c t i o n s in S D R s .
4. V a l u e d at c u r r e n t m a r k e t e x c h a n g e r a t e s .
FOREIGN OFFICIAL A S S E T S H E L D AT F E D E R A L R E S E R V E B A N K S
Millions of dollars, end of period
1986
Assets
1983
1984
Oct.
1 Deposits
Assets held in custody
2 U . S . T r e a s u r y securities 1
3 E a r m a r k e d gold 2
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
190
267
480
303
224
287
226
255
268
342
117,670
14,414
118,000
14,242
121,004
14,245
156,076
14,110
156,919
14,057
155,835
14,048
159,597
14,041
160,942
14,046
167,423
14,036
172,929
14,031
1. M a r k e t a b l e U . S . T r e a s u r y bills, n o t e s , a n d b o n d s ; a n d n o n m a r k e t a b l e U . S .
T r e a s u r y securities p a y a b l e in dollars a n d in foreign c u r r e n c i e s .
2. E a r m a r k e d gold is v a l u e d at $42.22 p e r fine troy o u n c e .
1987
1985
NOTE. E x c l u d e s d e p o s i t s a n d U . S . T r e a s u r y securities held f o r i n t e r n a t i o n a l
and regional o r g a n i z a t i o n s . E a r m a r k e d gold is gold held f o r f o r e i g n a n d i n t e r n a tional a c c o u n t s a n d is n o t i n c l u d e d in t h e gold s t o c k of t h e U n i t e d S t a t e s .
Summary Statistics
3.14
FOREIGN BRANCHES OF U.S. B A N K S
A55
Balance Sheet Data 1
M i l l i o n s o f dollars, e n d o f p e r i o d
1987
1986
Asset account
1984
1983
1985
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.''
All foreign countries
1 Total, all currencies
? Claims on United States
Parent bank
Other banks in United States 2
4
5
Nonbanks 2
6 Claims on foreigners
Other branches of parent bank
7
8
Banks
9
Public borrowers
Nonbank foreigners
10
453,656
458,012
474,567
446,581
446,618'
456,628'
458,305
457,819
456,522
115,542
82,026
113,393
78,109
13,664
21,620
320,162
95,184
100,397
23,343
101,238
119,706'
87,201
13,057
19,448'
315,676'
91,399
102,960
23,478
97,839'
116,392
82,302
13,624
20,466
328,553
103,278
107,503
23,505
94,267
112,078
79,999
11,659
20,420
305,562
90,412
100,707
24,215
90,228
108,420
76,280'
12,034
20,106'
308,322'
91,576'
103,293
23,314
90,139
113,178'
81,985'
13,685
17,508
314,340
97,788
105,237
23,584
87,731
115,273
83,185
12,723
19,365
311,411
93,290
105,377
23,337
89,407
113,815
81,953
13,158
18,704
312,0%
90,326
109,748
23,192
88,830
111,864
78,475
15,894
17,495
311,600
89,360
109,375
23,579
89,286
342,689
96,004
117,668
24,517
107,785
11 Other assets
12 Total payable in U.S. dollars
n Claims on United States
14
Parent bank
Other banks in United States 2
15
Nonbanks 2
16
17 Claims on foreigners
Other branches of parent bank
18
19
Banks
?0
Public borrowers
Nonbank foreigners
21
477,090
1
22 Other assets
18,859
20,101
22,630'
29,622
28,941
29,876
29,110
31,621
31,908
33,058
371,508
350,636
336,520'
330,597
309,087
306,683'
317,486
309,719
311,669
306,025
113,436
80,909
247,406
78,431
93,332
17,890
60,977
111,426
77,229
13,500
20,697
228,600
78,746
76,940
17,626
55,288
116,638'
85,971
12,454
18,213'
210,129'
72,727'
71,868'
17.26C
48,274'
112,133
80,753
12,802
18,578
207,701
78,400
68,596
16,521
44,184
107,612
78,335
10,544
18,733
190,030
67,835
62,836
17,455
41,904
104,281
74,762
10,986
18,533
190,656'
67,841'
64,920
16,820
41,075
109,234
80,575'
12,830
15,830
196,448
73,704
66,421
16,586
39,737
110,5%
81,423
11,531
17,642
187,2%
67,479
63,637
16,459
39,721
109,341
80,359
12,102
16,880
189,875
65,220
68,320
16,320
40,015
107,015
76,615
14,757
15,643
185,364
64,006
65,874
16,223
39,261
10,666
10,610
9,753'
10,763
11,445
11,746
11,804
11,827
12,453
13,646
United Kingdom
23 Total, all currencies
74 Claims on United States
75
Parent bank
76
Other banks in United States 2
Nonbanks 2
77
28 Claims on foreigners
79
Other branches of parent bank
30
Banks
31
Public borrowers
Nonbank foreigners
32
158,732
144,385
148,599
151,596
142,398
143,806'
140,917
144,093
146,188
145,486
34,433
29,111
27,675
21,862
1,429
4,384
111,828
37,953
37,443
5,334
31,098
33,157
26,970
1,106
5,081
110,217
31,576
39,250
5,644
33,747
30,879
24,291
2,092
4,496
113,368
34,678
40,204
5,086
33,400
30,747
24,800
1,314
4,633
105,534
31,268
37,836
5,157
31,273
28,940
22,671
1,534
4,735
108,153'
29,966'
41,145
5,038
32,004
24,599
19,085
1,612
3,902
109,508
33,422
39,468
4,990
31,628
28,720
23,330
1,220
4,170
108,720
30,218
40,677
4,942
32,883
28,851
23,326
1,258
4,267
110,274
29,575
43,189
4,983
32,527
28,503
23,303
1,288
3,912
109,297
28,782
42,537
4,897
33,081
119,280
36,565
43,352
5,898
33,465
33 Other assets
34 Total payable in U.S. dollars
35 Claims on United States
36
Parent bank
37
Other banks in United States 2
Nonbanks 2
18
39 Claims on foreigners
40
Other branches of parent bank
41
Banks
4?
Public borrowers
43
Nonbank foreigners
44 Other assets
5,019
4,882
5,225
7,349
6,117
6,713
6,810
6,653
7,063
7,686
126,012
112,809
108,626
103,228
97,295
97,125'
95,028
95,359
97,568
95,319
33,756
28,756
88,917
31,838
32,188
4,194
20,697
26,868
21,495
1,363
4,010
82,945
33,607
26,805
4,030
18,503
32,092
26,568
1,005
4,519
73,475
26,011
26,139
3,999
17,326
29,512
23,826
1,848
3,838
70,325
27,151
22,917
3,778
16,479
29,312
24,323
1,110
3,879
64,873
24,632
21,011
3,859
15,371
27,564
22,106
1,364
4,094
66,304'
23,229'
24,020
3,811
15,244
23,193
18,526
1,475
3,192
68,138
26,361
23,251
3,677
14,849
27,070
22,673
996
3,401
65,022
22,720
23,656
3,683
14,963
27,290
22,749
1,061
3,480
66,872
22,578
25,685
3,716
14,893
26,665
22,662
980
3,023
64,466
21,785
24,225
3,660
14,796
3,339
2,996
3,059
3,391
3,110
3,257
3,697
3,267
3,406
4,188
Bahamas and Caymans
45 Total, all currencies
46 Claims on United States
47
Parent bank
48
Other banks in United States 2
49
Nonbanks 2
50 Claims on foreigners
51
Other branches of parent bank
57
Banks
53
Public borrowers
Nonbank foreigners
54
55 Other assets
56 Total payable in U.S. dollars
1
152,083
146,811
142,055
143,082
134,060
131,363
142,592
135,627
133,229
133,837
75,309
48,720
77,296
49,449
11,544
16,303
65,598
17,661
30,246
6,089
11,602
74,864
50,553
11,204
13,107
63,882
19,042
28,192
6,458
10,190
71,918
46,635
10,641
14,652
66,610
22,763
27,779
6,434
9,634
68,624
44,476
9,557
14,591
59,612
16,985
26,205
7,263
9,159
66,078
42,223
9,628
14,227
59,436
18,139
25,743
6,697
8,857
76,663
53,068
11,156
12,439
61,390
18,803
27,476
6,929
8,182
72,643
48,036
10,625
13,982
57,825
16,258
26,366
7,026
8,175
68,238
44,124
10,924
13,190
59,671
16,151
28,139
6,974
8,407
67,356
41,290
13,715
12,351
60,644
16,529
28,574
6,914
8,627
it
con
72,868
20,626
36,842
6,093
12,592
3,906
3,917
3,309
4,544
5,824
5,849
4,539
5,159
5,320
5,837
145,641
141,562
136,794
136,615
127,361
124,801
136,813
129,474
126,605
126,808
1. Beginning with June 1984 data, reported claims held by foreign branches
have been reduced by an increase in the reporting threshold for " s h e l l " branches
from $50 million to $150 million equivalent in total assets, the threshold now
applicable to all reporting branches.
2. Data for assets vis-a-vis other banks in the United States and vis-a-vis
nonbanks are combined for dates before June 1984.
A56
3.14
International Statistics • July 1987
Continued
1986
Sept.
Oct.
1987
Nov.
Dec.
Jan.
Feb.
Mar.P
All foreign countries
57 Total, all currencies
477,090
453,656
458,012
474,567
446,581
446,618'
456,628'
458,305
457,819
456,522
58 Negotiable CDs 3
39 To United States
60
Parent bank
61
Other banks in United States
62
Nonbanks
n.a.
188,070
81,261
29,453
77,356
37,725
147,583
78,739
18,409
50,435
34,607
155,538
83,914
16,894
54,730
33,642
151,281
87,927
14,153
49,201
32,444
141,126
75,777
14,791
50,558
32,926
137,029'
75,062
14,532'
47,435
31,629
151,632'
82,561'
15,646'
53,425'
33,395
140,089'
70,047'
15,068
54,974
36,074
140,046
73,095
13,602
53,349
34,873
141,093
70,777
13,666
56,650
63 To foreigners
64
Other branches of parent bank
63
Banks
66
Official institutions
67
Nonbank foreigners
68 Other liabilities
269,685
90,615
92,889
18,896
68,845
19,335
247,907
93,909
78,203
20,281
55,514
20,441
245,939'
89,529
76,814
19,520'
60,076
21,928'
269,322
102,245
81,953
20,109
65,015
20,322
253,202
87,883
80,709
19,436
65,174
19,809
256,611'
87,993'
83,784'
18,831
66,003'
20,052
253,775
95,146
77,809'
17,835
62,985'
19,592'
264,463'
90,303'
89,199
19,532
65,429
20,358
261,944
88,524
86,474
19,818
67,128
19,755
260,736
87,897
84,875
20,591
67,373
19,820
69 Total payable in U.S. dollars
388,291
367,145
353,712'
349,259
323,699
320,348'
336,406
323,900
325,951
321,349
70 Negotiable CDs 3
71 To United States
72
Parent bank
73
Other banks in United States
74
Nonbanks
n.a.
184,305
79,035
28,936
76,334
35,227
143,571
76,254
17,935
49,382
31,063
150,162'
80,888
16,264
53,010'
30,560
143,627
83,790
13,173
46,664
29,206
133,301
71,858
13,768
47,675
29,752
129,224'
71,017
13,679^
44,528
28,466
143,65c
78,472'
14,609'
50,569'
29,921
131,557'
65,419'
14,047
52,091
32,407
131,617
68,540
12,505
50,572
31,148
132,258
65,755
12,564
53,939
75 To foreigners
76
Other branches of parent bank
Banks
77
Official institutions
78
Nonbank foreigners
79
80 Other liabilities
194,139
73,522
57,022
13,855
51,260
9,847
178,260
77,770
45,123
15,773
39,594
10,087
163,583'
71,078'
37,365'
14,359'
40,781'
8,904'
167,356
77,464
35,358
13,697
40,837
7,716
153,536
65,077
33,802
13,320
41,337
7,656
153,972'
64,178'
35,306'
13,139
41,349'
7,400
156,806
71,181
33,85c
12,371
39,404'
7,484'
155,182'
64.38C
37,159
13,688
39,955
7,240
154,343
63,272
37,253
13,189
40,629
7,584
150,091
62,202
35,111
13,392
39,386
7,852
United Kingdom
158,732
144,385
148,599
151,596
142,398
143,806'
140,917
144,093
146,188
145,486
82 Negotiable CDs 3
83 To United States
84
Parent bank
Other banks in United States
83
86
Nonbanks
81 Total, all currencies
n.a.
55,799
14,021
11,328
30,450
34,413
25,250
14,651
3,125
7,474
31,260
29,422
19,330
2,974
7,118
30,352
26,540
17,399
2,062
7,079
28,847
24,610
14,014
2,382
8,214
28,984
22,585'
13,811
2,184'
6,590
27,781
24,657
14,469
2,649
7,539
29,432
19,465
10,004
2,154
7,307
32,233
22,501
12,735
2,154
7,612
30,968
21,433
12,332
1,816
7,285
87 To foreigners
88
Other branches of parent bank
89
Banks
Official institutions
90
Nonbank foreigners
91
92 Other liabilities
95,847
19,038
41,624
10,151
25,034
7,086
77,424
21,631
30,436
10,154
15,203
7,298
78,525
23,389
28,581
9,676
16,879
9,392
85,554
28,272
31,190
8,652
17,440
9,150
80,252
24,194
31,001
8,068
16,989
8,689
83,455'
23,739'
34,321'
7,875
17,520
8,782
79,498
25,036
30,877
6,836
16,749
8,981
86,229
23,595
36,479
8,484
17,671
8,967
82,418
21,230
35,434
7,832
17,922
9,036
83,723
21,371
35,971
7,827
18,554
9,362
131,167
117,497
112,697
108,249
99,820
99,327'
99,707
98,741
101,603
98,967
94 Negotiable CDs 3
95 To United States
96
Parent bank
Other banks in United States
97
98
Nonbanks
n.a.
54,691
13,839
11,044
29,808
33,070
24,105
14,339
2,980
6,786
29,337
27,756
18,956
2,826
5,974
28,490
24,039
16,984
1,735
5,320
26,927
21,960
13,591
2,108
6,261
27,166
20,055'
13,438
1,880'
4,737
26,169
22,075
14,021
2,325
5,729
27,701
16,829
9,451
1,887
5,491
30,175
19,894
12,157
1,926
5,811
28,868
18,940
11,606
1,602
5,732
99 To foreigners
Other branches of parent bank
100
101
Banks
Official institutions
102
Nonbank foreigners
103
104 Other liabilities
73,279
15,403
29,320
8,279
20,277
3,197
56,923
18,294
18,356
8,871
11,402
3,399
51,980
18,493
14,344
7,661
11,482
3,624
52,645
21,305
14,491
6,015
10,834
3,075
47,491
17,289
14,123
5,685
10,394
3,442
49,056'
16,695'
15,984'
5,655
10,722
3,050
48,138
17,951
15,203
4,934
10,050
3,325
51,174
16,386
18,626
6,096
10,066
3,037
48,242
14,323
18,207
5,176
10,536
3,292
47,531
14,471
18,027
4,924
10,109
3,628
93 Total payable in U.S. dollars
Bahamas and Caymans
105 Total, all currencies
152,083
146,811
142,055
143,082
134,060
131,363
142,592
135,627
133,229
133,837
106 Negotiable CDs 3
107 To United States
Parent bank
108
Other banks in United States
109
Nonbanks
110
n.a.
111,299
50,980
16,057
44,262
615
102,955
47,162
13,938
41,855
610
103,813
44,811
12,778
46,224
527
102,012
49,981
10,986
41,045
683
95,840
43,470
11,144
41,226
784
94,493
43,572
11,131
39,790
847
105,248'
48,648'
11,715'
44,885'
995
98,733
40,845
11,687
46,201
855
95,221
40,409
10,151
44,661
813
98,401
39,625
10,539
48,237
38,445
14,936
11,876
1,919
11,274
2,339
40,320
16,782
12,405
2,054
9,079
2,921
35,053
14,075
10,669
1,776
8,533
2,579
38,447
15,918
10,158
2,834
9,537
2,096
35,427
13,574
8,964
2,665
10,224
2,110
33,841
12,661'
8,545
2,577
10,058'
2,245
34,400
12,631
8,617'
2,719
10,433'
2,097'
33,831
12,323
8,402
2,808
10,298
2,068
35,053
12,972
8,507
3,013
10,561
2,100
32,652
11,673
8,169
2,836
9,974
1,971
148,278
143,582
138,322
138,733
130,084
138,774
131,572
129,183
129,048
111 To foreigners
Other branches of parent bank
112
113
Banks
114
Official institutions
115
Nonbank foreigners
116 Other liabilities
117 Total payable in U.S. dollars
3. Before June 1984, liabilities on negotiable CDs were included in liabilities to
the United States or liabilities to foreigners, according to the address of the initial
purchaser.
127,309
Summary Statistics
3.15
A57
S E L E C T E D U . S . LIABILITIES TO FOREIGN OFFICIAL INSTITUTIONS
Millions of dollars, end of period
1986
Item
1984
Sept.
1 Total 1
2
3
4
5
6
7
8
9
10
11
12
By type
Liabilities r e p o r t e d by b a n k s in the United States 2
U.S. T r e a s u r y bills a n d certificates 3
U . S . T r e a s u r y b o n d s and n o t e s
Marketable
Nonmarketable4
U . S . securities o t h e r t h a n U . S . T r e a s u r y securities 5
By area
Western Europe1
Canada
Latin A m e r i c a and C a r i b b e a n
Asia
Africa
Other countries6
Oct.
Nov.
Dec.
Jan/
Feb.
Mar.P
180,552
178,385
209,743
211,297
211,121
211,356
213,369
214,865
225,845
26,089
59,976
26,734
53,252
29,722
75,095
27,392
75,457
27,777
75,132
27,288
75,650
27,594
75,718
28,964
75,434
31,032
79,629
69,019
5,800
19,668
77,154
3,550
17,695
87,503
1,300
16,123
91,092
1,300
16,056
91,225
1,300
15,687
91,521
1,300
15,597
93,019
1,300
15,738
93,701
1,300
15,466
98,707
1,300
15,177
69,776
1,528
8,561
93,954
1,264
5,469
74,418
1,314
11,144
86,490
1,824
3,195
87,314
1,626
10,328
105,704
1,864
2,907
88,658
1,699
10,136
105,422
1,716
3,666
87,725
1,891
9,086
105,580
1,545
5,294
87,859
2,004
8,358
106,119
1,503
5,513
89,570
3,382
7,672
107,526
1,299
3,920
90,367
3,761
7,415
108,804
1,164
3,354
98,764
5,111
8,231
108,436
1,188
4,115
1. Includes the B a n k f o r International S e t t l e m e n t s .
2. Principally d e m a n d d e p o s i t s , time d e p o s i t s , b a n k e r s a c c e p t a n c e s , c o m m e r cial p a p e r , negotiable time certificates of deposit, and b o r r o w i n g s u n d e r repurchase agreements.
3. Includes n o n m a r k e t a b l e certificates of i n d e b t e d n e s s (including those payable in foreign c u r r e n c i e s t h r o u g h 1974) and T r e a s u r y bills issued to official
institutions of foreign c o u n t r i e s .
4. E x c l u d e s n o t e s issued t o foreign official n o n r e s e r v e agencies. Includes
b o n d s and n o t e s p a y a b l e in foreign c u r r e n c i e s .
3.16
1987
1985
5. Debt securities of U . S . g o v e r n m e n t c o r p o r a t i o n s and federally s p o n s o r e d
agencies, and U . S . c o r p o r a t e stocks a n d b o n d s .
6. Includes countries in O c e a n i a and E a s t e r n E u r o p e .
NOTE. Based on T r e a s u r y D e p a r t m e n t d a t a and on d a t a r e p o r t e d t o the
T r e a s u r y D e p a r t m e n t by b a n k s (including F e d e r a l R e s e r v e Banks) and securities
dealers in the United States.
LIABILITIES TO A N D CLAIMS O N FOREIGNERS Reported by Banks in the United States
Payable in Foreign Currencies
Millions of dollars, end of period
1986
Item
1983
1 B a n k s ' o w n liabilities
2 B a n k s ' o w n claims
3
Deposits
4
O t h e r claims
5 Claims of b a n k s ' d o m e s t i c c u s t o m e r s 1
1. A s s e t s o w n e d by c u s t o m e r s of the reporting b a n k located in the United
States that r e p r e s e n t claims on f o r e i g n e r s held by reporting b a n k s f o r the a c c o u n t s
of their d o m e s t i c c u s t o m e r s .
5,219
7,231
2,731
4,501
1,059
1984
8,586
11,984
4,998
6,986
569
1985
15,368
16,294
8,437
7,857
580
Mar.
June
Sept.
21,264
19,728
11,311
8,417
1,426
24,130
21,264
11,413
9,851
1,385
29,353
24,567
13,716
10,851
1,659
NOTE. Data on claims e x c l u d e foreign c u r r e n c i e s held by U . S .
authorities,
Dec.
29,481
25,441
13,359
12,083
2,613
monetary
A58
3.17
International Statistics • July 1987
LIABILITIES TO FOREIGNERS
Payable in U.S. dollars
Reported by Banks in the United States
M i l l i o n s of dollars, e n d o f p e r i o d
1987
1986
Holder and type of liability
1983
1984
1985
Sept.
Oct.
506,104
501,095
Nov.
Dec.
Jan/
Feb.
