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FEDERAL RESERVE BANK
OF NEW YORK

A N N U A L REPORT

1980

FEDERAL

RESERVE

B A N K OF N E W Y O R K

April 2, 1981

To the Depository Institutions in the
Second Federal Reserve District

I am pleased to present our
sixty-sixth Annual R e p o r t , reviewing major
economic and financial developments and
this Bank's operations in 198 0.

Anthony M. Solomon
President

Federal Reserve Bank
of New York

SIXTY-SIXTH
ANNUAL REPORT
For the Year
Ended
December 31, 1980

Second Federal Reserve District

Contents:

Page
1980— AN ECONOMIC OVERVIEW...................................................................................

The Domestic Economy

...................................................................................................

Monetary P o lic y ................................................................................................................

International Developments.............................................................................................

MONETARY CONTROL A C T ...............................................................................................

THE BANK IN 1980 .........................................................................................................

Managerial and Operational Highlights ..........................................................................

Financial Statements

.......................................................................................................

Changes in Directors and Senior O ffic e rs ......................................................................

List of Directors and Officers .........................................................................................

Sixty-sixth Annual Report
Federal Reserve Bank of New York

1980—AN ECONOM IC O V E R V IE W

Th e Domestic Economy
The United States economy underwent wide fluctuations during 1980. Economic
activity plunged into steep recession early in the year, bottomed out in the
summer, and then rebounded over the rest of the year. In the financial markets,
interest rates soared to record highs in March, plummeted from April through
July, and then surged to new highs as the economy recovered. A few industries
were especially hard hit by these economic and financial fluctuations. The
automotive industry had its worst year ever. New home construction was throttled
by the record high interest rates. And many thrift institutions, burdened by large
holdings of old low-interest mortgages, posted sizable losses. By the end of
the year the economy as a whole was essentially back to where it had been at the
beginning of the year, and real gross national product (GNP) was only fraction
ally higher than two years earlier.
Despite the slack in the economy, inflationary forces proved to be severe
and persistent. Early in 1980, inflationary expectations exploded, and there was
an urgent sense that previous measures were insufficient to contain inflationary
pressures. In March, President Carter announced a broad anti-inflation program
and called upon the Federal Reserve to institute special measures designed to
limit the growth of credit. By the end of the year, inflation, though remaining
high by historical standards, had receded from the extraordinary heights reached
earlier in the year. Still, inflationary expectations had not really abated, as
monetary policy—notwithstanding its success in moderating the growth of money
— was perceived as needing more support from other arms of policy.

d o w n t u r n . In 1979 the well-advertised recession had not materialized
and, as 1980 opened, there was a widespread perception that economic activity
was on a plateau and that a contraction in the economy was not imminent. In
ventories were lean everywhere in the economy, except in the automobile
industry, and new orders were showing no signs of decline. Detroit was doing
very poorly, yet the previous slump in domestic car sales appeared to have
leveled off.
While the real economy was marking time, there was an alarming flare-up in
inflation (Chart 1). The consumer price index shot up at an almost 17 percent
annual rate in January 1980 and remained close to that in the following month.
True, consumer prices had accelerated to double-digit rates during 1979, but
most of that speedup had been related to the prices of food, energy, and homeownership, which tended to reflect special circumstances rather than the
general inflationary environment. What was so disturbing about the spurt
in the consumer price index in the opening months of 1980 was that it was
broadly based, encompassing many other prices besides those of food, energy,
and homeownership. A similar pattern showed up in producer prices. While the
index of producer prices of finished goods had begun to accelerate in mid-1979,
this had reflected the run-up in oil prices. However, when producer prices of
finished goods other than energy and food surged ahead in early 1980, it looked
as if inflation had taken a serious turn for the worse.
As these worries about inflation escalated, interest rates moved sharply higher.
At about the same time, the Administration announced a $16 billion deficit for
fiscal 1981, whereas previous indications had been that the budget would be in
balance that year. This accentuated the inflation fears even more. The bond
markets came close to panic, and some observers began to question how much
longer the bond markets could survive.
Faced with disarray in the bond markets and intensifying inflationary pres
sures, the President announced a new anti-inflation program in mid-March.
Included in this program were a commitment to balance the 1981 budget, an
extension of the wage and price standards established by the Council on
Wage and Price Stability at the end of 1979, and a renewed appeal to the
Congress to enact several energy conservation measures. In addition, the
President invoked the powers granted to him under the Credit Control Act
of 1969 to authorize the Federal Reserve to impose restraints on the growth of
credit. Accordingly, the Federal Reserve instituted an extensive credit restraint
program on March 14. The controls were aimed at limiting the growth of

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overall bank lending and of unsecured consumer credit by all types of lenders,
most notably through credit cards. Consumer credit lenders were required to
maintain noninterest-bearing deposits equal to 15 percent of increases in covered
loans. Altogether, only about half of total consumer credit was covered. Not
covered by the program were secured consumer loans such as mortgages, homeimprovement loans, automobile loans, and other consumer durables loans. At

Chart 1.

ALTHOUGH INFLATION SLOWED DURING THE YEAR, IT REMAINED
HIGH AT THE YEAR-END, BOTH AT THE CONSUMER LEVEL . . .

. . . AN D AT THE

PRODUCER LEVEL.

All data are seasonally adjusted annual rates.

the same time, the Federal Reserve imposed a surcharge of 3 percentage points
above the basic discount rate on certain discount window borrowings by large
member banks.
Along with the imposition of the credit controls, the economy skidded into
recession. While January 1980 is generally accepted as the official cyclical
peak, industrial production and employment remained fairly level until midMarch or so. From then onward, the downslide was fast and steep. Busi
nesses reacted exceptionally quickly to the downturn in demand, cutting back
production and laying off workers. By this prompt reaction, they prevented
much of the inventory accumulation that occurs in the typical recession and
tends to prolong the downturn. Industrial production plunged between March
and June at as fast a rate as in the 1974 recession at its steepest (Chart 2).
Real GNP fell at a 9.9 percent annual rate in the second quarter, the largest
quarterly decline ever recorded during the postwar period.
The 1980 recession itself was largely the result of a collapse in consumption
spending. In real terms, consumption spending plummeted at a 10 percent
annual rate in the second quarter, and this alone accounted for nearly two
thirds of the overall fall in GNP. In most past recessions other than the
1974 experience, consumer spending had generally been a stabilizing force,
declining less than other components of demand. The plunge of consumption
spending in the spring of 1980 was concentrated in durable goods, mainly motor
vehicles and parts. Real consumption spending for nondurable goods and ser
vices edged down in the second quarter at a 2 percent annual rate.
Mirroring the fall in consumption spending was a sharp drop in instal
ment credit. Consumer instalment credit fell about $8 billion from March until
July (Chart 3). Not only did consumers cut back on their use of credit cards,
which were covered by the credit restraint program, but they also reduced
their borrowing for automobiles, other durables, and home improvements which
were not covered. Thus, only a part of the $8 billion decline in consumer in
stalment debt can be attributed directly to the consumer credit restraint program.
Indirectly, however, the program did change the behavior of both borrowers
and lenders and had an important psychological effect on household willingness
to finance purchases with credit. At the same time, some lenders were finding
consumer lending unprofitable. Since the cost of short-term funds was running
well above the going rate for such loans (held back by usury ceilings in many
states), lenders had an incentive to curtail their consumer loan business.
Nevertheless, it would be wrong to exaggerate the effects of the credit
6

Chart 2.

ECONOMIC ACTIVITY TURNED D O W N EARLY IN 1980 AN D THEN REBOUNDED
IN THE SECOND HALF OF THE YEAR.

Ail data are seasonally adjusted.

restraint program in dampening consumption. Although on a quarterly basis
the collapse in consumption spending appears to have coincided with the
program, monthly data suggest that personal consumption spending had begun
to decline in advance of the program. Indeed, real consumption spending
peaked in January and was already 2 percent lower in March (Chart 3). Nor
was the subsequent decline in consumption outlays from March until May any
faster or sharper than the downslide in the earlier months. Most of the January-

Chart 3.

CONSUMER EXPENDITURES DROPPED FROM JA N U A R Y THROUGH M A Y
AN D THEN RECOVERED.

CONSUMER INSTALMENT CREDIT REFLECTED THE SWINGS IN CONSUMPTION
AN D THE MARCH 14 CREDIT RESTRAINT PROGRAM .

All data are seasonally adjusted.

to-May decline in total consumption spending, moreover, was concentrated
in purchases of motor vehicles and parts. Thus, it appears that recessionary
forces were already at work before the special credit restraints were imposed.
Another major force in the downturn was residential construction. Major
pieces of Federal legislation had the effect of preempting the usury ceilings
on mortgage interest rates throughout the country unless individual states
expressly declared otherwise. Despite the lifting of mortgage usury ceilings,
8

mortgage lending and home construction continued declining over the opening
months of 1980. Then, as interest rates in general surged to record high levels,
mortgage lending dried up almost completely, with the rate on new commitments
climbing as high as 16 to 17 percent. Housing starts plunged. By May, housing
starts were down to only 900,000 units at an annual rate, the lowest level since
early 1975 when the economy was also enmeshed in a recession.
The 1980 recession turned out to be exceptionally brief, lasting but six
months in all. Industrial production bottomed out in July at a level 8 percent
below the cyclical peak recorded for the preceding January. Unemployment
stood at 7.8 percent in July, up almost 2 percentage points from what it had
been at the end of 1979. In view of the remarkably steep curtailment in the use
of credit during the recession as well as the sharp fall in the monetary aggregates,
the credit controls were loosened at the end of May and then phased out
altogether in July.

u p t u r n .
With the slump in business activity, interest rates tumbled.
The yield on three-month Treasury bills, for example, after peaking at 16 per
cent at the end of March, fell below 7 percent in June (Chart 4). Other short
term rates staged similarly spectacular declines. Long-term rates also dropped,
rapidly, though not by as much as short-term rates. As interest rates declined,
the apprehension that had affected financial markets and institutions, businesses,
and households subsided.
Thrift institutions became more willing to make mortgages. Indeed, they
offered mortgages at rates close to 12 percent in July, compared with 17 per
cent in March. (This decline was much larger than the fall in rates on long
term securities.) With the decline in mortgage rates, activity in the housing
market revived. Sales of new single-family houses jumped in July and August,
and new home construction also swelled. Housing starts surged 26 percent in
June, rising to 1.2 million units at an annual rate, and by October had surpassed
IVi million units.
Even more significant in the upturn was a sharp resurgence in consumer
spending on goods and services. In real terms, consumption outlays bottomed
out in May and then rebounded vigorously. This growth was concentrated
in spending on durable goods. Domestic car sales reached an annual rate
of 6.4 million units in July, up nearly 25 percent from the low in May. In
the process, dealers’ inventories of new domestic cars receded from the ex-

t h e

trem ely high levels to which they had clim bed in the spring. The econom ic
expansion continued unfolding over the rest of the year, im pelled largely by
the m om entum in nonautom otive consum ption spending. Payroll em ploym ent
increased by IV4 m illion jobs from July to D ecem ber, and the unem ploym ent
rate declined alm ost V2 percentage point, closing out the year at 7.4 percent.
As the tem po of econom ic activity picked up, interest rates began to rise.
The rise in rates was m odest at first, but the pace quickened as the year wore
on. In an effort to limit the excessive growth of money and credit, in midN ovem ber the Federal Reserve raised the basic discount rate and im posed a

C h a rt 4.

