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FEDERAL RESERVE BANK OF NEW YORK April 16, 1984 To the Depository Institutions in the Second Federal Reserve District I am pleased to present our sixty-ninth Annual Report, reviewing major economic and financial developments, at home and abroad, in 1983. Anthony M. Solomon President Federal Reserve Bank of New York SIXTY-NINTH ANNUAL REPORT For the Year Ended December 31, 1983 Second Federal Reserve D istrict Contents: Page RECOVERY AT H O M E......................................................................................................................... 3 The Domestic Economy..................................................................................................................... 4 The Financial M a rk e ts ..................................................................................................................... 6 Monetary P o lic y ................................................................................................................................ 7 UNEVENNESS A B R O A D ..................................................................................................................... ..... 13 The United States Import Surge..................................................................................................... ..... 14 Foreign Industrial C o u n t r ie s .......................................................................................................... ..... 16 The High-Debt C o u n tr ie s ................................................................................................................ ..... 19 Financial S ta tem e n ts....................................................................................................................... .....25 Changes in Directors and Senior O ffic e rs .........................................................................................28 List of Directors and O fficers.......................................................................................................... .....31 Sixty-ninth Annual Report Federal Reserve Bank of New York R EC O V ER Y A T HOM E In contrast to the first three years of this decade, 1983 was a year of generally good econom ic news in the U nited States. Real output rose strongly, the unem ploym ent rate fell dram atically, inflation was quite low, interest rates were fairly stable, and the m onetary aggregates cam e in pretty much as desired by the Federal Reserve. Still, even with all the good new s, the financial markets rem ained nervous about the large budget deficits projected for upcom ing years (Chart 1). The m arkets also w orried about the im plications of the record foreign trade deficit and the strong dollar for interest rates and the future perform ance of the economy. The Federal R eserve shared these concerns, in particular w hether the potential budget deficits projected beyond 1983 would cause interest rates to rise over the longer run, choking off the investm ent needed to maintain the economic expansion w ith low inflation. In general, m onetary policy in 1983 continued the flexible, more judgm ental approach begun in 1982 when it became apparent that financial innovation and deregulation were distorting the behavior and significance of the m onetary aggregates. N onetheless, even though it became necessary to view the m onetary aggregates in the broader context of what was happening in the econom y, the Federal Reserve during 1983 reaffirm ed its intention to keep monetary growth in line with low rates of inflation. 3 Th e Domestic Economy In 1983, the econom ic recovery exceeded m ost expectations. Even so, real GNP for the year as a whole looked typical com pared with the first years of previous recoveries. Consum ption spending, inventory accum ulation, residential con struction, and business investm ent all added to the rebound. Only net exports represented a drag on the econom y, due largely to the strong dollar and the w eaker econom ies o f our m ajor trading partners. W ith the benefit of hindsight, some of the factors behind the stronger than expected recovery can be seen clearly. First, the depressing influence on the econom y o f the high levels of interest rates was overem phasized, and the stim ulative effects of the large decline in rates after m id-1982 were not given enough attention. The decline in rates helped strengthen credit-sensitive sectors such as autos and housing. It also was a factor behind the large increase in the stock m arket that boosted consum er wealth and contributed to the overall advance in consum ption expenditures. In addition, the drop in energy prices also stim ulated consum er spending but not by nearly so much as the wealth effects from the stock m arkets. Finally, the grow ing budget deficit during a period of considerable unused capacity provided additional stim ulus as the economy emerged from recession. W hile aggregate dem and exceeded expectations, the decline in the unem ploy m ent rate associated with the advance in the economy was even more surprising. In the first years of previous recoveries, the unem ploym ent rate typically had declined slow ly. This tim e around the drop was 2x percentage points. Because the growth h of the labor force was w eaker than expected as the economy recovered in 1983, the increases in production and em ploym ent brought the unem ploym ent rate down to 8.2 percent by the year-end from 10.7 percent at the recession trough. D espite the greater than anticipated econom ic growth and the decline in unem ploym ent, inflation did not accelerate significantly in 1983. There were, how ever, some signs o f pickup in the second half of the year from the very low rates prevailing around the trough of the recession. Over the year, the GNP deflator rose 4 percent, the low est rate on a fourth-quarter to fourth-quarter basis since 1967. O ther m easures of inflation showed sim ilar or even more pronounced im provem ent. In part, the slow dow n in inflation was due to special factors such as the strong dollar, the decline in world oil prices, and com petitive forces associated with the deregulation of some industries. But the real test of policy is not w hether inflation can be reduced when there is a considerable amount of unused capacity in the econom y and when productivity increases are typical of the early stage of a 4 business recovery. R ather, the real test will be to hold down inflation as the econom y clim bs tow ard higher levels of utilization. C h a r t 1. C o m p a r e d w i t h t h e f ir s t t h r e e y e a r s o f t h i s d e c a d e , 1 9 8 3 s h o w e d strong g r o w t h . . . m o d e ra te in flatio n . . . Pe rc e n t 6 4 2 0 -2 1980-82 Average 1983 a n d s t a b le interest ra tes . . P e rc ent ag e p o in ts 1980-82 Average 1983 b u t the size o f the d eficit c a u s e d c o n c e rn . S p r e a d b e tw e e n the h ig h a n d low th r e e - m o nt h T r e a su r y bi ll rate 10 8 6 4 2 0 1 98 3 5 The Financial Markets The financial markets also remained concerned about the long-term outlook for inflation as the expansion continued against the backdrop of unprecedented projected budget deficits. But for these markets 1983 was a surprise in that a strong recovery took place without private and government credit demands putting upward pressure on interest rates. Once again, one can give at least a partial explanation of what happened in 1983 with the benefit of hindsight. First, aftertax corporate profits and hence internal cash flows were much improved. These gains resulted from productivity increases that had begun during the 1982 recession, a substantial slowdown in the growth of compensation, and the effects of more liberal depreciation rules and other changes in the tax codes. Thus, businesses were not so dependent on borrowed funds as they might have been under more normal circumstances. Second, high U.S. interest rates and economic and political uncertainty around the world meant that foreign capital flowed into the United States, and this relieved some of the upward pressure on interest rates that might have occurred otherwise. But neither of these factors can be relied on to be permanent. As the economic expansion continues, productivity gains may slow, wage demands could stiffen as the number of unemployed falls, and the prices of raw materials are likely to rise. Hence, profit growth will not be as strong. Firms will need to turn to the financial markets and banks for financing as internally generated cash flows slow. Moreover, recent surveys and normal cyclical patterns suggest that spending on plant and equipment may continue at a rapid pace. Thus, upward pressure on rates could develop if the Federal Government also has a large presence in the financial markets. And the capital inflows from abroad, attracted by high U.S. interest rates, have