Mar.P
512,653
537,778
524,912
522,815
523,523
378,023
24,772
125,618
35,915
191,718
404,395
23,786
131,281
40,545
208,782
391,417
22,492
125,010
39,373
204,543
388,315
22,439
127,112
39,967
198,797
388,307
22,261
124,522
42,041
199,483
1 All foreigners
369,607
407,306
2 Banks' own liabilities
Demand deposits
3
4
Time deposits'
Other 2
5
Own foreign offices 3
6
279,087
17,470
90,632
25,874
145,111
306,898
19,571
110,413
26,268
150,646
341,070
21,107
117,278
29,305
173,381
372,533
21,347
125,241
37,795
188,150
365,956
21,730
123,752
36,332
184,142
90,520
68,669
100,408
76,368
94,656
69,133
133,571
90,467
135,139
91,305
134,630
90,351
133,383
90,257
133,495
89,278
134,500
90,695
135,216
93,048
17,467
4,385
18,747
5,293
17,964
7,558
15,303
27,800
15,649
28,184
15,343
28,936
16,523
26,603
14,656
29,561
13,839
29,966
14,881
27,287
11 Nonmonetary international and regional
organizations7
5,957
4,454
5,821
3,038
3,902
4,315
4,826
5,081
4,520
3,739
12 Banks' own liabilities
Demand deposits
13
Time deposits'
14
Other 2
15
4,632
297
3,584
750
2,014
254
1,267
493
2,621
85
2,067
469
1,721
180
1,243
299
2,426
175
1,939
312
2,944
135
2,299
511
2,977
199
2,166
611
3,732
183
2,515
1,034
2,193
157
1,488
548
2,360
246
1,230
883
16 Banks' custody liabilities 4
17
U.S. Treasury bills and certificates
Other negotiable and readily transferable
18
instruments 6
Other
19
1,325
463
2,440
916
3,200
1,736
1,317
218
1,476
308
1,371
262
1,849
259
1,349
86
2,326
1,213
1,379
154
862
0
1,524
0
1,464
0
1,099
0
1,162
6
1,104
5
1,590
0
1,261
2
1,112
1
1,225
0
20 Official institutions8
79,876
86,065
79,985
104,818
102,849
102,909
102,938
103,311
104,398
110,662
21 Banks' own liabilities
Demand deposits
22
23
Time deposits'
Other 2
24
19,427
1,837
7,318
10,272
19,039
1,823
9,374
7,842
20,835
2,077
10,949
7,809
26,969
1,895
10,923
14,151
24,268
1,840
10,593
11,835
25,165
2,188
11,271
11,706
24,796
2,267
10,577
11,952
25,367
1,487
11,311
12,569
26,406
1,513
11,385
13,508
27,771
1,923
10,951
14,896
25 Banks' custody liabilities 4
26
U.S. Treasury bills and certificates 5
Other negotiable and readily transferable
27
instruments 6
Other
28
60,448
54,341
67,026
59,976
59,150
53,252
77,849
75,095
78,581
75,457
77,744
75,132
78,142
75,650
77,944
75,718
77,992
75,434
82,891
79,629
6,082
25
6,966
84
5,824
75
2,554
199
2,920
204
2,480
132
2,347
145
2,158
69
2,418
140
3,129
132
29 Banks9
226,887
248,893
275,589
319,013
314,433
325,392
349,605
339,131
336,242
333,334
30 Banks' own liabilities
Unaffiliated foreign banks
31
32
Demand deposits
33
Time deposits'
Other 2
34
35
Own foreign offices 3
205,347
60,236
8,759
37,439
14,038
145,111
225,368
74,722
10,556
47,095
17,071
150,646
252,723
79,341
10,271
49,510
19,561
173,381
276,511
88,361
9,254
57,412
21,694
188,150
271,790
87,648
9,714
55,601
22,333
184,142
282,785
91,067
11,626
57,515
21,927
191,718
309,792
101,010
10,301
64,480
26,229
208,782
296,436
91,893
10,432
57,772
23,689
204,543
293,834
95,037
10,097
61,425
23,515
198,797
294,186
94,703
9,502
61,407
23,794
199,483
36 Banks' custody liabilities 4
37
U.S. Treasury bills and certificates
Other negotiable and readily transferable
38
instruments 6
Other
39
21,540
10,178
23,525
11,448
22,866
9,832
42,502
10,635
42,643
10,601
42,607
10,491
39,812
9,962
42,695
9,826
42,408
10,486
39,147
9,744
7,485
3,877
7,236
4,841
6,040
6,994
5,803
26,064
5,600
26,442
5,550
26,566
5,513
24,338
5,433
27,436
4,340
27,582
4,377
25,026
40 Other foreigners
56,887
67,894
74,331
79,236
79,911
80,037
80,411
77,389
77,655
75,788
41 Banks' own liabilities
Demand deposits
42
43
Time deposits
Other 2
44
49,680
6,577
42,290
813
60,477
6,938
52,678
861
64,892
8,673
54,752
1,467
67,333
10,018
55,664
1,651
.7,472
10,000
55,620
1,852
67,129
10,824
54,533
1,772
66,830
11,019
54,059
1,752
65,882
10,389
53,412
2,081
65,881
10,672
52,815
2,395
63,990
10,589
50,933
2,468
7,207
3,686
7,417
4,029
9,439
4,314
11,903
4,519
12,439
4,939
12,908
4,465
13,580
4,387
11,507
3,648
11,774
3,563
11,798
3,520
3,038
483
3,021
367
4,636
489
5,846
1,537
5,968
1,532
6,209
2,234
7,074
2,120
5,804
2,055
5,969
2,242
6,150
2,128
10,346
10,476
9,845
6,584
6,759
6,609
7,343
7,191
7,722
7,674
7 Banks' custody liabilities 4
8
U.S. Treasury bills and certificates 5
9
Other negotiable and readily transferable
instruments 6
Other
10
45 Banks' custody liabilities 4
46
U.S. Treasury bills and certificates
Other negotiable and readily transferable
47
instruments 6
Other
48
49 MEMO: Negotiable time certificates of
deposit in custody for foreigners
1. Excludes negotiable time certificates of deposit, which are included in
"Other negotiable and readily transferable instruments."
2. Includes borrowing under repurchase agreements.
3. U.S. banks: includes amounts due to own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned subsidiaries of
foreign banks: principally amounts due to head office or parent foreign bank, and
foreign branches, agencies or wholly owned subsidiaries of head office or parent
foreign bank.
4. Financial claims on residents of the United States, other than long-term
securities, held by or through reporting banks.
435,726
5. Includes nonmarketable certificates of indebtedness and Treasury bills
issued to official institutions of foreign countries.
6. Principally bankers acceptances, commercial paper, and negotiable time
certificates of deposit.
7. Principally the International Bank for Reconstruction and Development, and
the Inter-American and Asian Development Banks.
8. Foreign central banks and foreign central governments, and the Bank for
International Settlements.
9. Excludes central banks, which are included in "Official institutions."
Bank-Reported
3.17
Data
A59
Continued
1987
1986
Area and country
1983
1984
1985
Sept.
Oct.
Nov.
Dec.
Jan/
Feb.
Mar.''
1 Total
369,607
407,306
435,726
506,104
501,095
512,653
537,778
524,912
522,815
523,523
2 Foreign countries
363,649
402,852
429,905
503,066
497,193
508,338
532,953
519,831
518,295
519,784
138,072
585
2,709
466
531
9,441
3,599
520
8,462
4,290
1,673
373
1,603
1,799
32,246
467
60,683
562
7,403
65
596
153,145
615
4,114
438
418
12,701
3,358
699
10,762
4,731
1,548
597
2,082
1,676
31,740
584
68,671
602
7,192
79
537
164,114
693
5,243
513
496
15,541
4,835
666
9,667
4,212
948
652
2,114
1,422
29,020
429
76,728
673
9,635
105
523
173,702
1,073
6,165
483
406
21,339
5,609
623
8,836
4,952
538
758
2,082
1,253
29,177
448
85,960
562
2,809
84
545
173,578
972
6,070
478
606
21,243
6,624
646
8,807
4,858
654
738
2,297
1,016
29,695
401
84,308
515
3,141
25
484
176,077
1,197
6,863
576
448
21,917
5,856
755
9,304
4,410
512
685
2,197
1,301
30,406
418
84,913
544
3,308
16
452
180,521
1,186
6.788
485
580
22,849
5,688
706
10,866
5,558
745
700
2,393
889
31,239
454
85,336
631
2,705
23
702
179,104
972
6,729
449
565
21,372
6,813
745
9,374
5,075
678
657
2,238
884
28,886
375
87,871
554
4,309
21
535
180,833
944
7,591
520
762
22,699
5,591
749
8,491
5,237
554
709
2,345
1,062
27,594
359
90,158
565
4,332
23
546
181,897
976
7,024
618
925
23,753
7,290
641
10,088
4,894
490
688
2,192
1,051
27,570
412
88,034
564
3,982
30
674
3 Europe
4
Belgium-Luxembourg
6
7
8
9
Germany
10
Italy
11
17
Netherlands
13
Norway
14
15
Spain
16
Sweden
Switzerland
17
18
Turkey
19
United Kingdom
Yugoslavia
?0
Other Western Europe 1
71
7?
U.S.S.R
Other Eastern E u r o p e 2
23
16,026
16,059
17,427
24,150
24,340
25,753
26,256
26,072
25,146
26,523
140,088
4,038
55,818
2,266
3,168
34,545
1,842
1,689
8
1,047
788
109
10,392
3,879
5,924
1,166
1,244
8,632
3,535
153,381
4,394
56,897
2,370
5,275
36,773
2,001
2,514
10
1,092
896
183
12,303
4,220
6,951
1,266
1,394
10,545
4,297
167,856
6,032
57,657
2,765
5,373
42,674
2,049
3,104
11
1,239
1,071
122
14,060
4,875
7,514
1,167
1,552
11,922
4,668
197,526
6,069
69,173
2,209
5,359
62,141
2,426
3,373
7
1,261
1,129
187
13,137
5,045
6,415
1,256
1,589
11,709
5,041
191,916
5,718
64,106
1,918
8.895
59,143
2,398
3,775
6
1,217
1,126
151
13,209
4,645
6,524
1,167
1,608
11,392
4,917
189,773
5,202
62,613
2,549
4,684
61,855
2,325
3,873
6
1,199
1,129
153
13,488
4,706
6,729
1,146
1,610
11,592
4,914
208,057
4,754
72,347
2,965
4,321
70,918
2,053
4,281
7
1,235
1,122
136
13,631
4,903
6,865
1,163
1,537
10,452
5,368
195,263
4,497
64,945
2,295
3,813
66,470
2,208
4,293
6
1,049
1,124
149
13,484
5,570
7,361
1,110
1,609
10,494
4,786
191,880
4,668
63,159
2,392
3,795
65,735
2,046
4,267
7
1,118
1,081
145
13,362
5,629
6,509
1,130
1,583
10,361
4,894
195,013
4,869
62,082
2,392
3,883
69,634
2,059
4,270
6
1,012
1,081
230
13,093
5,643
6,670
1,062
1,630
10,364
5,031
58,570
71,187
72,280
100,097
99,360
107,054
108,973
112,054
113,711
108,896
249
4,051
6,657
464
997
1,722
18,079
1,648
1,234
747
12,976
9,748
1,153
4,990
6,581
507
1,033
1,268
21,640
1,730
1,383
1,257
16,804
12,841
1,607
7,786
8,067
712
1,466
1,601
23,077
1,665
1,140
1,358
14,523
9,276
1,940
16,132
9,349
651
1,611
2,109
39,986
1,282
1,400
1,100
13,056
11,481
1,585
16,534
8,663
755
1,530
1,986
41,340
1,446
1,707
1,115
12,045
10,654
1,450
17,540
9,347
701
1,528
2,380
46,184
1,128
1,720
1,083
13,010
10,984
1,476
18,903
9,517
673
1,548
1,890
47,436
1,146
1,865
1,120
12,356
11,042
2,046
19,553
9,383
664
1,410
1,761
49,997
1,063
1,811
1,282
12,325
10,760
1,630
21,127
9,538
686
1,591
1,892
50,920
1,022
1,779
1,224
12,160
10,142
1,973
20,131
9,159
501
1,379
1,666
48,934
1,179
1,737
1,235
11,554
9,448
2,827
671
84
449
87
620
917
3,396
647
118
328
153
1,189
961
4,883
1,363
163
388
163
1,494
1,312
4,166
843
91
325
80
1,625
1,203
3,973
640
86
347
79
1,623
1,199
4,018
710
84
264
96
1,593
1,272
4,018
706
92
271
74
1,518
1,358
3,662
608
74
341
54
1,336
1,249
3,500
791
76
200
42
1,156
1,233
3,475
753
99
196
40
1,108
1,278
64 Other countries
65
Australia
All other
66
8,067
7,857
210
5,684
5,300
384
3,347
2,779
568
3,425
2,785
639
4,026
2,943
1,083
5,662
4,286
1,376
5,128
4,205
922
3,674
2,677
997
3,226
2,459
767
3,981
3,020
960
67 Nonmonetary international and regional
organizations
68
International
69
Latin American regional
Other regional 5
70
5,957
5,273
419
265
4,454
3,747
587
120
5,821
4,806
894
121
3,038
1,759
972
307
3,902
2,748
957
197
4,315
3,232
927
157
4,826
3,512
1,033
281
5,081
3,958
960
164
4,520
3,606
762
152
3,739
2,747
788
204
24 Canada
75 Latin America and Caribbean
76
77
Bermuda
78
79
Brazil
30
British West Indies
31
Chile
37
Colombia
33
Cuba
Ecuador
34
35
Guatemala
36
Jamaica
37
38
Netherlands Antilles
39
40
41
4?
Other Latin America and Caribbean
43
44
45
46
47
48
49
50
SI
5?
53
54
55
56
57
58
59
60
61
6?
63
China
Mainland
Hong Kong
Indonesia
Middle-East oil-exporting countries 3
Other Asia
Egypt
Morocco
South Africa
Oil-exporting countries 4
Other Africa
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria.
5. Asian, African, Middle Eastern, and European regional organizations,
except the Bank for International Settlements, which is included in " O t h e r
Western E u r o p e . "
A60
3.18
International Statistics • July 1987
BANKS' OWN CLAIMS ON FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
M i l l i o n s of dollars, e n d o f period
1986
Area and country
1983
1984
1987
1985
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.P
1 Total
391,312
400,162
401,608
416,601
407,832
418,485
444,458
420,632'
416,857
412,210
2 Foreign countries
391,148
399,363
400,577
416,401
407,460
418,313
441,475'
420,570'
416,679
411,661
3 Europe
4
Austria
5
Belgium-Luxembourg
6
Denmark
7
Finland
8
France
9
Germany
10
Greece
11
Italy
12
Netherlands
13
Norway
14
Portugal
15
Spain
16
Sweden
17
Switzerland
18
Turkey
19
United Kingdom
20
Yugoslavia
21
Other Western Europe 1
22
U.S.S.R
Other Eastern Europe 2
23
91,927
401
5,639
1,275
1,044
8,766
1,284
476
9,018
1,267
690
1,114
3,573
3,358
1,863
812
47,364
1,718
477
192
1,598
99,014
433
4,794
648
898
9,157
1,306
817
9,119
1,356
675
1,243
2,884
2,230
2,123
1,130
56,185
1,886
596
142
1,389
106,413
598
5,772
706
823
9,124
1,267
991
8,848
1,258
706
1,058
1,908
2,219
3,171
1,200
62,566
1,964
998
130
1,107
106,755
654
6,574
807
1,085
10,209
1,609
706
6,795
2,040
732
734
1,995
2,487
2,665
1,586
62,017
1,871
791
405
992
104,647
595
7,712
796
1,111
9,600
1,432
626
7,713
2,592
711
699
1,922
2,375
2,832
1,612
58,248
1,886
799
296
1,090
107,047
748
8,149
764
1,176
9,574
1,769
792
8,391
2,427
712
682
1,722
2,343
3,574
1,539
59,120
1,813
600
225
927
107,549
738
7,511
700
947
11,401
1,826
648
9,051
3,314
654
706
1,459
1,945
3,049
1,541
58,380
1,833
556
345
944
100,817'
654
7,571
667
797
9,095'
2,277
635
7,916
2,087
741
677'
1,479
2,280
2,622
1,469
55,765'
1,775'
536
396
1,379'
102,399
559
8,882
631
1,050
10,001
1,736
634
7,339
2,063
766
679
1,637
2,422
2,423
1,436
56,467
1,769
491
401
1,009
99,199
655
8,030
645
1,117
9,693
1,639
525
6,985
2,391
662
737
1,767
2,457
2,334
1,568
53,969
1,840
801
364
1,020
24 Canada
16,341
16,109
16,482
18,112
19,532
20,338
20,957
20,749
19,192
19,701
25 Latin America and Caribbean
26
Argentina
27
Bahamas
28
Bermuda
29
Brazil
30
British West Indies
31
Chile
32
Colombia
33
Cuba
34
Ecuador
35
Guatemala 3
36
Jamaica 3
37
Mexico
38
Netherlands Antilles
39
Panama
Peru
40
41
Uruguay
42
Venezuela
43
Other Latin America and Caribbean
205,491
11,749
59,633
566
24,667
35,527
6,072
3,745
0
2,307
129
215
34,802
1,154
7,848
2,536
977
11,287
2,277
207,862
11,050
58,009
592
26,315
38,205
6,839
3,499
0
2,420
158
252
34,885
1,350
7,707
2,384
1,088
11,017
2,091
202,674
11,462
58,258
499
25,283
38,881
6,603
3,249
0
2,390
194
224
31,799
1,340
6,645
1,947
960
10,871
2,067
205,584
12,119
61,705
320
24,856
40,364
6,489
2,633
0
2,387
135
224
31,037
1,133
6,377
1,600
1,051
11,177
1,977
196,861
12,243
53,557
452
24,740
39,981
6,514
2,674
0
2,420
122
209
31,061
967
6,094
1,625
930
11,185
2,086
196,768
12,017
54,196
447
25,882
39,694
6,526
2,665
1
2,395
138
216
30,659
931
5,354
1,618
943
11,019
2,067
208,902
12,079
59,877
418
25,586
46,305
6,533
2,819
0
2,430
140
198
30,490
1,039
5,423
1,637
940
11,052
1,937
195,094'
12,114'
51,694'
415
25,766'
41,128'
6,472'
2,801
2
2,425'
133
199
30,273'
960
5,270
1,624'
937
10,018'
1,864'
195,776
12,211
52,489
376
25,796
41,063
6,565
2,743
1
2,422
145
199
29,857
1,072
5,204
1,616
932
11,175
1,910
198,431
12,162
53,725
544
25,889
42,368
6,492
2,692
6
2,339
135
192
29,755
992
5,454
1,583
959
11,276
1,868
44 Asia
China
Mainland
Taiwan
Hong Kong
India
Indonesia
Israel
Japan
Korea
Philippines
Thailand
Middle East oil-exporting countries 4
Other Asia
67,837
66,316
66,212
78,073
78,631
86,236
%,148
95,988'
91,798
86,614
292
1,908
8,489
330
805
1,832
30,354
9,943
2,107
1,219
4,954
5,603
710
1,849
7,293
425
724
2,088
29,066
9,285
2,555
1,125
5,044
6,152
639
1,535
6,797
450
698
1,991
31,249
9,226
2,224
845
4,298
6,260
758
1,903
8,883
355
689
1,622
42,751
7,846
2,148
636
3,724
6,758
758
1,528
8,337
316
694
1,630
45,240
7,023
2,071
611
3,3%
7,027
793
1,812
7,575
327
722
1,615
53,351
6,533
1,972
595
3,778
7,162
787
2,675
8,250
321
718
1,645
59,852
7,155
2,202
577
4,122
7,845
983
2,617
8,443
333
699
1,611
58,315
6,783
2,147'
521
5,483
8,053
873
2,890
9,225
325
679
1,531
55,623
6,161
2,120
556
4,892
6,922
1,034
2,696
8,248
485
652
1,526
51,817
5,941
2,269
454
5,130
6,362
57 Africa
58
Egypt
59
Morocco
60
South Africa
61
Zaire
62
Oil-exporting countries 5
63
Other
6,654
747
440
2,634
33
1,073
1,727
6,615
728
583
2,795
18
842
1,649
5,407
721
575
1,942
20
630
1,520
4,651
593
636
1,607
33
512
1,270
4,531
577
621
1,549
35
545
1,203
4,737
560
621
1,586
27
690
1,253
4,621
567
598
1,531
28
688
1,208
4,599
577
590
1,516
36
725
1,156
4,637
593
585
1,507
42
743
1,168
4,834
618
584
1,531
42
856
1,204
64 Other countries
65
Australia
66
All other
2,898
2,256
642
3,447
2,769
678
3,390
2,413
978
3,225
2,221
1,004
3,259
2,143
1,115
3,187
1,980
1,207
3,297
1,952
1,345
3,323
2,081
1,242
2,878
1,906
971
2,882
1,991
892
164
800
1,030
200
372
171
2,983
62
178
549
45
46
47
48
49
50
51
52
53
54
55
56
67 Nonmonetary international and regional
organizations 6
1. Includes the Bank for International Settlements. Beginning April 1978, also
includes Eastern European countries not listed in line 23.
2. Beginning April 1978 comprises Bulgaria, Czechoslovakia, the German
Democratic Republic, Hungary, Poland, and Romania.
3. Included in "Other Latin America and Caribbean" through March 1978.
4. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
5. Comprises Algeria, Gabon, Libya, and Nigeria.
6. Excludes the Bank for International Settlements, which is included in
"Other Western E u r o p e . "
Nonbank-Reported
3.19
Data
BANKS' OWN A N D DOMESTIC CUSTOMERS' CLAIMS ON FOREIGNERS Reported by Banks in the
United States
Payable in U.S. Dollars
M i l l i o n s o f dollars, e n d o f period
1987
1986
Type of claim
1983
1984
1985
Sept.
1 Total
2
3
4
5
6
7
8
.
Banks' own claims on foreigners
Foreign public borrowers
Own foreign offices'
Unaffiliated foreign banks
Deposits
Other
All other foreigners
9 Claims of banks' domestic customers 2 . .
Oct.
Nov.
407,832
60,745
182,548
117,865
53,546
64,319
46,675
418,485
60,785
189,732
120,485
53,300
67,185
47,483
Dec.
426,215
433,078
430,489
448,375
391,312
57,569
146,393
123,837
47,126
76,711
63,514
400,162
62,237
156,216
124,932
49,226
75,706
56,777
401,608
60,507
174,261
116,654
48,372
68,282
50,185
416,601
60,603
193,350
116,837
52,178
64,660
45,811
34,903
2,969
32,916
3,380
28,881
3,335
31,774
3,668
33,971
4,413
26,064
23,805
19,332
22,337
24,044
5,870
5,732
6,214
5,769
5,514
37,715
37,103
28,487
27,082
25,606
46,337
40,714
37,780
43,753
Jan/
Feb.
478,429
444,458
63,582
212,023
122,819
57,349
65,471
46,034
Mar.''
412,210
420,632
61,833
192,120
121,005
54,266
66,740
45,674
416,857
61,698
190,529
120,311
55,493
64,817
44,319
46,506
47,835
412,210
62,122
189,745
116,483
53,487
62,996
43,859
11 Negotiable and readily transferable
12 Outstanding collections and other
13 MEMO: C u s t o m e r liability o n
Dollar deposits in banks abroad, reported by nonbanking business enterprises in the United States 4 . . . .
1. U.S. banks: includes amounts due from own foreign branches and foreign
subsidiaries consolidated in "Consolidated Report of Condition" filed with bank
regulatory agencies. Agencies, branches, and majority-owned
subsidiaries of
foreign banks: principally amounts due from head office or parent foreign bank,
and foreign branches, agencies, or wholly owned subsidiaries of head office or
parent foreign bank.
2. Assets owned by customers of the reporting bank located in the United
States that represent claims on foreigners held by reporting banks for the account
of their domestic customers.
3.20
44,772
42,771
43,597R
3. Principally negotiable time certificates of deposit and bankers acceptances.
4. Includes demand and time deposits and negotiable and nonnegotiable
certificates of deposit denominated in U.S. dollars issued by banks abroad. For
description of changes in data reported by nonbanks, see July 1979 BULLETIN,
p. 550.
NOTE. Beginning April 1978, data for banks' own claims are given on a monthly
basis, but the data for claims of banks' own domestic customers are available on a
quarterly basis only.
BANKS' OWN CLAIMS ON UNAFFILIATED FOREIGNERS Reported by Banks in the United States
Payable in U.S. Dollars
Millions o f dollars, e n d o f p e r i o d
1986
Maturity; by borrower and area
1
2
3
4
5
6
7
8
9
10
11
1?
13
14
15
16
17
18
19
By borrower
Maturity of 1 year or less'
Foreign public borrowers
All other foreigners
Maturity of over 1 year'
Foreign public borrowers
All other foreigners
By area
Maturity of 1 year or less'
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other 2
Maturity of over 1 year'
Europe
Canada
Latin America and Caribbean
Asia
Africa
All other 2
1. Remaining time to maturity.
1983
1984
n.a.
1985
Mar.
June
Sept.
Dec/
243,715
243,952
227,903
221,294
222,597
224,693
230,897
176,158
24,039
152,120
67,557
32,521
35,036
167,858
23,912
143,947
76,094
38,695
37,399
160,824
26,302
134,522
67,078
34,512
32,567
152,782
23,883
128,900
68,512
36,875
31,637
152,589
23,171
129,418
70,008
37,365
32,643
155,116
22,527
132,589
69,577
38,189
31,388
159,414
24,920
134,494
71,483
39,816
31,667
56,117
6,211
73,660
34,403
4,199
1,569
58,498
6,028
62,791
33,504
4,442
2,593
56,585
6,401
63,328
27,966
3,753
2,791
53,432
6,013
59,550
28,013
3,331
2,443
57,948
6,074
57,397
25,802
3,297
2,073
59,383
6,160
58,191
26,474
3,071
1,838
61,057
5,794
55,879
29,372
2,854
4,458
13,576
1,857
43,888
4,850
2,286
1,101
9,605
1,882
56,144
5,323
2,033
1,107
7,634
1,805
50,674
4,502
1,538
926
7,812
1,925
52,167
4,251
1,634
722
7,934
2,256
53,572
4,034
1,497
714
7,297
1,930
54,093
3,976
1,479
802
6,796
1,930
56,336
4,091
1,534
795
2. Includes nonmonetary international and regional organizations.
A61
A62
3.21
International Statistics • July 1987
CLAIMS ON FOREIGN COUNTRIES Held by U.S. Offices and Foreign Branches of U.S.-Chartered Banks 1 - 2
B i l l i o n s o f dollars, e n d o f period
1985
Area or country
1982
1983
1986
1984
Mar.
June
Sept.
Dec.
Mar.
June
Sept.