S H O R T -T E R M IN T ER ES T R A T E S W E R E H I G H L Y V O L A T I L E IN 1 9 8 0 . . .

. . . A N D , AS E X P EC TA TIO N S O F IN FL A T IO N
LO N G -T E R M

RATES A L S O V A R IED

W ID EL Y .

AND

TH E S T R E N G T H O F T H E E C O N O M Y

CHANGED,

surcharge of 2 percentage points on certain discount window borrowings by
large institutions. By late November, interest rates had surpassed the record
highs attained earlier in the year and continued climbing to new records.
In the face of the rising interest rates, the pace of the upturn began to taper
off toward the year-end. Housing starts, for instance, flattened out at an annual
rate of about IV2 million units over the last few months of the year. Although
single-family housing starts did decline, the construction of new multifamily
units picked up, buoyed in part by the infusion of Federal funds. Also, new
domestic car sales leveled off after July and were essentially flat throughout the
rest of the year. Still, nonautomotive consumption spending spurted, and overall
economic activity did continue to expand over the closing months of the year.
By the end of 1980, industrial production had regained all but 1 percent of
the loss sustained during the recession.
Even after yet another year of no economic growth, inflation stubbornly
persisted. Much of the bulge in oil prices had worked its way through the
industrial structure by mid-1980 so that there was some apparent relief in pro
ducer price increases. However, the underlying inflation rate, adjusted for
biases and special factors, appeared to be running close to 10 percent. Unlike
past inflationary episodes, wages and prices continued to grow at distressingly
high rates despite the substantial slack in the economy. This time, decisions
about wages and prices have come to be based on deeply embedded inflationary
expectations conditioned by the rapid rates of inflation recorded in recent years.
Altering these heightened expectations will take time as well as consistent and
coordinated fiscal and monetary policies.

f i n a n c i a l m a r k e t s . It was a turbulent year for the financial markets.
Twice during the year, interest rates rose to record levels— once at the
beginning of the year and then again at the end (Chart 4 ). In addition, day-today variations in long-term interest rates were as large as 30 to 40 basis points
(0.3 to 0.4 percentage point), whereas in earlier years a swing of even 10 basis
points would have been regarded as uncommonly large.
Early in the year the rapid rise in rates was accompanied by severe strains.
Indeed, from January to March, the bond markets almost came to a stand
still as investors, alarmed by the sudden flare-up in inflation, abandoned the
market. During this same period, the life insurance companies became increas
ingly disturbed by the precipitous decline in their cash flow and the massive

t h e

reduction of the value of the assets in their portfolios. And thrift institutions,
distressed because their marginal cost of funds had risen so much and fearful
that large-scale deposit withdrawals were in the offing, hiked mortgage rates to
levels designed to discourage almost all potential borrowers. In the spring and
early summer, interest rates fell sharply and the strains on the financial markets
eased considerably. Participants in the financial markets, observing how quickly
conditions could change, adapted their positions and expectations accordingly.
Indeed, when rates rose sharply for a second time later in the year, there was
much less apprehension and worry.
Reflecting the sharp fluctuations in interest rates, the volume of monthly
corporate bond issues in 1980 ranged from very low to record high levels. For
the year as a whole, a record $52Vi billion in gross corporate bonds was either
privately placed or sold in the public market, compared with $40 billion in
1979. Early in the year, as the alarm in this market grew, new issues tapered
off to a trickle. However, as rates declined in the late spring and early summer,
corporations marketed record volumes of new bond issues, averaging nearly
%1Vi billion per month in May, June, and July. Then, as long-term rates
began rising, many corporations delayed their issuance of new long-term bonds.
Instead, borrowers turned to commercial banks for funds, and business loans
boomed. From July to December, business loans (including loans sold to
affiliates but excluding bankers’ acceptances) increased almost $29 billion,
whereas they had actually slipped a bit from January to July.
The sharp upward sweeps in interest rates during 1980 had a wrenching
effect upon the thrift institutions. Unlike commercial banks, thrift institutions
have not been able to develop a close match between the interest rates they
earn on their assets and those they pay for their funds, and as a result their
profits were unfavorably affected by the run-up in rates. By the end of 1980,
roughly 40 percent of the total liabilities of the thrift institutions was made up
of rate-sensitive money market certificates, first authorized with a six-month
maturity and minimum denomination of $10,000 in 1978 and with a thirtymonth maturity in 1980. In contrast, most of their assets are long-term,
fixed-rate mortgages with a majority of them issued years earlier when interest
rates were much lower.
In 1980, mortgage lenders increasingly sought to change their lending
operations to reduce their interest rate vulnerability. Mortgage rates now tend
to be set at the time of closing instead of commitment, and large nonrefundable
commitment fees are imposed to discourage borrowers from canceling in the
12

event that rates decline. Lenders also increasingly rely on the secondary
mortgage markets. The ratio of mortgage resales in the secondary markets to
originations in 1980 was nearly double what it had been in 1978.
The thrift institutions have issued an increasingly larger proportion of flexible
rate mortgages. By the end of 1980, flexible rate mortgages accounted for
almost 6 percent of their total outstanding mortgages. Of the several different
kinds of flexible rate mortgages, the two most popular instruments were the
variable rate mortgage and the renegotiable rate mortgage. For variable rate
mortgages, the interest rate can be changed within specified limits every six
months. For renegotiable rate mortgages, the interest rate becomes subject to
renegotiation and can be changed within specified limits every three to five years.
There was also some experimentation with other types of mortgages. A few
lenders, for example, have issued the so-called shared-appreciation mortgages,
but these have not yet been approved by the Federal Home Loan Bank Board
for use by Federally chartered thrift institutions.
Pinched severely by the high interest rates recorded in 1980, the life insurance
companies also sought ways to change their investment policies in order to
reduce their vulnerability. More and more of the commercial mortgages that
these companies are adding to their portfolios involve a flexible rate related
to the prime rate or some other independent index, income participation in the
properties, or call provisions entitling them to call back the loan before it
matures and renegotiate the interest rate. There have been similar changes in
their investments in directly placed corporate bonds. Increasingly, these bonds
include a floating rate; income-participation features, such as warrants; and
much shorter maturities than those prevailing in the past.
By the end of the year, the thrift institutions and insurance companies
had made some progress toward allaying their vulnerability to high interest
rates. Still, the process was far from complete, and many of the thrift institu
tions sustained large losses during 1980. In a few cases, the losses were so large
that an institution’s net worth was totally exhausted. Unless there is relief
soon from these high interest rates, many other thrift institutions will also be
threatened with financial insolvency, creating additional strains on the financial
system. This possibility makes the current anti-inflation effort all the more
imperative. Only to the extent that inflation is permanently dampened will there
be a sustainable decline in interest rates.

M onetary Policy
Monetary policy faced a difficult course in 1980. Turbulent swings in economic
activity and financial conditions marked the year and greatly complicated the
execution of policy. As the pace of business and financial flows plunged and
then recovered, both the money stock and the level of interest rates showed
large fluctuations. Despite much short-run variability, however, growth of the
narrow aggregates for the year as a whole (after adjustment for the more rapid
than expected growth of interest-bearing checkable deposits) was close to the
upper limits of the Federal Reserve’s annual target ranges, while the broader
money measures exceeded their top limits by a small margin. Bank credit
growth was well within its target range for the year (table).
The basic goal of monetary policy—to reduce inflation by gradually low
ering money growth— did not change in 1980. In pursuit of this goal, the
Federal Reserve continued to use a new operating procedure begun in October
1979 that places more weight on controlling the supply of bank reserves and
less on limiting short-run movements in the Federal funds rate. At the same
time, the Reserve System formulated its annual targets in terms of new monetary
aggregates designed to reflect financial innovation and regulatory changes in
a better way.
In recent years, new types of deposits and market instruments have devel
oped. The monetary aggregates were redefined to account for these changes and
to combine in a consistent way liabilities issued by all depository institutions.

GROWTH RATES AND TARGET RANGES FOR THE AGGREGATES
FOURTH QUARTER TO FOURTH QUARTER (in percent)

Aggregates

M -1 A ............................................................
M -1 B ............................................................
M-2 ..............................................................
M-3 ..............................................................
Bank c re d it..................................................

1980annual
target ranges

3.5-6.0
4.0-6.5
6.0-9.0
6.5-9.5
6.0-9.0

Annual
growth rates

5.0 (6.3)*
7.3 (6.7)*
9.8
9.9
7.9

1981 annual
target ranges

3.0-5.5f
3.5-6.0f
6.0-9.0
6.5-9.5
6.0-9.0

* Adjusted for the more rapid than expected growth of ATS accounts in 1980. This adjustment assumes that two thirds of
the unexpected growth of other checkable deposits during 1980 resulted from shifts of funds out of demand deposits
and one third from shifts out of savings accounts.
t After adjusting for the effects of nationwide NOW accounts.