been a double-edged sword. They have contributed to the strong dollar and thus have helped enlarge our trade deficit. At the same time, the savings these capital flows represent have helped directly and indirectly to finance the budget deficit without large increases in interest rates. But these deficits obviously pose problems both in terms of their damage to domestic industries and in terms of the longer run implications of the mounting foreign debt that is the counterpart of these deficits. In any case, the willingness of foreigners to finance the United States cannot be counted on indefinitely. The risk is that the dollar could decline precipitously as foreign investors lose confidence in our ability to manage our affairs and control inflation in the long run. As capital leaves the United States and the dollar falls, 6 and the Federal Government and private borrowers compete for the relatively small amount of domestic savings, upward pressures on interest rates would be inevitable. Under such circumstances, housing, investment, and other credit-sensitive sectors are bound to be hurt as would the prospects for keeping down inflation. The fear of such an outcome helps explain why interest rates are high not only in absolute terms but also when compared with recent inflation rates. Markets remain skeptical about this country’s ability to maintain the recent progress on inflation. Too often in the past they have seen inflation and interest rates fall during a recession only to rise to new highs during the expansion phase of the new cycle. And this has occurred even with budget deficits less out of line with the size of the economy than currently. Until there are some clear signs that the enormous deficits now ahead of us will be reduced significantly, the markets are likely to remain unconvinced. Monetary Policy Large prospective budget deficits combined with the Federal Reserve’s commit ment to maintain anti-inflationary monetary policy sparked considerable discussion during 1983 about the long-run effects on the economy of a tight-monetary, easyfiscal policy mix. Such a mix is, of course, uncomfortable because of the high rates that result. However, the ability of monetary policy to reduce the discomfort is very limited. An easier monetary policy under present circumstances would lead only to higher inflationary expectations and, with a lag, higher inflation and interest rates. In 1983 the economy did very well despite the tight-monetary, easyfiscal policy mix. But over the long run such a mix would tend to skew the economy’s output toward consumption and away from capital investment. Thus, it would slow the growth of productive capacity and increase inflationary pressures. It would also work against the export sector and cause many more export-oriented firms to relocate plants and jobs abroad in order to compete better in world markets. While monetary policy in 1983 maintained its long-run strategy of containing inflation by keeping money growth under control, innovation and deregulation continued to make the interpretation of the monetary aggregates in general and M-l 7 Chart 2. The g ro w t h of N O W 19 8 0 - IV has b e e n a sso cia ted w ith a ccounts as a p e r c e n t a g e of M -l 19 81 - IV w eaker than 198 2-I V 19 83- IV a v e r a g e g r o w t h o f v e l o c i t y in r e c e n t y e a r s , r a i s i n g t h e q u e s t i o n o f w h e t h e r a s i g n i f i c a n t p o r t i o n o f N O W s is u s e d f o r n o n t r a n s a c t i o n s p u r p o s e s . reco ve rie s in particular very difficult (Charts 2 and 3). Beginning in late 1982, the Congress authorized two new accounts, the m oney m arket deposit account (included in M-2) and the Super NOW account (a com ponent of M -l). Because these new accounts offer both savings and transactions features and because they were likely to be attractive com pared with both existing accounts and assets outside M -l and M -2, the Federal Open M arket Com m ittee (FOM C) em phasized the need for judgm ent and flexibility in reacting to m ovem ents in the monetary aggregates during 1983. 8 C h a r t 3. W i t h M - 2 a n d M - 3 b e c o m i n g d o m i n a t e d b y a s s e t s b e a r i n g m a r k e t rates of in tere st . . . Inst ru m ent s p a y i n g m a r k e t - r e la te d r a t e s as a 1978-IV 1979-IV 1980-IV 1981-IV 19 82- IV 19 8 3 - IV t h e i r g r o w t h r a t e s i n r e c e n t y e a r s d o n o t s e e m to h a v e b e e n s e n s i t i v e . . . 1978 1979 1980 1981 198 2 1983* to c h a n g e s i n i n t e r e s t r a t e s . * M -2 adjusted fo r m oney m a rk e t de p osit a cco u n ts in 1983. M oreover, given the unusually large decline in M -l velocity in 1982 (high M -l grow th caused by strength in NOW accounts combined with low nominal GNP grow th), it was not certain as 1983 began how much weight should be given to M -l in the policy process. In these circum stances, the FOMC set a broad and, by the 9 standards of the past few years, high range for M-l growth in 1983 of 4 to 8 percent. At the same time, because of the large volume of funds that were likely to flow into money market deposit accounts from outside M-2 over the first few months of 1983, the FOMC set a range of 7 to 10 percent for M-2 with the February-March average to be used as the base. It was not expected that M-3 or total credit would be much affected by the new accounts, and their respective ranges were set at Qh to 9*/2 percent and 8^2 to IV/2 percent over the full year. In the first half of 1983, M-l growth remained very rapid relative to GNP, reflecting continued strength in NOW accounts. This decline in velocity was a puzzle of sorts that analysts spent a great deal of time trying to explain during the course of the year. It now seems that the rapid growth of M-l relative to GNP in the last half of 1982 and early 1983 in part stemmed from the fact that NOW accounts are more sensitive to changes in interest rates than the other components of M-l. As a result, consumers showed a greater willingness than they did previously to increase money holdings as interest rates declined. Moreover, since some consumers also use their NOW accounts for savings purposes, it appears that the high level of unemployment and the low level of consumer confidence in late 1982 and early 1983 may have added a precautionary motive to the buildup in NOW account balances. In any case, at its mid-1983 review of the monetary targets the FOMC concluded that the earlier spurt in M-l had in part reflected such special factors and thus would not prove to be inflationary. Accordingly, M-l continued to be assigned consider ably less weight in the policy process. Its monitoring range was raised to 5 to 9 percent and its base was moved to the second quarter of 1983 from the fourth quarter of 1982. As it turned out, M-l seemed to return to a more normal relationship with GNP in the second half of the year, and its growth ended the year close to the midpoint of the newly established monitoring range. M-2, M-3, and total credit also ended the year generally in line with the objectives set by the FOMC for 1983. Even though the M-2 and M-3 performance generally met the Federal Reserve’s 1983 objectives, changes in the financial markets in recent years also have raised questions about the interpretation of these aggregates (Chart 3). In particular, with more and more of M-2 and M-3 bearing market-related rates, it is no longer clear that their growth would slow appreciably should the Federal Reserve restrict the supply of reserves and should interest rates rise, because the rates on M-2 and M-3 assets would move in step with market rates. Under such circumstances, M-2 and M-3 would slow only as the economy is affected by the change in interest rates. 