Dec.P
436.1
433.9
405.7
405.5
3%. 8
394.9
391.9
394.4
391.0
391.3
395.5
179.6
13.1
17.1
12.7
10.3
3.6
5.0
5.0
72.1
10.4
30.2
167.8
12.4
16.2
11.3
11.4
3.5
5.1
4.3
65.3
8.3
29.9
148.1
8.7
14.1
9.0
10.1
3.9
3.2
3.9
60.3
7.9
27.1
153.0
9.3
14.5
8.9
10.0
3.8
3.1
4.2
65.4
9.1
24.7
146.7
8.9
13.5
9.6
8.6
3.7
2.9
4.0
65.7
8.1
21.7
152.0
9.5
14.8
9.8
8.4
3.4
3.1
4.1
67.1
7.6
24.3
148.5
9.3
12.3
10.5
9.8
3.7
2.8
4.4
64.6
7.0
24.2
156.3
8.3
13.8
11.2
8.5
3.5
2.9
5.4
68.5
6.2
28.1
159.9
9.0
15.1
11.5
9.3
3.4
2.9
5.6
68.9
6.8
27.4
158.9
8.5
14.6
12.5
8.1
3.9
2.7
4.8
70.0
6.1
27.7
159.6
8.5
13.8
11.2
9.2
4.6
2.4
5.5
72.0
5.4
26.9
13 Other developed countries
14
Austria
15
Denmark
16
Finland
17
Greece
18
Norway
19
Portugal
20
Spain
21
Turkey
22
Other Western Europe
23
South Africa
24
Australia
33.5
1.9
2.4
2.2
3.0
3.3
1.5
7.5
1.4
2.3
3.7
4.3
36.0
1.9
3.4
2.4
2.8
3.3
1.5
7.1
1.7
1.8
4.7
5.4
33.6
1.6
2.2
1.9
2.9
3.0
1.4
6.5
1.9
1.7
4.5
6.0
32.8
1.6
2.1
1.8
2.9
2.9
1.4
6.4
1.9
1.7
4.2
6.1
32.3
1.6
1.9
1.8
2.9
2.9
1.3
5.9
2.0
1.8
3.9
6.2
32.0
1.7
2.1
1.8
2.8
3.4
1.4
6.1
2.1
1.7
3.3
5.6
30.4
1.6
2.4
1.6
2.6
2.9
1.3
5.8
1.9
2.0
3.2
5.0
31.6
1.6
2.5
1.9
2.5
2.7
1.1
6.4
2.3
2.4
3.2
4.9
30.6
1.7
2.4
1.6
2.6
3.0
1.0
6.4
2.5
2.1
3.1
4.2
29.4
1.7
2.3
1.7
2.3
2.7
1.0
6.7
2.1
1.6
3.1
4.1
26.2
1.7
1.7
1.4
2.3
2.4
.9
5.8
2.0
1.5
3.1
3.5
25 OPEC countries 3
26
Ecuador
27
Venezuela
28
Indonesia
29
Middle East countries
30
African countries
26.9
2.2
10.5
2.9
8.5
2.8
28.4
2.2
9.9
3.4
9.8
3.0
24.9
2.2
9.3
3.3
7.9
2.3
24.5
2.2
9.3
3.3
7.4
2.3
22.8
2.2
9.3
3.1
6.1
2.2
22.7
2.2
9.0
3.1
6.2
2.3
21.6
2.1
8.9
3.0
5.5
2.0
20.7
2.2
8.7
3.3
4.8
1.8
20.6
2.1
8.8
3.0
5.0
1.7
20.0
2.1
8.7
2.8
4.6
1.7
19.6
2.2
8.6
2.6
4.5
1.7
1 Total
2 G-10 countries and Switzerland
3
Belgium-Luxembourg
4
France
5
Germany
6
Italy
7
Netherlands
8
Sweden
9
Switzerland
10
United Kingdom
11
Canada
12
Japan
106.5
110.8
111.8
110.8
110.0
107.8
105.1
103.5
101.5
99.7
100.1
32
33
34
35
36
37
38
Latin America
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Other Latin America
8.9
22.9
6.3
3.1
24.2
2.6
4.0
9.5
23.1
6.4
3.2
25.8
2.4
4.2
8.7
26.3
7.0
2.9
25.7
2.2
3.9
8.6
26.4
7.0
2.8
25.5
2.2
3.8
8.6
26.6
6.9
2.7
25.3
2.1
3.7
8.9
25.5
6.6
2.6
24.4
1.9
3.5
8.9
25.6
7.0
2.7
24.2
1.8
3.4
8.9
25.6
7.0
2.3
24.0
1.7
3.3
9.2
25.3
7.1
2.2
23.8
1.6
3.3
9.3
25.2
7.1
2.0
23.8
1.5
3.3
9.5
25.3
7.1
2.1
23.9
1.4
3.7
39
40
41
42
43
44
45
46
47
Asia
China
Mainland
Taiwan
India
Israel
Korea (South)
Malaysia
Philippines
Thailand
Other Asia
.2
5.3
.5
2.3
10.7
2.1
6.3
1.6
1.1
.3
5.2
.9
1.9
11.2
2.8
6.1
2.2
1.0
.7
5.1
.9
1.8
10.6
2.7
6.0
1.8
1.1
.7
5.3
.9
1.7
10.4
2.7
6.1
1.7
1.1
.3
5.5
.9
2.3
10.0
2.8
6.0
1.6
.9
1.1
5.1
1.1
1.5
10.4
2.7
6.0
1.7r
.9
.5
4.5
1.2
1.6
9.4
2.4
5.7
1.4
1.0
.6
4.3
1.2
1.3
9.5
2.2
5.6
1.3
.9
.6
3.7
1.3
1.6
8.7
2.0
5.7
1.1
.8
.6
4.3
1.3
1.4
7.3
2.1
5.4
1.0
.7
.4
4.9
1.2
1.6
6.8
2.1
5.4
.9
.7
48
49
50
51
Africa
Egypt
Morocco
Zaire
Other Africa 4
1.2
.7
.1
2.4
1.5
.8
.1
2.3
1.2
.8
.1
2.1
1.1
.8
.1
2.2
1.0
.8
.1
2.0
1.0
.9
.1
2.0
1.0
.9
.1
1.9
.9
.9
.1
1.9
.9
.9
.1
1.7
.7
.9
.1
1.6
.7
.9
.1
1.6
52 Eastern Europe
53
U.S.S.R
54
Yugoslavia
55
Other
6.2
.3
2.2
3.7
5.3
.2
2.4
2.8
4.4
.1
2.3
2.0
4.3
.2
2.2
1.9
4.3
.3
2.2
1.8
4.6
.2
2.4
1.9
4.2
.1
2.2
1.8
4.0
.3
2.0
1.7
4.0
.3
2.0
1.7
3.4
.1
1.9
1.4
4.0
.4
1.7
1.9
56 Offshore banking centers
57
Bahamas
58
Bermuda
59
Cayman Islands and other British West Indies
60
Netherlands Antilles
61
Panama 5
62
Lebanon
63
Hong Kong
64
Singapore
65
Others 6
66.0
19.0
.9
12.8
3.3
7.5
.1
13.3
9.1
.0
68.9
21.7
.9
12.2
4.2
5.8
.1
13.8
10.3
.0
65.6
21.5
.9
11.8
3.4
6.7
.1
11.4
9.8
.0
63.2
20.1
.7
12.3
3.3
5.5
.1
11.4
9.9
.0
63.9
21.1
.9
12.1
3.2
5.4
.1
11.4
9.7
.0
58.8
16.6
.8
12.3
2.3
6.1
.0
11.4
9.4
.0
65.4
21.4
.7
13.4
2.3
6.0
.1
11.5
9.9
.0
61.6
21.5
.7
11.3
2.3
5.9
.1
11.4
8.4
.0
57.2
17.3
.4
12.8
2.3
5.5
.1
9.4
9.3
.0
62.6
20.0
.4
13.2
1.9
6.8
.1
10.4
9.7
.0
65.6
22.6
.7
14.6
1.9
5.1
.1
11.2
9.4
.0
66 Miscellaneous and unallocated 7
17.5
16.8
17.3
16.9
16.9
17.3
16.9
16.7
17.2
17.5
20.3
31 Non-OPEC developing countries
1. The banking offices covered by these data are the U.S. offices and foreign
branches of U.S.-owned banks and of U.S. subsidiaries of foreign-owned banks.
Offices not covered include (1) U.S. agencies and branches of foreign banks, and
(2) foreign subsidiaries of U.S. banks. To minimize duplication, the data are
adjusted to exclude the claims on foreign branches held by a U.S. office or another
foreign branch of the same banking institution. The data in this table combine
foreign branch claims in table 3.14 (the sum of lines 7 through 10) with the claims
of U.S. offices in table 3.18 (excluding those held by agencies and branches of
foreign banks and those constituting claims on own foreign branches).
2. Beginning with June 1984 data, reported claims held by foreign branches
have been reduced by an increase in the reporting threshold for "shell" branches
from $50 million to $150 million equivalent in total assets, the threshold now
applicable to all reporting branches.
3. Besides the Organization of Petroleum Exporting Countries shown individually, this group includes other members of OPEC (Algeria, Gabon, Iran, Iraq,
Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, and United Arab Emirates) as well
as Bahrain and Oman (not formally members of OPEC).
4. Excludes Liberia.
5. Includes Canal Zone beginning December 1979.
6. Foreign branch claims only.
7. Includes New Zealand, Liberia, and international and regional organizations.
Nonbank-Reported
3.22
Data
A63
LIABILITIES TO UNAFFILIATED FOREIGNERS Reported by Nonbanking Business Enterprises in the
United States'
M i l l i o n s o f dollars, e n d o f p e r i o d
1986
1985
Type, and area or country
982
1984
1983
Mar.
Dec.
Dec.?
Sept.
June
1 Total
27,512
25,346
29,357
27,741
26,301
24,698
24,460
25,336
2 Payable in dollars
3 Payable in foreign currencies
24,280
3,232
22,233
3,113
26,389
2,968
24,352
3,389
22,544
3,757
21,040
3,657
20,633
3,827
21,568
3,768
By type
4 Financial liabilities
5
Payable in dollars
6
Payable in foreign currencies
11,066
8,858
2,208
10,572
8,700
1,872
14,509
12,553
1,955
13,516
11,313
2,203
12,971
10,705
2,267
11,578
9,515
2,063
11,700
9,418
2,281
12,070
9,705
2,365
7 Commercial liabilities
8
Trade payables
9
Advance receipts and other liabilities . .
16,446
9,438
7,008
14,774
7,765
7,009
14,849
7,005
7,843
14,225
6,685
7,540
13,329
5,618
7,711
13,120
5,472
7,648
12,760
5,592
7,168
13,267
6,306
6,961
15,423
1,023
13,533
1,241
13,836
1,013
13,039
1,186
11.839
1,490
11,525
1,595
11,214
1,546
11,863
1,404
6,501
505
783
467
711
792
3,102
5,742
302
843
502
621
486
2,839
6,728
471
995
489
590
569
3,297
7,616
329
857
434
745
676
4,254
7,460
338
851
388
630
692
4,217
7,022
288
686
280
635
561
4,274
7,254
322
501
319
708
692
4,272
7,851
245
729
372
701
714
4,790
10
11
12
13
14
15
16
17
18
Payable in dollars
Payable in foreign currencies
By area or country
Financial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
19
Canada
746
764
863
839
832
367
362
403
20
21
22
23
24
25
26
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,751
904
14
28
1,027
121
114
2,596
751
13
32
1,041
213
124
5,086
1,926
13
35
2,103
367
137
3,184
1,123
4
29
1,843
15
3
2,810
958
4
26
1,639
20
3
2,443
874
14
27
1,386
30
3
2,269
863
4
28
1,256
18
5
1,969
621
4
32
1,160
22
3
27
28
29
Asia
Japan
Middle East oil-exporting countries 2 ..
1,039
715
169
1,424
991
170
1,777
1,209
155
1,815
1,198
82
1,824
1,217
78
1,685
1,214
43
1,790
1,354
3
1,767
1,352
8
30
Africa
17
0
19
0
14
0
12
0
12
0
12
0
4
2
1
1
12
27
41
50
32
49
21
79
3,831
52
598
468
346
367
1,027
3,245
62
437
427
268
241
732
4,001
48
438
622
245
257
1,095
4,074
62
453
607
364
379
976
3,925
66
382
546
545
261
957
3,826
58
358
561
586
284
864
4,337
75
369
628
613
360
1,086
4,422
99
314
693
493
384
1,279
31
32
33
34
35
36
37
38
39
40
Oil-exporting countries 3
All other 4
Commercial liabilities
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
1,495
1,841
1,975
1,449
1,445
1,357
1,240
1,387
41
42
43
44
45
46
47
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
1,570
16
117
60
32
436
642
1,473
1
67
44
6
585
432
1,871
7
114
124
32
586
636
1,088
12
77
58
44
430
212
1,107
26
218
64
7
256
364
1,242
10
294
45
35
235
488
843
37
172
43
45
196
207
856
19
132
59
46
211
215
48
49
50
Asia
Japan
Middle East oil-exporting countries 2 - 5 .
8,144
1,226
5,503
6,741
1,247
4,178
5,285
1,256
2,372
6,046
1,799
2,829
5,384
2,039
2,171
5,075
2,100
1,787
4,781
2,114
1,490
5,018
2,046
1,668
51
52
Africa
Oil-exporting countries 3
753
277
553
167
588
233
587
238
486
148
567
215
578
176
622
197
53
All other 4
651
921
1,128
982
983
1,053
980
962
1. For a description of the changes in the International Statistics tables, see
July 1979 BULLETIN, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations.
5. Revisions include a reclassification of transactions, which also affects the
totals for Asia and the grand totals.
A64
International Statistics • July 1987
3.23
CLAIMS ON UNAFFILIATED FOREIGNERS
United States 1
Reported by Nonbanking Business Enterprises in the
M i l l i o n s of dollars, e n d o f period
1985
Type, and area or country
1983
1982
1986
1984
Mar.
Dec.
June
Sept.
Dec.''
1 Total
28,725
34,911
29,901
28,437
31,383
33,282
32,599
32,847
2 Payable in dollars
3 Payable in foreign currencies
26,085
2,640
31,815
3,096
27,304
2.597
26,135
2,302
29,196
2,187
31,100
2,182
30,123
2,475
30,244
2,603
By type
4 Financial claims
5
Deposits
6
Payable in dollars
7
Payable in foreign currencies
8
Other financial claims
9
Payable in dollars
10
Payable in foreign currencies
17,684
13,058
12,628
430
4,626
2,979
1,647
23,780
18,496
17,993
503
5,284
3,328
1,956
19,254
14,621
14,202
420
4,633
3,190
1,442
18,451
15,204
14,589
615
3,248
2,213
1,035
21,996
18,612
18,155
457
3,384
2,291
1,093
24,139
20,833
20,278
555
3,306
2,285
1,021
23,503
18,566
18,078
488
4,937
3,717
1,220
23,277
18,573
18,024
549
4,704
3,406
1,298
11 Commercial claims
12
Trade receivables
13
Advance payments and other claims
11,041
9,994
1,047
11,131
9,721
1,410
10,646
9,177
1,470
9,986
8,696
1,290
9,387
8,087
1,300
9,142
7,802
1,341
9,096
7,924
1,172
9,570
8,424
1,146
14
15
10,478
563
10,494
637
9,912
735
9,333
652
8,750
637
8,537
606
8,329
767
8,814
756
4,873
15
134
178
97
107
4,064
6,488
37
150
163
71
38
5,817
5,762
15
126
224
66
66
4,864
6,530
10
184
223
61
74
5,725
7,183
10
217
174
61
166
6,310
9,626
11
257
148
17
177
8,799
9,548
67
418
129
44
138
8,525
8,466
41
131
86
87
134
7,736
16
17
18
19
20
21
22
Payable in dollars
Payable in foreign currencies
By area or country
Financial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
23
Canada
4,377
5,989
3,988
3,260
4,020
4,429
3,817
4,119
24
25
26
27
28
29
30
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
7,546
3,279
32
62
3,255
274
139
10,234
4,771
102
53
4,206
293
134
8,216
3,306
6
100
4,043
215
125
7,841
2,698
6
78
4,571
180
48
10,073
3,516
2
77
6,034
178
43
9,253
3,310
17
75
5,402
176
42
9,300
2,912
19
101
5,871
173
40
9,245
2,574
13
67
6,068
173
24
698
153
15
764
297
4
961
353
13
696
475
4
619
350
2
723
499
2
673
387
2
1,335
1,003
11
158
48
147
55
210
85
103
29
87
27
89
25
84
18
85
26
31
159
117
21
14
20
81
27
3,826
151
474
357
350
360
811
3,670
135
459
349
334
317
809
3,801
165
440
374
335
271
1,063
3,533
175
426
346
284
284
898
3,390
148
384
399
221
247
795
3,304
131
391
418
230
228
674
3,344
123
412
397
183
232
830
3,530
129
386
429
199
213
822
31
32
33
34
35
36
37
38
39
40
41
42
43
Japan
Middle East oil-exporting countries 2
Africa
Oil-exporting countries 3
All other 4
Commercial claims
Europe
Belgium-Luxembourg
France
Germany
Netherlands
Switzerland
United Kingdom
44
Canada
633
829
1,021
1,023
1,061
965
929
902
45
46
47
48
49
50
51
Latin America and Caribbean
Bahamas
Bermuda
Brazil
British West Indies
Mexico
Venezuela
2,526
21
261
258
12
775
351
2,695
8
190
493
7
884
272
2,052
8
115
214
7
583
206
1,753
13
93
206
6
510
157
1,592
27
82
217
7
388
172
1,611
24
148
193
29
323
181
1,665
29
132
206
23
299
190
1,827
29
157
228
54
385
219
52
53
54
Asia
Japan
Middle East oil-exporting countries 2
3,050
1,047
751
3,063
1,114
737
3,073
1,191
668
2,982
1,016
638
2,609
801
630
2,574
845
622
2,471
788
597
2,630
842
507
55
56
Africa
Oil-exporting countries 3
588
140
588
139
470
134
437
130
491
167
450
170
456
168
463
135
57
All other 4
417
286
229
257
244
237
231
218
1. For a description of the changes in the International Statistics tables, see
July 1979 BULLETIN, p. 550.
2. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
3. Comprises Algeria, Gabon, Libya, and Nigeria.
4. Includes nonmonetary international and regional organizations,
Securities Holdings and Transactions
3.24
A65
FOREIGN TRANSACTIONS IN SECURITIES
M i l l i o n s o f dollars
1987
Transactions, and area or country
1987
1986
1986
1985
Jan.-Mar.
Oct.
Sept.
Nov.
Dec.
Jan.
Feb.
Mar .P
U.S. corporate securities
STOCKS
1
2
Foreign purchases
Foreign sales
81,995
77,054
148,134
129,436
61,439
51,605
12,250
10,991
10,979
12,300
12,033
12,086
14,096
12,320
17,617
15,956
20,758
17,651
23,064
17,998
3
Net purchases, or sales ( - )
4,941
18,698
9,833
1,259
-1,322
-52
1,776
1,661
3,107
5,066
4
Foreign countries
4,857
18,905
9,976
1,304
-1,179
-19
1,696
1,741
3,206
5,028
5
6
7
8
9
10
11
1?
13
14
IS
16
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Africa
Other countries
2,057
-438
730
-123
-75
1,665
356
1,718
238
296
24
168
9,559
459
341
936
1,560
4,826
807
3,029
975
3,865
297
373
4,682
1,242
97
213
379
2,419
327
1,011
-270
3,886
15
324
573
30
9
36
71
448
106
147
58
346
-13
86
-1,124
-92
-104
-19
-405
-481
-115
154
-51
16
39
-97
-485
-69
- 3
-50
-236
-114
41
367
-92
80
23
48
557
113
24
14
47
363
102
220
267
450
17
84
1,061
140
62
53
101
647
100
308
136
88
-1
49
1,778
446
16
91
99
989
-116
331
-175
1,159
15
214
1,843
656
19
69
180
783
343
372
-230
2,639
1
61
17
Nonmonetary international and
regional organizations
84
-208
-142
-45
-143
-34
80
-80
-100
37
BONDS2
18
19
Foreign purchases
Foreign sales
86,587
42,455
122,743
71,840
29,449
20,900
10,235
5,597
9,752
5,539
9,277
6,105
11,879
7,733
9,308
7,178
8,022
5,453
12,120
8,270
20
Net purchases, or sales (—)
44,132
50,903
8,549
4,638
4,213
3,172
4,147
2,130
2,569
3,850
21
Foreign countries
44,227
50,056
8,410
4,934
4,455
2,853
4,251
2,218
2,183
4,008
22
23
24
Europe
France
Germany
Netherlands
Switzerland
United Kingdom
Canada
Latin America and Caribbean
Middle East 1
Other Asia
Africa
Other countries
40,047
210
2,001
222
3,987
32,762
190
498
-2,648
6,091
11
38
39,307
388
-251
387
4,529
33,899
548
1,468
-2,961
11,539
16
139
6,390
105
129
33
702
5,514
451
270
-207
1,555
5
-54
3,445
-29
26
51
30
3,468
2
64
-169
1,590
6
- 4
3,475
0
82
-55
265
3,177
88
101
-33
817
-3
11
2,100
328
-108
113
204
1,416
154
66
-355
902
3
-15
3,074
32
-19
52
-117
2,770
153
102
-258
1,174
3
3
1,375
6
-213
- 7
66
1,392
-103
103
-57
917
0
-16
1,406
17
145
-29
78
1,182
364
98
-139
469
1
-16
3,609
81
198
69
558
2,940
190
70
-11
169
3
-22
-95
847
139
-296
-243
319
-104
-88
386
-159
76
27
7,8
29
30
31
32
33
34
Nonmonetary international and
regional organizations
Foreign securities
35
36
37
Stocks, net purchases, or sales (—)
Foreign purchases
Foreign sales
-3,941
20,861
24,803
-1,452
50,292
51,744
-1,324
19,449
20,773
679
5,120
4,440
1,311
6,426
5,115
391
4,190
3,799
65
4,709
4,644
- 167 R
5,001'
5,169
-463
7,247
7,710
-693
7,201
7,894
38
39
40
Bonds, net purchases, or sales ( - )
Foreign purchases
Foreign sales
-3,999
81,216
85,214
-3,098
166,700
169,798
-413
43,856
44,269
-2,340
15,239
17,578
2,125
16,274
14,149
-683
12,663
13,346
-441
16,316
16,756
32C
11,427'
11,107'
-217
15,821
16,037
-516
16,609
17,125
41
Net purchases, or sales (—), of stocks and bonds . . . .
-7,940
-4,550
-1,737
-1,660
3,436
-292
-376
152'
-680
-1,209
42
Foreign countries
-9,003
-5,665
-2,293
-1,598
3,117
-294
-825
10'
-789
-1,514
43
44
45
46
47
48
Europe
Canada
Latin America and Caribbean
-9,887
-1,686
1,797
659
75
38
-17,675
-875
3,469
11,342
52
-1,977
-2,123
-1,222
84
1,411
3
-446
-3,390
109
351
1,764
3
-434
-657
94
502
3,237
-1
-59
-1,010
-106
16
820
4
-19
-1,369
-264
203
1,511
3
-909
-188'
- 3 %
389
168
4
33'
-1,271
-622
124
935
0
45
-665
-204
-429
309
-1
-524
49
Nonmonetary international and
regional organizations
1,063
1,115
556
-63
320
2
449
143
109
305
Africa
Other countries
1. Comprises oil-exporting countries as follows: Bahrain, Iran, Iraq, Kuwait,
Oman, Qatar, Saudi Arabia, and United Arab Emirates (Trucial States).
2. Includes state and local government securities, and securities of U.S.
government agencies and corporations. Also includes issues of new debt securi-
ties sold abroad by U.S. corporations organized to finance direct investments
abroad.