The major new transactions aggregate, M-1B, contains currency plus all
“checkable deposits”— including those that pay interest— at both banks and
thrift institutions. M-1A, which is similar to the old M -l concept, does not
contain other checkable deposits such as ATS (automatic transfer service) and
NOW (negotiable order of withdrawal) accounts. For the broader measures,
new M-2 adds to M-1B savings and small time deposits at all institutions.
Furthermore, it contains a number of liquid market instruments that serve
some of the functions of money: money market mutual funds shares, over
night repurchase agreements (RPs), and overnight Eurodollars. The second
broad target aggregate, M-3, consists of M-2 plus large time deposits and term
RPs. While the new definitions attempt to allow for recent market innovations
and regulatory changes in a consistent manner, further evolution of market prac
tices could well make necessary a future review of the definitions.

b e h a v io r o f t h e a g g r e g a t e s .
For the year as a whole the mone
tary aggregates increased at rates near the upper bounds of the annual ranges.
But money growth was very erratic within the year, reflecting in part unusually
sharp swings in the pace of economic activity. The extent of the movements
in money growth, however, was greater than what could be accounted for by
the business cycle alone. Thus, for example, the decline in the money stock
in the second quarter appears to have been sharper than what can be explained
by the concomitant drop in economic activity or by a lagged reaction to record
high interest rates in the first quarter. The combination of shifts in expecta
tions about inflation, the imposition and removal of the special credit restraint
measures, and the unusually sharp swings in interest rates aggravated oscillations
in the demand for money.
Coming into the year, the monetary aggregates continued their modest ex
pansion of late 1979. Soon, however, strains appeared in the financial markets.
Inflationary expectations accelerated strongly and business loans resumed rapid
growth. In this atmosphere of inflationary credit demand, market rates moved
sharply higher.
In March, the establishment of the credit restraint program precipitated a sharp
decline in credit demand. As businesses and consumers repaid bank loans, the
rate of bank credit growth slowed abruptly and turned negative. The high level
of market interest rates, the recession, and the contraction of financial flows
combined to curtail the growth of money demand. The narrow aggregates, in

t h e

Chart S.

B O T H N A R R O W AGGREG ATE S S H O W E D W ID E S W I N G S DUR IN G 1980, BUT
M - 1 A FINISHED THE Y E AR WELL W I T H I N ITS T A R G E T R A N G E . . .

. . . W H IL E M-1B SL IG H TL Y EXCEEDED ITS UPPER LIMIT . . .

. . . REFLECTING FASTER T H A N EXPECTED G R O W T H OF ATS A C C O U N T S
A T CO M M ER CI AL BA NKS.
1
INTEREST-BEARING CHECKABLE DEPOSITS
M n n th lv n v p m a p t

B illio n s of
d o lla rs
25

AT THRIFT INSTITUTIONS

15 —

10 -

M / ^ com m eroa^

5 -

1979

1980

a n k s

fact, fell precipitously in April and remained weak until midsummer. Over this
period, interest rates fell even more quickly than they had climbed.
With the resurgence of the economy and the phasing-out of the credit restraint
program in July, both business and consumer credit demands revived and the
monetary aggregates began to grow faster. In fact, by the autumn they were grow
ing more quickly than expected on the basis of established relationships to income
and interest rates, partially offsetting their abnormal weakness in the spring.
Money continued to grow rapidly through the autumn as business activity
and credit demand strengthened further. By the beginning of the fourth quarter,
M-1B and the broad monetary aggregates were at or above the top of their
target ranges. But market rates were again in a strong steady climb, reaching
levels in early December above their March peaks. As 1980 ended, money
growth began to slow. For the year, M-1A finished well inside its range, while
M-1B exceeded its target (Chart 5).
The disparity between the growth rates of the two narrow aggregates re
sulted from the rapid growth of ATS accounts. In the second half of 1980,
commercial banks aggressively promoted these accounts to solidify their market
share in advance of the January 1, 1981 date on which nationwide NOW
accounts would be permitted. As the public shifted funds from demand de
posits to other checkable deposits, growth of M-1A slowed. Although this
shift did not affect M-1B, funds from savings accounts were also moved into
ATS accounts, raising M-1B growth and widening the spread between the
growth rates of the narrow aggregates. The M-1A and M-1B targets for 1980
were set with only a Vi percentage point spread because a relatively small growth
of interest-bearing checkable deposits was anticipated prior to the authoriza
tion of nationwide NOW accounts. Reflecting the more rapid than expected
ATS growth, M-1B actually increased about 2V4 percentage points faster
than M-1A. Adjusted for the rapid increase of ATS accounts, however, both
M-1A and M-1B showed annual growth rates about equal to the upper limits
of the Reserve System’s ranges (table).
Over the course of the year, the broad money measures were much less
variable than M-1A and M-1B. Thus, M-2 and M-3 declined only slightly and
temporarily in April. They also grew rapidly in late summer and autumn but
showed little of the slowdown late in the year that characterized the narrow
aggregates. Both broad measures finished the year somewhat above their target
ranges (Chart 6).
For 1981, the System, in line with the long-run objective of reducing in-

Chart 6.

THE BROADER MONETARY AGGREGATES WERE LESS VARIABLE
OVER THE YEAR . . .

. . . AND FINISHED SOM EW HAT ABOVE THEIR AN N U AL TARGETS . . .

1979

1980

. . . BUT BANK CREDIT SHOWED LARGE SWINGS AND ENDED
THE YEAR INSIDE ITS RANGE.

All data are seasonally adjusted.

flation, set targets for the narrow monetary aggregates V2 percentage point lower
than those for 1980 (after adjustment for the effects of nationwide NOW
accounts), while keeping the target ranges for the broad monetary aggregates
and for bank credit unchanged.

t h e n e w a p p r o a c h . As noted,
the Federal Reserve con
tinued to implement policy under the new operating procedure that em
phasizes control of the supply of bank reserves rather than the Federal funds
rate. In outline, it works as follows. The Federal Open Market Committee
(FOMC) sets up short-run paths for the aggregates that accord with the annual
targets. Given the short-run money objective, associated paths for total and
nonborrowed reserves are constructed that take into account expected shifts in
the public’s demand for currency, the composition of bank liabilities with
different reserve requirements, expected bank borrowings at the discount win
dow, and other factors affecting the relation between nonborrowed reserves
and money. The Trading Desk then supplies nonborrowed reserves consistent
with this objective. Thus, if the demand for money and required reserves is run
ning high (low) relative to the FOMC’s targets, nonborrowed reserves will be in
short (excess) supply. This will, in turn, put upward (downward) pressure on short
term interest rates. In this way, pressures are generated that tend to curb the over
shooting (undershooting) of money growth relative to the short-term objectives.
For 1980 as a whole, monetary expansion was not far out of line with the
targets for the year, but money growth was highly variable from month to
month and the wide movements in interest rates were unprecedented. The broad
swings in money and interest rates to a large extent reflected the unusual
economic circumstances during the year.
The fluctuations in money growth that occurred have led some observers to
suggest that the procedure used to implement the money targets should be
changed. However, the new approach was not intended to control short-run
aggregates growth rigidly. There is little evidence that tighter month-to-month
(or even quarter-to-quarter) control of money growth would result in a
smoother course for income growth since, even on a quarterly basis, the rela
tionship of money to GNP has been unstable and unpredictable (Chart 7).
To the contrary, attempting stricter short-run money control in the face of
fluctuating demands might only result in more variability in interest rates and,
in turn, in real output.

a p p r a is in g

C h a rt 7.

Q U AR TER LY C H A N G E S IN THE VELO CITY O F M O N E Y C O N T IN U E D TO BE ERRATIC IN 1980.

Velocity is the ratio of GNP to money.
All data are seasonally adjusted.

The new procedure was set up instead to ensure that policy would operate
to achieve long-run money growth consistent with a reduction of inflation.
From this view, policy worked well last year. Although the monetary aggregates
other than M-1A came in slightly above target for the year, this reflected the
acceleration of their growth after midyear, too late for the full response of
money growth to reduced reserve availability to appear by the end of 1980. On
balance, the new procedure did operate effectively to restrain monetary
expansion.
Although 1980 was a difficult year for which to sort out causes and effects,
the Federal Reserve has evaluated the experience with the new approach to
determine whether certain refinements could improve overall performance.
Some steps are being considered with an eye toward their possible advantages
20

in terms of more effective and timely monetary control. The principal questions
being examined are whether a switch to contemporaneous reserve accounting
would improve the control of money through reserves and whether other ways
of setting the discount rate or administering the discount window would increase
the Trading Desk’s ability to control the monetary aggregates.
Fundamentally, more stable money growth on a short-run basis would appear to
require extreme swings in short-term interest rates. Research studies of monetary
developments in 1980 offer some support to the claim that even greater interest
rate changes than occurred last year could have dampened the fluctuations
of the aggregates. The reduction of variability would have been small, however,
relative to the changes in the aggregates that actually took place. Looking at
all the evidence, there is little reason to believe that single-minded control of
money growth on a monthly or quarterly basis is an appropriate monetary
policy.