10 Indeed, M-2 and M-3 may prove more sensitive to the shifting tides of investor sentiment than to GNP, given the enormously increased importance of moneymarket-rate instruments now included in these measures. Hence, although the Federal Reserve placed primary weight on M-2 and M-3 in 1983, it was necessary to view their behavior in the larger context of what was happening to real output, inflation, and the financial markets. In one sense, this has been a particularly frustrating period for those who would prefer to see monetary policy develop along neat and simple lines. For quite some time, the monetary aggregate targets had seemed to provide a clear conceptual basis for monetary policy. However, since at least mid-1982 it has been difficult, if not impossible, to make sensible policy just by reference to targets for any one of these measures, or even to all of them taken together. System policymakers have had to interpret the meaning of these various measures in light of their changing character. For the long run, the function of monetary policy—really the only long-run function it can perform— is to stabilize the value of money within a context of general financial stability. In the short run, it has powerful effects on other matters also of great public concern— on real growth and employment. Monetary policy neither can, as a practical matter, nor should entirely ignore these important shortrun concerns. But it does remain true that pressures to focus on short-run concerns at the expense of long-run goals tends to be a constant problem in monetary policymaking. A basic function of the monetary targeting approach, both here and abroad, has been to keep the attention of the policymakers and the public focused on the essential long-run price stability role of monetary policy— to put a little distance between monetary policy and the constant pressures to tinker for the sake of short-run objectives. When financial innovation and deregulation impinge on the economic meaning of the monetary measures, however, some of their value as a means of focusing on the longer run is lost— perhaps permanently, certainly temporarily. Ideally, the monetary targets should serve as a means of communicating Federal Reserve objectives to the public, of referring day-to-day decisions to longer run criteria, and as a means of accountability. When the monetary targets must be subject to frequent review, adjustment, and reevaluation, some of the pristine simplicity of the approach is bound to be lost. Major elements of judgment inevitably become involved in policymaking, and some of the sense of clear longer term direction may be compromised. This is undoubtedly unfortunate. But the alternative is to ignore the problems of 11 the monetary measures, to treat as sacrosanct numerical values whose meaning is necessarily surrounded by uncertainty. Such an approach would not make sense. And it is likely that this kind of ambiguous situation with regard to the aggregates will remain with us for some time to come. Recent events have also forced the Federal Reserve to make some modification in the tactics of monetary policy. Before October 1979, the FOMC announced monetary targets as it does now, but it focused short-run tactics almost exclusively on interest rate objectives. Experience in the late 1970s with accelerating inflation showed that such an approach inhibits forceful action when it is needed. It proved just too difficult to raise interest rate targets fast enough to deal with the gathering inflationary momentum. Despite a series of increases, nominal interest rates fell behind the accelerating inflation. Then, at the highly publicized Saturday meeting of October 1979, the Federal Reserve changed procedures. The approach adopted then put increased emphasis on the growth of bank reserves and less emphasis on interest rates in the conduct of day-to-day operations. With interest rates no longer targeted directly in the new approach, there was room for some automatic interest rate response to short-run deviations of money growth from targets. A major advantage of the new approach was that, with these semiautomatic interest rate responses, the interest rate levels which were really needed to bring down money growth and inflation could emerge. The disadvantage was that the automatic aspects generated a lot of interest rate volatility in response to erratic movements in M-l. In 1983 the FOMC employed operating procedures that lie somewhere between the pre- and post-October 1979 approaches. On the one hand, precise interest rate targets were no longer set as was done before October 1979. But, on the other hand, the new focus on a “ degree of reserve availability” (that is probably best measured by the volume of discount window borrowing or by excess reserves less such borrowing) did not provide for automatic responses to short-term money movements of the kind that were put in place after October 1979. Clearly, the Federal Reserve was more prepared to respond to significant and persisting deviations of money growth from target— provided they were seen to be significant for the economy at large— than it was before October 1979. But, at the same time, the new approach to controlling money growth was less mechanical than the approach used between October 1979 and late 1982. In the present circumstances, the changing character of the monetary aggregates not only requires more flexibility in setting— and resetting if need be— the long term targets. It also argues for a less mechanistic response to their shorter term 12 movements. The current procedures should be fully compatible with the Federal Reserve’s basic long-run commitment to provide a stable monetary environment that can contain inflation. The experience we as a nation have been through in recent years should help us in that regard. This experience has taught us a heightened awareness of the broad need to restrain money and credit growth. This need remains entirely valid despite the current problems with specific measures of money. Given broad appreciation of this, there is a good chance the FOMC can continue to run a policy that avoids excessive money growth without resorting to undue reactions to short-run money behavior. With past experience as a guide, it should be possible to deal more promptly and vigorously with sustained monetary excesses than was done before October 1979. U N EV E N N E S S A B R O A D Internationally, 1983 was a year of uneven economic performance. Canada’s recovery and inflation slowdown paralleled those of the United States; Japan had moderate growth and low inflation but, in Europe, expansion and inflation rates were more ragged. Several developing economies in Asia did very well. Yet, for many other developing countries, international debt problems remained a frustrating, painful, ongoing ordeal. Economic growth in the United States was of particular worldwide importance last year. Along with a rising dollar, it stimulated a strong demand for imports and thus served as a major propellant for expansion elsewhere. U.S. import purchases provided more than half the increase in total world trade from the end of 1982 to the end of 1983 and by the fourth quarter were running at an annual rate $43 billion, or 18 percent, above the level in the last quarter of 1982. U.S. exports, in contrast, remained on the weak side for most of the year, primarily due to the strength of the dollar and slow economic growth in the rest of the world. As a consequence, the United States recorded its largest merchandise trade deficit in history, over $60 billion, and a current account deficit of over $40 billion. By the fourth quarter of 1983, the excess of our payments abroad for 13 goods and services over corresponding receipts was running about $60 billion at an annual rate and it was becom ing increasingly apparent that this dependence on foreign capital inflows was not sustainable in the long run. The United States Import Surge The increase in U .S . im ports was unevenly distributed across products and among countries o f origin (Chart 4). A large part o f the rise in imports during 1983 was in autom otive products and capital goods. Asia had some of the biggest gains in exports to the United States, with Japan, South K orea, and Taiwan doing C h a r t 4 . T h e s h a r p 1 9 8 3 g r o w t h o f U .S . i m p o r t s w a s . . . u n e v e n ly d istrib u te d a n d a m o n g su p p liers. a m o n g products * . . . Food , feed, Lat in Other Western C h a r t sh o w s d is t r i b u t io n of the i n c r e a s e in U.S. im po rts from the last q u a r t e r of 1982 to the last q u a r t e r of 1983. * E x c lu d in g p e tro le u m , w hich a ctu a lly declined. 14 C hart 5. East A sia m a in ta in e d its com petitiven ess th rou gh price ra th er than e x c h a n g e rate m ovem ents. ’• Average for Japan, So uth K orea, and Taiw an w eighted by trade with ‘ the U nite d Sta te s. 1" A verage for France, G erm any, Italy, and the U nited K ingdom w eighted by tra d e w ith the U nited States. particularly well. These Asian exporters, selling the products for which U.S. import demand was strong, were price competitive with those of European countries, their chief competitors. They maintained their relative price attractive ness by making significant cuts in the dollar prices they charged. These cuts compensated for the much sharper depreciation of European currencies against the dollar (Chart 5). Europe’s sales increases to the United States were considerably smaller than Asia’s, although European sales of automotive products did reasonably well (table). Europe, however, had much more difficulty than Asia in selling capital goods, particularly business machines. One significant factor affecting European sales of capital goods may have been the rising capital goods price level in Germany, which provides about 30 percent of Europe’s capital goods sales to the United States. Japan also continued to increase significantly the dollar value of its automobile sales by selling larger and more fully equipped cars. This offset the voluntary export restraints that limited the total number of automobiles sold. Canada, with its close trade ties to the United States, showed a large increase in 15 G R O W T H R A T E S O F S E L E C T E D U .S . I M P O R T S F R O M A S I A A N D W E S T E R N E U R O P E Percentage change from the fourth quarter of 1982 to the fourth quarter of 1983 Japan Total ............................................................ Other Asia 41 44 Western Europe 5* ................................................... 52 68 11 Automotive products............................................ 43 64t 44 Other consumer goods ........................................ 32 33 10 Capital goods * Total growth is low because imports of petroleum and petroleum products declined over 40 percent, f This represents primarily automobile parts which grew from a very small base ($60 million) in the last quarter of 1982. exports to this country— over 20 percent. Sales of automobiles, which are covered by a special trade agreement between Canada and the United States, accounted for almost three quarters of the rise. Latin America’s trade gain in the United States was, in contrast, fairly small despite strong sales increases in some product areas such as steel. This relative weakness largely reflected declining world prices of petroleum, which accounts for almost half of Latin American exports. Similarly, U.S. imports— mostly oil— from members of the Organization of Petroleum Exporting Countries showed no increase at all. Foreign Industrial Countries Exports to the United States played a significant role in generating expanded economic activity in many countries. The industrializing countries in Asia that had large export increases to the United States grew very rapidly. Taiwan’s real GNP jumped an estimated 7 percent, with increased sales to the United States equal to about half the total rise in output. For South Korea, growth was almost 9 percent, and U.S. sales gains accounted for about one quarter of the total. Among the industrialized countries, Japan and Canada had the largest increases in exports to the United States in 1983 and also had the fastest domestic growth rates (Chart 6). Canada’s GNP grew about 7 percent over the course of 1983 and Japan, with more constrained domestic demand, had GNP growth of about 4 percent. Increased U.S. sales accounted for more than one third of Japan’s total 16 C h a rt 6. In d u stria l cou n tries’ grow th rates d iffe re d g re a tly . 198 2 1983 in part because in flation rates posed d iffe rin g constraints on m acroeconom ic p o licie s. 1981 1982 1983 17 expansion. The Western European economies, less successful at taking advantage of strong U.S. demand, had smaller increases in output. The relatively weak European export performance was indicative of broader economic problems. For many European countries, unemployment continued to rise even as inflation remained a pressing concern. Meanwhile, currency values were falling to new lows against the dollar while exports remained slack. As they entered 1983, the European countries faced thorny policy dilemmas: balancing pressures for expansion versus contraction, low versus high interest rates, and social welfare expenditures versus funds for private investment. Except for Switzerland, unemployment was high throughout Europe. At the start of 1983, Europe as a whole had an unemployment rate of about 10 percent. Yet inflation was not coming down nearly so fast as in the United States and was generally regarded as unacceptably high (Chart 6). Even Germany’s inflation, at 4l > percent, was considered too high in terms of its traditional domestic standards. A Most European countries also remained concerned over the size of their government sectors and over their large government budget deficits. Fiscal policies generally remained little changed and in some cases moved toward restraint. At the same time, capital outflows, in part induced by higher interest rates in the United States and sharply falling exchange rates relative to the dollar, were a factor behind the maintenance of fairly restrictive monetary policies. The strength of the dollar remained a constraint on European policies throughout the year. The dollar, originally buoyed by rising interest rates in the United States in 1981 and the first part of 1982, continued to rise in 1983 despite a widening U.S. current account deficit. Interest rate differentials continued to favor dollardenominated assets, and the good performance of the U.S. economy made dollar investments doubly attractive. Political and quasi-political considerations, includ ing the debt crisis, stimulated further “ safe haven” flows to the United States. The foreign exchange market became gripped by a bandwagon mentality, as psychological factors all worked one way and the dollar kept reaching new highs against European currencies. The yen-dollar relationship, in contrast, changed little over the course of the year. Individual European countries differed in the seriousness of their economic problems and in their degree of policy restraint. Germany and the United Kingdom, starting with lower inflation and declining government deficits relative to GNP, followed slightly more expansionary policies than in the previous year. However, the aggregate growth of output in both countries was slowed by their foreign trade sectors. Germany’s exports to other European countries, accounting 18 for about two thirds of German sales abroad, were sluggish until the end of the year. For the United Kingdom, exports were also weak while higher imports satisfied about one third of the total increase in British domestic demand. As a result, real output grew only about 3 percent in Germany and 2Vi percent in the United Kingdom from the end of 1982 to the end of 1983. France and Italy faced the most serious inflation problems among the major European countries. For France, this was compounded by balance-of-payments difficulties. These two countries, therefore, followed relatively restrictive macroeconomic policies. Balance-of-payments positions in both Italy and France improved substantially in 1983. While both countries made some progress on the inflation front during the year, their inflation rates remained above the European average by the year-end, allowing for no policy relaxation. Real GNP changed little in France and rose only modestly in Italy over the course of 1983. As the year ended, there were signs of an increase in confidence in most European countries. Domestic orders (especially those for investment goods), as well as export orders, picked up in Germany. For the United Kingdom, survey reports suggested that business investment was about to begin expanding once more. In Italy, production declines bottomed out around midyear and moderate economic growth resumed. France also experienced economic growth at the yearend, as consumer spending recovered and external demand continued strong. The High-Debt Countries For many heavily debt-burdened, less developed, countries 1983 was a period of massive austerity with little sign of economic revival as the year ended. These countries continued to suffer declines in economic activity as ongoing foreign debt problems, coupled with related collapses in domestic economic confidence, forced painful economic retrenchment. At the beginning of 1983, almost thirty countries were embroiled in financial difficulties so severe that they required large-scale debt rescheduling along with major domestic economic adjustment. More countries found themselves in that predicament as the year progressed. Among the major borrowers in the group were Argentina, Brazil, Chile, Mexico, Nigeria, the Philippines, Poland, and Venezuela. For these borrowers and their creditors, 1983 was a year-long struggle to try to restore financial and economic viability. 