A66
3.25
International Statistics • July 1987
MARKETABLE U.S. TREASURY BONDS A N D NOTES
Millions of dollars
Foreign Transactions
1987
Country or area
1985
1987
1986
1986
Jan.Mar.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.P
Transactions, net purchases or sales ( - ) during period 1
1 Estimated total 2
29,208
24,173
13,855
5,105
3,032
-2,259
991
-156'
7,782
2 Foreign countries 2
28,768
25,277
5,786
4,062
2,717
-301
-488
58C
1,818
3,388
4,303
476
1,917
269
976
773
-1,810
1,701
0
-188
16,851
349
7,531
1,283
132
310
4,648
2,598
0
881
8,115
235
3,353
-607
536
1,721
1,530
1,347
0
1,145
-722
239
1,098
-313
85
-53
-1,972
195
0
-190
3,046
4
2,497
112
-6
449
141
-149
0
-230
-727
-53
700
38
-70
-498
-335
-510
0
19
1,001
75
-487
-58
-236
-428
1,036
1,099
0
297
1,376
59
581
-366
-229
-135
1,227
236
3
846
1,709
211
1,118
41
440
473
-57
-518
0
-403
5,031
-35
1,655
-283
325
1,383
360
1,628
-3
702
4,315
248
2,336
1,731
19,919
17,909
112
308
878
-95
1,131
-159
5,466
4,048
-54
1,255
-1,358
87
-228
-1,218
-2,017
-688
-15
-83
220
266
32
-78
4,942
4,489
11
-200
-219
69
-314
26
-30
-450
-13
163
75
-139
6
208
-152
188
2
482
97
29
96
-28
-2,067
-2,086
-14
198
-1,006'
-33
-445'
-528
-922
-76
6
280
-290
18
374
-682
1,231
1,776
-34
-396
-62
102
-156
-8
-2,327
-2,388
12
32
442
-436
18
-1,105
-1,430
157
8,070
7,949
11
1,043
937
39
315
365
-5
-1,958
-2,010
0
1,478
1,412
0
-736
-791
0
5,966
5,964
0
-2,840
-2,776
11
28,768
8,135
20,631
25,277
14,366
10,913
5,786
7,186
-1,400
4,062
1,878
2,183
2,717
3,589
-872
-301
133
-434
-488
295
-782
580'
1,498'
-918
1,818
682
1,135
3,388
5,007
-1,617
-1,547
7
-1473
5
-1,456
19
-205
2
-377
-1
-1,014
1
-21
0
-721
1
-962
1
226
17
3 Europe 2
4
Belgium-Luxembourg
5
Germany 2
6
Netherlands
7
Sweden
8
Switzerland 2
9
United Kingdom
10
Other Western E u r o p e
11
Eastern Europe
12 Canada
13
14
15
16
17
18
19
20
Latin America and Caribbean
Venezuela
Other Latin America and Caribbean
Netherlands Antilles
Asia
Japan
Africa
All other
21 Nonmonetary international and regional organizations
22
International
23
Latin American regional
6,229
MEMO
24 Foreign countries' 1
25
Official institutions
26
Other foreign 2
27
28
Oil-exporting countries
Middle East 3
Africa 4
1. Estimated official and private transactions in marketable U.S. Treasury
securities with an original maturity of more than 1 year. Data are based on
monthly transactions reports. Excludes nonmarketable U . S . Treasury bonds and
notes held by official institutions of foreign countries.
2. Includes U.S. Treasury notes publicly issued to private foreign residents
denominated in foreign currencies.
3. Comprises Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, and
United Arab Emirates (Trucial States).
4. Comprises Algeria, Gabon, Libya, and Nigeria,
Interest and Exchange Rates
3.26
A67
DISCOUNT RATES OF FOREIGN CENTRAL BANKS
P e r c e n t per a n n u m
Rate on Apr. 30, 1987
Rate on Apr. 30, 1987
Austria..
Belgium .
Brazil...
Canada..
Denmark
Percent
Month
effective
3.5
8.5
49.0
7.90
7.0
Jan. 1987
Jan. 1987
Mar. 1981
Apr. 1987
Oct. 1983
Country
Percent
France 1
Germany, Fed. Rep. of
Italy
Japan
Netherlands
1. As of the end of February 1981, the rate is that at which the Bank of France
discounts Treasury bills for 7 to 10 days.
2. Minimum lending rate suspended as of Aug. 20, 1981.
NOTE. Rates shown are mainly those at which the central bank either discounts
3.27
Rate on Apr. 30, 1987
Country
Country
7.75
3.5
11.5
2.5
4.5
Month
effective
Mar.
Mar.
Mar.
Feb.
Mar.
1987
1986
1987
1987
1986
Norway
Switzerland
United Kingdom 2 .
Venezuela
Percent
Month
effective
8.0
3.5
June 1983
Jan. 1987
Oct. 1985
or makes advances against eligible commercial paper and/or government commercial banks or brokers. For countries with more than one rate applicable to such
discounts or advances, the rate shown is the one at which it is understood the
central bank transacts the largest proportion of its credit operations.
FOREIGN SHORT-TERM INTEREST RATES
P e r c e n t p e r a n n u m , a v e r a g e s of daily figures
1986
Country, or type
1
2
3
4
5
6
7
8
9
10
1984
1985
1987
1986
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
Eurodollars
United Kingdom
Canada
Germany
Switzerland
10.75
9.91
11.29
5.96
4.35
8.27
12.16
9.64
5.40
4.92
6.70
10.87
9.18
4.58
4.19
5.88
11.08
8.45
4.56
3.96
5.96
11.12
8.39
4.67
3.88
6.23
11.30
8.34
4.80
4.08
6.10
10.98
7.95
4.45
3.63
6.32
10.79
7.44
3.94
3.58
6.37
9.90
7.14
3.97
3.93
6.73
9.72
7.62
3.85
3.65
Netherlands
France
Italy
Belgium
Japan
6.08
11.66
17.08
11.41
6.32
6.29
9.91
14.86
9.60
6.47
5.56
7.68
12.60
8.04
4.96
5.32
7.38
10.85
7.29
4.75
5.48
7.51
11.05
7.38
4.39
6.03
7.92
11.40
7.39
4.40
5.58
8.49
11.39
7.88
4.23
5.31
8.36
11.13
7.75
3.98
5.38
7.85
10.65
7.49
4.00
5.31
7.87
10.03
7.21
3.92
NOTE. Rates are for 3-month interbank loans except for Canada, finance company paper; Belgium, 3-month Treasury bills; and Japan, Gensaki rate.
A68
3.28
International Statistics • July 1987
FOREIGN EXCHANGE RATES
C u r r e n c y units p e r dollar
1986
Country/currency
1984
1985
Nov.
1
2
3
4
5
6
7
Australia/dollar 1
Austria/schilling
Belgium/franc
Brazil/cruzeiro
Canada/dollar
China, P.R./yuan
Denmark/krone
8
9
10
11
12
13
14
Finland/markka
France/franc
Germany/deutsche mark
Greece/drachma
Hong Kong/dollar
India/rupee
Ireland/pound 1
15
16
17
18
19
20
21
Italy/lira
Japan/yen
Malaysia/ringgit
Netherlands/guilder
New Zealand/dollar 1
Norway/krone
Portugal/escudo
22
23
24
25
26
27
28
29
30
31
Singapore/dollar
South Africa/rand 1
South Korea/won
Spain/peseta
Sri Lanka/rupee
Sweden/krona
Switzerland/franc
Taiwan/dollar
Thailand/baht
United Kingdom/pound 1
1987
1986
Dec.
Jan.
Feb.
Mar.
Apr.
87.937
20.005
57.749
1841.50
1.2953
2.3308
10.354
70.026
20.676
59.336
6205.10
1.3658
2.9434
10.598
67.093
15.260
44.662
13.051
1.38%
3.4615
8.0954
64.45
14.251
42.069
14.10
1.3863
3.7314
7.6444
65.95
13.9%
41.381
14.54
1.3801
3.7314
7.5235
66.09
13.087
38.616
15.58
1.3605
3.7314
7.0591
66.77
12.833
37.789
18.08
1.3340
3.7314
6.8939
68.17
12.905
38.029
20.56
1.3194
3.7314
6.9166
71.19
12.739
35.562
22.59
1.3183
3.7314
6.8388
6.0007
8.7355
2.8454
112.73
7.8188
11.348
108.64
6.1971
8.9799
2.9419
138.40
7.7911
12.332
106.62
5.0721
6.9256
2.1704
139.93
7.8037
12.597
134.14
4.9576
6.6206
2.0243
139.12
7.7974
13.076
134.64
4.8980
6.5296
1.9880
140.13
7.7931
13.149
136.78
4.6419
6.2007
1.8596
134.80
7.7698
13.029
143.90
4.5556
6.0760
1.8239
133.88
7.7952
13.062
145.93
4.5102
6.1091
1.8355
134.68
7.8017
12.924
145.54
4.4227
6.0332
1.8125
133.502
7.8023
12.8224
147.49
1756.10
237.45
2.3448
3.2083
57.837
8.1596
147.70
1908.90
238.47
2.4806
3.3184
49.752
8.5933
172.07
1491.16
168.35
2.5830
2.4484
52.456
7.3984
149.80
1401.08
162.85
2.6131
2.2870
51.382
7.5401
149.54
1379.44
162.05
2.5%6
2.2470
51.339
7.5294
148.61
1317.17
154.83
2.5701
2.0978
53.605
7.1731
142.90
1297.74
153.41
2.5418
2.0592
54.815
7.0067
141.62
1305.90
151.43
2.5230
2.0731
56.333
6.9335
141.48
1292.%
143.00
2.4861
2.0447
57.751
6.7781
140.339
2.1325
69.534
807.91
160.78
25.428
8.2706
2.3500
39.633
23.582
133.66
2.2008
45.57
861.89
169.98
27.187
8.6031
2.4551
39.889
27.193
129.74
2.1782
43.952
884.61
140.04
27.933
7.1272
1.7979
37.837
26.314
146.77
2.1922
44.37
873.54
136.10
28.471
6.9683
1.6858
36.438
26.278
142.38
2.1900
44.94
868.43
134.49
28.532
6.9081
1.6647
36.001
26.239
143.93
2.1510
47.70
862.86
129.54
28.578
6.6188
1.5616
35.304
26.037
150.54
2.1410
47.97
857.38
128.62
28.662
6.5016
1.5403
35.056
25.933
152.80
2.1418
48.21
856.11
128.86
28.823
6.4202
1.5391
34.681
25.881
159.23
2.1350
49.55
845.00
126.975
28.902
6.3210
1.4968
33.863
25.695
162.99
138.19
143.01
112.22
107.90
106.54
101.13
98.99
97.09
MEMO
32 United States/dollar 2
1. Value in U.S. cents.
2. Index of weighted-average exchange value of U.S. dollar against currencies
of other G-10 countries plus Switzerland. March 1973 = 100. Weights are 1972-76
global trade of each of the 10 countries. Series revised as of August 1978. For
description and back data, see "Index of the Weighted-Average Exchange Value
of the U.S. Dollar: Revision" on p. 700 of the August 1978 BULLETIN.
99.46
3. Currency reform.
NOTE. Averages of certified noon buying rates in New York for cable transfers.
Data in this table also appear in the Board's G.5 (405) release. For address, see
inside front cover.
A69
Guide to Tabular Presentation,
Statistical Releases, and Special Tables
GUIDE
TO TABULAR
Symbols and
c
e
p
r
*
PRESENTATION
Abbreviations
Corrected
Estimated
Preliminary
Revised (Notation appears on column heading when
about half of the figures in that column are changed.)
Amounts insignificant in terms of the last decimal place
shown in the table (for example, less than 500,000
when the smallest unit given is millions)
General
0
n.a.
n.e.c.
IPCs
REITs
RPs
SMSAs
Calculated to be zero
Not available
Not elsewhere classified
Individuals, partnerships, and corporations
Real estate investment trusts
Repurchase agreements
Standard metropolitan statistical areas
Cell not applicable
Information
Minus signs are used to indicate (1) a decrease, (2) a negative
figure, or (3) an outflow.
"U.S. government securities" may include guaranteed
issues of U.S. government agencies (the flow of funds figures
also include not fully guaranteed issues) as well as direct
STATISTICAL
obligations of the Treasury. "State and local government"
also includes municipalities, special districts, and other political subdivisions.
In some of the tables details do not add to totals because of
rounding.
RELEASES
List Published Semiannually,
with Latest Bulletin
Reference
Issue
June 1987
Anticipated schedule of release dates for periodic releases
SPECIAL
TABLES
Published Irregularly, with Latest Bulletin
Assets
Assets
Assets
Assets
Assets
Assets
Assets
Assets
Terms
Terms
Terms
Terms
Page
A89
Reference
and liabilities of commercial banks, March 31, 1986
and liabilities of commercial banks, June 30, 1986
and liabilities of commercial banks, September 30, 1986
and liabilities of commercial banks, December 31, 1986
and liabilities of U.S. branches and agencies of foreign banks,
and liabilities of U.S. branches and agencies of foreign banks,
and liabilities of U.S. branches and agencies of foreign banks,
and liabilities of U.S. branches and agencies of foreign banks,
of lending at commercial banks, May 1986
of lending at commercial banks, August 1986
of lending at commercial banks, November 1986
of lending at commercial banks, February 1987
Digitized Special
for FRASER
tables begin
on next page.
March 31, 1986
June 30, 1986
September 30, 1986
December 31, 1986
June
June
July
July
November
December
March
May
July
December
February
May
1987
1987
1987
1987
1986
1986
1987
1987
1986
1986
1987
1987
A70
A76
A70
A76
A70
A76
A70
A76
A70
A70
A70
A70
A70
4.20
Special Tables • July 1987
DOMESTIC A N D FOREIGN OFFICES, Insured Commercial Bank Assets and Liabilities' 2
Consolidated Report of Condition, September 30, 1986
Millions o f dollars
Banks with domestic
offices only 5
Banks with foreign offices 3 - 4
Item
Total
Total
1 Total assets6
2 Cash and balances due from depository institutions
Cash items in process of collection, unposted debits, and currency
3
4
Cash items in process of collection and unposted debits and coin
5
Currency and coin
6
Balances due from depository institutions in the United States
7
Balances due from banks in foreign countries and foreign central banks
Balances due from Federal Reserve Banks
8
2,772,938
1,612,911
325,280
226,168
74,225
n.a.
n.a.
33,274
95,765
22,904
A
1
n.a.
1
I
Foreign
423,841
113,326
1,969
n.a.
n.a.
19,178
92,061
118
Domestic
Over 100
Under 100
1,244,421
731,739
428,288
112,843
72,257
61,552
10,705
14,096
3,704
22,786
62,191
25,005
17,432
7,573
22,094
5,785
9,307
36,920
1
n.a.
|
1
1
MEMO
9
Noninterest-bearing balances due from commercial banks in the United
States (included in balances due from depository institutions in the U.S.)
n.a.
9,577
13,446
13,789
n.a.
n.a.
638,776
372,250
184,496
24,235
160,260
163,512
121,420
87,919
57,802
30,118
722
630
91
87,198
57,171
30,027
96,423
62,439
33,984
83,587
n.a.
n.a.
39,088
n.a.
151,397
50,102
n.a.
21,266
8,852
63,238
33,338
9,182
76
15
773
22,740
427
21,189
8,837
62,465
10,597
8,755
10,119
23,865
55,387
11,702
11,236
7,704
n.a.
32,771
5,062
3,847
21,632
n.a.
2,049
7,133
24,156
8
418
22,314
2,041
6,714
1,842
1,197
10,039
467
601
4,461
125,476
1,682,700
16,216
1,666,478
26,847
103
1.639,527
53,956
1,008,931
7,007
1,001,917
16,861
102
984,954
193
237,054
2,020
235,020
n.a.
n.a.
n.a.
53,763
771,877
4,988
766,897
n.a.
n.a.
n.a.
41,545
446,291
5,913
440,379
6,660
0
433,719
29,976
227,478
3,296
224,182
3,327
1
220,854
482,701
n.a.
n.a.
n.a.
n.a.
n.a.
65,187
n.a.
n.a.
n.a.
229,425
n.a.
n.a.
n.a.
n.a.
n.a.
59,312
18,404
4,830
36,079
16,341
n.a.
n.a.
n.a.
n.a.
n.a.
32,392
1,304
311
30,777
213,084
67,300
1,478
83,703
7,293
53,310
26,920
17,099
4,519
5,302
159,833
25,850
3,182
75,559
5,120
50,123
5,153
4,073
832
248
93,442
8,520
7,798
50,928
1,905
24,292
722
n.a.
n.a.
n.a.
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
To U.S. addressees (domicile)
To non-U.S. addressees (domicile)
Acceptances of other banks
U.S. banks
Foreign banks
Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
Credit cards and related plans
48
Other (includes single payment and installment)
49
34,142
570,242
n.a.
n.a.
2,511
n.a.
n.a.
6,098
398,825
289,792
109,033
933
292
642
420
122,592
18,035
104,557
299
7
292
5,678
276,233
271,757
4,476
634
285
350
7,056
118,529
118,124
404
887
n.a.
n.a.
20,987
52,889
n.a.
n.a.
690
n.a.
n.a.
315,907
79,824
236,083
141,851
44,120
97,731
11,063
n.a.
n.a.
130,788
n.a.
n.a.
122,355
33,318
89,036
51,701
2,386
49,315
50 Obligations (other than securities) of states and political subdivisions in the U.S. .
Nonrated industrial development obligations
51
Other obligations (excluding securities)
52
53 All other loans
54
Loans to foreign governments and official institutions
Other loans
55
Loans for purchasing and carrying securities
56
57
All other loans
60,757
45,926
14,831
125,449
n.a.
n.a.
n.a.
n.a.
38,778
28,634
10,144
112,313
38,913
73,399
n.a.
n.a.
631
107
523
48,949
35,761
13,188
n.a.
n.a.
38,147
28,526
9,621
63,363
3,152
60,211
17,541
42,671
18,923
15,274
3,649
9,760
236
9,525
2,171
7,353
3,056
2,019
1,038
3,376
n.a.
n.a.
n.a.
n.a.
25,804
44,294
41,656
8,835
2,160
42,348
n.a.
3,620
70,315
21,396
43,169
21,169
3,570
1.811
41,990
n.a.
2,338
49,290
4,366
16,181
17,030
26,988
n.a.
n.a.
n.a.
n.a.
47,420
n.a.
n.a.
3,795
900
12,657
2,703
286
332
n.a.
1,119
12,775
614
225
7,831
2,562
62
26
n.a.
163
8,249
10 Total securities, loans and lease financing receivables, net
11 Total securities, book value
12
U.S. Treasury securities and U.S. government agency and corporation
obligations
U.S. Treasury securities
13
14
U.S. government agency and corporation obligations
15
All holdings of U.S. government-issued or guaranteed certificates of
participation in pools of residential mortgages
16
All other
Securities issued by states and political subdivisions in the United States
17
18
Other securities
19
Other domestic securities
All holdings of private certificates of participation in pools of
20
residential mortgages
All other
21
22
Foreign securities
23
24
25
26
27
28
29
Federal funds sold and securities purchased under agreements to resell
Total loans and lease financing receivables, gross
LESS: Unearned income on loans
Total loans and leases (net of unearned income)
LESS: Allowance for loan and lease losses
LESS: Allocated transfer risk reserves
EQUALS: Total loans and leases, net
Total loans, gross, by category
30 Loans secured by real estate
Construction and land development
31
Farmland
32
1-4 family residential properties
33
Multifamily (5 or more) residential properties
34
Nonfarm nonresidential properties
35
36 Loans to depository institutions
37
To commercial banks in the United States
38
To other depository institutions in the United States
39
To banks in foreign countries
40
41
42
43
44
45
46
47
58
59
60
61
62
63
64
65
66
Lease financing receivables
Assets held in trading accounts
Premises and fixed assets (including capitalized leases)
Other real estate owned
Investments in unconsolidated subsidiaries and associated companies
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs . . .
Intangible assets
Other assets
n.a.
n.a.
2,234,431
1,223,405
469,428
267,929
n.a.
n.a.
1
T
1
n.a.
1
I
1
Commercial Banks
4.20
A71
Continued
B a n k s with d o m e s t i c
offices o n l y 5
B a n k s with foreign offices 3 - 4
Total
O v e r 100
Foreign
Total
67 Total liabilities, limited-life preferred stock and equity capital
2,772,938
1,612,911
68 Total liabilities 7
69
Limited-life p r e f e r r e d s t o c k
2,595,682
1,524,999
74
62
70 Total d e p o s i t s
71
Individuals, p a r t n e r s h i p s , a n d c o r p o r a t i o n s
U.S. government
72
73
S t a t e s a n d political s u b d i v i s i o n s in t h e U n i t e d S t a t e s
74
C o m m e r c i a l b a n k s in the U n i t e d S t a t e s
75
O t h e r d e p o s i t o r y i n s t i t u t i o n s in t h e U n i t e d S t a t e s
76
B a n k s in f o r e i g n c o u n t r i e s
77
F o r e i g n g o v e r n m e n t s a n d official institutions
78
Certified a n d official c h e c k s
79
All o t h e r 8
2,137,457
731,739
421,566
1,158,784
679,408
12
n.a.
n.a.
324,022
171,500
823,286
725,255
3,075
34,923
35,380
4,987
7,436
2,030
10,198
609,369
550,061
1,761
38,227
11,205
2,650
175
183
5,107
80 Total t r a n s a c t i o n a c c o u n t s
81
Individuals, p a r t n e r s h i p s , a n d c o r p o r a t i o n s
82
U.S. government
83
S t a t e s a n d political s u b d i v i s i o n s in t h e United S t a t e s
84
C o m m e r c i a l b a n k s in the United S t a t e s
85
O t h e r d e p o s i t o r y institutions in the U n i t e d S t a t e s
86
B a n k s in f o r e i g n c o u n t r i e s
87
F o r e i g n g o v e r n m e n t s and official institutions
88
Certified a n d official c h e c k s
89
All o t h e r
293,231
235,032
2,323
7,496
26,014
4,296
6,697
1,173
10,198
177,938
154,718
1,260
8,201
6,896
1,688
56
90 D e m a n d d e p o s i t s (included in total t r a n s a c t i o n a c c o u n t s )
91
Individuals, partnerships, and corporations
U.S. government
92
93
S t a t e s a n d political subdivisions in t h e United S t a t e s
94
C o m m e r c i a l b a n k s in the U n i t e d S t a t e s
95
O t h e r d e p o s i t o r y institutions in t h e U n i t e d S t a t e s
%
B a n k s in f o r e i g n c o u n t r i e s
97
F o r e i g n g o v e r n m e n t s a n d official institutions
98
Certified a n d official c h e c k s
99
All o t h e r
100
Total nontransaction accounts
101
Individuals, partnerships, and corporations
102
U.S. government
103
S t a t e s a n d political s u b d i v i s i o n s in the United S t a t e s
104
C o m m e r c i a l b a n k s in t h e U n i t e d S t a t e s
105
U . S . b r a n c h e s a n d a g e n c i e s of f o r e i g n b a n k s
106
O t h e r c o m m e r c i a l b a n k s in the U n i t e d S t a t e s
107
O t h e r d e p o s i t o r y i n s t i t u t i o n s in t h e U n i t e d S t a t e s
108
B a n k s in f o r e i g n c o u n t r i e s
109
F o r e i g n b r a n c h e s of o t h e r U . S . b a n k s
110
O t h e r b a n k s in f o r e i g n c o u n t r i e s
111
Foreign g o v e r n m e n t s a n d official institutions
112
All o t h e r
240,852
184,072
2,320
6,083
26,013
4,295
6,697
1,172
10,198
122,365
102,650
1,246
4,727
6,893
1,675
55
10
5,107
530,055
490,223
752
27,428
9,366
337
9,029
691
739
24
715
856
431,432
395,342
500
30,026
4,309
730
3,580
961
120
5
115
172
187,614
18,886
38,380
33,631
n.a.
7,931
40,073
4,295
12,994
332
2,041
n.a.