International Developments
Controlling inflation was the overriding objective of the major foreign indus
trial countries during 1980. They all had to deal with the consequences of the
second round of oil price hikes that had built up over the previous year. These
price hikes raised inflation rates throughout the world. By increasing oil-import
bills, they also worsened current account positions. Simultaneously, many
countries experienced inflationary consequences from fairly brisk levels of
economic activity and the beginning of some pressures on industrial capacity.
The concern was that these developments would set off a wage-price spiral
and push inflation up even further. To contain these inflationary pressures,
authorities in all the major countries were directing their economic policies
toward restraint. This meant limited money and credit growth, relatively high
interest rates, and broadly nonexpansionary fiscal policies.
The immediate impact of these policies differed widely across countries. By
the end of the year, some countries were left with sustained or moderately
higher inflation rates while others recorded substantial reductions from earlier
peaks. Current account positions improved considerably in some countries, but
deficits widened in others. Similarly, there were also wide swings in exchange
rates and consequently in international competitive positions.
What was common, by contrast, was a sharp decline in growth most every
where beginning in the second quarter. The falloff was led by a slowdown in
domestic demand, combined in some countries with weak export performance.
With growth rates falling, unemployment for some began to move markedly
upward by late summer.
At the outset of the year, few major countries questioned the need for a re
strictive policy stance to get inflation under control. But, by the end of the year,
a number of countries were finding it increasingly difficult to reconcile growth
and employment objectives with the continuing aim of lowering inflation. Any
case for stimulating the economies abroad could run up against the problem of
worsening inflationary expectations and, therefore, compounding the difficulty
of achieving either lower inflation or sustained economic growth.
Diversity in response to the effects of the second energy shock was also mir
rored in the developing countries during 1980. While most oil producers faced
generally smooth sailing, those dependent on oil imports fared less well. On
top of higher oil-import bills, many nonoil less developed countries (LDCs)
found the growth of their export volume slacken because of weakening demand
22

in the industrial countries. Disparate movements in prices of specific com
modities also had an uneven impact on many of these countries. In addition,
high levels of interest rates worldwide added to debt service costs. The question
of adequate financing for current account deficits became increasingly im
portant during the year.

m a j o r i n d u s t r i a l c o u n t r i e s . As 1980 got under way, there was
widespread agreement among the major countries on the direction for economic
policy. Broadly restrictive monetary policies with associated high interest rates,
together with nonexpansionary fiscal policies, were pursued to prevent sharply
higher energy prices from setting off an inflationary spiral. The need for
restraint had become apparent as early as mid-1979, once the full dimen
sions of the wave of oil price increases that started at the end of 1978
were recognized. Oil prices rose by about 140 percent between the end of
1978 and the end of 1980 (Chart 8). In contrast to the period following
the first oil shock in 1973-74, most of the major economies allowed the oil
price increases to be passed through to domestic prices. As a consequence,
over the course of 1979 and 1980, the direct effects of the oil price hikes raised
domestic consumer prices for the major industrial economies on average by an
estimated 4 to 5 percentage points, while the indirect effects added a few more
percentage points.
This inflationary impulse was aggravated in many of the foreign economies
by the effects of robust levels of economic activity in early 1980. Some of
these economies were growing rapidly at this time and nearing high levels
of resource utilization. Germany, Japan, and Italy had especially strong expan
sions. Of the major foreign countries, only the United Kingdom and Canada
were experiencing declines in early 1980.
Restrictive policies were also desired for external reasons. Most foreign econ
omies had to finance widening current account deficits. High interest rates could
attract capital inflows and offset expected current account deficits. High interest
rates would also tend to strengthen the currency. This could ease domestic in
flationary pressures by holding down import costs. But here the risk was that
the competitiveness of a country’s exports would be undermined over the
longer term. Moreover, while an individual country might seek some external
benefits from a restrictive policy, all countries could not simultaneously improve
their situation by this means.

t h e

C h a rt 8. OIL PRICE INCREASES ADDED TO IN F L A T IO N IN E A R LY 1980 .

. . . P R O M P T I N G A R ESTR ICTIVE P O L I C Y S T A N C E A B R O A D A N D
A S L O W D O W N IN G R O W T H .

e c o n o m i c
a c t i v i t y .
In early 1980, the prevailing view was that there was
sufficient strength in some of the m ajor econom ies to prevent a synchronized
decline in growth abroad, despite the slowdown in the U nited States. In fact,
this did not turn out to be true. Beginning in the second quarter, all the foreign
industrial econom ies, with the exception of Japan, suffered sharp falloffs in

economic activity. Overall growth for the year is estimated to have been on
average about 2.5 percent for these economies, down substantially from the
4.4 percent rate recorded in 1979.
In the United Kingdom, the decline proved far steeper than had been expected,
with no evidence at the end of the year that the recession had bottomed out.
In Germany, surprisingly strong growth in the first quarter was followed by a
broadly based decline for the rest of the year. Japan was the only major country
to show significant growth in 1980. Yet, despite overall growth of around
5.5 percent, domestic demand was relatively weak throughout much of the year,
rising by no more than about 2 percent.
One feature of the slowdown that was common to most countries in North
America and Europe was a decline in car production, roughly 24 percent in
the United States and about 8 percent in Europe. The only major countries in
creasing production in 1980 were Japan and Italy. For Japan, this was largely
because of a favorable exchange rate early in the year, rapid productivity
gains, and the ability to deliver fuel-efficient cars. Another common feature of
the slowdown was the sharp falloff in housing and nonresidential construction.
The declines were particularly steep in the United Kingdom.
The tendency of unemployment to be a lagging indicator of decline was
underscored by the experiences in 1980. Unemployment did not increase im
mediately as industrial production fell. But, when unemployment began to rise,
especially as in the United Kingdom, it did so at a rapid pace. By December,
it was approaching 9 percent in the United Kingdom, over 3 percentage points
higher than the year before, and was near 8 percent in Canada and Italy. Germa
ny also began to register increases in unemployment by the end of the year,
with the rate rising by about 1 percentage point over the course of 1980.

m o n e t a r y p o l ic y a n d e x c h a n g e r a t e s .
Most of the major foreign
countries had chosen to reduce their targets for money supply growth for
1980, compared with 1979. And there was some success in achieving the
targeted aggregates or forecast levels. The major exception was the United
Kingdom where the targeted aggregate of sterling M-3 (currency plus sterling
demand and time deposits of United Kingdom residents) increased substan
tially, but growth of other nontargeted aggregates, notably M -l, was very slow.
One of the clearest signs of the restrictiveness of monetary policy abroad
during the year was that nominal interest rates rose substantially more than

the rates of consum er price increases for most countries. N om inal interest rates
abroad began to m ove sharply upw ard in early February. T here was some
easing tow ard early sum m er but, from the autum n on, short-term interest rate
levels abroad firmed in G erm any and were essentially unchanged in F rance and
Italy. T hey eased m oderately in Jap an and the U nited Kingdom . Swings in
interest rates abroad w ere generally less pronounced than those observed in the
U nited States.
Interest rate m ovem ents in the U nited States, relative to those abroad, con
tributed to wide swings in exchange rate relationships am ong the m ajor cur-

C h a rt

all

TH E M A J O R

C U R R E N C IE S

B U T R O SE T O W A R D
G ERM AN
AND

MARK

JA PA N ES E

S P R IN G

W EAKEN ED
YEN

D EC LIN ED
AS

FRO M

R EM A IN E D

A G A I N S T THE

U N IT E D

S T A TE S

TH E S U M M E R

DO LLAR

EAR LY

INTEREST R A TE S
ON,

B U T TH E

IN TH E

PLU M M ETED.

POUND

YEAR,
TH E

S T E R LIN G

STRONG.

End-of-month rates, com puted as percentage deviation from end-1979 rates.
26

rencies in 1980 (Chart 9). Thus, for example, the German mark was strong
against the dollar early in the year, but began falling sharply toward spring
as interest rates in the United States rose. It firmed against the dollar in late
spring and early summer, when United States interest rates plummeted, but
began falling toward late summer as interest rates here turned up again and
expectations for an early improvement in the German current account evapo
rated. The Japanese yen was also weak against the dollar in early 1980 with
high interest rates here, but firmed in midyear, and remained strong for the
rest of the year, as Japan’s current account deficit narrowed and the country
recorded a relatively good economic performance. By the end of 1980, there was
about a 25 percent appreciation of the Japanese yen against the German mark.
While interest rate differentials were important in influencing exchange rate
changes in 1980, they could not account entirely for the changes which took
place. For example, the interest rate differential between the dollar and the
German mark prevailing in March 1980 also prevailed roughly in December
1980. Yet the dollar was about 5 percent higher against the German mark in
December than it was in March. Even more to the point, movements in the
interest rate differential between the dollar and the Japanese yen had little to do
with the strong appreciation of the yen against the dollar after the middle of
1980. For, over this period, the interest rate differential in short-term money
market rates began to move sharply in favor of the dollar, but the yen rose by
almost 11 percent against the dollar from early August to the end of December.
The influence of inflation rate differentials on exchange rates in 1980 was also
hard to detect. This was notably so for Germany, where an impressive relative
inflation performance during the year failed to arrest the sharp depreciation of
the German mark against the dollar and the Japanese yen. For the German
mark, the large and unaccustomed current account deficit seems to have exerted
a major influence on exchange rate performance.

p e r f o r m a n c e . All the foreign industrial economies, except the
United Kingdom, faced widening current account deficits coming into 1980
(Chart 10). This was due largely to the increased prices for imported oil. In
Germany, a weakening in export volume and the jump in oil prices helped
increase the country’s current account deficit to its highest level ever, about $15
billion for the year. In France, a current account deficit of about $7 billion for
1980 reversed a small surplus for 1979, primarily as a result of higher costs for

e x t e r n a l

energy imports. Strong exports of agricultural goods, services, and militaryrelated items offset a deterioration in industrial exports stemming from a firm
currency and high inflation. And in Italy, government measures to sustain the
lira in the European Monetary System despite a high inflation rate weakened
the country’s international competitiveness and led to a substantial decline in
export volume. This falloff in exports contributed significantly to the $15 billion
swing in the Italian current account balance in 1980 to a $10 billion deficit.
Japan managed to start improving its situation over the course of 1980,
achieving virtual current account balance by the year-end, even though the
deficit for the year was $11 billion. The improvement was due primarily to
sharply increased exports, which rose by almost 19 percent in volume. The lagged
effects of a substantial depreciation of the Japanese yen in 1979 contributed to
the strength of Japanese exports. The improvement in the country’s current
account deficit was also due to a leveling-off in import volume as a result of
slower growth and, even more importantly, of energy conservation efforts.
Only two countries, the United Kingdom and the United States, were able
to register current account surpluses in 1980. In the United Kingdom, the
surplus totaled about $5 billion. The slowdown in domestic economic activity
helped depress import volume substantially, despite a strong currency. In addi
tion, the achievement of a net surplus in the oil balance contributed to reversing
earlier deficits.
The United States current account was about in balance in 1980. Quarter by
quarter, the current account was erratic, due to special transactions on invest
ment income. Import volume fell by the middle of the year with the drop in
domestic economic activity, and export volume tapered off in the latter part
of the year with the slowdown abroad. Despite this slowdown, the volume
of nonagricultural exports held up fairly well, rising by almost 3 percent
from the fourth quarter of 1979 to the fourth quarter of 1980. Another impor
tant contribution to the current account surplus in this country was the impressive
reduction of oil-import volume. This fell by over 25 percent from the fourth
quarter of 1979 to the fourth quarter of 1980, even though real GNP was
about the same in both periods.
Most of the other major countries also recorded substantial progress in oil
conservation and oil-import reduction in 1980. Worldwide conservation efforts
helped the oil markets withstand the war in the Middle East in the latter part
of 1980. While there was some run-up in oil prices, this appeared rather modest
in view of the considerable loss in output. Although the war produced a shock
28

Chart 10.