19 Countries with large debt payments problems generally adopted very stringent economic and budgetary policies during the past two years. Their prime concern was to reduce their current account deficits in the least jarring manner possible to Chart 7. forced the h igh-debt countries to and their per capita incom e slash im ports d ra m a tica lly . . . fell sh a rp ly. 20 meet foreign financing constraints. They also needed to adjust their fiscal policies to their sharply curtailed access to foreign funds and to lower tax revenues. Tax receipts fell both because of declines in economic activity and because of lower tariff receipts as imports were slashed. At the same time, these countries also had to deal with soaring inflation rates, often reaching new records, as large devaluations added to already exceedingly strong price pressures. The austerity measures undertaken reduced real per capita income in virtually every heavily indebted country. For Argentina, Brazil, Chile, Mexico, and Peru, the declines ranged from more than 5 to nearly 20 percent since 1981 (Chart 7). The construction and industrial sectors were almost always the hardest hit, the very sectors on which most of these countries had pinned their hopes for rapid economic growth and increased employment. Instead, these countries experienced rising unemployment, generally well above 20 percent, while underemployment, always a grave problem, worsened considerably. The measures undertaken did achieve dramatic reductions in import purchases. Latin America, accounting for most of the debt problems, imported less than $70 billion in 1983, down from $90 billion in 1982 and over $100 billion in both 1980 and 1981. Individual countries showed even more impressive cuts (Chart 7). Mexico’s imports in 1983 were only about one third of the 1981 level. In Venezuela, 1983 imports fell 50 percent from the 1982 figure. In Argentina, imports were down 22 percent in 1983 after dropping 42 percent the year before. Chilean imports, having fallen 45 percent in 1982, were down another 10 percent in 1983. Brazil’s 23 percent cut in imports last year, after a 12 percent drop in 1982, left its import volume below even the 1974 level. These massive import reductions fed on each other as many of the high-debt countries had provided important export markets for each other. Import cuts in one country became export declines in another, leading to further cumulative import cuts. This trade dependence was very clear in Latin America. Between 1981 and 1982 total Latin American export receipts declined by nearly $10 billion. Almost half of the fall was in trade with other Latin American countries which were cutting their own imports. Most of the remaining decline was in shipments to debt-troubled Eastern European economies. These trade feedback effects continued in 1983, as imports fell even further in Latin America. At the same time, imports of investment goods and key production materials were among those that were cut sharply, making it more difficult for the debt-burdened countries to increase or even to maintain production capabilities. While most high-debt countries reduced their imports dramatically, overall 21 economic restructuring plans were more difficult to implement. Measures recommended by the International Monetary Fund (IMF) under its conditional loan programs often clashed with traditional domestic policies, such as complete indexation for inflation, large government subsidies, or rigid public-sector wages. Working out generally acceptable programs was often difficult, and the time it took to reach agreement between the IMF and the borrowing countries varied considerably from country to country. The speed with which countries could deal with their financial problems in part depended on the amount of adjustment required and on factors underlying their basic payments imbalances. Mexico and Brazil were examples of these differences. Both countries had been running significant current account deficits, averaging 5 percent of GNP from 1979 to 1981. Both then cut their imports sharply, back to their nominal levels of 1978. With these measures Mexico, which had substantially increased its oil exports over the intervening period, managed to achieve a current account surplus by 1983. In contrast, Brazil’s current account deficit remained over $6 billion in 1983, mainly because its oil import payments doubled after the second oil price shock. Mexico, among the first of the major borrowers to announce debt-servicing difficulties during the current crisis, was the first country to show significant improvement. Mexico had a relatively less difficult time than other countries in cutting imports because its foreign purchases had grown exceedingly rapidly during the last oil boom. This, along with an earlier resolution of domestic economic policy debates, allowed Mexico to proceed with debt restructuring more rapidly. The country gained significantly from the process. The rescheduling agreements reduced Mexico’s near-term debt service burden, including short-term debt due, by over $25 billion in 1983. The turnaround in Mexico’s current account reduced new financing needs. New economic policy measures gave significant incentives to Mexico’s manufacturing industries. And confidence began to build again in the Mexican economy, as evidenced by a sharp recovery in Mexico’s stock market. For other countries, achieving such a degree of adjustment is taking longer as they have had to deal with more protracted economic policy debates and larger current account imbalances. The international debt crisis posed difficult problems for lenders as well as borrowers. At the beginnning of the year, international banks had $330 billion in loans to non-OPEC developing countries. Some large banks had overall loan exposures in high-debt countries much greater than their capital base. About half of these loans were either short-term or longer term loans scheduled to come due 22 within the year. A number of countries found they were unable to meet the original payments schedules and, by the end of 1983, banks had requests to reschedule close to $100 billion of their loans. In addition, borrowers were seeking substantial amounts of new loans to meet their continuing financing needs. The rescheduling negotiations were very arduous, partly because of the large number of creditor banks involved, often in the hundreds for major borrowing countries. The diverse interests of the banks compounded problems. Banks of different sizes and nationalities had different viewpoints and commitments to the international credit market. It was, consequently, extremely difficult to portion out the task of refinance among these creditors. Different regulatory treatment of bank loans in various countries also contributed to coordination difficulties. Banks were in general accord on one aspect of the rescheduling negotiations, however: the requirement that borrowing countries adopt IMF programs. Banks viewed these programs as commitments by the debtor countries to follow policies necessary to resolve underlying financial difficulties. Consequently, conditional IMF loans became an integral part of the adjustment process since banks usually linked to them the disbursal of their own new loans. An expansion of IMF funding therefore became crucial in 1983. Without a quota increase, the role of the IMF would have had to change as its resources were extended to the limit. Hence, the protracted U.S. Congressional debate on IMF funding prior to its passage last fall added a major degree of uncertainty to the rescheduling process. Governments and central banks from creditor countries took an active part in encouraging debt rescheduling negotiations. Emergency financing was provided through Bank for International Settlements swap loans, increased Export-Import Bank credit guarantees, U.S. Commodity Credit Corporation loans, and other arrangements. Official loans were also rescheduled (in what are commonly referred to as “ Paris Club” agreements). Aside from this encouragement and the rescheduling of official debt, however, a firm stance was taken that banks must bear the ultimate responsibility for the loans they had extended. Although some observers called for official assumption of problem country loans or establishment of a multilateral institution to undertake that task, this was not done. In the United States, the Congress passed legislation mandating that there be increased bank provisioning for possible loss against the loans outstanding to several countries with the most serious debt problems. Bank regulatory requirements for foreign loan reporting were also increased. Restric tions on bank accounting of reschedulings and other fees were introduced. The 23 Securities and Exchange C om m ission required fuller disclosure of banks’ problem loans in published financial statem ents. As 1984 began, with many o f the more difficult reschedulings negotiated, the deepest w orries about the international debt crisis appeared to have subsided. The problem s were not resolved and probably cannot be in any com prehensive way for a long tim e. But progress was being made. Clearly, all the participants still faced m onum ental challenges. The com m ercial bank lenders cannot shrink from the problem . A long with other financial institutions in the developed countries, their governm ents, and the IM F, the banks will have to work out some appropriate forms of channeling capital to the developing countries. Short-term variable-rate bank loans are not the means for transferring savings from rich nations to poor nations. The industrial countries have to provide growing markets for the products of the debtors since expanding exports are obviously essential for the needed restructuring of the debtor co untries’ econom ies. And the high-debt countries must follow more viable policies. In particular, they must maintain com petitive exchange rates, prices, and interest rates so that they can avoid the past m istakes that have encouraged capital flight and wasted scarce resources on inefficient production for protected m arkets. 