10,304
52,319
251
7,872
19,030
25,166
113
114
115
116
117
118
119
120
121
122
123
124
125
F e d e r a l f u n d s p u r c h a s e d a n d securities sold u n d e r a g r e e m e n t s to r e p u r c h a s e
Demand notes issued to the U . S . Treasury
Other borrowed money
B a n k s liability o n a c c e p t a n c e s e x e c u t e d a n d o u t s t a n d i n g
N o t e s a n d d e b e n t u r e s s u b o r d i n a t e d to d e p o s i t s
N e t d u e to o w n f o r e i g n offices, E d g e a n d A g r e e m e n t subsidiaries a n d I B F s
All o t h e r liabilities
Total e q u i t y c a p i t a l 9
Perpetual preferred stock
C o m m o n stock
Surplus
U n d i v i d e d profits a n d capital r e s e r v e s
Cumulative foreign currency translation adjustments
126
127
128
129
130
131
H o l d i n g s of c o m m e r c i a l p a p e r i n c l u d e d in total l o a n s , g r o s s
Total individual r e t i r e m e n t a c c o u n t s (IRA) and K e o g h plan a c c o u n t s
Total b r o k e r e d d e p o s i t s
Total b r o k e r e d retail d e p o s i t s
I s s u e d in d e n o m i n a t i o n s of $100,000 o r less
Issued in d e n o m i n a t i o n s g r e a t e r t h a n $100,000 a n d participated out by the
b r o k e r in s h a r e s of $100,000 o r less
N o n t r a n s a c t i o n savings d e p o s i t s
Total time d e p o s i t s o f less than $100,000
T i m e certificates of d e p o s i t of $100,000 or m o r e
O p e n - a c c o u n t t i m e d e p o s i t s of $100,000 or m o r e
Super N O W accounts
Money market deposit accounts (MMDAs)
Total time a n d savings d e p o s i t s
I
n.a.
18,718
231,895
n.a.
76,982
42,534
16,426
n.a.
66,475
177,181
1,310
28,904
60,265
87,204
n.a.
MEMO
132
133
134
135
136
137
138
Quarterly
averages
139 Total loans
140 Obligations ( o t h e r t h a n securities) of s t a t e s and political subdivisions
in the United S t a t e s
141 T i m e certificates of d e p o s i t of $100,000 o r m o r e
142 S u p e r N O W a c c o u n t s , m o n e y m a r k e t d e p o s i t a c c o u n t s , a n d time d e p o s i t s ( o t h e r
than certificates of d e p o s i t s of $100,000 o r m o r e )
143 N u m b e r of b a n k s
F o o t n o t e s a p p e a r at the e n d of table 4.22
,147,308
14,167
32,747
10,817
188,388
n.a.
63,128
42,176
14,003
n.a.
51,111
87,850
938
13,946
28,045
45,243
-322
\
30,717
619
121,186
775
n.a.
24,748
8,545
11
5,107
1,116
294
28,749
22,145
5,125
1,209
27,314
3,624
2,494
1,079
3,916
229,204
134,353
138,439
28,059
48,123
174,241
582,434
1,415
182,038
165,477
79,606
4,311
52,677
127,718
487,004
736,580
434,786
38,997
137,563
18,523
80,230
378,143
350,376
n.a.
2,202
U n d e r 100
A72
4.21
Special Tables • July 1987
DOMESTIC OFFICES, Insured Commercial Banks with Assets of $100 Million or more or with foreign offices '-2-3
Consolidated Report of Condition, September 30, 1986
M i l l i o n s o f dollars
Members
Item
Total
I Total assets
6
7. Cash and balances due from depository institutions
3
Cash items in process of collection and unposted debits
4
Currency and coin
5
Balances due from depository institutions in the United States
6
Balances due from banks in foreign countries and foreign central banks
7
Balances due from Federal Reserve Banks
8 Total securities, loans and lease financing receivables, (net of unearned income)
9 Total securities, book value
10
U.S. Treasury securities
11
U.S. government agency and corporation obligations
12
All holdings of U.S. government-issued or guaranteed certificates of
participation in pools of residential mortgages
n
All other
14
Securities issued by states and political subdivisions in the United States
15
Other domestic securities
16
All holdings of private certificates of participation in pools of residential mortgages
17
All other
18
Foreign securities
Nonmembers
Total
National
State
1,976,159
1,618,609
1,270,965
347,644
357,551
175,034
78,984
18,278
36,190
9,489
32,093
146,197
72,510
15,149
23,813
7,154
27,571
114,849
55,960
12,472
19,861
5,686
20,870
31,348
16,550
2,677
3,952
1,468
6,701
28,837
6,474
3,129
12,377
2,335
4,522
1,626,356
1,314,160
1,047,702
266,459
312,196
323,772
119,610
64,011
247,264
91,040
48,336
193,749
73,192
40,492
53,515
17,848
7,844
76,508
28,570
15,675
31,309
32,702
117,852
19,991
3,238
16,753
2,309
26,521
21,815
92,573
13,553
2,679
10,874
1,762
22,568
17,924
68,530
10,903
1,973
8,930
633
3,953
3,891
24,043
2,651
707
1,944
1,129
4,788
10,887
25,279
6,437
558
5,879
547
95,308
78,823
59,440
19,383
16,485
1,218,168
10,900
1,207,276
996,539
8,474
988,073
800,970
6,466
794,512
195,569
2,009
193,561
221,629
2,426
219,203
Total loans, gross, by category
23 Loans secured by real estate
24
Construction and land development
?5
Farmland
26
1-4 family residential properties
27
Multifamily (5 or more) residential properties
28
Nonfarm nonresidential properties
29 Loans to commercial banks in the United States
30 Loans to other depository institutions in the United States
31 Loans to banks in foreign countries
32 Loans to finance agricultural production and other loans to farmers
372,918
93,149
4,660
159,263
12,413
103,433
21,172
5,351
5,549
12,734
288,899
76,113
3,166
122,282
9,597
77,741
17,353
5,095
5,399
10,257
246,257
62,756
2,815
105,825
8,226
66,635
12,963
4,224
3,274
9,014
42,642
13,357
351
16,457
1,371
11,106
4,390
871
2,125
1,243
84,019
17,036
1,494
36,981
2,816
25,692
3,819
256
150
2,477
33 Commercial and industrial loans
34
T o U.S. addressees (domicile)
35
To non-U.S. addressees (domicile)
394,761
389,881
4,880
326,410
321,859
4,551
254,071
250,339
3,732
72,339
71,520
819
68,351
68,023
329
1,521
553
396
1,190
453
349
1,099
414
331
91
39
18
332
100
47
40 Loans to foreign governments and official institutions
41 Obligations (other than securities) of states and political subdivisions in the United States
42
Nonrated industrial development obligations
43
Other obligations (excluding securities)
44
45
Loans for purchasing and carrying securities
46
253,143
3,388
57,070
43,800
13,270
69,736
19,712
50,024
207,120
3,216
47,939
36,088
11,851
65,015
18,584
46,432
172,178
2,291
35,772
26,329
9,443
44,807
11,219
33,588
34,942
924
12,166
9,758
2,408
20,208
7,364
12,844
46,022
172
9,131
7,712
1,419
4,721
1,128
3,592
47 Lease financing receivables
48 Customers' liability on acceptances outstanding
49 Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs
50
20,825
32,199
47,420
142,570
18,647
31,480
43,743
126,771
15,020
22,249
30,149
86,165
3,627
9,231
13,595
40,606
2,178
719
3,676
15,799
19 Federal funds sold and securities purchased under agreements to resell
20 Total loans and lease financing receivables, gross
21
LESS: Unearned income on loans
22 Total loans and leases (net of unearned income)
36 Acceptances of other banks 1 0
37
Of U.S. banks
38
Of foreign banks
39 Loans to individuals for household, family and other personal expenditures
Commercial Banks
4.20
Continued
State
347,644
51 Total liabilities and equity capital
1,976,159
1,618,609
1,270,965
52 Total liabilities 7
1,838,192
1,506,932
1,185,325
321,607
53 T o t a l d e p o s i t s
54
Individuals, partnerships, and corporations
55
U.S. government
56
S t a t e s a n d political s u b d i v i s i o n s in t h e U n i t e d S t a t e s
57
C o m m e r c i a l b a n k s in t h e U n i t e d S t a t e s
58
O t h e r d e p o s i t o r y i n s t i t u t i o n s in t h e U n i t e d S t a t e s
59
B a n k s in f o r e i g n c o u n t r i e s
60
F o r e i g n g o v e r n m e n t s a n d official institutions
61
Certified a n d official c h e c k s
1,432,655
1,275,316
4,836
73,151
46,586
7,636
7,612
2,212
15,305
1,135,073
1,005,534
4,035
55,051
42,655
6,161
7,162
1,998
12,478
915,239
817,574
3,481
45,918
31,678
4,124
3,301
1,040
8,124
219,834
187,960
554
9,133
10,977
2,037
3,861
958
4,354
62 Total t r a n s a c t i o n a c c o u n t s
63
Individuals, partnerships, and corporations
64
U.S. government
65
S t a t e s a n d political s u b d i v i s i o n s in t h e U n i t e d S t a t e s
66
C o m m e r c i a l b a n k s in the U n i t e d S t a t e s
67
O t h e r d e p o s i t o r y i n s t i t u t i o n s in t h e United S t a t e s
68
B a n k s in f o r e i g n c o u n t r i e s
69
F o r e i g n g o v e r n m e n t s a n d official institutions
70
Certified a n d official c h e c k s
471,168
389,750
3,583
15,697
32,910
5,984
6,753
1,184
15,305
387,954
315,249
3,012
12,759
31,456
5,331
6,582
1,086
12,478
303,642
251,731
2,523
10,321
23,914
3,528
2,966
534
8,124
84,312
63,518
489
2,438
7,542
1,803
3,616
551
4,354
71 D e m a n d d e p o s i t s (included in total t r a n s a c t i o n a c c o u n t s )
72
Individuals, partnerships, and corporations
73
U.S. government
74
S t a t e s a n d political s u b d i v i s i o n s in the United S t a t e s
75
C o m m e r c i a l b a n k s in t h e U n i t e d S t a t e s
76
O t h e r d e p o s i t o r y i n s t i t u t i o n s in t h e United S t a t e s
77
B a n k s in f o r e i g n c o u n t r i e s
78
F o r e i g n g o v e r n m e n t s a n d official institutions
79
Certified a n d official c h e c k s
363,216
286,722
3,566
10,810
32,907
5,971
6,752
1,181
15,305
304,822
235,805
2,997
9,091
31,456
5,328
6,582
1,084
12,478
233,491
184,583
2,508
7,338
23,914
3,526
2,966
532
8,124
71,331
51,223
489
1,754
7,542
1,802
3,616
551
4,354
80 Total n o n t r a n s a c t i o n a c c o u n t s
81
Individuals, p a r t n e r s h i p s , a n d c o r p o r a t i o n s
82
U.S. government
83
S t a t e s a n d political s u b d i v i s i o n s in t h e U n i t e d S t a t e s
84
C o m m e r c i a l b a n k s in t h e U n i t e d S t a t e s
85
U . S . b r a n c h e s a n d a g e n c i e s of f o r e i g n b a n k s
86
O t h e r c o m m e r c i a l b a n k s in the U n i t e d S t a t e s
87
O t h e r d e p o s i t o r y institutions in t h e United S t a t e s
88
B a n k s in f o r e i g n c o u n t r i e s
89
F o r e i g n b r a n c h e s of o t h e r U . S . b a n k s
90
O t h e r b a n k s in f o r e i g n c o u n t r i e s
91
Foreign g o v e r n m e n t s a n d official institutions
% 1,487
885,565
1,252
57,454
13,676
1,067
12,608
1,652
859
29
830
1,028
747,120
690,285
1,024
42,292
11,198
655
10,543
830
579
28
551
912
611,597
565,843
958
35,597
7,764
579
7,184
596
335
23
311
505
135,522
124,442
65
6,696
3,435
76
3,358
234
245
5
240
407
92
93
94
95
96
97
98
227,687
23,181
51,373
33,963
2,041
7,931
67,292
208,949
21,257
46,505
33,244
1,362
6,788
60,542
155,435
16,525
30,677
23,303
1,192
4,910
42,955
53,514
4,732
15,828
9,941
170
1,878
17,588
137,968
111,677
85,640
26,038
1,410
56,063
25,769
7,618
2,288
892
43,645
21,528
6,113
1,391
736
36,266
18,088
5,346
1,358
156
7,379
3,440
767
33
5,331
411,242
299,830
218,045
32,370
100,800
301,959
,069,439
4,722
323,133
225,835
169,554
28,597
77,584
238,573
830,252
3,988
262,037
192,563
137,971
19,027
65,012
193,905
681,748
734
61,096
33,273
31,584
9,570
12,572
44,668
148,503
1,171,366
57,519
217,793
956,577
48,856
169,049
771,102
36,136
138,990
185,475
12,720
30,058
728,520
565,433
468,003
2,461
1,426
1,214
F e d e r a l f u n d s p u r c h a s e d a n d securities sold u n d e r a g r e e m e n t s t o r e p u r c h a s e
Demand notes issued to the U . S . Treasury
Other borrowed money
B a n k s liability o n a c c e p t a n c e s e x e c u t e d and o u t s t a n d i n g
N o t e s a n d d e b e n t u r e s s u b o r d i n a t e d to d e p o s i t s
N e t d u e t o o w n f o r e i g n offices, E d g e a n d A g r e e m e n t subsidiaries a n d I B F s
R e m a i n i n g liabilities
99 Total equity capital 9
MEMO
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
H o l d i n g s o f c o m m e r c i a l p a p e r i n c l u d e d in total l o a n s , g r o s s
Total individual r e t i r e m e n t a c c o u n t s (IRA) and K e o g h plan a c c o u n t s
Total brokered deposits
T o t a l b r o k e r e d retail d e p o s i t s
I s s u e d in d e n o m i n a t i o n s of $100,000 o r less
I s s u e d in d e n o m i n a t i o n s g r e a t e r t h a n $100,000 a n d p a r t i c i p a t e d o u t by the b r o k e r in s h a r e s
of $100,000 o r less
Nontransaction savings deposits
T o t a l time d e p o s i t s of less t h a n $100,000
T i m e certificates of d e p o s i t of $100,000 or m o r e
O p e n - a c c o u n t time d e p o s i t s of $100,000 o r m o r e
Super N O W accounts
Money market deposit accounts (MMDAs)
T o t a l time a n d s a v i n g s d e p o s i t s
Quarterly
averages
Total loans
Obligations ( o t h e r t h a n securities) of s t a t e s a n d political s u b d i v i s i o n s in the U n i t e d S t a t e s
T i m e certificates of d e p o s i t of $100,000 or m o r e
S u p e r N O W a c c o u n t s , m o n e y m a r k e t d e p o s i t a c c o u n t s , a n d time d e p o s i t s (other t h a n
certificates of d e p o s i t s of $100,000 o r m o r e )
117 N u m b e r of b a n k s
F o o t n o t e s a p p e a r at the e n d of table 4.22
—
212
A71
A74
4.22
Special Tables • July 1987
DOMESTIC OFFICES, Insured Commercial Bank Assets and Liabilities' 2 3
Consolidated Report of Condition, September 30, 1986
M i l l i o n s of dollars
Members
Nonmembers
Item
Total
1 Total assets6
6 Total securities, loans, and lease financing receivables (net of unearned income)
7
8
9
10
11
12
13
14
15
16
Total securities, book value
U.S. Treasury securities and U.S. government agency and corporation obligations
Securities issued by states and political subdivisions in the United States
Other securities
All holdings of private certificates of participation in pools of residential mortgages
All other
Federal funds sold and securities purchased under agreements to resell
Total loans and lease financing receivables, gross
LESS: Unearned income on loans
Total loans and leases (net of unearned income)
Total loans, gross, by category
17 Loans secured by real estate
18
Construction and land development
19
Farmland
20
1-4 family residential properties
21
Multifamily (5 or more) residential properties
22
Nonfarm nonresidential properties
23
24
25
26
27
28
29
30
31
32
33
34
35
Loans to depository institutions
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
Acceptances of other banks
Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
Obligations (other than securities) of states and political subdivisions in the United States . . . .
Nonrated industrial development obligations
Other obligations (excluding securities)
All other loans
Lease financing receivables
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining assets
State
1,801,962
1,422,048
379,914
602,485
211,954
22,603
36,811
152,540
162,810
17,043
20,450
125,317
128,751
14,031
16,989
97,731
34,060
3,012
3,462
27,587
49,143
5,561
16,361
27,222
2,001,934
1,474,257
1,179,346
294,910
527,677
445,193
267,207
150,623
27,362
3,839
23,523
125,284
1,445,646
14,196
1,431,458
296,497
172,714
106,301
17,482
2,918
14,564
93,207
1,094,453
9,908
1,084,553
233,867
140,639
79,894
13,335
2,159
11,175
71,575
881,524
7,628
873,904
62,630
32,075
26,407
4,148
759
3,389
21,632
212,929
2,280
210,649
148,696
94,494
44,323
9,880
921
8,959
32,077
351,193
4,288
346,905
466,360
101,669
12,459
210,190
14,317
127,724
328,946
80,079
5,864
144,394
10,417
88,192
279,021
66,129
4,981
123,662
8,895
75,354
49,925
13,950
882
20,732
1,523
12,838
137,414
21,590
6,595
65,796
3,900
39,532
32,795
33,721
447,650
2,212
28,247
17,860
350,243
1,512
20,820
15,068
273,911
1,366
7,427
2,793
76,333
146
4,547
15,861
97,407
700
304,844
60,126
45,819
14,307
76,500
21,439
32,225
47,420
158,334
229,791
49,218
36,912
12,306
69,700
18,934
31,495
43,743
133,399
190,909
36,881
27,031
9,850
48,304
15,245
22,258
30,149
91,693
38,882
12,337
9,881
2,456
21,397
3,689
9,237
13,595
41,707
75,053
10,908
8,906
2,001
6,800
2,505
730
3,676
24,935
2,404,447
2 Cash and balances due from depository institutions
3
Currency and coin
4
Noninterest-bearing balances due from commercial banks
5
Other
National
36 Total liabilities and equity capital
2,404,447
1,801,962
1,422,048
379,914
602,485
7
2,229,467
1,674,630
1,323,633
350,997
554,837
Individuals, partnerships, and corporations
U.S. government
States and political subdivisions in the United States
Commercial banks in the United States
Other depository institutions in the United States
Certified and official checks
All other
1,813,435
1,622,385
5,631
100,076
48,402
8,981
18,099
9,859
1,297,836
1,154,298
4,397
65,628
43,763
6,835
13,741
9,174
1,049,590
940,363
3,788
54,702
32,508
4,711
9,166
4,353
248,246
213,935
609
10,926
11,255
2,124
4,575
4,821
515,599
468,088
1,234
34,447
4,639
2,146
4,358
685
46 Total transaction accounts
47
Individuals, partnerships, and corporations
48
U.S. government
49
States and political subdivisions in the United States
50
Commercial banks in the United States
51
Other depository institutions in the United States
52
Certified and official checks
53
All other
571,173
478,764
4,190
22,259
33,357
6,554
18,099
7,948
431,074
353,673
3,292
15,320
31,770
5,606
13,741
7,672
339,351
283,616
2,763
12,460
24,071
3,772
9,166
3,502
91,724
70,057
530
2,860
7,699
1,833
4,575
4,170
140,098
125,091
898
6,939
1,587
948
4,358
276
54 Demand deposits (included in total transaction accounts)
55
Individuals, partnerships, and corporations
56
U.S. government
57
States and political subdivisions in the United States
58
Commercial banks in the United States
59
Other depository institutions in the United States
60
Certified and official checks
61
All other
422,364
338,788
4,153
13,491
33,353
6,533
18,099
7,944
330,897
258,707
3,267
10,142
31,770
5,600
13,741
7,669
255,085
203,624
2,740
8,217
24,071
3,767
9,166
3,500
75,811
55,083
528
1,925
7,699
1,832
4,575
4,169
91,467
80,081
885
3,349
1,583
933
4,358
275
1,242,262
1,143,622
1,441
77,816
15,045
2,427
1,911
866,762
800,625
1,105
50,308
11,993
1,230
1,502
710,240
656,747
1,025
42,242
8,437
939
851
156,522
143,878
80
8,066
3,556
291
652
375,500
342,997
336
27,508
3,052
1,197
409
231,121
23,914
52,234
33,989
2,423
7,931
72,353
210,821
21,604
47,030
33,259
1,451
6.788
62,629
156,816
16,810
31,153
23,312
1,270
4,910
44,681
54.004
4,795
15,878
9,946
181
1,878
17,947
20,300
2,309
5,203
730
972
1,143
9,724
37 Total liabilities
39
40
41
42
43
44
45
62 Total nontransaction accounts
63
Individuals, partnerships, and corporations
64
U.S. government
65
States and political subdivisions in the United States
66
Commercial banks in the United States
67
Other depository institutions in the United States
68
All other
69
70
71
72
73
74
75
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Other borrowed money
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining liabilities
Commercial Banks
4.20
A71
Continued
Members
Item
Nonmembers
Total
Total
76 Total equity capital 9
National
State
174,980
127,332
98,415
28,917
47,648
77 Assets held in trading accounts 1 0
78
U.S. Treasury securities
79
U.S. government agency corporation obligations
80
Securities issued by states and political subdivisions in the United States
81
Other bonds, notes and debentures
82
Certificates of deposit
83
Commercial paper
84
Bankers acceptances
85
Other
28,113
13,116
3,897
5,132
247
1,427
286
2,559
813
27,743
13,079
3,896
5,090
247
1,417
286
2,544
802
17,545
7,917
1,992
3,478
133
1,195
286
1,754
435
10,198
5,162
1,904
1,612
114
222
0
790
366
370
37
1
41
0
10
0
15
11
86 Total individual retirement accounts (IRA) and Keogh plan accounts
87 Total brokered deposits
88 Total brokered retail deposits
89
Issued in denominations of $100,000 or less
90
Issued in denominations greater than $100,000 and participated out by the broker in
shares of $100,000 or less
91 Nontransaction savings deposits
92 Total time deposits of less than $100,000
93 Time certificates of deposit of $100,000 or more
94 Open-account time deposits of $100,000 or more
95 Super N O W accounts
96 Money market deposit accounts (MMDAs)
97 Total time and savings deposits
71,436
26,319
8,024
2,580
49,904
21,796
6,317
1,528
41,452
18,315
5,521
1,477
8,452
3,481
796
51
21,532
4,523
1,707
1,052
5,444
505,318
439,055
263,698
34,191
138,971
364,482
1,319,071
4,789
364,626
281,555
191,223
29,358
93,616
266,551
966,939
4,044
296,040
238,055
156,474
19,671
78,387
217,009
794,505
745
68,586
43,500
34,749
9,687
15,228
49,543
172,434
655
140,692
157,500
72,475
4,833
45,355
97,930
424,132
1,393,367
263,450
1,051,978
190,521
849,730
157,318
202,248
33,203
341,389
72,929
971,253
666,141
551,014
115,127
305,112
14,167
5,960
4,867
1,093
8,207
MEMO
Quarterly
averages
98 Total loans
99 Time certificates of deposit of $100,000 or more
100 Super N O W accounts, money market deposit accounts, and time deposits (other than
certificates of deposit of $100,000 or more)
101 N u m b e r of banks
1. Effective Mar. 31, 1984, the report of condition was substantially revised
for commercial banks. Some of the changes are as follows: (1) Previously, banks
with international banking facilities (IBFs) that had no other foreign offices were
considered domestic reporters. Beginning with the Mar. 31, 1984 call report these
banks are considered foreign and domestic reporters and must file the foreign and
domestic report of condition; (2) banks with assets greater than $1 billion have
additional items reported; (3) the domestic office detail for banks with foreign
offices has been reduced considerably; and (4) banks with assets under $25 million
have been excused f r o m reporting certain detail items.
2. The " n . a . " for some of the items is used to indicate the lesser detail
available from banks without foreign offices, the inapplicability of certain items to
banks that have only domestic offices and/or the absence of detail on a fully
consolidated basis for banks with foreign offices.
3. All transactions between domestic and foreign offices of a bank are
reported in " n e t due f r o m " and " n e t due t o . " All other lines represent
transactions with parties other than the domestic and foreign offices of each bank.
Since these intraoffice transactions are nullified by consolidation, total assets and
total liabilities for the entire bank may not equal the sum of assets and liabilities
respectively, of the domestic and foreign offices.