THE RISE IN OPEC OIL PRICES CAUSED A FURTHER DETERIORATION IN THE
PATTERN OF WORLD PAYMENTS IN 1980 . . .
CURRENT ACCOUNTS
19 7 9

Billions of
dollars

OPEC

15 0

NON-OPEC
DEVELOPING
COUNTRIES

INDUSTRIAL
COUNTRIES _

19 8 0

Billions of
dollars UNITED
20 .STATES

GERMANY
AND JAPAN

10 —

100
50

-10

—

-2 0 —

-5 0

-1 00

UNITED
KIN GDO M , _
FRANCE,
AN D IT A L Y .

—

-3 0

. . . BUT THE UNITED STATES ACCOUNTS STRENGTHENED AS EXPORT GROWTH
CONTINUED AND IMPORTS DECLINED.

UNITED STATES EXPORT VOLUME HELD UP WELL DESPITE THE SLOW D O W N ABROAD, AND
IMPORT VOLUME DROPPED OFF.

All United States data are at seasonally adjusted annual rates.

effect on supplies, it did not lead to another round of stockpiling. This reflected
the basic weakness in demand and the large size of oil stockpiles. It also
reflected a greater appreciation of a need to forestall another round of specu
lative stockpiling that might have generated greater pressures on prices.

Inflation performances among foreign economies varied greatly
during 1980. Annual consumer price increases ranged from 5 and 8 percent
in Germany and Japan to 22 percent in Italy. The main difference in 1980,
compared with the period following the first oil shock, was that inflation rates
stabilized fairly rapidly by the middle of the year. In Germany and Japan,
consumer price inflation peaked at midyear, and both countries were able to
reduce the rate of their price increases considerably thereafter. Consumer
prices in Germany, however, began to edge upward again toward the end
of the year. The United Kingdom also achieved a measure of success. Although
consumer prices rose 18 percent in 1980, the annualized monthly rate of
increase averaged only 7 percent during the second half of the year. France,
Canada, and Italy were relatively less successful. These countries experienced
sustained or mildly accelerating consumer price inflation throughout the year.
One message that foreign policymakers were reasonably successful in con
veying during the year was the need for moderation in the demands for wage
increases. In both Germany and Japan, wage increases for the year of about
6 to 7 percent yielded no significant real income gains. In the United Kingdom,
average wage increases relative to those a year earlier began falling to roughly
10 percent by the end of the year and real wages began to decline. Over
all, wage increases for the foreign economies were expected to average about
9 percent in 1980, about the same as in 1979. But productivity growth of manu
facturing slowed markedly, compared with 1979. Only Japan recorded a
substantial increase in productivity, while the United Kingdom registered an
actual decline. As a result, unit labor costs rose on average by some 7 percent,
nearly twice as fast as they did in 1979. The increases were most pronounced
in the United Kingdom and Italy; Japan alone registered no significant increases.
On balance, the influence of monetary and fiscal restraint on inflation per
formances in 1980 was mixed. It was clear by the end of the year that the
restrictive policy stance was not entirely successful in reducing inflationary
pressures. The inflation problem was still there. The questions that now had
to be faced were the costs countries were prepared to accept to reduce inflation
in f l a t io n

and the policies that would offer the best promise of success without unduly
prolonging the economic slowdown.

d e v e l o p i n g c o u n t r i e s . Like the industrial countries, the nonoil de
veloping countries, too, had to adapt their economies to the effects of the
large oil price increases. They also faced many of the other problems confronted
by the industrial countries: high inflation, relatively slow growth, and widen
ing current account deficits. For the nonoil LDC group as a whole, real growth
averaged slightly less than 5 percent, about the same as the year before. The
range of outcomes was, however, very wide, going from a 5 percent drop in
Korea to an 8 percent increase in Brazil. In most oil-importing LDCs, the
growth of export volume declined, primarily because of the slowdown in aggre
gate demand among the industrial countries. Import growth also fell in volume
terms, even though the value of imports increased markedly, largely as a result
of higher oil prices. The nonoil LDCs thus were not a source of demand strength
for the world economy in 1980.
The OPEC countries, by contrast, were a source of demand strength. With
real imports growing by about 20 percent, their overall import bill rose to
about $140 billion. Other oil-exporting countries, such as Mexico, also had
substantial increases in imports.
As the OPEC countries registered current account surpluses totaling about
$110 billion in 1980, the nonoil developing countries saw their combined cur
rent account deficits expand markedly. These deficits rose by about $15 billion
from their 1979 level to roughly $55 billion, even after accounting for govern
ment loans and other official transfers. Payments positions ranged from near
balance in Colombia to deficits of about $5 billion in Korea and as high as
$13 billion in Brazil.
The nonoil LDCs also faced different experiences in financing their deficits.
Some continued to rely on the syndicated credit markets, as they had in the
past, despite some hardening in terms. Others, not wanting publicly to accept
worsened terms or discouraged from seeking more funds through this market,
opted for privately arranged bank loans, export credits, and drawing down
reserves. As a result, borrowing by the nonoil LDCs in the syndicated credit
markets fell during 1980 by almost 35 percent over the 1979 level. Overall
bank lending to these countries, however, remained strong.
The relative ease with which the nonoil LDCs managed to finance their deficits

t h e

in 1980 was, nevertheless, no assurance that these countries would find the path
comparably easy in future years. Many of the international banks had become
concerned about their exposure in certain countries. This accounted for some
of the hardening in borrowing terms during 1980, particularly for those countries
already heavily in debt. To be sure, the International Monetary Fund (IMF)
and the World Bank both stepped up their lending to many of these countries
substantially in 1980. Even so, it was unclear whether their resources were
adequate to prepare them to play a potentially larger role in the recycling
process despite the increase in IMF quotas and World Bank capital during
1980. As the year drew to a close, however, efforts were under way to expand
the IMF’s resources by borrowing so as to ensure available funds for balanceof-payments financing by both LDC and industrial country members should the
need arise.
The outlook for 1981 was uncertain. If 1980 had been a year of diversity,
there was little to indicate that 1981 would be significantly different. Countries
continued to face the need to maintain their fight against inflation and to reduce
their current account deficits. Solving these problems would require some degree
of international cooperation. For the oil-exporting countries, this could entail
taking a more direct role in providing finance and contributing to international
payments balance. For the rest, it would mean maintaining an open trading
environment as well as adequate access for deficit countries to national and
international capital markets. Above all, the oil-importing countries would
have to pursue their efforts to conserve substantially more energy and to develop
both oil and nonoil energy sources. As 1981 got under way, the challenges
to the world economy were never greater and the need for imaginative and
sustained leadership never more critical.

M O N E TA R Y C O N TR O L A C T
The Depository Institutions Deregulation and Monetary Control Act of 1980
(Public Law 96-221), signed into law by President Carter on March 31, 1980,
is regarded by many as comparable in significance to the Federal Reserve Act,
the Banking Act of 1933, and the Bank Holding Company Act of 1956. It
represents a major step toward deregulating banking in the United States, in
troducing competition on an equal basis in the provision of all types of banking
services. The act is designed to improve the effectiveness of monetary policy
by applying new reserve and reporting requirements set by the Board of
Governors of the Federal Reserve System for nearly all depository institutions
and by generally eliminating distinctions—both costs and benefits—between
member banks and other depository institutions. The International Banking Act
of 1978 had already provided that foreign-owned banking institutions should be
placed on an equal basis with domestic banks. Major parts of its implementation
have been timed to coincide with that of the Monetary Control Act, thus ex
tending the concept of equal treatment to all types of depository institutions
operating in the United States.

Among the major provisions of the Monetary Control Act are
the orderly elimination of restrictions imposed on depository institutions by Fed
eral ceilings on deposit interest rates (Regulation Q) and the preemption of
many of the controls imposed by state usury laws on loan interest rates. The
Congress created a new agency, the Depository Institutions Deregulation Com
mittee, to oversee a phaseout of the deposit interest rate limitations over a
six-year period.
The Monetary Control Act permits Federally chartered thrift institutions to
offer a wider range of financial services. Their additional powers will enable
thrift institutions to compete more broadly with commercial banks, particularly
in servicing the financial needs of households and small businesses.
The act also calls for regulatory simplification by setting a checklist with
which, to the maximum extent practicable, each Federal financial regulatory
agency must comply before issuing a new regulation. Extensive revisions of
the Truth-in-Lending Act were included to simplify the process of informing
borrowers of the cost of credit.
d e r e g u l a t io n

c o n t r o l . The Monetary Control Act represents the culmination
of many years of effort to impose uniform reserve requirements on all depository
institutions, in order to enhance monetary control as well as competitive equity.
In recent years, member banks had been leaving the Federal Reserve System
in increasing numbers because of costs of the reserves borne by them and not
by their competitors. Now, nearly all depository institutions are subject to Fed
eral Reserve reserve requirements based on the nature of their deposits. The new
reserve requirements recognize that, with NOW (negotiable order of with
drawal), ATS (automatic transfer service), credit union share draft, and other
accounts increasingly offering the same services as demand deposits, com
petitive equality calls for imposing the same reserve requirement on all accounts
that are used for making payments or transfers to third parties (named “trans
action” accounts by the act). Reserve requirements are also imposed on non
personal time deposits and on Eurocurrency liabilities. Nontransferable personal
time accounts such as savings accounts and IRA or Keogh Plan accounts held
by natural persons are not subject to reserve requirements.
Under certain circumstances, supplemental reserves on which interest would
be paid may be imposed by the Board of Governors. In addition, the Board
was granted broad authority to require reports of liabilities and assets from
depository institutions.
These changes necessitated that, in a relatively short period of time, the Bank
and the Federal Reserve System as a whole formulate policy for new reserve
requirements and reports, prepare major revisions in regulations, restructure
reporting systems, educate a large number of new reporters, and open new
reserve accounts.
In recognition of the burdensome effect the imposition of reserves and weekly
reporting would have on smaller institutions, the Board of Governors granted
institutions with $2 million or less in deposits a temporary waiver from reserve
requirements. Most institutions with deposits over $2 million and less than $15
million were allowed to submit reports of deposits quarterly instead of weekly.
The revised reserve-requirement regulation (Regulation D) contains com
plex phasing provisions that began November 13, 1980. Most member banks
are being phased down from the old reserve requirements to the new lower
levels over a 3 Vi-year period. Nonmember depository institutions are being
phased up to a full reserve requirement over an eight-year period. The
reserve requirement applying to United States branches and agencies of foreign
banks will be phased up to a full reserve requirement over a two-year period.
m o n e t a r y