24 Fin a n cia l S ta te m e n ts 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 3 A N D 1 9 8 2 (in dollars) 1983 1982 Total current earnings.................................................................. 5,141,341,063 5,092,376,638 Net expenses ............................................................................... 196,785,846 178,434,858* Current net earnings 4,944,555,217 4,913,941,780* Profit on sales of United States Government securities and Federal agency obligations (net)................................................................ 6,693,696 27,142,214 All other..................................................................................... 20,850 17,408 Total additions 6,714,546 27,159,622 37,253,441 Additions to current net earnings: Deductions from current net earnings: Loss on foreign exchange (net)....................................................... 111,336,562 All other..................................................................................... 116,615 656,034* Total deductions 111,453,177 37,909,475* Net deductions............................................................................. 104,738,631 10,749,853* Assessments by the Board of Governors: Board expenditures........................................................................ 17,513,200 15,383,800 Federal Reserve currency costs....................................................... 41,636,586 22,400,628* Total assessments 59,149,786 37,784,428* Net earnings available for distribution 4,78 0 ,6 66,800 4,86 5 ,4 07 ,49 9 Distribution of net earnings: Dividends paid.............................................................................. 20,884,084 19,582,450 Transferred to surplus.................................................................. 25,823,850 12,929,400 Payments to United States Treasury (interest on Federal Reserve notes).................................................................. 4,733,958,866 4,832,895,649 Net earnings distributed 4,78 0 ,6 6 6,80 0 4,86 5 ,4 0 7,49 9 SUR PLUS A C CO U N T Surplus— beginning of year........................................................... 331,612,700 318,683,300 Transferred from net earnings......................................................... 25,823,850 12,929,400 Surplus— end of year 3 57 ,4 36,550 3 31 ,6 12,700 ★ Restated to reflect changes in Federal Reserve System accounting procedures. 25 S T A T E M E N T O F C O N D IT IO N In dollars Assets D EC. 3 1 , 1 9 8 3 D EC. 3 1 , 1 9 8 2 Gold certificate account...................................... 3,058,029,344 3,211,909,363 Special Drawing Rights certificate account........... 1,335,000,000 1,335,000,000 Coin................................................................ 24,192,328 31,564,944 4,417,221,672 4,578,474,307 Total Advances ......................................................... 124,125,000 90,470,000 Acceptances held under repurchase agreements. .. 418,160,108 1,479,978,181 ★Bought outright................................................. 49,294,020,471 42,656,356,801 Held under repurchase agreements....................... 1,384,200,000 3,704,305,000 Bought outright................................................. 2,830,462,845 2,811,153,205 Held under repurchase agreements....................... 207,700,000 587,795,000 54,258,668,424 51,330,058,187 Cash items in process of collection....................... 1,361,852,987 1,629,966,743 Bank premises................................................. 25,117,643 24,757,834 United States Government securities: Federal agency obligations: Total loans and securities Other assets: Due from Federal Deposit Insurance Corporation for indebtedness assumed.................................. 142,666,667 285,333,333 t All other........................................................... 2,086,313,647 2,509,328,674 3,615,950,944 4,449,386,584 447,748,455 871,255,883 Total other assets Interdistrict settlement account.......................... Total Assets ★ includes securities loaned— fully s e c u r e d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . t Includes assets denominated in foreign currencies revalued m onthly at market .ra. te .s. . .. 26 62,739,589,495 61,229,174,961 743,870,000 S T A T E M E N T O F C O N D IT IO N In dollars Liabilities DEC. 3 1, 1983 DEC. 3 1, 1982 Federal Reserve notes (net)................... 49,474,467,588 44,812,432,506 Depository institutions.......................... 6,227,619,079 8,882,084,540 United States Treasury— general account. 3,660,842,946 5,033,451,366 Foreign— official accounts..................... 77,415,895 170,570,230 Other ................................................. 513,168,084 586,685,060 10,479,046,004 14,672,791,196 Deferred availability cash items............. 1,215,482,355 484,833,832 All other............................................. 855,720,448 Reserves and other deposits: Total deposits Other liabilities: Total other liabilities Total Liabilities 2,071,202,803 62,024,716,395 595,892,027* 1,080,725,859 60,565,949,561 Capital Accounts Capital paid in .................................... 357.436.550 331.612.700 Surplus............................................... 357.436.550 331.612.700 Total Capital Accounts 714,873,100 663,225,400 Total Liabilities and Capital Accounts 62,739,589,495 61,229,174,961 ★ Includes exchange translation account balances reflecting the monthly revaluation of outstanding foreign exchange commitments. 27 C h a n g e s in D i r e c t o r s a n d S e n io r O f f ic e r s in d i r e c t o r s . In November 1983, the Board of Governors of the Federal Reserve System redesignated John Brademas Chairman of the board of directors and Federal Reserve Agent for the year 1984. Dr. Brademas, President of New York University, New York, N .Y ., has been serving as a Class C director and as Chairman and Federal Reserve Agent since January 1983. Also in November, the Board of Governors reappointed Gertrude G. Michelson Deputy Chairman for the year 1984. Mrs. Michelson, Senior Vice President of R.H. Macy & Co., Inc., New York, N .Y ., has been serving as a Class C director since February 1978 and as Deputy Chairman since January 1983. At the same time, the Board of Governors reappointed Clifton R. W harton, J r ., a Class C director for the three-year term beginning January 1, 1984. Dr. W harton, Chancellor of the State University of New York System, Albany, N .Y ., has been serving as a Class C director since January 1983. In December 1983, member banks in Group 2 elected T. Joseph Semrod a Class A director and reelected John R. Opel a Class B director, each for a three-year term beginning January 1, 1984. Mr. Semrod, Chairman of the Board of United Jersey Bank, Hackensack, N .J., succeeded Peter D. Kieman, Chairman and President of Norstar Bancorp In c ., Albany, N. Y ., who served as a Class A director from January 1, 1981 through December 31, 1983. Mr. Opel, Chairman of the Board of International Business Machines Corporation, Armonk, N .Y ., has been serving as a Class B director since January 14, 1981. changes Buffalo Branch. In October 1983, the board of directors of this Bank redesignated M. Jane Dickman Chairman of the Branch board for the year 1984. Miss Dickman, a partner in the accounting firm of Touche Ross & Co., Buffalo, N .Y ., has been a director of the Branch since January 1977 and has been serving as Chairman of the Branch board since January 1983. At the same time, the Bank’s board appointed Herbert Fort a director of the Buffalo Branch for a three-year term beginning January 1, 1984. Mr. Fort, President of The Bath National Bank, Bath, N .Y ., succeeded Carl F. Ulmer, President of The Evans National Bank of Angola, Angola, N. Y ., who had been a director of the Branch since January 1981. In January 1984, the Board of Governors of the Federal Reserve System appointed Laval S. Wilson a director of the Buffalo Branch for a term ending December 31, 1986. Dr. Wilson, Superintendent of the Rochester City School District, Rochester, N .Y ., succeeded John Rollins Burwell, President of Rollins Container C orp., Rochester, N. Y ., who served as a director of the Branch from January 1979 through December 31,1983. 