4. Foreign offices include branches in foreign countries, Puerto Rico, and in
U.S. territories and possessions; subsidiaries in foreign countries; all offices of
Edge Act and Agreement corporations wherever located and IBFs.
5. The 'over 100' column refers to those respondents whose assets, as of June
30 of the previous calendar year, were equal to or exceeded $100 million, (These
respondents file the F F I E C 032 or F F I E C 033 call report.) T h e ' u n d e r 100' column
refers to those respondents whose assets, as of June 30 of the previous calendar
year, were less than $100 million. (These respondents filed the F F I E C 034 call
report.)
6. Since the domestic portion of allowances for loan and lease losses and
allocated transfer risk reserve are not reported for banks with foreign offices, the
components of total assets (domestic) will not add to the actual total (domestic).
7. Since the foreign portion of demand notes issued to the U . S . Treasury is not
reported for banks with foreign offices, the components of total liabilities (foreign)
will not add to the actual total (foreign).
8. The definition of 'all other' varies by report form and therefore by column
in this table. See the instructions for more detail.
9. Equity capital is not allocated between the domestic and foreign offices of
banks with foreign offices.
10. Components of assets held in trading accounts are only reported for banks
with total assets of $1 billion or more; therefore the c o m p o n e n t s will not add to the
totals for this item.
A76
4.20
Special Tables • July 1987
DOMESTIC A N D FOREIGN OFFICES, Insured Commercial Bank Assets and Liabilities'
Consolidated Report of Condition, December 31, 1986
2
M i l l i o n s o f dollars
Banks with domestic
offices only 5
Banks with foreign offices 1 ' 4
Item
Total
Total
1 Total assets6
2 Cash and balances due from depository institutions
3
Cash items in process of collection, unposted debits, and currency
4
Cash items in process of collection and unposted debits and coin
5
Currency and coin
6
Balances due from depository institutions in the United States
7
Balances due from banks in foreign countries and foreign central banks
8
Balances due from Federal Reserve Banks
2,904,857
1,688,566
374,475
255,538
94,312
n.a.
n.a.
35,665
97,053
28,507
A
T
1
n.a.
I
T
Foreign
421,468
116,143
1,609
n.a.
n.a.
20,882
93,470
182
Domestic
Over 100
Under 100
1,334,748
774,879
441,412
139,395
92,703
80,295
12,409
14,784
3,583
28,325
76,852
32,432
23,811
8,621
25,155
6,859
12,406
42,085
A
T
1
n.a.
1
T
MEMO
9
Noninterest-bearing balances due from commercial banks in the United
States (included in balances due from depository institutions in the U.S.)
15,885
15,185
666,838
380,472
167,754
162,794
122,089
99,545
62,462
37,082
98,850
61,951
36,899
84,545
n.a.
n.a.
126
16
798
22,805
336
27,877
9,205
56,468
11,742
10,266
12,853
24,046
50,365
13,580
13,199
8,918
n.a.
30,992
6,551
3,349
7,252
23,945
9
327
22,469
3,340
6,925
1,476
1,558
11,641
382
774
5,777
138,256
1,750,837
15,853
1,734,987
28,150
105
1,706,731
52,929
1,054,562
7,041
1,047,524
17,789
105
1,029,631
209
226,788
2,123
224,668
n.a.
n.a.
n.a.
52,720
827,774
4,918
822,856
n.a.
n.a.
n.a.
49,367
467,363
5,737
461,626
6,949
0
454,676
35,959
228,911
3,075
225,837
3,412
0
222,424
509,535
n.a.
n.a.
n.a.
n.a.
n.a.
69,834
n.a.
n.a.
n.a.
242,835
n.a.
n.a.
n.a.
n.a.
n.a.
62,644
21,285
5,908
35,451
17,241
n.a.
n.a.
n.a.
n.a.
n.a.
30,330
978
284
29,069
225,595
71,035
1,429
86,376
8,237
58,518
32,315
20,307
5,625
6,383
169,910
27,131
3,362
78,956
5,567
54,894
6,359
5,205
824
330
%,790
8,625
7,921
52,625
2,014
25,605
830
n.a.
n.a.
n.a.
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
To U.S. addressees (domicile)
To non-U.S. addressees (domicile)
Acceptances of other banks
U.S. banks
Foreign banks
Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
48
Credit cards and related plans
49
Other (includes single payment and installment)
31,640
598,676
n.a.
n.a.
3,167
n.a.
n.a.
5,988
421,106
319,009
102.0%
1,222
460
762
399
114,150
15,998
98,152
458
25
433
5,589
306,956
303,011
3,944
765
435
329
6,534
124,621
124,229
392
1,007
n.a.
n.a.
19,118
52,949
n.a.
n.a.
937
n.a.
n.a.
323,670
84,836
238,834
146,087
46,148
99,939
11,233
n.a.
n.a.
134,854
n.a.
n.a.
126,013
35,675
90,339
51,570
3,013
48,557
50 Obligations (other than securities) of states and political subdivisions in the U . S . .
51
Nonrated industrial development obligations
52
Other obligations (excluding securities)
53 AH other loans
54
Loans to foreign governments and official institutions
55
Other loans
56
Loans for purchasing and carrying securities
57
All other loans
58,640
44,265
14,375
128,253
n.a.
n.a.
n.a.
n.a.
37,178
27,258
9,920
114,540
39,051
75,489
n.a.
n.a.
611
111
499
47,826
35,783
12,043
n.a.
n.a.
36,567
27,146
9,421
66,714
3,269
63,446
16,158
47,288
18,451
15,038
3,413
10,609
233
10,376
2,143
8,233
3,011
1,969
1,041
3,104
n.a.
n.a.
n.a.
n.a.
27,423
42,775
42,269
9,055
2,175
40,161
n.a.
4,227
67,564
22,962
41,496
21,454
3,578
1,799
39,820
n.a.
2,776
47,262
4,542
15,630
18,420
25,866
n.a.
n.a.
n.a.
n.a.
54,530
n.a.
n.a.
3,859
964
12,934
2,849
320
324
n.a.
1,276
12,520
602
315
7,881
2,628
56
18
n.a.
175
7,782
10 Total securities, loans and lease financing receivables, net
11 Total securities, book value
12
U.S. Treasury securities and U.S. government agency and corporation
obligations
13
U.S. Treasury securities
14
U.S. government agency and corporation obligations
15
All holdings of U.S. government-issued or guaranteed certificates of
participation in pools of residential mortgages
16
All other
17
Securities issued by states and political subdivisions in the United States
18
Other securities
19
Other domestic securities
20
All holdings of private certificates of participation in pools of
residential mortgages
21
All other
22
Foreign securities
23
24
25
26
27
28
29
Federal funds sold and securities purchased under agreements to resell
Total loans and lease financing receivables, gross
LESS: Unearned income on loans
Total loans and leases (net of unearned income)
LESS: Allowance for loan and lease losses
LESS: Allocated transfer risk reserves
EQUALS: Total loans and leases, net
Total loans, gross, by category
30 Loans secured by real estate
31
Construction and land development
32
Farmland
33
1 4 family residential properties
34
Multifamily (5 or more) residential properties
35
Nonfarm nonresidential properties
36 Loans to depository institutions
37
To commercial banks in the United States
38
To other depository institutions in the United States
39
To banks in foreign countries
40
41
42
43
44
45
46
47
58
59
60
61
62
63
64
65
66
Lease financing receivables
Assets held in trading accounts
Premises and fixed assets (including capitalized leases)
Other real estate owned
Investments in unconsolidated subsidiaries and associated companies
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and Agreement subsidiaries and lBFs . . .
Intangible assets
Other assets
n.a.
9,961
n.a.
n.a.
192,286
24,532
100,474
63,249
37,224
929
787
142
49,775
n.a.
138,623
54,678
n.a.
28,004
9,221
57,266
34,546
10,601
5,682
24,669
n.a.
n.a.
n.a.
2,322,155
1,274,846
477,168
283,869
n.a.
n.a.
1
T
1
n.a.
1
1
T
Commercial
4.20
Banks A71
Continued
Banks with domestic
offices only 5
Banks with foreign offices 3 4
Item
Total
Foreign
Total
Domestic
Over 100
U n d e r 100
67 Total liabilities, limited-life preferred stock and equity capital
2,904,857
1,688,566
774,879
441,412
68 Total liabilities 7
Limited-life preferred stock
69
2,724,926
82
1,598,413
64
421,797
n.a.
1,244,266
n.a.
721,727
15
404,786
2
70 Total deposits
Individuals, partnerships, and corporations
71
72
U.S. government
73
States and political subdivisions in the United States
Commercial banks in the United States
74
Other depository institutions in the United States
75
76
Banks in foreign countries
Foreign governments and official institutions
77
78
Certified and official checks
79
All other 8
2,255,200
i
1,213,663
J
313,174
171,067
900,489
789,116
2,603
36,895
39,961
5,932
8,428
1,633
15,922
647,119
583,258
1,757
38,925
11,921
2,928
147
170
8,013
394,418
358,392
867
27,472
2,038
1,461
n.a.
n.a.
4,156
33
358,944
288,492
1,824
8,844
30,107
5,058
7,742
956
15,922
208,610
180,316
1,294
9,572
7,468
1,876
64
8
8,013
112,323
99,100
689
7,210
537
620
n.a.
n.a.
4,156
12
295,819
226,894
1,820
7,322
30,107
5,058
7,739
954
15,922
143,930
119,586
1,276
5,651
7,467
1,867
64
7
8,013
541,545
500,624
779
28,052
9,854
388
9,466
874
687
23
663
677
438,509
402,942
463
29,354
4,453
726
3,727
1,052
83
0
83
162
66,882
57,997
668
2,905
535
610
n.a.
n.a.
4,156
12
282,095
259,292
177
20,262
1,502
n.a.
n.a.
841
n.a.
n.a.
n.a.
n.a.
21
1
42,934
4,055
15,087
324
1,893
n.a.
10,315
53,136
255
7,886
19,625
25,369
3,250
710
1,190
17
387
n.a.
4,814
36,624
126
7,111
13,511
15,877
244
35,571
24,901
5,434
1,103
1,889
28,247
3,698
2,645
1,351
n.a.
15,527
590
411
318
4,331
241,138
132,185
140,888
27,334
57,754
178,089
604,670
1,293
191,706
163,228
79,558
4,016
61,663
132,272
503,188
93
98,109
136,312
45,944
1,730
42,756
64,619
327,536
763,249
443,788
221,927
37,616
138,321
18,235
78,933
n.a.
45,205
382,647
358,907
244,684
2,179
11,603
80 Total transaction accounts
Individuals, partnerships, and corporations
81
82
U.S. government
83
States and political subdivisions in the United States
Commercial banks in the United States
84
85
Other depository institutions in the United States
86
Banks in foreign countries
Foreign governments and official institutions
87
88
Certified and official checks
89
All other
90 Demand deposits (included in total transaction accounts)
Individuals, partnerships, and corporations
91
92
U.S. government
93
States and political subdivisions in the United States
Commercial banks in the United States
94
95
Other depository institutions in the United States
Banks in foreign countries
96
97
Foreign governments and official institutions
98
Certified and official checks
99
All other
100
Total nontransaction accounts
Individuals, partnerships, and corporations
101
102
U.S. government
103
States and political subdivisions in the United States
Commercial banks in the United States
104
105
U.S. branches and agencies of foreign banks
Other commercial banks in the United States
106
107
Other depository institutions in the United States
108
Banks in foreign countries
Foreign branches of other U.S. banks
109
Other banks in foreign countries
110
Foreign governments and official institutions
111
All other
112
113
114
IIS
116
117
118
1
120
121
17?
173
124
125
Federal f u n d s purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Other borrowed money
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to o w n foreign offices, Edge and Agreement subsidiaries and IBFs
All other liabilities
Total equity capital 9
Perpetual preferred stock
C o m m o n stock
Surplus
Undivided profits and capital reserves
Cumulative foreign currency translation adjustments
n.a.
n a.
n a.
n. a.
28,892
28,214
16,724
26,581
801
114,725
n a.
n a.
n.a.
n.a.
n a.
n a.
n a.
246,214
n.a.
81,695
40,425
16,785
n a.
60,949
179,849
1,409
29,007
62,288
87,463
200,031
n a.
65,417
40,084
14,505
n.a.
45,820
90, 089
1,028
14,010
29,152
46,217
318
881
n.a.
27,629
8,904
199,150
18,894
37,788
31,179
n.a.
13,120
n a.
1
n.a.
I
825
581
t
MEMO
176
127
128
129
Holdings of commercial paper included in total loans, gross
Total individual retirement accounts (IRA) and Keogh plan accounts
Total brokered deposits
Total brokered retail deposits
Issued in denominations of $100,000 or less
Issued in denominations greater than $100,000 and participated out by the
broker in shares of $100,000 or less
Nontransaction savings deposits
Total time deposits of less than $100,000
Time certificates of deposit of $100,000 or more
Open-account time deposits of $100,000 or more
Super N O W accounts
Money market deposit accounts (MMDAs)
Total time and savings deposits
n.a.
Quarterly
averages
139 Total loans
140 Obligations (other than securities) of states and political subdivisions
in the United States
141 Time certificates of deposit of $100,000 or more
14? Super N O W accounts, money market deposit accounts, and time deposits (other
than certificates of deposits of $100,000 or more)
n a.
NO
131
132
133
134
135
136
137
138
143 N u m b e r of banks
Footnotes appear at the end of table 4.22
K
n a.
\
n a.
r
14,040
258
n.a.
1
n.a.
n.a.
A78
4.21
Special Tables • July 1987
DOMESTIC OFFICES, Insured Commercial Banks with Assets of $100 Million or more or with foreign offices 1-2-3
Consolidated Report of Condition, December 31, 1986
M i l l i o n s o f dollars
Members
Item
Total
1
Total assets6
7
4
5
6
7
Cash and balances due from depository institutions
Cash items in process of collection and unposted debits
Currency and coin
Balances due from depository institutions in the United States
Balances due from banks in foreign countries and foreign central banks
Balances due from Federal Reserve Banks
8
Total securities, loans and lease financing receivables, (net of unearned income)
N
14
IS
16
17
18
Total securities, book value
U.S. Treasury securities
U.S. government agency and corporation obligations
All holdings of U.S. government-issued or guaranteed certificates of
participation in pools of residential mortgages
All other
Securities issued by states and political subdivisions in the United States
Other domestic securities
All holdings of private certificates of participation in pools of residential mortgages
All other
Foreign securities
19
Federal funds sold and securities purchased under agreements to resell
9
10
11
12
Nonmembers
Total
National
State
2,109,627
1,735,653
1,357,208
378,445
373,974
216,247
104,105
21,030
39,939
10,442
40,731
181,871
94,807
17,521
26,396
7,840
35,306
139,406
72,697
14,297
21,581
6,119
24,712
42,465
22,111
3,224
4,815
1,721
10,594
34,376
9,298
3,509
13,543
2,601
5,424
1,717,118
1,395,139
1,106,224
288,915
321,979
330,548
124,414
73,981
255,327
96,195
56,649
198,985
77,545
45,454
56,342
18,649
11,195
75,221
28,219
17,333
40,731
33,251
106,833
23,464
4,899
18,566
1,858
34,455
22,194
84,777
16,272
4,187
12,085
1,437
26,935
18,519
62,697
12,638
2,671
9,966
651
7,520
3,675
22,079
3,635
1,515
2,119
786
6,276
11,057
22,056
7,192
712
6,481
420
102,088
83,102
64,167
18,935
18,985
1,295,138
1,064,942
849,401
215,541
230,195
10,655
1,284,482
8,233
1,056,709
6,330
843,071
1,903
213,638
2,423
227,773
Total loans, gross, by category
23 Loans secured by real estate
24
Construction and land development
?5
Farmland
26
1-4 family residential properties
Multifamily (5 or more) residential properties
27
28
Nonfarm nonresidential properties
29 Loans to commercial banks in the United States
30 Loans to other depository institutions in the United States
31 Loans to banks in foreign countries
32 Loans to finance agricultural production and other loans to farmers
395,505
98,166
4,790
165,332
13,803
113,412
25,512
6,449
6,713
12,123
307,298
80,282
3,310
127,591
10,799
85,315
21,812
6,185
6,579
9,816
260,821
65,915
2,911
110,367
9,258
72,370
16,477
4,793
4,206
8,593
46,477
14,367
400
17,223
1,541
12,946
5,335
1,391
2,373
1,223
88,207
17,884
1,480
3,004
28,097
3,701
264
134
2,307
33 Commercial and industrial loans
34
35
To non-U.S. addressees (domicile)
431,577
427,241
4,336
359,949
355,961
3,988
278,787
275,464
3,323
81,162
80,497
665
71,627
71,279
348
1,772
734
394
1,326
601
312
1,199
533
307
127
69
5
446
133
82
39 Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
40 Loans to foreign governments and official institutions
41 Obligations (other than securities) of states and political subdivisions in the United States . . . .
Nonrated industrial development obligations
42
43
Other obligations (excluding securities)
44
45
Loans for purchasing and carrying securities
46
260,867
3,502
55,018
42,184
12,834
73,822
18,301
55,521
213,853
3,330
46,409
34,894
11,514
68,342
17,082
51,259
175,413
2,408
34,417
25,194
9,223
46,562
10,691
35,871
38,441
921
11,992
9,701
2,291
21,780
6,392
15,388
47,014
172
8,610
7,289
1,320
5,480
1,219
4,261
47 Lease financing receivables
48 Customers' liability on acceptances outstanding
49 Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs
22,279
30,608
54,530
145,655
20,045
29,760
50,140
128,884
15,725
21,241
36,001
90,337
4,320
8,518
14,139
38,547
2,234
848
4,390
16,771
2 0 Total loans and lease financing receivables, gross
LESS: Unearned income on loans
71
22 Total loans and leases (net of unearned income)
36 Acceptances of other banks 1 0
37
Of U.S. banks
38
Of foreign banks
37,742
Commercial
4.20
Banks
Continued
Members
Total
Total
National
51 Total liabilities and equity capital
2,109,627
1,735,653
1,357,208
378,445
52 Total liabilities 7
1,965,992
1,618,876
1,267,685
351,191
53 Total d e p o s i t s
54
Individuals, partnerships, and corporations
55
U.S. government
56
S t a t e s a n d political s u b d i v i s i o n s in the United S t a t e s
57
C o m m e r c i a l b a n k s in the U n i t e d S t a t e s
58
O t h e r d e p o s i t o r y i n s t i t u t i o n s in the United S t a t e s
59
B a n k s in f o r e i g n c o u n t r i e s
60
F o r e i g n g o v e r n m e n t s a n d official institutions
61
Certified a n d official c h e c k s
1,547,608
1,372,374
4,360
75,821
51,881
8,861
8,575
1,803
23,935
1,234,133
1,089,458
3,664
57,617
47,006
7,208
8,144
1,599
19,440
983,369
875,628
3,200
47,826
33,631
5,123
4,123
823
13,018
250,764
213,830
464
9,791
13,375
2,084
4,021
776
6,422
62 Total t r a n s a c t i o n a c c o u n t s
63
Individuals, p a r t n e r s h i p s , a n d c o r p o r a t i o n s
64
U.S. government
65
S t a t e s a n d political s u b d i v i s i o n s in t h e United S t a t e s
66
C o m m e r c i a l b a n k s in the U n i t e d S t a t e s
67
O t h e r d e p o s i t o r y institutions in the United S t a t e s
68
B a n k s in f o r e i g n c o u n t r i e s
69
F o r e i g n g o v e r n m e n t s a n d official institutions
70
Certified a n d official c h e c k s
567,554
468,808
3,117
18,416
37,574
6,934
7,806
964
23,935
470,222
382,531
2,603
15,181
35,751
6,194
7,634
890
19,440
362,271
300,366
2,192
12,244
25,852
4,339
3,790
469
13,018
107,952
82,165
412
2,936
9,899
1.854
3,843
421
6,422
71 D e m a n d d e p o s i t s (included in total t r a n s a c t i o n a c c o u n t s )
72
Individuals, p a r t n e r s h i p s , a n d c o r p o r a t i o n s
73
U.S. government
74
S t a t e s a n d political s u b d i v i s i o n s in the United S t a t e s
75
C o m m e r c i a l b a n k s in the U n i t e d S t a t e s
76
O t h e r d e p o s i t o r y institutions in the United S t a t e s
77
B a n k s in f o r e i g n c o u n t r i e s
78
Foreign g o v e r n m e n t s a n d official institutions
79
Certified a n d official c h e c k s
439,749
346,480
3,096
12,973
37,574
6,926
7,803
961
23,935
370,919
287,271
2,586
35,750
6,190
7,631
888
19,440
279,076
220,485
2,176
8,952
25,852
4,337
3,788
467
13,018
91,842
66,786
410
2,209
9,8
1,853
3,843
421
6,422
80 Total n o n t r a n s a c t i o n a c c o u n t s
81
Individuals, partnerships, and corporations
82
U.S. government
83
S t a t e s a n d political s u b d i v i s i o n s in t h e U n i t e d S t a t e s
84
C o m m e r c i a l b a n k s in t h e U n i t e d S t a t e s
85
U . S . b r a n c h e s a n d a g e n c i e s of f o r e i g n b a n k s
86
O t h e r c o m m e r c i a l b a n k s in t h e United S t a t e s
87
O t h e r d e p o s i t o r y institutions in the United S t a t e s
88
B a n k s in f o r e i g n c o u n t r i e s
89
F o r e i g n b r a n c h e s of o t h e r U . S . b a n k s
90
O t h e r b a n k s in foreign c o u n t r i e s
91
Foreign g o v e r n m e n t s a n d official institutions
980,054
903,566
1,243
57,405
14,307
1,114
13,193
1,926
770
23
746
839
763,911
706,927
1,060
42,437
11,256
661
10,595
1,014
510
23
487
709
621,099
575,262
1,008
35,582
7,779
598
7,181
784
333
18
314
353
142,812
131,665
52
6.855
3,477
63
3,414
230
178
5
173
355
92
93
94
95
96
97
98
242,084
22,950
52,875
31,503
1,893
13,120
67,080
224,047
21,070
47,970
30,656
1,296
11,587
59,704
170,220
15,678
34,384
22,085
1,140
6,207
40,808
53,827
5,392
13,586
8,570
156
5,380
18,896
143,635
116,778
89,523
27,255
2,133
63,819
28,599
8,079
2,454
1,525
51,442
22,276
5,776
1,272
1,279
37,579
19,055
4,954
1,232
246
13,863
3,221
821
39
5,624
432,844
295,413
220,446
31,350
119,417
310,361
1,107,858
4,504
342,154
224,205
169,635
27,917
92,785
246,592
863,214
3,722
273,992
190,407
138,288
18,412
77,082
199,783
704,292
782
68,161
33,798
31,347
9,505
15,704
46,809
158,921
,207,038
55,851
217,254
988,721
47,583
168,157
790,685
35,033
136,809
198,036
12,550
31,348
741,554
577,267
474,065
103,202
2,437
1,415
1,203
212
F e d e r a l f u n d s p u r c h a s e d a n d securities sold u n d e r a g r e e m e n t s t o r e p u r c h a s e
D e m a n d n o t e s i s s u e d to t h e U . S . T r e a s u r y
Other borrowed money
B a n k s liability o n a c c e p t a n c e s e x e c u t e d and o u t s t a n d i n g
N o t e s and d e b e n t u r e s s u b o r d i n a t e d to d e p o s i t s
N e t d u e to o w n f o r e i g n offices, E d g e a n d A g r e e m e n t subsidiaries a n d I B F s
R e m a i n i n g liabilities
99 Total equity capital 9
11,162
MEMO
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
Holdings of c o m m e r c i a l p a p e r i n c l u d e d in total l o a n s , g r o s s
Total individual r e t i r e m e n t a c c o u n t s (IRA) and K e o g h plan a c c o u n t s
Total b r o k e r e d d e p o s i t s
Total b r o k e r e d retail d e p o s i t s
Issued in d e n o m i n a t i o n s of $100,000 o r less
Issued in d e n o m i n a t i o n s g r e a t e r t h a n $100,000 a n d p a r t i c i p a t e d out by the b r o k e r in s h a r e s
of $100,000 o r less
N o n t r a n s a c t i o n savings d e p o s i t s
Total time d e p o s i t s of l e s s t h a n $100,000
T i m e certificates of d e p o s i t of $100,000 or m o r e
O p e n - a c c o u n t t i m e d e p o s i t s of $100,000 o r m o r e
Super N O W accounts
Money market deposit accounts (MMDAs)
Total time and savings d e p o s i t s
Quarterly
averages
Total loans
Obligations ( o t h e r than securities) of s t a t e s a n d political s u b d i v i s i o n s in the U n i t e d S t a t e s
T i m e certificates of d e p o s i t of $100,000 or m o r e
S u p e r N O W a c c o u n t s , m o n e y m a r k e t d e p o s i t a c c o u n t s , a n d time d e p o s i t s ( o t h e r t h a n
certificates of d e p o s i t s of $100,000 o r more)
117 N u m b e r of b a n k s
F o o t n o t e s a p p e a r at the e n d of t a b l e 4.22
A71
A80
4.22
Special Tables • July 1987
DOMESTIC OFFICES, Insured Commercial Bank Assets and Liabilities' 2
Consolidated Report of Condition, December 31, 1986
3
Millions of dollars
Members
Nonmembers
Item
Total
1 Total assets6
2 Cash and balances due from depository institutions
3
Currency and coin
4
Noninterest-bearing balances due from commercial banks
5
Other
National
State
2,551,039
1,925,460
1,512,997
412,463
625,579
258,332
25,646
41,030
191,656
200,802
19,518
22,676
158,608
155,152
15,940
18,636
120,576
45,650
3,578
4,040
38,031
57,530
6,128
18,354
33,048
2,101,002
1,559,512
1,240,852
318,660
541,490
452,637
282,940
137,825
31,873
5,673
26,205
138,047
1,524,049
13,730
1,510,319
304,758
186,523
97,681
20,556
4,537
16,024
100,188
1,164,148
9,582
1,154,566
239,142
150,120
73,327
15,695
2,938
12,756
78,565
930,567
7,422
923,145
65,617
36,403
24,354
4,861
1,599
3,267
21,623
233,582
2,160
231,421
147,878
96,417
40,145
11,317
1,136
10,182
37,859
359,901
4,148
355,753
492,295
106,792
12,711
217,957
15,817
139,017
348,911
84,277
6,095
150,481
11,646
96,413
294,729
69,268
5,145
128,759
9,949
81,608
54,182
15,009
950
21,722
1,696
14,805
143,383
22,515
6,616
67,477
4,171
42,605
39,504
31,241
484,525
2,709
35,080
16,877
383,879
1,754
25,947
14,210
298,534
1,547
9,133
2,666
85,345
207
4,424
14,364
100,646
955
312,438
58,029
44,153
13,876
80,428
22,881
30,625
54,530
161,080
236,629
47,686
35,706
11,981
73,012
20,320
29,771
50,140
135,376
194,081
35,514
25,878
9,636
50,061
15,944
21,249
36,001
95,745
42,547
12,172
9,827
2,345
22,952
4,376
8,522
14,139
39,631
75,809
10,343
8,447
1,895
7,415
2,561
855
4,390
25,704
36 Total liabilities and equity capital
2,551,039
1,925,460
1,512,997
412,463
625,579
37 Total liabilities7
2,370,779
1,793,191
1,410,873
382,319
577,588
38 Total deposits
39
Individuals, partnerships, and corporations
40
U.S. government
41
States and political subdivisions in the United States
42
Commercial banks in the United States
43
Other depository institutions in the United States
44
Certified and official checks
45
All other
1,942,026
1,730,766
5,227
103,293
53,920
10,321
28,091
10,411
1,403,382
1,243,641
4,037
68,398
48,283
7,921
21,343
9,760
1,122,549
1,002,485
3,516
56,670
34,614
5,735
14,570
4,961
280,833
241,156
521
11,728
13,669
2,186
6,774
4,799
538,644
487,125
1,190
34,895
5,636
2,400
6,747
651
46 Total transaction accounts
47
Individuals, partnerships, and corporations
48
U.S. government
49
States and political subdivisions in the United States
50
Commercial banks in the United States
51
Other depository institutions in the United States
52
Certified and official checks
53
All other
679,877
567,908
3,807
25,625
38,111
7,554
28,091
8,781
518,715
425,339
2,902
17,973
36,144
6,485
21,343
8,529
402,119
335,606
2,447
14,559
26,087
4,588
14,570
4,263
116,596
89,733
456
3,414
10,057
1,897
6,774
4,266
161,162
142,569
904
7,652
1,966
1,069
6,747
253
506,631
404,478
3,764
15,879
38,108
7,535
28,091
8,776
400,499
312,851
2,873
12,285
36,144
6,477
21,343
8,525
303,364
241,552
2,421
9,893
26,087
4,581
14,570
4,259
97,135
71,299
452
2,392
10,057
1,895
6,774
4,266
106,133
91,627
891
3,594
1,964
1,059
6,747
252
1,262,149
1,162,858
1,420
77,667
15,809
2,767
1,630
884,666
818,302
1,135
50,425
12,139
1,436
1,232
720,430
666,879
1,070
42,111
8,527
1,147
698
164,237
151,423
65
8,314
3,612
290
533
377,483
344,556
285
27,243
3,670
1,331
398
245,333
23,660
54,065
31,520
2,280
13,120
71,894
225,842
21,400
48,833
30,666
1,385
11,587
61,684
171,586
15,944
35,039
22,093
1,219
6,207
42,444
54,256
5,456
13,794
8,574
166
5,380
19,240
19,492
2,260
5,232
854
895
1,533
10,210
6 Total securities, loans, and lease financing receivables (net of unearned income)
7
8
9
10
11
12
13
14
15
16
Total securities, book value
U.S. Treasury securities and U.S. government agency and corporation obligations
Securities issued by states and political subdivisions in the United States
Other securities
All holdings of private certificates of participation in pools of residential mortgages
All other
Federal funds sold and securities purchased under agreements to resell
Total loans and lease financing receivables, gross
LESS: Unearned income on loans
Total loans and leases (net of unearned income)
Total loans, gross, by category
17 Loans secured by real estate
18
Construction and land development
19
Farmland
20
1 4 family residential properties
21
Multifamily (5 or more) residential properties
22
Nonfarm nonresidential properties
23
24
25
26
27
28
29
30
31
32
33
34
35
Loans to depository institutions
Loans to finance agricultural production and other loans to farmers
Commercial and industrial loans
Acceptances of other banks
Loans to individuals for household, family and other personal expenditures
(includes purchased paper)
Obligations (other than securities) of states and political subdivisions in the United States . . . .