The Monetary Control Act permits depository institutions, except member
banks, to maintain reserves at Reserve Banks on a pass-through basis. A non
member depository institution may maintain reserves with another depository
institution that is subject to Federal reserve requirements. In addition, reserves
may be maintained on a pass-through basis at a Federal Home Loan Bank or,
as permitted on a case-by-case basis by the Board of Governors, at a bankers’
bank. Such banks are owned primarily by depository institutions and do not do
business with the general public.

r e s e r v e s e r v i c e s * The Monetary Control Act will have a signifi
cant effect on this and other Reserve Banks’ services. To date, these services,
such as check collection, wire transfers of funds and securities, coin and cur
rency, and securities safekeeping, have been offered mainly to member banks
and without charge. Beginning in 1981, these services will be available equally
to all depository institutions and at a fee. It is far too early to assess the impact
of pricing on this Bank’s operations. However, operational improvements in the
past few years have placed the Bank in a good position to implement pricing.
Another fundamental change made by the Monetary Control Act is that all
depository institutions with transaction accounts or nonpersonal time accounts
now have access to the Reserve Banks’ discount windows. The act also removed
the V2 percent penalty for advances secured by collateral not eligible for
discount by a Reserve Bank. This Bank’s discount window staff has met indi
vidually and with groups of depository institutions that became eligible for
discount window borrowing under the act to explain the philosophy and opera
tions of the discount window and to learn about the funding needs of these
institutions.

f e d e r a l

T H E B A N K IN 1980

Managerial and Operational Highlights
The Monetary Control Act and other developments added importantly to the
complexity and total cost of Bank operations during 1980. Considerable fur
ther progress, however, was made toward improving the Bank’s operational
efficiency and physical plant. Productivity again increased appreciably, and
unit costs rose far less than the rate of inflation. At the same time, the quality
of services was maintained and improvements achieved in several areas.
Persistent inflation continued to exert upward pressure on salaries and the
prices of goods and services purchased by the Bank. Additional cost pres
sures resulted from implementation of the Monetary Control Act, Systemwide float reduction efforts, and the substantial increase in direct investment
by the public in marketable Treasury issues. As a result, expenses in 1980
increased by 13 percent over 1979 levels.
Staffing remained constant in 1980, after five consecutive years of decline
(Chart 11). Since the mid-1974 peak, Bankwide staffing has declined by more
than 1,000 people, an average annual rate of decline of 2.6 percent. The vol
ume of operations in 1980 continued to expand, with increases ranging from
a low of 4 percent in the Check area to such high levels as 25 percent and
37 percent in the Funds Transfer and Government Bond areas. Productivity
gains of 12 to 14 percent enabled the Bank to keep increases in aggregate unit
costs (in measurable areas which account for two thirds of total expenses) to
less than 4 percent.
The productivity and unit cost performance reflects the results of the major
capital investments made in many parts of the Bank during the last six years.
The installation of new check equipment and the introduction of new check
processing concepts are now virtually complete throughout the District, with
the final phase under way at the Utica Regional Check Processing Center.
Check productivity increased dramatically, rising to more than 2,475 items
per man-hour during the fourth quarter, an increase of nearly 30 percent com
pared with the average of 1979; meanwhile, quality has also been improving.
In Cash operations, several additional high-speed currency processors were
acquired in 1980, and by the year-end almost a quarter of all currency was
processed on the new equipment which is better able to sort fit from unfit notes.
36

Chart 11.

TOTAL EMPLOYMENT AT THE FEDERAL RESERVE B A N K OF NEW Y O R K LEVELED
OFF IN 1980, AFTER FIVE CONSECUTIVE YEARS OF DECLINE.

Number of officers and em ployees

All data are year-end levels.

The results have been greater efficiency as well as improvements in the quality
of currency distributed by this Bank.
The installation of a new telecommunications switch, which is expected to
help the Federal Reserve meet the anticipated substantially higher volume of
funds and securities transfers during the 1980s, proceeded on schedule. The
related project of developing a new on-line terminal network to expand direct
access to the telecommunications network by Second District financial insti-

tutions also moved along as planned. Replacement and expansion of both the
telecommunications switch and the terminal network are scheduled to be com
pleted by late 1982. Expansion of the Bank’s analytical computer was accel
erated to meet the new reporting requirements of the Monetary Control Act.
The Bank’s ongoing role in the development and implementation of domes
tic and international monetary policy placed heavy demands on Bank resources
given the continuing economic turbulence at home and abroad. Implementation
of the Federal Reserve’s special credit restraint program was a major, if tem
porary, undertaking. From March until July, many of the Bank’s management
and staff were suddenly pressed into service interpreting and applying the
rules of the program which covered a broad range of financial institutions as
well as retail establishments.
Soaring interest rates increased public interest in Government securities and
importantly affected fiscal agency operations; the number of individuals pur
chasing Government securities at the Bank rose by 60 percent over 1979. Since
1977, the number of tenders for Government securities by individuals has
increased ninefold in this District.
Efficiency throughout the Bank was improved, not only by continuing refine
ments in budgetary and planning procedures, but also by the consolidation of
Bank operations in New York City into two locations, the main building and
rented space across the street. The related major power project to modernize
the Bank’s electrical and air-conditioning systems was also completed in 1980,
except for the final phase of the air-conditioning renovation.

Financial Statements
S T A T E M E N T O F E A R N IN G S A N D E X P E N S E S F O R
T H E C A L E N D A R Y E A R S 1 9 8 0 A N D 1 9 7 9 (In dollars)

1980

197 9 *

Total current earnings................................................................

3,335,892,900

2,590,907,017

Net expenses..............................................................................

163,597,671

144,046,463

Current net earnings

3,172,295,229

2,446,860,554

Additions to current net earnings:
Profit on foreign exchange (net) ..............................................
All other ......................................................................................

24,318,030
209,126

1,474,474

Total additions

24,527,156

1,474,474

—

Deductions from current net earnings:
Loss on foreign exchange (n e t)..................................................
Loss on sales of United States Government securities and Federal
agency obligations (net) ............................................................
All o th e r......................................................................................

50,330,254
1,315,286

37,616,259
257,491

Total deductions

51,645,540

38,823,329

Net deductions............................................................................

27,118,384

37,348,855

Assessment for the Board of Governors......................................

15,742,400

13,075,100

Net earnings available for distribution

3 ,129,434,445

2,39 6 ,4 36,599

—

949,579

Distribution of net earnings:
Dividends paid ............................................................................
Transferred to su rp lu s................................................................
Payments to United States Treasury (interest on
Federal Reserve notes)................................................................

17,866,143
16,122,050

17,101,407
10,042,500

3,095,446,252

2,369,292,692

Net earnings distributed

3 ,1 29,4 34,445

2,396,436,599

289,884,750
16,122,050

279,842,250
10,042,500

30 6,006,800

289 ,8 84,750

SUR PLUS A C C O U N T

Surplus— beginning of y e a r ........................................................
Transferred from net earnings....................................................
Surplus— end of year

Figures reflect a reclassification of loss on foreign exchange for consistency with the 1980 classification.

S T A T E M E N T O F C O N D IT IO N
In dollars

D E C . 3 1 , &980

D E C . 3 1. 1979

3,012,103,748
665,000,000
23,700,869

2,841,319,270
459,000,000
21,001,713

3,700,804,617

3,321,320,983

Advances ............................................................
Acceptances held under repurchase agreements

663,470,000
776,489,237

510,710,000
703,548,343

United States Government securities:
Bought outright* .................................. .............
Held under repurchase agreements........ ............

31,009,393,835
2,029,250,000

28,663,956,833
1,167,670,000

Federal agency obligations:
Bought o u trig h t.................................. ...........
Held under repurchase agreements....................

2,271,605,538
525,050,000

2,025,020,242
493,905,000

37,275,258,610

33,564,810,418

2,350,527,303
19,765,150
2,126,696,299

2,089,516,473
14,180,116
1,219,953,542

4,496,988,752

3,323,650,131

2,859,073,335

1,266,062,898

4 8 ,3 3 2,125,31 4

4 1 ,4 7 5,844,43 0

387,395,000

363,690.000

Assets

Gold certificate account......................................
Special Drawing Rights certificate account .. .
Coin .................................................................... .
Total

Total loans and securities

Other assets:
Cash items in process of collection....................
Bank premises ....................................................
All o t h e r f........................................ ...................
Total other assets
Interdistrict settlement account..........................
Total Assets

* Includes securities loaned— fully secured.....................
t Includesassetsdenom
inated inforeign currencies revalued monthlyat m
arket rates.

S T A T E M E N T O F C O N D IT IO N
In dollars

Liabilities

D E C. 3 1, 1980

D EC. 31, 1079

Federal Reserve notes (net) ......................................................

35,601,390,747

29,934,647,497

Reserves and other deposits:
Depository institutions................................................................
United States Treasury— general account................................
Foreign— official accounts..........................................................
Other ............................................................................................

6,521,343,106
3,062,266,692
145,508,759

7,320,492,985
1,252,497,929
207,256,087

435,619,614

719,065,164

Total deposits

10,164,738,171

9,499,312,165

Other liabilities:
Deferred availability cash ite m s ................................................