28 i n s e n i o r o f f i c e r s . The following changes in official staff at the level of Vice President and above have occurred since the publication of the previous Annual Report: Robert C. Thoman, formerly Vice President, Check Processing Function (Utica Office), retired on June 1, 1983. Mr. Thoman joined the Bank’s staff in 1950 and became an officer in 1960. Neal M. Soss, Vice President, was assigned to the Foreign Relations Function upon his return, on October 17, 1983, from a leave of absence as Special Assistant to Chairman Volcker of the Board of Governors of the Federal Reserve System. Effective February 7, 1984, Mr. Soss resigned from the Bank. He had joined the Bank’s staff as an officer in 1981. changes Effective January 1, 1984: Suzanne Cutler, Senior Vice President in charge of the Management Planning Group, was assigned responsibility for the Pricing and Promotion Function in addition to her continuing responsibility for the Personnel and the Planning and Control Functions. Chester B. Feldberg, formerly Vice President, was appointed Senior Vice President with responsibility for the Loans and Credits Function. Margaret L. Greene, formerly Vice President, was appointed Senior Vice President with responsibility for the Foreign Exchange Function. Israel Sendrovic, formerly Vice President, was appointed Senior Vice President with responsibility for the Automation Group. Effective March 29, 1984, Mr. Sendrovic resigned from the Bank. He had joined the Bank’s staff in 1970 and became an officer in 1975. Robert M. Abplanalp, formerly Assistant Vice President, was appointed Vice President and assigned to the Planning and Control Function. Jorge A. Brathwaite, Vice President, formerly assigned to the Government Bond and Safekeeping Function, was assigned to the Electronic Services Function. Ralph A. Cann, III, Vice President, formerly assigned to the Service Function, was assigned to the Fiscal Services Function. John M. Eighmy, formerly Assistant Vice President, was appointed Vice President and assigned to the Service Function. Charles M. Lucas, formerly Assistant Vice President, was appointed Vice President and assigned to the Foreign Exchange Function. Herbert W. W hiteman, Jr., Vice President, formerly assigned to the Pricing and Promotion Function, was assigned responsibility for the Security Control Group. 29 Jeffrey R. Shafer, Vice President, formerly assigned to the Research and Statistics Function, was granted a leave of absence on January 16, 1984 to serve as a consultant to the Organization for Economic Cooperation and Development, Paris, France. Richard Vollkommer, formerly Vice President, Cash Processing Function, retired on M arch 1,1984. Mr. Vollkommer had joined the Bank’s staff in 1940 and became an officer in 1970. Paul B. Henderson, J r ., formerly Senior Adviser for Strategic Developments, retired on April 1, 1984. Mr. Henderson had joined the Bank’s staff as an officer in 1974. 30 D ir e c t o r s o f th e F e d e ra l R e s e rv e B a n k o f N e w Y o r k Term expires Dec. 31 Class Group D IR E C T O R S A lfred B r itta in I I I .......................................................................................................... .................................... Chairman of the Board, Bankers Trust Company, New York, N.Y. 1985 A 1 T. J oseph S e m r o d ............................................................................................................... .................................... Chairman of the Board, United Jersey Bank, Hackensack, N.J. 1986 A 2 R o b er t A. R o u g h ............................................................................................................... .................................... President, The National Bank of Sussex County, Branchville, N.J. 1984 A 3 W illiam S. C o o k ................................................................................................................. .................................... President and Chief Executive Officer, Union Pacific Corporation, New York, N.Y. 1985 B 1 J ohn R. O p e l ........................................................................................................................ .................................... Chairman of the Board, International Business Machines Corporation, Armonk, N.Y. 1986 B 2 E dw ar d L. H e n n e ssy , J r .................................................................................................. .................................... Chairman of the Board, Allied Corporation, Morristown, N.J. 1984 B 3 J o h n B r a d e m a s , Chairman and Federal Reserve A gent......................................... .................................... President, New York University, New York, N.Y. 1985 C G e r t r u d e G. M ic h e ls o n , Deputy Chairm an.......................................................... .................................... Senior Vice President, R.H. Macy & Co., Inc., New York, N.Y. 1984 C C lifton R. W h a r t o n , J r ................................. ................................................................. .................................... Chancellor, State University of New York System, Albany, N.Y. 1986 C D IR E C T O R S — B U F F A L O B R A N C H M. J a n e D ic k m a n , Chairman.......................................................................................................................... 1985 Partner, Touche Ross & Co., Buffalo, N.Y. E d w a r d W. D u f f y ................................................................................................................................................... Chairman of the Executive Committee, Marine Midland Banks, Inc., Buffalo, N.Y. 1984 G e o r g e L. W e s s e l ................................................................................................................................................... President, Buffalo AFL-CIO Council, Buffalo, N.Y. 1984 F r e d e r ic k G. Ra y .............................................................................................................................................................................. 198 5 Chairman of the Board, Rochester Community Savings Bank, Rochester, N.Y. D o n a l d I. W ic k h a m ................................................................................................................................................. President, Tri-Way Farms, Inc., Stanley, N.Y. 1985 Herbert Fo 1986 r t ....................................................................................................................................................................................... President, The Bath National Bank, Bath, N.Y. La v a l S. W i l s o n ................................................................................................................................................................................. 1986 Superintendent, Rochester City School District, Rochester, N.Y. M E M B E R O F F E D E R A L A D V IS O R Y C O U N C IL — 1 9 8 4 L ew is T. P r e s t o n ..................................................................................................................................................... Chairman of the Board, Morgan Guaranty Trust Company of New York, New York, N.Y. 1984 31 O f f ic e r s o f th e F e d e ra l R e s e r v e B a n k o f N e w Y o r k A n th o n y M. S o l o m o n , President T h om as M. T im l e n , F irst Vice President S am Y . C ross , Executive Vice President Foreign Group R on a ld B. G r a y , Executive Vice P resident Bank Supervision J am es H. O l t m a n , G eneral Counsel P eter F o u s e k , Executive Vice President Research and Statistics P eter D. S te r n l ig h t , Executive Vice President Open Market Operations A U D IT AU TO M A TIO N GROUP and D irector o f Research J o h n E. F l a n a g a n , G eneral Auditor R o b er t J. A m b r o se , A ssistant G eneral Auditor L o r etta G. A n sb r o , Audit Officer E dw ar d J. C h u r n e y , M anager, Auditing D epartm ent H. A llan V ir g in ia , M anager, Audit Analysis D epartm ent D A T A P R O C E S S IN G P eter J. F u l l e n , Vice President H o w ar d F. C r u m b , A ssistant Vice P resident G eo r g e L u k o w ic z , A ssistant Vice President R on a ld J. C l a r k , M anager, Communications and Technical Services D epartm ent J am es H. G a v e r , M anager, AD M INISTRA TIVE SERVICES GROUP E d w in R. P o w e r s , Vice P resident J e ro m e P. P e r l o n g o , M anager (Night Officer) Analytical Computer D epartm ent P eter M. G o r d o n , M anager, Computer O perations Support D epartm ent J o hn C. H e id e l b e r g e r , M anager, Telecommunications O perations D epartm ent K enn eth M. L e f f l e r , M anager, G eneral Purpose Computer D epartm ent S Y S TEM S DEVELO PM ENT A C C O U N T IN G C a th y E. M in e h a n , Vice President L e o n R. H o lm e s , A ssistant Vice President D o n a l d R. A n d e r s o n , M anager, Accounting D epartm ent K a th leen A. O ’N e il , M anager, Accounting D epartm ent Jo sep h R. P r a n c l , J r . , O perations Analysis Officer S E R V IC E S usan C. Y o u n g , Vice P resident B a r ba r a R. B u t l e r , A ssistant Vice President O m P. B ag a r ia , M anager, Funds Transfer System s Staff V iera A. C r o u t , M anager, O perations Systems D epartm ent P atr ic ia Y. J u n g , M anager, D ata Systems D epartm ent H arry Z. M e l z e r , M anager, Common Systems D epartm ent M o n ik a K. N o v ik , M anager, D ata Systems D epartm ent J oh n M . E ig h m y , Vice P resident R o n a ld E. L o n g , Assistant Vice President M a tth ew C. D r e x l e r , M anager, Building Planning D epartm ent B A N K S U P E R V IS IO N J o seph C. M e e h a n , M anager, RONALD B. G r a y , Executive Vice P resident A. M a r sh a ll P u c k e t t , Vice P resident F red er ic k C. S c h a d r a c k , Vice P resident St e ph en G. T h ie k e , Vice President G eo r g e R. J u n c k e r , C h ief Com pliance Examiner Building O perating D epartm ent J ason M. S t e r n , M anager, Records, Printing, and Postal Services Departm ent R uth A nn T y l e r , M anager, Service D epartm ent 32 O ff ic e rs (Continued) L e o n K o r o b o w , Assistant Vice President R o b e r t A. O ’S u l l i v a n , C h ief Financial Examiner B e n e d ic t R a f a n e l l o , Adviser W illia m L. R u t l e d g e , Assistant Vice President Jam es P. B a r r y , Assistant C hief Examiner J oh n M. C a sa z z a , Assistant C hief Examiner E u g e n e P. E m o n d , M anager, Supervision Support D epartm ent A. J o h n M a h e r , Assistant C h ief Examiner T h o m a s P. M c Q u e e n e y , Assistant C hief Examiner G e r a l d P. M in e h a n , M anager, Foreign Banking Applications D epartm ent D o n ald E. S c h m id , M anager, Bank Analysis Departm ent LEG AL Jam es H. O l tm a n , G eneral Counsel E r n e s t T. P a t r ik i s , D eputy G eneral Counsel D o n N. RlNGSMUTH, Assistant G eneral Counsel D o n a ld 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 J e f f r e y F. I n g b e r , Assistant Counsel and A ssistant Secretary J o y c e E. M o ty le w s k i, Assistant Counsel B r a d l e y K. S a b e l, Secretary and Assistant Counsel * M in d y R. S ilv e r m a n , Assistant Counsel W a l k e r F. T o d d , A ssistant 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 E C O N O M IC A D V I S E R R ic ha rd G. D a v is , Senior Economic A dviser C hester B. F e l d b e r g , Senior Vice President R o b er t T. F a l c o n e r , Assistant Vice President G ary H a b e r m a n , M anager, C redit and D iscount Departm ent F r anklin T. L o v e , M anager, C redit and D iscount D epartm ent FOREIGN GR O UP S am Y. C r o s s , Executive Vice President M A N A G E M E N T PLANNING GROUP F O R E IG N E X C H A N G E M a r g a r et L. G r e e n e , Senior Vice President C h a rles M. L u c a s , Vice P resident PETER S. HOLMES, Foreign Exchange Trading Officer P a tricia H. K u w a y a m a , M anager, Foreign Exchange D epartm ent F O R E IG N R E L A T I O N S Irw in D. S a n d b e r g , Senior Vice President Jo h n H o p k in s H e ire s , A dviser GEORGE W. R y a n , A ssistant Vice President G e o r g e R. A r r i n g t o n , M anager, Foreign Relations D epartm ent G eo rge H. B o s s y , M anager, Foreign Relations D epartm ent F rancis J. R eisc h a c h , M anager, Foreign Relations D epartm ent S u zan ne C u t l e r , Senior Vice President PERSONNEL R ob er ta J. G r e e n , Vice President * T err en c e J. C h e c k i , A ssistant Vice President C a rl W. T u r n ipse e d , Assistant Vice President R o b er t C. S c r iv a n i , M anager, Personnel D epartm ent P L A N N IN G A N D C O N T R O L R o b er t M. A b pl a n a l p , Vice President A a ron S. D r il l ic k , M anager, M anagement Information D epartm ent N ir m al V. M a n e r ik a r , M anager, M anagement Information D epartm ent *On leave of absence. 33 O ff ic e rs (Continued) P R I C IN G A N D P R O M O T I O N WHITNEY R. Irw in , Senior Bank Services Officer B r u c e A. C a s s e l l a , Bank Services Officer M a r c o s T. Jo n e s , M anager, Pricing Administration D epartm ent B etsy B u ttrill W h it e , M anager, Pricing Administration D epartm ent C H E C K P R O C E S S IN G Jam es O. A s to n , Vice President t Louis J. B r e n d e l , Regional M anager (Jericho Office) H arry A. C u r t h , J r ., Regional M anager (Utica Office) F red A. D e n e se v ic h , Regional M anager (Cranford Office) A n tho ny N. S a g l ia n o , Regional M anager (Jericho Office) O P E N M A R K E T O P E R A T IO N S P eter D. S te r n l ig h t , Executive Vice President E d w ar d J. G e n g , Senior Vice President P aul M e e k , Vice President and M onetary Adviser M a r y R. C l a r k i n , Assistant Vice President EDWARD J. O z o g , Assistant Vice President J o a n E. L o v e t t, M anager, * Jo h n F. S o b a l a , Assistant Vice President J a n e t L. W y n n , Assistant Vice President S te v e n J. G a r o f a l o , O perations Analysis Officer P a u l L. M c E v ily , M anager, Check Services D epartm ent D on a ld R. M o o r e , M anager, Check Processing Departm ent T hom as E. N e v iu s , M anager, Check Adjustment D epartm ent Securities D epartm ent C h r isto ph er J. M c C u r d y , Research Officer and Senior Economist A nn -M ar ie M e u l e n d y k e , M anager, Securities D epartm ent O F F IC E O F T H E P R E S ID E N T B ar ba r a L. W a l t e r , Assistant to the President E L E C T R O N IC S E R V IC E S J o r g e A. B r a t h w a it e , Vice President H enry F. W ie n e r , A ssistant Vice President H. J ohn C o s t a l o s , M anager, Securities Transfer Departm ent R ob er t W. D a b b s , M anager, Funds Transfer Departm ent A nd rew H e ik a u s , M anager, Funds Transfer D epartm ent OPERATIONS GROUP H enr y S. F u ja r sk i , Senior Vice President W illiam M. S c h u l t z , Adviser C A S H P R O C E S S IN G JOSEPH P. B o t t a , Assistant Vice President M a r t i n P. C u s ic k , M anager, Paying and Receiving Departm ent T h o m as J. L a w l e r , M anager, Currency Verification Departm ent C harles E. R o c k e y , M anager, Currency Services D epartm ent L il l i e S. W eb b, M anager, Currency Verification Departm ent F IS C A L S E R V IC E S R a lp h C a ro l F ra n k Jo sep h A. C a n n , III, Vice President W. B a r r e t t , Assistant Vice President C. E isem an , A ssistant Vice President J. G rim sh a w , M anager, Safekeeping D epartm ent A ngus J. K e n n e d y , M anager, Government Bond D epartm ent J ohn J. S t r ic k , M anager, Savings Bond D epartm ent P U B L IC I N F O R M A T I O N *On leave of absence. t Retires May I, 1984. 34 P eter B a k st a n s k y , Vice President R ich a rd H. H o e n ig , Assistant Vice President M ar g a r et E. B r u s h , M anager, Public Information D epartm ent O ff ic e rs (Continued) D a v id L. R o b e r t s , R ES EA R CH A N D S T A T IS T IC S P eter F o u s e k , Executive Vice P resident and D irector o f Research R o g er M. K u b a r y c h , Senior Vice President Research Officer and Senior Economist L eo n a r d G. S a h l in g , Research Officer and Senior Economist and D eputy D irector o f Research R ich a rd J. G e l s o n , Vice President *J effrey R. S h a f e r , Vice P resident M . A k b ar A k h t a r , S E C R E T A R Y ’S O F F I C E A ssistant D irector o f Research E d w a r d J. F r y d l , B r a dley K. S a b e l , Secretary Assistant D irector o f Research and A ssistant Counsel W illiam J. G a s s e r , J effr ey F. I n g b e r , A ssistant Counsel Assistant D irector o f Research and A ssistant Secretary J oh n W e n n in g e r , T h eo d o r e N. O p p e n h e im e r , Assistant Secretary A ssistant D irector o f Research N an cy B e r c o v ic i , M anager, Statistics D epartm ent t S teph en V. O. C l a r k e , SECURITY CONTROL GROUP Research Officer and Senior Economist P atr ic k J. C o r c o r a n , H er b er t W. W h it e m a n , J r ., Vice President Research Officer and Senior Economist E dna E. E h r l ic h , E L E C T R O N IC S E C U R IT Y Research Officer and Senior Economist R ic h a rd P. P a ssa d in , Security Officer A a ron S. G u r w it z , Research Officer and Senior Economist G er a ld H a y d e n , M anager, Research Support D epartm ent S u sa n F. M o o r e , M anager, Statistics D epartm ent C arl J. P a l a s h , Research Officer and Senior Economist P R O T E C T IO N R o b er t V. M u r r a y , Assistant Vice President S E C U R IT Y C O N T R O L J ohn C h o w a n s k y , Security Control A dviser O FFICE R S — B U FFA LO BRANCH J ohn T. K e a n e , Vice President and Branch M anager PETER D. L u c e , Assistant Vice President A C C O U N T IN G ; C A S H ; C R E D IT , D IS C O U N T , A N D F IS C A L A G E N C Y G ary S. W e in t r a u b , Cashier B A N K S E R V I C E S A N D P U B L IC IN F O R M A T IO N ; P E R S O N N E L ; P R O T E C T IO N R o b er t J. M c D o n n e l l , O perations Officer B U IL D IN G O P E R A T IN G ; C H E C K ; S E R V IC E D avid P. S c h w a r zm u el ler , O perations Officer * O n le a v e o f a b s e n c e . t R e t i r e s M a y 1, 1 9 8 4 . 35