Nonrated industrial development obligations
Other obligations (excluding securities)
All other loans
Lease financing receivables
Customers' liability on acceptances outstanding
Net due from own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining assets
54 Demand deposits (included in total transaction accounts)
55
Individuals, partnerships, and corporations
56
U.S. government
57
States and political subdivisions in the United States
58
Commercial banks in the United States
59
Other depository institutions in the United States
60
Certified and official checks
61
All other
,
62 Total nontransaction accounts
63
Individuals, partnerships, and corporations
64
U.S. government
65
States and political subdivisions in the United States
66
Commercial banks in the United States
67
Other depository institutions in the United States
68
All other
69
70
71
72
73
74
75
Federal funds purchased and securities sold under agreements to repurchase
Demand notes issued to the U.S. Treasury
Other borrowed money
Banks liability on acceptances executed and outstanding
Notes and debentures subordinated to deposits
Net due to own foreign offices, Edge and Agreement subsidiaries and IBFs
Remaining liabilities
Commercial
4.20
Banks
A71
Continued
Members
Item
Nonmembers
Total
Total
9
National
State
180,260
132,269
102,124
30,145
47,991
77 Assets held in trading accounts 1 0
78
U.S. Treasury securities
79
U.S. government agency corporation obligations
80
Securities issued by states and political subdivisions in the United States
81
Other bonds, notes and debentures
82
Certificates of deposit
83
Commercial paper
84
Bankers acceptances
85
Other
27,145
10,820
3,997
5,874
271
1,502
200
2,454
1,154
26,723
10,777
3,988
5,845
271
1,502
200
2,445
1,143
16.211
5,393
2,778
3,647
147
1,343
199
1,730
454
10,512
5,384
1,210
2,198
124
158
715
688
423
43
9
28
0
0
0
9
11
86 Total individual retirement accounts (IRA) and Keogh plan accounts
87 Total brokered deposits
88 Total brokered retail deposits
89
Issued in denominations of $100,000 or less
90
Issued in denominations greater than $100,000 and participated out by the broker in
shares of $100,000 or less
91 Nontransaction savings deposits
92 Total time deposits of less than $100,000
93 Time certificates of deposit of $100,000 or more
94 Open-account time deposits of $100,000 or more
95 Super N O W accounts
96 Money market deposit accounts (MMDAs)
97 Total time and savings deposits
79,345
29,190
8,489
2,772
57,752
22,551
5,980
1,425
42,801
19,287
5,122
1,359
14,951
3,265
857
65
21,593
6,638
2,509
1,347
5,717
530,953
431,726
266,390
33,080
162,174
374,980
1,435,394
4,555
385,541
278,853
191,689
28,583
110,671
275,635
1,002,882
3,763
309,372
235,013
157,084
18,961
91,872
223,662
819,184
792
76,169
43,840
34,605
9,622
18,798
51,973
183,698
1,162
145,412
152,872
74,701
4,497
51,503
99,345
432,511
1,428,965
262,458
1,084,563
189,655
869,252
155,112
215.311
34,544
344,402
72,803
986,238
678,755
557,580
121,175
307,483
14,040
5,907
4,812
1,095
8,133
76 Total equity capital
MEMO
Quarterly
averages
98 Total loans
99 Time certificates of deposit of $100,000 or more
100 Super N O W accounts, money market deposit accounts, and time deposits (other than
certificates of deposit of $100,000 or more)
101 N u m b e r of banks
1. Effective Mar. 31, 1984, the report of condition w a s substantially revised for
commercial banks. Some of the changes are as follows: (1) Previously, banks
with international banking facilities (IBFs) that had no other foreign offices were
considered domestic reporters. Beginning with the Mar. 31, 1984 call report these
banks are considered foreign and domestic reporters and must file the foreign and
domestic report of condition; (2) banks with assets greater than $1 billion have
additional items reported; (3) the domestic office detail for banks with foreign
offices has been reduced considerably; and (4) banks with assets under $25 million
have been excused f r o m reporting certain detail items.
2. T h e " n . a . " for some of the items is used to indicate the lesser detail available
from banks without foreign offices, the inapplicability of certain items to banks
that have only domestic offices and/or the absence of detail on a fully consolidated
basis for banks with foreign offices.
3. All transactions between domestic and foreign offices of a bank are reported
in " n e t due f r o m " and " n e t due t o . " All other lines represent transactions with
parties other than the domestic and foreign offices of each bank. Since these
intraoffice transactions are nullified by consolidation, total assets and total
liabilities for the entire bank may not equal the sum of assets and liabilities
respectively, of the domestic and foreign offices.
4. Foreign offices include branches in foreign countries, Puerto Rico, and in
U.S. territories and possessions; subsidiaries in foreign countries; all offices of
Edge Act and Agreement corporations wherever located and IBFs.
1
5. The 'over 100' column refers to those respondents whose assets, as of June
30 of the previous calendar year, were equal to or exceeded $100 million. (These
respondents file the F F I E C 032 or F F I E C 033 call report.) The under 100' column
refers to those respondents whose assets, as of June 30 of the previous calendar
year, were less than $100 million. (These respondents filed the F F I E C 034 call
report.)
6. Since the domestic portion of allowances for loan and lease losses and
allocated transfer risk reserve are not reported for banks with foreign offices, the
components of total assets (domestic) will not add to the actual total (domestic).
7. Since the foreign portion of demand notes issued to the U.S. Treasury is not
reported for banks with foreign offices, the components of total liabilities (foreign)
will not add to the actual total (foreign).
8. The definition of 'all other' varies by report form and therefore by column in
this table. See the instructions for more detail.
9. Equity capital is not allocated between the domestic and foreign offices of
banks with foreign offices.
10. Components of assets held in trading accounts are only reported for banks
with total assets of $1 billion or more; therefore the c o m p o n e n t s will not add to the
totals for this item.
A82
Federal Reserve Board of Governors
Chairman
Vice Chairman
M A R T H A R . SEGER
MANUEL H . JOHNSON,
WAYNE D . ANGELL
OFFICE
MEMBERS
OFFICE OF STAFF DIRECTOR
MONETARY
AND FINANCIAL
PAUL A . VOLCKER,
OF BOARD
JOSEPH R . C O Y N E , Assistant
to the
Board
D O N A L D J. W I N N , Assistant
to the
Board
STEVEN M . ROBERTS, Assistant
to the
Chairman
BOB S. MOORE, Special Assistant to the Board
LEGAL
MICHAEL B R A D F I E L D , General
Counsel
J. VIRGIL MATTINGLY, JR., Deputy General Counsel
RICHARD M. ASHTON, Associate General Counsel
OLIVER IRELAND, Associate General Counsel
RICKI R. TIGERT, Assistant General Counsel
MARYELLEN A. BROWN, Assistant to the General Counsel
OFFICE
OF THE
DONALD L. KOHN, Deputy Staff Director
NORMAND R.V. BERNARD, Special Assistant to the Board
DIVISION
DIVISION
SECRETARY
WILLIAM W . W I L E S ,
Secretary
BARBARA R . L O W R E Y , Associate
Secretary
JAMES M C A F E E , Associate
Secretary
JAMES L .
EDWARD
MICHAEL
JARED J.
OF RESEARCH
AND
DAVID E. LINDSEY, Associate
Director
ELEANOR J. STOCKWELL, Associate
S U S A N J. LEPPER, Assistant
RICHARD D . PORTER, Assistant
MARTHA S . S C A N L O N , Assistant
Director
Director
Director
JOYCE K. ZICKLER, Assistant
Director
DIVISION
GRIFFITH L . G A R W O O D ,
Director
G L E N N E . L O N E Y , Assistant
Director
E L L E N M A L A N D , Assistant
Director
DOLORES S . S M I T H , Assistant
Director
OF INTERNATIONAL
EDWIN M . TRUMAN,
WILLIAM TAYLOR,
RALPH W . S M I T H , JR., Assistant
KAREN H. JOHNSON, Assistant
Director
Director'
DON E. KLINE, Associate Director
FREDERICK M. STRUBLE, Associate Director
WILLIAM A. RYBACK, Deputy Associate Director
STEPHEN C. SCHEMERING, Deputy Associate Director
RICHARD SPILLENKOTHEN, Deputy Associate Director
Director
Director
Director
Director
Director
JAMES D . GOETZINGER, Assistant
MICHAEL G . M A R T I N S O N , Assistant
Director
ROBERT S . PLOTKIN, Assistant
Director
S I D N E Y M . S U S S A N , Assistant
Director
LAURA M. HOMER, Securities Credit Officer
1. On loan from the Federal Reserve Bank of Chicago.
FINANCE
Director
ROBERT F . GEMMILL, Staff
D O N A L D B . A D A M S , Assistant
PETER HOOPER I I I , Assistant
A N T H O N Y C O R N Y N , Assistant
JAMES I. GARNER, Assistant
Director
LARRY J. PROMISEL, Senior Associate Director
CHARLES J. SIEGMAN, Senior Associate Director
DAVID H. HOWARD, Deputy Associate Director
DIVISION
OF
BANKING
SUPERVISION
AND
REGULATION
HERBERT A . BIERN, Assistant
Director
MARTHA BETHEA, Deputy Associate Director
THOMAS D. SIMPSON, Deputy Associate Director
LAWRENCE SLIFMAN, Deputy Associate Director
PETER A. TINSLEY, Deputy Associate Director
(Administration )
DIVISION OF
CONSUMER
AND COMMUNITY
AFFAIRS
JOE M. CLEAVER, Assistant
STATISTICS
KICHLINE,
Director
C . E T T I N , Deputy
Director
J. PRELL, Deputy
Director
E N Z L E R , Associate
Director
LEVON H . G A R A B E D I A N , Assistant
FRANKLIN D . DREYER, Deputy
FOR
POLICY
Adviser
Director
Director
Director
Director
A83
and Official Staff
H . ROBERT H E L L E R
EDWARD W . KELLEY, JR.
OFFICE OF
STAFF DIRECTOR
FOR
S. DAVID FROST, Staff
OFFICE OF STAFF DIRECTOR
FOR
FEDERAL RESERVE BANK
ACTIVITIES
MANAGEMENT
THEODORE E. ALLISON, Staff Director
Director
EDWARD T. MULRENIN, Assistant Staff Director
PORTIA W. THOMPSON, Equal Employment
Opportunity
Programs Officer
DIVISION
OF
PERSONNEL
DIVISION OF FEDERAL
BANK
OPERATIONS
RESERVE
C L Y D E H . FARNSWORTH, J R . ,
ELLIOTT C. MCENTEE, Associate
DAVID L. SHANNON,
DAVID L. ROBINSON, Associate
Director
JOHN R. WEIS, Assistant
Director
CHARLES W. WOOD, Assistant
OFFICE
OF THE
EARL G. HAMILTON, Assistant Director
JOHN H. PARRISH, Assistant Director
FLORENCE M . Y O U N G ,
Controller
BRENT L . BOWEN, Assistant
DIVISION
OF SUPPORT
ROBERT E . FRAZIER,
Controller
SERVICES
Director
GEORGE M. LOPEZ, Assistant
Director
OFFICE OF THE EXECUTIVE
INFORMATION
RESOURCES
DIRECTOR
FOR
MANAGEMENT
ALLEN E. BEUTEL, Executive
Director
STEPHEN R. MALPHRUS, Associate
Director
DIVISION
SYSTEMS
OF HARDWARE
BRUCE M . BEARDSLEY,
AND
SOFTWARE
Director
THOMAS C. JUDD, Assistant
Director
ELIZABETH B . RIGGS, Assistant
Director
ROBERT J. ZEMEL, Assistant
Director
DIVISION OF APPLICATIONS
STATISTICAL
SERVICES
WILLIAM R . JONES,
DEVELOPMENT
Director
DAY W. RADEBAUGH, Assistant
Director
RICHARD C. STEVENS, Assistant
PATRICIA A . WELCH, Assistant
Director
Director
Director
Director
C. WILLIAM SCHLEICHER, JR., Associate
Director
CHARLES W . BENNETT, Assistant
Director
JACK DENNIS, JR., Assistant
Director
Director
CONTROLLER
GEORGE E . LIVINGSTON,
Director
AND
Adviser
A84
Federal Reserve Bulletin • July 1987
Federal Open Market Committee
FEDERAL
OPEN
MARKET
COMMITTEE
MEMBERS
P A U L A . VOLCKER,
E. GERALD CORRIGAN, Vice Chairman
Chairman
H . ROBERT HELLER
M A N U E L H . JOHNSON
SILAS K E E H N
WAYNE D . ANGELL
EDWARD G . BOEHNE
ROBERT t l . BOYKIN
ALTERNATE
ROBERT P . BLACK
THOMAS M . TIMLEN
E D W A R D W . KELLEY, JR.
MARTHA R . SEGER
GARY H . STERN
MEMBERS
ROBERT P . FORRESTAL
ROBERT T . PARRY
STAFF
DONALD L. KOHN, Secretary and Staff Adviser
NORMAND R . V . BERNARD, Assistant
Secretary
ROSEMARY R. LONEY, Deputy Assistant
MICHAEL BRADFIELD, General
Secretary
Counsel
JAMES H. OLTMAN, Deputy General Counsel
JAMES L . KICHLINE,
Economist
EDWIN M . TRUMAN, Economist
(International)
PETER FOUSEK, Associate
Economist
RICHARD W . LANG, Associate
Economist
DAVID E. LINDSEY, Associate
Economist
MICHAEL J. PRELL, Associate
Economist
ARTHUR J. ROLNICK, Associate
Economist
HARVEY ROSENBLUM, Associate
Economist
KARL A . SCHELD, Associate
Economist
CHARLES J. SIEGMAN, Associate
Economist
THOMAS D . SIMPSON, 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
JOHN G . M E D L I N JR.,
JULIEN L . MCCALL, Vice
President
President
JOHN F . M C G I L L I C U D D Y , D E W A L T H . A N K E N Y , JR., A N D F . PHILLIPS GILTNER,
JOHN P. LAWARE, First District
JOHN F. MCGILLICUDDY, Second District
SAMUEL A. MCCULLOUGH, Third District
JULIEN L. MCCALL, Fourth District
JOHN G. MEDLIN, JR., Fifth District
BENNETT A. BROWN, Sixth District
Directors
CHARLES T. FISHER, III, Seventh District
DONALD N. BRANDIN, Eighth District
DEWALT H . ANKENY, JR., N i n t h District
F. PHILLIPS GILTNER, Tenth District
GERALD W. FRONTERHOUSE, Eleventh District
JOHN D. MANGELS, Twelfth District
HERBERT V . PROCHNOW, SECRETARY
WILLIAM J. KORSVIK, ASSOCIATE SECRETARY
A85
and Advisory Councils
CONSUMER
ADVISORY
COUNCIL
EDWARD N. LANGE, Seattle, Washington, Chairman
STEVEN W. HAMM, Columbia, South Carolina, Vice Chairman
E D W I N B . BROOKS, JR., R i c h m o n d , V i r g i n i a
JONATHAN A . B R O W N , W a s h i n g t o n , D . C .
JUDITH N . B R O W N , E d i n a , M i n n e s o t a
MICHAEL S . CASSIDY, N e w Y o r k , N e w Y o r k
THERESA FAITH CUMMINGS, S p r i n g f i e l d , I l l i n o i s
RICHARD B . D O B Y , D e n v e r , C o l o r a d o
RICHARD H . F I N K , W a s h i n g t o n , D . C .
NEIL J. FOG ARTY, Jersey City, New Jersey
STEPHEN GARDNER, D a l l a s , T e x a s
KENNETH A . HALL, J a c k s o n , M i s s i s s i p p i
Massachusetts
RAMON E. JOHNSON, Salt Lake City, Utah
ROBERT W. JOHNSON, West Lafayette, Indiana
THRIFT
INSTITUTIONS
ADVISORY
HELEN E. NELSON, Mill Valley, California
SANDRA R . PARKER, R i c h m o n d , V i r g i n i a
JOSEPH L . PERKOWSKI, C e n t e r v i l l e , M i n n e s o t a
B R E N D A L . SCHNEIDER, D e t r o i t , M i c h i g a n
JANE S H U L L , P h i l a d e l p h i a , P e n n s y l v a n i a
TED L. SPURLOCK, Dallas, Texas
MEL R. STILLER, Boston, Massachusetts
CHRISTOPHER J. SUMNER, Salt Lake City, Utah
ELENA G. HANGGI, Little Rock, Arkansas
ROBERT J. HOBBS, B o s t o n ,
JOHN M . KOLESAR, C l e v e l a n d , O h i o
A L A N B . LERNER, D a l l a s , T e x a s
FRED S . MCCHESNEY, C h i c a g o , I l l i n o i s
RICHARD L . D . MORSE, M a n h a t t a n , K a n s a s
E D W A R D J. WILLIAMS, C h i c a g o , I l l i n o i s
MICHAEL ZOROYA, S t . L o u i s , M i s s o u r i
COUNCIL
MICHAEL R. WISE, Denver, Colorado, President
JAMIE J. JACKSON, Houston, Texas, Vice President
GERALD M . CZARNECKI, M o b i l e , A l a b a m a
JOHN C . D I C U S , T o p e k a , K a n s a s
BETTY GREGG, P h o e n i x , A r i z o n a
THOMAS A. KINST, Hoffman Estates, Illinois
RAY MARTIN, Los Angeles, California
D O N A L D F . MCCORMICK, L i v i n g s t o n , N e w J e r s e y
JANET M . PAVLISKA, A r l i n g t o n , M a s s a c h u s e t t s
HERSCHEL ROSENTHAL, M i a m i , F l o r i d a
WILLIAM G . SCHUETT, M i l w a u k e e , W i s c o n s i n
GARY L. SIRMON, Walla Walla, Washington
A86
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A87
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VESTIGATION, by Bonnie E. Loopesko. November
1983. Out of print.
Limit of 50 copies
1 3 4 . SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: A REVIEW OF THE LITERATURE, b y
The Board of Directors' Opportunities in Community Reinvestment
The Board of Directors' Role in Consumer Law Compliance
Combined Construction/Permanent Loan Disclosure and
Regulation Z
Community Development Corporations and the Federal Reserve
Construction Loan Disclosures and Regulation Z
Finance Charges Under Regulation Z
How to Determine the Credit Needs of Your Community
Regulation Z: The Right of Rescission
The Right to Financial Privacy Act
Signature Rules in Community Property States: Regulation B
Signature Rules: Regulation B
Timing Requirements for Adverse Action Notices: Regulation B
What An Adverse Action Notice Must Contain: Regulation B
Understanding Prepaid Finance Charges: Regulation Z
Ralph W. Tryon. October 1983. 14 pp. Out of print.