1,384,300,095

711,320,060

AH o th e r* ....................................................................................

569,682,701

750,795,208

Total other liabilities

1,953,982,796

1,462,115,268

Total Liabilities

47 ,7 20 ,11 1,71 4

40 ,8 96 ,07 4,93 0

Capital Accounts

Capital paid i n ............................................................................
Surplus ........................................................................................

306,006,800
306,006,800

289,884,750
289,884,750

Total Capital Accounts

61 2,01 3,6 00

57 9,76 9,5 00

Total Liabilities and Capital Accounts

4 8 ,3 32 ,12 5,31 4

41 ,4 75 ,84 4,43 0

* com
m
itm
ents1
1
8
1
1
8
8tf*,l#lat,on account ba,ances redacting the m
onthly revaluation of outstanding foreign exchange

Changes in Directors and Senior Officers
d i r e c t o r s . In August 1980, member banks in Group 1 elected
William S. Cook a Class B director for the unexpired portion of the term ending
December 31, 1982. Mr. Cook, President of Union Pacific Corporation, New
York, N.Y., succeeded Maurice F. Granville, Chairman of the Board of Texaco
Inc., New York, N.Y., who had served as a Class B director from March 14,
1972 through December 31, 1979.
In December 1980, the Board of Governors of the Federal Reserve System
reappointed Robert H. Knight a Class C director of the Bank for the three-year
term ending December 31, 1983 and designated him as Chairman of the board
of directors and Federal Reserve Agent for the year 1981. Mr. Knight, a partner
in the New York law firm of Shearman & Sterling, has been serving as a Class C
director since February 1976 and as Chairman and Federal Reserve Agent since
January 1978; he also served as Deputy Chairman in 1976 and 1977. At the
same time, the Board of Governors reappointed Boris Yavitz as Deputy Chair
man for the year 1981. Dr. Yavitz, Dean of the Graduate School of Business at
Columbia University, has been serving as a Class C director since June 1977
and as Deputy Chairman since January 1978.
In December 1980, member banks in Group 2 elected Peter D. Kiernan a
Class A director for the three-year term ending December 31, 1983. Mr.
Kiernan, Chairman and President of United Bank Corporation, Albany, N.Y.,
succeeded Raymond W. Bauer, Chairman and President of United Counties
Trust Company, Elizabeth, N.J., who had served as a Class A director from
April 15, 1977 through December 31, 1980.
In January 1981, member banks in Group 2 elected John R. Opel a Class B
director for the three-year term ending December 31, 1983. Mr. Opel, President
and Chief Executive Officer of International Business Machines Corporation,
Armonk, N.Y., succeeded William S. Sneath, Chairman of the Board of Union
Carbide Corporation, New York, N.Y., who had served as a Class B director
from August 15, 1973 through December 31, 1980.

c h a n g e s in

Buffalo Branch. The board of directors of this Bank redesignated Frederick
D. Berkeley as Chairman of the Branch board for the year 1981. Mr. Berkeley,
who is Chairman of the Board and President of Graham Manufacturing Co.,
Inc., Batavia, N.Y., has been a director of the Branch since February 1977 and
served as Chairman of the Branch board in 1979 and 1980. The Bank’s board
42

also appointed Carl F. Ulmer a director of the Buffalo Branch for a three-year
term ending December 31, 1983. Mr. Ulmer, President of The Evans National
Bank of Angola, Angola, N.Y., succeeded William S. Gavitt, President of The
Lyons National Bank, Lyons, N.Y., who had been a director of the Branch
since January 1978. At the same time, this Bank’s directors reappointed John
Rollins Burwell a Branch director for a three-year term ending December 31,
1983. Mr. Burwell, President of Rollins Container Corp., Rochester, N.Y.,
has been a director of the Branch since January 1979.

The following changes in official staff at
the level of Vice President and above have occurred since January 1980:
William H. Braun, Jr., Vice President, retired effective June 1, 1980. Mr.
Braun joined the Bank’s staff in 1935 and became an officer in 1956.
Roger M. Kubarych, formerly Assistant Vice President, was appointed Vice
President and Assistant Director of Research effective July 1, 1980.
E.
Gerald Corrigan, formerly Senior Vice President, resigned from the Bank
effective July 31, 1980 to accept appointment as President of the Federal Re
serve Bank of Minneapolis. Mr. Corrigan, who had been on temporary assign
ment as Special Assistant to the Chairman of the Board of Governors since
August 1979, joined the staff of this Bank in 1968 and became an officer in
1972.

c h a n g e s in s e n i o r o f f i c e r s .

Effective January 1, 1981:
The assignment of Thomas C. Sloane, Senior Vice President and Senior
Adviser, to the Administrative Services Group was terminated. He continues to
have responsibility for the Management Planning Group and the Bank Relations
Office.
Ralph A. Cann, III, formerly Assistant Vice President, was appointed Vice
President and assigned to the Building Services Function.
The assignment of Henry S. Fujarski, Vice President, was broadened to
include responsibility for the Administrative Services Group.
Roberta J. Green, formerly Assistant Vice President, was appointed Vice
President and assigned to the Personnel Function.
Sam Y. Cross joined the Bank as a Senior Vice President effective February 1,
1981 and was assigned as the officer in charge of the newly established Foreign

Relations Function, which has assumed the banking relations responsibilities
of the former Foreign Function. At the same time, the foreign exchange trading
activities of the Foreign Function were assumed by the newly established Foreign
Exchange Function; Scott E. Pardee, Senior Vice President, was assigned as the
officer in charge of this Function. Incident to this organizational change,
Margaret L. Greene and H. David Willey, Vice Presidents formerly assigned to
the Foreign Function, were assigned to the Foreign Exchange and Foreign
Relations Functions, respectively.
Neal M. Soss has accepted appointment as a Vice President, effective
April 15, 1981. He will be assigned to the Bank Supervision Function, with
primary responsibility for the Banking Studies Department.

Directors of the Federal Reserve Bank of New York
Term expires Dec. 31 Class Group

DIRECTO RS

G ordon T. W a l l i s .......................................................................................................................................

1982

1983

1981

1982

1983

1981

Chairman and Federal Reserve A g en t ........................................................

1983

Deputy Chairman ..........................................................................................................

1982

G ertrude G . M ichelso ^ .........................................................................................................................

1981

Chairman of the Board, Irving Trust Company, New York, N.Y.

P eter D . K i e r n a n .......................................................................................................................................
Chairman and President, United Bank Corporation, Albany, N.Y.

Jam es W h e l d e n ............................................................................................................................................
President, Ballston Spa N ational Bank, Ballston Spa, N.Y.

W illiam S. C o o k ..........................................................................................................................................
President, Union Pacific Corporation, New York, N.Y.

Joh n R. O p e l .................................................................................................................................................
President and Chief Executive Officer, International Business Machines Corporation, Armonk, N.Y.

E dward L. H ennessy , Jr ............................................................................................................................
Chairman of the Board, Allied Chemical Corporation, Morristown, N J .

R obert H . K night ,
Partner, Shearman

B oris Y avitz,

&Sterling, Attorneys, New York, N.Y.

Dean, Graduate School of Business, Columbia University, New York, N.Y.
Senior Vice President, R.H. Macy

&Co.,

Inc., New York, N.Y.

D IR E C T O R S— BUFFALO BRANCH

Chairman .....................................................................................................

1982

R obert J. D o n o u g h ..................................................................................................................................

1981

G eorge L. W e s s e l .....................................................................................................................................

1981

F rederick D . B erkeley ,

Chairman of the Board and President, Graham Manufacturing Co., Inc., Batavia, N.Y.
President, Liberty National Bank and Trust Company, Buffalo, N.Y.

President, Buffalo AFL-CIO Council, Buffalo, N.Y.

M. Jane D i c k m a n .......................................................................................................................................

1982

Partner, Touche Ross & Co., Buffalo, N.Y.

A rthur M . R ic h a r d s o n ...........................................................................................................................

1982

Joh n R ollins B u r w e l l ...........................................................................................................................

1983

President, Security Trust Company, Rochester, N.Y.
President, Rollins Container Corp., Rochester, N.Y.

C arl F . U l m

............................................................................................................................................

1983

President, The Evans National Bank of Angola, Angola, N.Y.

M EM BER OF FEDERAL ADVISORY COU NCIL---- 1 9 8 1

D onald C. P l a t t e n ..................................................................................................................................

1981

Chairman of the Board, Chemical Bank, New York, N.Y.

Officers of the Federal Reserve Bank of New York
A n t h o n y M . S o lo m o n , President
THOMAS M . TlMLEN, First Vice President

S a m Y . CROSS, Senior Vice President
Foreign Relations

Ja m e s H. O l t m a n , General Counsel

P e t e r F o u s e k , Senior Vice President
and Director of Research
Research and Statistics
R o n a ld B. G r a y , Senior Vice President
Bank Supervision
P a u l B. H e n d e r s o n , J r ., Senior Vice President
Operations Group
A l a n R. H o lm e s , Senior Policy Adviser

S c o t t E. P a rd e e , Senior Vice President
Foreign Exchange
T h o m a s C. S lo a n e , Senior Vice President
and Senior Adviser
Bank Relations; Management Planning Group

A U D IT

B A N K R E L A T IO N S

J o h n E. F la n a g a n , General Auditor
F r a n k C. E is e m a n , Assistant General Auditor
W illia m M . S c h u l t z , Assistant General Auditor
R o b e r t J. A m b ro se , Manager,
Auditing Department
L o r e t t a G . A n s b ro , Manager,
Audit Analysis Department

ADMINISTRATIVE SERVICES GROUP
H e n r y S. F u j a r s k i , Vice President
A C C O U N T IN G

J o h n M . E ighm y , Assistant Vice President
D o n a l d R. A n d e r s o n , Manager,
Accounting Department
K a t h l e e n A. O ’N e il,
Accounting Officer
B U IL D IN G S E R V IC E S

R a lp h A . C a n n , III, Vice President
M a t t h e w C. D r e x l e r , Manager,
Building Operating Department
S E R V IC E

R ic h a r d V o l l k o m m e r , Vice President
LOUIS J. B r e n d e l , Assistant Vice President
R o n a ld E. L o n g , Manager,
Service Department
R o b e r t V. M u r r a y , Manager,
Protection Department
A n t h o n y N . S a g lia n o , Manager,
Records Management and
Postal Services Department
*On leave of absence.
t Effective April 15,1981.