135. SMALL EMPIRICAL MODELS OF EXCHANGE MARKET
INTERVENTION: APPLICATIONS TO C A N A D A , GERMA-
NY, AND JAPAN, by Deborah J. Danker, Richard A.
Haas, Dale W. Henderson, Steven A. Symansky, and
Ralph W. Tryon. April 1985. 27 pp. Out of print.
136. T H E EFFECTS OF FISCAL POLICY ON THE U . S . ECONO-
MY, by Darrell Cohen and Peter B. Clark. January
1984. 16 pp. Out of print.
1 3 7 . T H E IMPLICATIONS FOR B A N K MERGER POLICY OF
FINANCIAL DEREGULATION, INTERSTATE B A N K I N G ,
A N D FINANCIAL SUPERMARKETS, b y S t e p h e n A .
Rhoades. February 1984. Out of print.
138. ANTITRUST L A W S , JUSTICE DEPARTMENT G U I D E LINES, A N D THE LIMITS OF CONCENTRATION IN L O -
CAL BANKING MARKETS, by James Burke. June 1984.
14 pp. Out of print.
139. SOME IMPLICATIONS OF FINANCIAL INNOVATIONS IN
THE UNITED STATES, by Thomas D. Simpson and
Patrick M. Parkinson. August 1984. 20 pp.
STAFF
STUDIES.- Summaries
Bulletin
Only Printed in the
Studies and papers on economic and financial subjects that
are of general interest. Requests to obtain single copies of
the full text or to be added to the mailing list for the series
may be sent to Publications
Services.
140. GEOGRAPHIC MARKET DELINEATION: A REVIEW OF
THE LITERATURE, by John D. Wolken. November
1984. 38 pp. Out of print.
1 4 1 . A COMPARISON OF DIRECT DEPOSIT A N D CHECK PAY-
MENT COSTS, by William Dudley. November 1984.
15 pp. Out of print.
142. MERGERS
AND
ACQUISITIONS
BY
COMMERCIAL
BANKS, 1960-83, by Stephen A. Rhoades. December
1984. 30 pp. Out of print.
Staff Studies 115-125 are out of print.
114. MULTIBANK HOLDING COMPANIES: RECENT E V I DENCE ON COMPETITION AND PERFORMANCE IN
BANKING MARKETS, by Timothy J. Curry and John T.
Rose. Jan. 1982. 9 pp.
126. DEFINITION A N D MEASUREMENT OF EXCHANGE MAR-
KET INTERVENTION, by Donald B. Adams and Dale
W. Henderson. August 1983. 5 pp. Out of print.
127. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: J A N U A R Y - M A R C H 1 9 7 5 , b y M a r g a r e t L .
Greene. August 1984. 16 pp. Out of print.
128. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: SEPTEMBER 1 9 7 7 - D E C E M B E R 1 9 7 9 , b y M a r -
garet L. Greene. October 1984. 40 pp. Out of print.
129. U . S . EXPERIENCE WITH EXCHANGE MARKET INTERVENTION: OCTOBER I98O-OCTOBER 1 9 8 1 , b y M a r g a r e t
L. Greene. August 1984. 36 pp.
1 3 0 . EFFECTS OF EXCHANGE RATE VARIABILITY ON INTERNATIONAL TRADE A N D OTHER ECONOMIC VARIABLES: A REVIEW OF THE LITERATURE, b y V i c t o r i a S .
Farrell with Dean A. DeRosa and T. Ashby McCown.
January 1984. Out of print.
131. CALCULATIONS OF PROFITABILITY FOR U . S . D O L L A R DEUTSCHE MARK INTERVENTION, b y L a u r e n c e R .
Jacobson. October 1983. 8 pp.
132. TIME-SERIES STUDIES OF THE RELATIONSHIP BETWEEN EXCHANGE RATES A N D INTERVENTION: A
143. COMPLIANCE COSTS A N D CONSUMER BENEFITS OF
THE ELECTRONIC F U N D TRANSFER ACT: RECENT
SURVEY EVIDENCE, by Frederick J. Schroeder. April
1985. 23 pp. Out of print.
144. SCALE ECONOMIES IN COMPLIANCE COSTS FOR CONSUMER CREDIT REGULATIONS: T H E TRUTH IN L E N D ING A N D E Q U A L CREDIT OPPORTUNITY L A W S , b y
Gregory E. Elliehausen and Robert D. Kurtz. May
1985. 10 pp.
1 4 5 . SERVICE CHARGES AS A SOURCE OF B A N K INCOME
A N D THEIR IMPACT ON CONSUMERS, b y G l e n n B .
Canner and Robert D. Kurtz. August 1985. 31 pp. Out
of print.
1 4 6 . T H E ROLE OF THE PRIME R A T E IN THE PRICING OF
BUSINESS LOANS BY COMMERCIAL BANKS, 1 9 7 7 - 8 4 ,
by Thomas F. Brady. November 1985. 25 pp.
147. REVISIONS IN THE MONETARY SERVICES (DIVISIA)
INDEXES OF THE MONETARY AGGREGATES, b y H e l e n
T. Farr and Deborah Johnson. December 1985. 42 pp.
148. T H E MACROECONOMIC A N D SECTORAL EFFECTS OF
THE ECONOMIC RECOVERY TAX ACT: SOME SIMULA-
TION RESULTS, by Flint Brayton and Peter B. Clark.
December 1985. 17 pp.
1 4 9 . T H E OPERATING PERFORMANCE OF ACQUIRED FIRMS
IN BANKING BEFORE A N D AFTER ACQUISITION, b y
Stephen A. Rhoades. April 1986. 32 pp.
150. STATISTICAL COST ACCOUNTING MODELS IN BANKING: A REEXAMINATION A N D AN APPLICATION, b y
John T. Rose and John D. Wolken. May 1986. 13 pp.
A88
1 5 1 . RESPONSES TO DEREGULATION: RETAIL DEPOSIT
PRICING FROM 1 9 8 3 THROUGH 1 9 8 5 , b y P a t r i c k I.
Mahoney, Alice P. White, Paul F. O'Brien, and Mary
M. McLaughlin. January 1987. 30 pp.
1 5 2 . DETERMINANTS OF CORPORATE MERGER ACTIVITY: A
REVIEW OF THE LITERATURE, by Mark J. Warshawsky.
April 1987. 18 pp.
REPRINTS
OF BULLETIN
ARTICLES
Bank Lending to Developing Countries. 10/84.
Survey of Consumer Finances, 1983: A Second Report.
12/84.
Union Settlements and Aggregate Wage Behavior in the
1980s. 12/84.
The Thrift Industry in Transition. 3/85.
A Revision of the Index of Industrial Production. 7/85.
Financial Innovation and Deregulation in Foreign Industrial
Countries. 10/85.
Recent Developments in the Bankers Acceptance Market.
1/86.
Most of the articles reprinted do not exceed 12 pages.
Limit of 10 copies
Foreign Experience with Targets for Money Growth. 10/83.
Intervention in Foreign Exchange Markets: A Summary of
Ten Staff Studies. 11/83.
A Financial Perspective on Agriculture. 1/84.
Survey of Consumer Finances, 1983. 9/84.
The Use of Cash and Transaction Accounts by American
Families. 2/86.
Financial Characteristics of High-Income Families. 3/86.
Prices, Profit Margins, and Exchange Rates. 6/86.
Agricultural Banks under Stress. 7/86.
Foreign Lending by Banks: A Guide to International and
U.S. Statistics. 10/86.
Recent Developments in Corporate Finance. 11/86.
U. S. International Transactions in 1986. 5/87.
A89
Index to Statistical Tables
References are to pages A3-A81 although the prefix "A" is omitted in this index
ACCEPTANCES, bankers (See Bankers acceptances)
Agricultural loans, commercial banks, 19, 20
Assets and liabilities (See also Foreigners)
Banks, by classes, 18-20, 70-81
Domestic finance companies, 37
Federal Reserve Banks, 10
Financial institutions, 26
Foreign banks, U.S. branches and agencies, 21
Nonfinancial corporations, 36
Automobiles
Consumer installment credit, 40, 41
Production, 47, 48
BANKERS acceptances, 9, 23, 24
Bankers balances, 18-20, 70, 72, 74, 76, 78, 80.
(See also Foreigners)
Bonds (See also U.S. government securities)
New issues, 34
Rates, 24
Branch banks, 21, 55
Business activity, nonfinancial, 44
Business expenditures on new plant and equipment, 36
Business loans (See Commercial and industrial loans)
CAPACITY utilization, 46
Capital accounts
Banks, by classes, 18, 71, 73, 75, 77, 79, 81
Federal Reserve Banks, 10
Central banks, discount rates, 67
Certificates of deposit, 24
Commercial and industrial loans
Commercial banks, 16, 19, 70, 72, 74, 76, 78, 80
Weekly reporting banks, 19-21
Commercial banks
Assets and liabilities, 18-20, 70-81
Commercial and industrial loans, 16, 18, 19, 20, 21
Consumer loans held, by type, and terms, 40, 41
Loans sold outright, 19
Nondeposit funds, 17
Number, by classes, 71, 73, 75, 77, 79, 81
Real estate mortgages held, by holder and property, 39
Time and savings deposits, 3
Commercial paper, 23, 24, 37
Condition statements (See Assets and liabilities)
Construction, 44, 49
Consumer installment credit, 40, 41
Consumer prices, 44, 50
Consumption expenditures, 51, 52
Corporations
Nonfinancial, assets and liabilities, 36
Profits and their distribution, 35
Security issues, 34, 65
Cost of living (See Consumer prices)
Credit unions, 26, 40. (See also Thrift institutions)
Currency and coin, 18, 70, 72, 74, 76, 78, 80
Currency in circulation, 4, 13
Customer credit, stock market, 25
DEBITS to deposit accounts, 15
Debt (See specific types of debt or securities)
Demand deposits
Banks, by classes, 18-21, 71, 73, 75, 77, 79, 81
Demand deposits—Continued
Ownership by individuals, partnerships, and
corporations, 22
Turnover, 15
Depository institutions
Reserve requirements, 8
Reserves and related items, 3, 4, 5, 12
Deposits (See also specific types)
Banks, by classes, 3, 18-20, 21, 71, 73, 75, 77, 79, 81
Federal Reserve Banks, 4, 10
Turnover, 15
Discount rates at Reserve Banks and at foreign central
banks and foreign countries (See Interest rates)
Discounts and advances by Reserve Banks (See Loans)
Dividends, corporate, 35
EMPLOYMENT, 45
Eurodollars, 24
FARM mortgage loans, 39
Federal agency obligations, 4, 9, 10, 11, 31, 32
Federal credit agencies, 33
Federal finance
Debt subject to statutory limitation, and types and
ownership of gross debt, 30
Receipts and outlays, 28, 29
Treasury financing of surplus, or deficit, 28
Treasury operating balance, 28
Federal Financing Bank, 28, 33
Federal funds, 6, 17, 19, 20, 21, 24, 28
Federal Home Loan Banks, 33
Federal Home Loan Mortgage Corporation, 33, 38, 39
Federal Housing Administration, 33, 38, 39
Federal Land Banks, 39
Federal National Mortgage Association, 33, 38, 39
Federal Reserve Banks
Condition statement, 10
Discount rates (See Interest rates)
U.S. government securities held, 4, 10, 11, 30
Federal Reserve credit, 4, 5, 10, 11
Federal Reserve notes, 10
Federal Savings and Loan Insurance Corporation insured
institutions, 26
Federally sponsored credit agencies, 33
Finance companies
Assets and liabilities, 37
Business credit, 37
Loans, 40, 41
Paper, 23, 24
Financial institutions
Loans to, 19, 20, 21
Selected assets and liabilities, 26
Float, 4
Flow of funds, 42, 43
Foreign banks, assets and liabilities of U.S. branches and
agencies, 21
Foreign currency operations, 10
Foreign deposits in U.S. banks, 4, 10, 19, 20
Foreign exchange rates, 68
Foreign trade, 54
Foreigners
Claims on, 55, 57, 60, 61, 62, 64
Liabilities to, 20, 54, 55, 57, 58, 63, 65, 66
A90
GOLD
Certificate account, 10
Stock, 4, 54
Government National Mortgage Association, 33, 38, 39
Gross national product, 51
HOUSING, new and existing units, 49
INCOME, personal and national, 44, 51, 52
Industrial production, 44, 47
Installment loans, 40, 41
Insurance companies, 26, 30, 39
Interest rates
Bonds, 24
Consumer installment credit, 41
Federal Reserve Banks, 7
Foreign central banks and foreign countries, 67
Money and capital markets, 24
Mortgages, 38
Prime rate, 23
International capital transactions of United States, 53-67
International organizations, 57, 58, 60, 63, 64
Inventories, 51
Investment companies, issues and assets, 35
Investments (See also specific types)
Banks, by classes, 18, 19, 20, 21, 26
Commercial banks, 3, 16, 18-20, 39, 70, 76
Federal Reserve Banks, 10, 11
Financial institutions, 26, 39
LABOR force, 45
Life insurance companies (See Insurance companies)
Loans (See also specific types)
Banks, by classes, 18-20
Commercial banks, 3, 16, 18-20, 70, 72, 74, 76, 78, 80
Federal Reserve Banks, 4, 5, 7, 10, 11
Financial institutions, 26, 39
Insured or guaranteed by United States, 38, 39
MANUFACTURING
Capacity utilization, 46
Production, 46, 48
Margin requirements, 25
Member banks (See also Depository institutions)
Federal funds and repurchase agreements, 6
Reserve requirements, 8
Mining production, 48
Mobile homes shipped, 49
Monetary and credit aggregates, 3, 12
Money and capital market rates, 24
Money stock measures and components, 3, 13
Mortgages (See Real estate loans)
Mutual funds, 35
Mutual savings banks, (See Thrift institutions)
NATIONAL defense outlays, 29
National income, 51
OPEN market transactions, 9
PERSONAL income, 52
Prices
Consumer and producer, 44, 50
Stock market, 25
Prime rate, 23
Producer prices, 44, 50
Production, 44, 47
Profits, corporate, 35
REAL estate loans
Banks, by classes, 16, 19, 20, 39
Financial institutions, 26
Terms, yields, and activity, 38
Type of holder and property mortgaged, 39
Repurchase agreements, 6, 17, 19, 20, 21
Reserve requirements, 8
Reserves
Commercial banks, 18, 71, 77
Depository institutions, 3, 4, 5, 12
Federal Reserve Banks, 10
U.S. reserve assets, 54
Residential mortgage loans, 38
Retail credit and retail sales, 40, 41, 44
SAVING
Flow of funds, 42, 43
National income accounts, 51
Savings and loan associations, 26, 39, 40, 42. {See also
Thrift institutions)
Savings banks, 26, 39, 40
Savings deposits (See Time and savings deposits)
Securities (See specific types)
Federal and federally sponsored credit agencies, 33
Foreign transactions, 65
N e w issues, 34
Prices, 25
Special drawing rights, 4, 10, 53, 54
State and local governments
Deposits, 19, 20
Holdings of U.S. government securities, 30
New security issues, 34
Ownership of securities issued by, 19, 20, 26
Rates on securities, 24
Stock market, selected statistics, 25
Stocks (See also Securities)
New issues, 34
Prices, 25
Student Loan Marketing Association, 33
TAX receipts, federal, 29
Thrift institutions, 3. (See also Credit unions and Savings
and loan associations)
Time and savings deposits, 3, 13, 17, 18, 19, 20, 21, 71, 73,
75, 77, 79, 81
Trade, foreign, 54
Treasury cash, Treasury currency, 4
Treasury deposits, 4, 10, 28
Treasury operating balance, 28
UNEMPLOYMENT, 45
U.S. government balances
Commercial bank holdings, 18, 19, 20
Treasury deposits at Reserve Banks, 4, 10, 28
U.S. government securities
Bank holdings, 18-20, 21, 30, 70, 72, 74, 76, 78, 80
Dealer transactions, positions, and financing, 32
Federal Reserve Bank holdings, 4, 10, 11, 30
Foreign and international holdings and transactions, 10,
30, 66
Open market transactions, 9
Outstanding, by type and holder, 26, 30
Rates, 24
U.S. international transactions, 53-67
Utilities, production, 48
VETERANS Administration, 38, 39
WEEKLY reporting banks, 19-21
Wholesale (producer) prices, 44, 50
YIELDS (See Interest rates)
A91
Federal Reserve Banks, Branches, and Offices
FEDERAL RESERVE BANK,
branch, or facility
Zip
Chairman
Deputy Chairman
President
First Vice President
BOSTON*
02106
Joseph A. Baute
George N . Hatsopoulos
Frank E. Morris
Robert W. Eisenmenger
N E W YORK*
10045
John R. Opel
Virginia A. Dwyer
Mary Ann Lambertsen
E. Gerald Corrigan
Thomas M. Timlen
Buffalo
14240
John T. Keane
PHILADELPHIA
19105
Nevius M. Curtis
George E. Bartol III
Edward G. Boehne
William H. Stone, Jr.
CLEVELAND*
44101
Charles W. Parry
John R. Miller
Owen B. Butler
James E. Haas
vacancy
William H. Hendricks
Leroy T. Canoles, Jr.
Robert A. Georgine
Gloria L. Johnson
Wallace J. Jorgenson
Robert P. Black
Jimmie R. Monhoilon
Bradley Currey, Jr.
Larry L. Prince
Margaret E. M. Tolbert
Andrew A. Robinson
Robert D. Apelgren
C. Warren Neel
Caroline K. Theus
Robert P. Forrestal
Jack Guynn
Robert J. Day
Marcus Alexis
Robert E. Brewer
Silas Keehn
Daniel M. Doyle
W.L. Hadley Griffin
Robert L. Virgil, Jr.
James R. Rodgers
Raymond M. Burse
Katherine H. Smythe
Thomas C. Melzer
Joseph P. Garbarini
John B. Davis, Jr.
Michael W. Wright
Warren H. Ross
Gary H. Stern
Thomas E. Gainor
Irvine O. Hockaday, Jr.
Robert G. Lueder
James E. Nielson
Patience S. Latting
Kenneth L. Morrison
Roger Guffey
Henry R. Czerwinski
Bobby R. Inman
Hugh G. Robinson
Mary Carmen Saucedo
Walter M. Mischer, Jr.
Robert F. McDermott
Robert H. Boykin
William H. Wallace
Fred W. Andrew
Robert F. Erburu
Richard C. Seaver
Paul E. Bragdon
Don M. Wheeler
John W. Ellis
Robert T. Parry
Carl E. Powell
Cincinnati
Pittsburgh
45201
15230
RICHMOND*
23219
Baltimore
21203
Charlotte
28230
Culpeper Communications
and Records Center 22701
ATLANTA
Birmingham
Jacksonville
Miami
Nashville
N e w Orleans
30303
35283
32231
33152
37203
70161
CHICAGO*
60690
Detroit
48231
ST. LOUIS
63166
Little Rock
Louisville
Memphis
72203
40232
38101
MINNEAPOLIS
55480
Helena
K A N S A S CITY
Denver
Oklahoma City
Omaha
DALLAS
El Paso
Houston
San Antonio
59601
64198
80217
73125
68102
75222
79999
77252
78295
S A N FRANCISCO
94120
Los Angeles
Portland
Salt Lake City
Seattle
90051
97208
84125
98124
Vice President
in charge of branch
Charles A. Cerino
Harold J. Swart
Robert D. McTeer, Jr.
Albert D. Tinkelenberg
John G. Stoides
Delmar Harrison
Fred R. Herr
James D. Hawkins
Patrick K. Barron
Jeffrey J. Wells
Henry H. Bourgaux
Roby L. Sloan
John F. Breen
James E. Conrad
Paul I. Black, Jr.
Robert F. McNellis
Enis Alldredge, Jr.
William G. Evans
Robert D. Hamilton
Tony J. Salvaggio
Sammie C. Clay
J. Z. Rowe
Thomas H. Robertson
Thomas C. Warren
Angelo S. Carella
E. Ronald Liggett
Gerald R. Kelly
* 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.
A92
The Federal Reserve System
Boundaries of Federal Reserve Districts and Their Branch Territories
April 1984
LEGEND
Boundaries of Federal Reserve Districts
®
Federal Reserve Bank Cities
Boundaries of Federal Reserve Branch
Territories
*
Federal Reserve Branch Cities
Federal Reserve Bank Facility
Q
Board of Governors of the Federal Reserve
System
Publications of Interest
FEDERAL RESERVE
REGULATORY
SERVICE
To promote public understanding of its regulatory
functions, the Board publishes the Federal Reserve
Regulatory Service, a three-volume looseleaf service
containing all Board regulations and related statutes,
interpretations, policy statements, rulings, and staff
opinions. For those with a more specialized interest in
the Board's regulations, parts of this service are
published separately as handbooks pertaining to monetary policy, securities credit, and consumer affairs.
These publications are designed to help those who
must frequently refer to the Board's regulatory materials. They are updated at least monthly, and each
contains conversion tables, citation indexes, and a
subject index.
The Monetary
Policy
and Reserve
Requirements
Handbook contains Regulations A, D, and Q plus
related materials. For convenient reference, it also
contains the rules of the Depository Institutions
Deregulation Committee.
The Securities
Credit Transactions
Handbook
con-
tains Regulations G, T, U, and X, dealing with extensions of credit for the purchase of securities, together
with all related statutes, Board interpretations, rulings, and staff opinions. Also included is the Board's
list of OTC margin stocks.
The Consumer
and Community
Affairs
Handbook
contains Regulations B, C, E, M, Z, AA, and BB and
associated materials.
For domestic subscribers, the annual rate is $200 for
the Federal
Reserve
Regulatory
Service
and $75 for
each handbook. For subscribers outside the United
States, the price including additional air mail costs is
$250 for the Service and $90 for each Handbook. All
subscription requests must be accompanied by a check
or money order payable to Board of Governors of the
Federal Reserve System. Orders should be addressed
to Publications Services, Mail Stop 138, Federal Reserve Board, 20th Street and Constitution Avenue,
N.W., Washington, D.C. 20551.
Publications of Interest
FEDERAL RESERVE
PUBLICATIONS
CONSUMER
CREDIT
The Federal Reserve Board publishes a series of
pamphlets covering individual credit laws and topics,
as pictured below. The series includes such subjects as
how the Equal Credit Opportunity Act protects women against discrimination in their credit dealings, how
to use a credit card, and how to use Truth in Lending
information to compare credit costs.
The Board also publishes the Consumer Handbook
to Credit Protection
Laws,
a complete guide to con-
sumer credit protections. This 44-page booklet explains how to use the credit laws to shop for credit,
apply for it, keep up credit ratings, and complain about
an unfair deal.
Protections offered by the Electronic Fund Transfer
Act are explained in Alice in Debitland. This booklet
offers tips for those using the new "paperless" systems for transferring money.
Copies of consumer publications are available free
of charge from Publications Services, Mail Stop 138,
Board of Governors of the Federal Reserve System,
Washington, D.C. 20551. Multiple copies for classroom use are also available free of charge.
Fair
Credit
Billing
1——,
1
What
Thithln
Lending
Means
To You
@FedFRASER