P e t e r D . S t e r n l i g h t , Senior Vice President
Open Market Operations

THOMAS C . S l o a n e , Senior Vice President
and Senior Adviser
B r u c e A. C a s s e l l a , Bank Relations Officer
* J a n e L. D e t r a , Bank Relations Officer
B A N K S U P E R V IS IO N

R o n a ld B. G r a y , Senior Vice President
A. M a r s h a l l P u c k e t t , Vice President
F r e d e r i c k C . S c h a d ra c k , Vice President
t N e a l M . S oss, Vice President
E d w a rd F . K i p f s t u h l , Chief Examiner
L e o n K o ro b o w , Assistant Vice President
B e n e d ic t R a f a n e l l o , Assistant Vice President
J o h n M . C a sa z z a ,
Assistant Chief Examiner
G e o r g e R . J u n c k e r , Manager,
Consumer Affairs and
Bank Regulations Department
A . J o h n M a h e r,
Assistant Chief Examiner
T h o m a s P. M c Q u e e n e y ,
Assistant Chief Examiner
W illia m L. R u t le d g e , Manager,
Domestic Banking Applications Department
D o n a l d E. S chm id, Manager,
Bank Analysis Department
B a r b a r a L. W a l t e r , Manager,
Foreign Banking Applications Department
E C O N O M IC A D V IS E R

R ic h a rd G . D avis, Senior Economic Adviser
E Q U A L O P P O R T U N IT Y

FRANKLIN T . L o v e, Equal Opportunity Officer

Officers (Continued)
F O R E IG N E X C H A N G E

SCOTT E . P a rd e e , Senior Vice President
M a r g a r e t L. G r e e n e , Vice President
CHARLES M . L u c a s, Assistant Vice President
H o w a r d L. A l e x a n d e r , Foreign Exchange Officer
R o b e r t D. S l e e p e r , Manager,
Foreign Exchange Department
F O R E IG N R E L A T IO N S

Sam Y . CROSS, Senior Vice President
H . D a v id W i l l e y , Vice President
J o h n H o p k in s H e ir e s , Adviser
GEORGE W . R y a n , Assistant Vice President
G e o r g e R. A r r i n g t o n , Manager,
Foreign Relations Department
G e o r g e H . B ossy, Manager,
Foreign Relations Department
F r a n c is J. R e is c h a c h , Manager,
Foreign Relations Department
LEGAL

J a m e s H . O l t m a n , General Counsel
ERNEST T . P a t r ik i s , Deputy General Counsel
D o n N . RlNGSMUTH, Assistant General Counsel
D o n a l d L. B i t t k e r , Assistant Counsel
R o b e r t N . D a v e n p o r t , J r ., Assistant Counsel
L a w r e n c e D . F r u c h t m a n , Assistant Counsel
B r a d le y K. S a b e l, Secretary
and Assistant Counsel
W a l k e r F . T odd, Assistant Counsel
R a le ig h M . T o z e r , Assistant Counsel
L O A N S A N D C R E D IT S

C h e s t e r B. F e l d b e r g , Vice President
S t e p h e n G . T h ie k e , Assistant Vice President
E u g e n e P. E m o n d , Manager,
Credit and Discount Department
G a r y H a b e rm a n , Manager,
Credit and Discount Department

MANAGEMENT PLANNING GROUP
T h o m a s C . S lo a n e , Senior Vice President
and Senior Adviser
PERSONNEL

R o b e r t a J. G r e e n , Vice President
T e r r e n c e J. CHECKI, Assistant Vice President
J o h n A . K l u e p f e l , Manager,
Personnel Department
M i c h a e l J. L a n g to n , Manager,
Personnel Department
C l i f f o r d N . L ip sco m b , Manager,
Personnel Department
P L A N N IN G A N D C O N T R O L

S u z a n n e C u t l e r , Vice President
JOHN F. S o b a la , Assistant Vice President
R o b e r t M . A b p l a n a l p , Manager,
Management Information Department

S Y S TEM S D EV ELO PM EN T

G e r i M . R ie g g e r, Vice President
DENIS L . C o n w a y , Assistant Vice President
ISRAEL SENDROVic, Assistant Vice President
C a r o l R . A g in s, Manager,
Common Systems Department
B a r b a r a R. B u t l e r , Manager,
Data Systems Department
J a c k M . S c h w a r t z , Manager,
Operations Systems Department
* S u s a n C. Y o u n g , Manager
O P E N M A R K E T O P E R A T IO N S

P e t e r D . STERNLIGHT, Senior Vice President
P a u l M e e k , Monetary Adviser
I r w i n D . S a n d b e rg , Vice President
M a ry R. C l a r k i n , Senior Trading Officer
F r e d J. L e v in , Manager,
Securities Department
JOAN E . L o v e t t , Securities Trading Officer
A n n -M arie M eu le n d y k e ,
Research Officer and Senior Economist
E d w a rd J. O zog, Manager,
Securities Department
O F F IC E O F T H E P R E S ID E N T

T h o m a s J. C a m p b e ll, Assistant Secretary

OPERATIONS GROUP
P a u l B. H e n d e r s o n , J r ., Senior Vice President
J o h n C. H o u h o u l i s , Operations Analysis Officer
C A S H P R O C E S S IN G

W h itn e y R . I r w i n , Vice President
J o h n C h o w a n s k y , Assistant Vice President
Jo s e p h F . D o n n e l l y , Manager,
Currency Services Department
T h o m a s E. N e v iu s, Operations Analysis Officer
D av id S. SLACKMAN, Manager,
Currency Department
H e n r y F . W ie n e r , Manager,
Funds Transfer Department
C H E C K P R O C E S S IN G

JAMES O. A s to n , Vice President
R o b e r t C. T h o m a n , Vice President
(Utica Office)
J o s e p h P. B o t t a , Assistant Vice President
F r e d A . D e n e s e v ic h , Regional Manager,
Cranford Office
J o s e p h M . O ’C o n n e l l , Regional Manager,
Jericho Office
E d w a rd H . D e n h o f f , Operations Officer,
Utica Office
D o n a l d R . M o o re , Manager,
Check Processing Department
C a r l W . T u rn ip s e e d , Manager,
Check Processing Department
R u t h A n n T y l e r , Manager,
Check Adjustment and
Return Items Department
JANET L. W y n n , Operations Analysis Officer

Officers

(Continued)
R ESEAR C H A N D S T A T IS T IC S

D A T A P R O C E S S IN G

H e r b e r t W . W h ite m a n , J r ., Vice President
H o w a r d F . C ru m b , Adviser
P e t e r J. F u l l e n , Assistant Vice President
CATHY E. M in e h a n , Assistant Vice President
M ic h a e l H e l l e r , Manager,
Technical Services Department
E v e r e t t H . J o h n s o n , Manager,
Communications Planning Department
G e o r g e L u k o w ic z , Manager,
Telecommunications Operations Department
R ic h a r d P. P a ssa d in , Manager,
General Purpose Computer Department
J e r o m e P. P e r l o n g o , Manager,
Computer Operations Support Department
G O V E R N M E N T B O N D A N D S A F E K E E P IN G

E d w in R. P o w e rs , Vice President
J o r g e A . B r a t h w a i t e , Assistant Vice President
L e o n R. H o lm e s , Assistant Vice President
C a r o l W . B a r r e t t , Manager,
Savings Bond Department
H. J o h n C o s t a lo s , Manager,
Securities Clearance Department
A n g u s J. K e n n e d y , Manager,
Government Bond Department
J o h n J. S t r i c k , Manager,
Safekeeping Department

PETER F o u s e k , Senior Vice President
and Director of Research
R o g e r M . K u b a ry c h , Vice President
and Assistant Director of Research
M a r c e l l e V. A ra k , Assistant Vice President
* R o b e r t T. F a l c o n e r , Assistant Vice President
R ic h a r d J. G e l s o n , Assistant Vice President
J e f f r e y R. S h a f e r , Assistant Vice President
M . A k b a r A k h t a r , Manager,
International Research Department
S te p h e n V . O. C l a r k e ,
Research Officer and Senior Economist
E d n a E. E h r l i c h , International Adviser
* S t u a r t M . F e d e r , Manager
E d w a rd J. F r y d l , Manager,
Financial Markets Department
W illia m J. G a s s e r, Manager,
External Financing Department
G e r a l d H a y d e n , Manager,
Research Support Department
P a t r ic i a H. K u w a y a m a , Manager,
Statistics Department
L e o n a r d G . S a h lin g , Manager,
Domestic Research Department
J o h n W e n n in g e r , Manager,
Monetary Research Department
S E C R E T A R Y ’S O F F IC E

B r a d le y K . S a b e l, Secretary
and Assistant Counsel
T h e o d o r e N . O p p e n h e im e r, Assistant Secretary

P U B L IC IN F O R M A T IO N

S E C U R IT Y A N D C O N T R O L

P e t e r B a k s ta n s k y , Vice President
R ic h a rd H . H o e n ig , Assistant Vice President

G e r a l d H a y d e n , Manager,
Security and Control Staff

OFFICERS—BUFFALO BRANCH

JOHN T. K e a n e , Vice President and Branch Manager
P e t e r D . L u c e , Assistant Vice President and Cashier
A C C O U N T I N G ; B A N K R E L A T IO N S A N D
P U B L IC I N F O R M A T IO N ; C H E C K

C O L L E C T IO N , L O A N S , A N D F I S C A L A G E N C Y ;
P E R S O N N E L ; S E R V IC E

R o b e r t J. M c D o n n e l l , Operations Officer

G a r y S. W e in tr a u b , Operations Officer
M A N A G E M E N T IN F O R M A T IO N

B U IL D IN G O P E R A T IN G ; C A S H ; P R O T E C T IO N

H a r r y A . C u r t h , J r ., Operations Officer

P e t e r D . L u c e , Assistant Vice President
and Cashier

Full text of Annual Report of the Federal Reserve Bank of New York : Annual Report : 1980

FRASER